Buying A Truck....

Well, I don't see how you can possibly figure how much you need per mile until and unless you know how many miles you're gonna drive. Seems there's be a sliding scale toward the end of the month. An extra 1000 miles after your truck and insurance is paid isn't going to need $1.80 for a profit.

 

Are you O/O or L/O? Are there any expenses you are saving losing that 25%? I'm just trying to figure out cpm for O/O with 100% payment assuming cheaper freight as well. I was assuming $1.32 would be good for O/O without the cut, but it won't work if you're getting insurance breaks or more from your co.

 

I hope and prey you are right.I have talked to 20 brokers and they can not find any frieght to bid on more then 1.80..

I hope that the people you lease to can actually 100% guarintee you that you will be pulling loads all the time at 1.80-2.00 a mile...

If thats the case then you are golden...You will make it and you will be very lucky to have found that kind of money...

If not you will be in trouble like myself and thousands of o/o, were the rates have been ''slashed from 2.50 a mile to .80 cents a mile...

This is why people are in trouble right now...Its not because of ''bad businessman'' its because there is no frieght and to many drivers are cutting the rates and pulling for 1.00 a mile....thats reality...

The same loads i pulled for say the last 5 years paid 2.50 a mile..Well them loads today are going for .80-1.50 because of the economy..But mainly because of the fact there is no freight.So people are taking it for 1.00 a mile just to move or they sit for days and days...

I hope for your sake this place you are ''leasing'' to is not selling you a product that dont exsist....

Tell them you want to see the original freight bills and by the way that is your right to see them and have copies of them...

 

Here is one of my trips bt.....this is a weekly trip i did....1.50 ALL MILES TO THE TRUCK

2,600 X 1.50 = 3,900 (GROSS)-SO FAR


3,000 (actual miles) = 3,000/5.5 = 545 gallons used

545gallons x 2.40 (avg) = $1,309 for fuel

loads payed are not (actual miles)--here is where the screwing starts...lol

loads payed computer miles which = 2,600 miles x 1.50 (avg) = $3,900 to the truck

deadhead for the week was 500 miles / 8.0 MPG = $62.50

3,900 x 35%(landstar cut) = 2,535.00

2,535.00 - (fuel) 1,309 - 62.50 = 1,163.50


gross to the truck is $1,163.50

deductions on a weekly basis..

work comp = 32.00
bobtail ins = 20.00
physical damage =11.00
comdata use = 12.00
pre pass = 2.70
cell phone= 20.00
computer fee = 20.00
tolls were at = 38.00
fuel tax = 40.00
truck maintanence = .10 a mile x 3000 MILES = $300.00
truck payment = 300.00
794.00

gross to truck = $1,163.50
deductions = 794.00

net pay was 368.80 / 6 DAYS OUT = 61.46 DAY

I AM WAITING FOR YOUR RESPONSE.....

 

With all respect to your conversation guys, let me jump in here with my opinion (we all have one, y'know). I, too, am considering the jump to O/O but with my own authority.

But, here's my .02 in response to the issues that I see in your report - which you were very candid and kind in providing for all of us to see:

1) O.O.R. miles were 13% for your 2,600 mile trip. I've run for Maverick for the past couple years and have achieved 3.3% to 5% consistently since my first quarter (although this ranks at the top of my board of 50 drivers). But, it illustrates that it is possible to use a GPS, cut through the woods, and save on O.O.R. mileage.

Possible net savings here: 208 miles (or $90.76 savings w/ your #'s)



2) Deadhead miles for the week equaled 62.50 gallons, not dollars.

Additional Costs: $150/week



3) Landstar's cut at 35% seems high, unless you are leasing a trailer from them.. I thought Landstar paid about 74% or so to the truck for van freight?

At any rate, 35% of anything is alot. In fact, 35% of $1.80 is .63/mile. This equates to a $63,000 cost essentially for the right to work through a full-time broker, to have your insurance paid, and the few extras that they have based on running 100,000 loaded miles.

With specific regard to this subject, assuming all things are equal, isn't the $1.80/mi. load on the landstar board equal to the $1.17 load on getloaded.com? Now, I know all things aren't equal, so let's even them out by adding $13,000/yr for auto and cargo insurance (.13/mi). So, isn't the $1.80/mi. load that you were referring to for 7 pages of text the same as a $1.17+.13/mi. load from somewhere else, give or take?

This is a very essential question not just for this thread but for the entire O/O message board.

4) You cite cell phone use at 20/week. But, on a previous page, you cited cell phone costs at around $5,000/year. That is an inconsistency.

5) $300/mo. toward tractor bill. First, I thought you owned the tractor, but that aside. $300 x 4.3/weeks in a mo. = $1,290/mo. ($15,480/yr). Ok, but let's not put all of that in the column of a loss. The only loss you have is the depreciation and the interest on this payment (probably about half, and this is tax deductible). The rest is, believe it or not, equity (like your house).

Net savings: $150/mo. (truck equity).

6) .10/mi. for maintenance? About $13,000-$15,000 a year for maintenance? Year after year? I'm assuming you don't own the trailer (see above), so you don't have to worry about it's maintenance upkeep. Then, I give you 10 new tires every year at $500/piece, 10 services at $250/piece, and a new engine overhaul every other year at $15,000 to $23,000/piece (every 3rd year then if it's a CAT). Ok, I will accept that for sake of argument.




In reading these 7 pages of text and the many other pages of text that I have read on this remarkably open and informative message board about the subject of becoming an O/O, I have always listened to everything that was said. This is, in reality, only my 5th or 6th post in almost 2 years. For me, honestly, many of these posts are increasingly disheartening and confusing. On the one hand, I respect someone for their decades of driving experience over 7 pages of text, and if that person says that you can't make any money if rates fall under $1.80/mi., then that person must be right. But, I have done my math as well and didn't see how this wasn't possible. So, I continued to read the discussion in a bit of a perplexed state. That is until I got to the point where you state you are leased to a company and pay 35% of your rate to them.

Oh..

I think there are alot of other O/O wannabe's that feel this same frustration and confusion when asking veteran drivers about the in's and out's of the trucking business. I have seen an enormous amount of goodwill on behalf of courageous, industrious, and eager young drivers who ask good questions about their intentions to become an owner operator only to get absolutely smashed in return by comments from older drivers that aren't put into proper context and are sometimes said with more contempt than goodwill in response to a younger driver that might assume to question their personal dogma. Well, I have questioned your numbers and found that my numbers, when put into proper context, are exactly the same.


So, in answer to you and many of the younger driver's questions about costs and what to price in, I say this (which is really the same thing you have said, but in a much more organized, informative, and concise way, just from a different perspective - that of an owner/operator with their own authority):


$2.40 gal/6.0 mpg = .40/mi for fuel

Variable Costs: .40/mi.

Maintenance Expense = $12,000/year (but, of course this varies on age of a truck.. look for a good truck with a newly rebuilt engine that has proper documentation for both scheduled services and the fact that the engine had an inframe around 150,000 miles ago).

Insurance Costs = $7,000/auto, $3,000/cargo, and $2,000/physical = $12,000/year (this is what I was quoted by Old National Bank Insurance Dept. here in Indiana for me).

Truck Payment = $10,000/yr. for a good used truck with a reasonable down payment (i.e. $6,500 down on a $35,000 used Kenworth W900 with a recently rebuilt - 8 mo's ago - engine and transmission that I am looking into). I won't assume any growth in truck equity for sake of argument.

Other Fixed Costs = $10,000/yr (yes, I lumped fees, permits, tolls, cell phone, computer costs, and everything other thing like that together... For the most part, they are just a bunch of fixed costs of doing business. )

Fixed Costs = $45,000/yr

Moving Forward with the assumptions and per mile calculations, I am going to assume what I ran last year, around 125,000 loaded miles with a great out of route percentage of 3.3% and a reasonable 7% for deadhead. This brings the annual hub mileage (actual miles driven) to 137,500. 10% more... So, let's add 10% more to the fuel costs to cover the O.O.R. mileage (now at .44/loaded mile).

Fixed Costs = $45,000/125,000=.36/mi.

Variable Costs = 137,500 total miles / 6.0 mpg x $2.40/gal / 125,000 loaded miles = .44/mi

Total B/E Rate = .80/mi.


Add .50/mi for driver pay


New B/E Rate = 1.30/mi. (very similar to the $1.17+.13 from above.. in fact, exactly the same)



If you are a new driver and have the balls to become an owner operator during one of the worst recessions since the Great Depression, do your own math, limit your risks, find the brokers and shippers to at least have some options when you get started, and Hammer Down!!!

 

What???,.....Why is everybody in a race to the soup kitchen line???

 

If you guys get your own authority, I want to know where you are planning to get the freight at the above numbers? And how do you plan on getting the miles in to pay the bills?

I have filing cabinets full of brokers and shippers. There is absolutely little if any work out here right now.

And how do you guys plan on paying for your fuel? When I dropped my authority my avg time to pay was out 55 days and getting worse. Then you have credit checks, which if you don't know already, you will be extending credit like a bank to these brokers and shippers. You would be amazed at how many brokers and shippers there are out here that do not pay their bills.

In these current economic times, I would really think long and hard about getting into this as an O/Op. Your numbers add up in good times, but these are not the times.

Mike