I am learning to drive at a local driving school, and we had a visit from a Stevens recruiter today. A large part of his presentation was about being an O/O for the company, with all kinds of blurb showing how much money some of them made. He obviously did not stay long enough to answer any substantitive questions, so I thought to bring those questions to the iluminati:
1. According to their website, they pay around $1.04/mile, and seem very confident that doing 3,500 miles per 8 day (70 hour driving) period is easily done.
2. This works out to about $3640 per 10 day period (of which there would be approximately 3 per month)
3. They charge between $550 and $650 for the weekly lease of the tractor, so, splitting the difference, and subtracting it from the gross, should yield $3040.
4. Now, assuming an average fuel economy figure of 7mpg for one of those nice shiny T2000s (with the leather seats and all), and an average cost for fuel of $2.50 per gallon, the fuel cost would be 3500 miles, divided by 7mpg, yielding 500 gallons, at a cost of $1750.
5. Subtract that from the remaining $3040, and one is left with $1325
6. Now, add in the task of escrowing a sufficient amount for issues like tolls, scales, tires, maintenance, insurance, taxes (both fuel, Federal and State income, at the very least), downtime, vacation, etc. I would take a stab in the dark and assign 30 cents a mile to those. (I am pretty sure there are a host I did not think of)
7. So, $0.30/mile of 3,500 works out to $1030, leaving one with $275 to make the little woman's day.
In summary, if one worked 36 such periods (3 per month) one would gross $131,040, and take home about $10,000.
No doubt my calculations could use a rigorous review, and I would highly appreciate feedback.
Fleece/Lease Purchase Program Info
Now some stuff you didn't include
Workers comp insurance. I would recommend a good health insurance plan for the self employed that will cover workplace accidents. $8500 per year.
Trailer rental. You didn't expect them to provide the trailer did you? $200 per week, $10,400 per year.
So to review:
$33,800 Tractor rental
$67,500 for annual fuel cost.
$10,400 trailer rental
$8,500 health insurance
Total expenses $147,200.
NET LOSS $27,200.
This may be the worst case scanario. Now imagine that your $650 lease payment is due and you only ran 1,000 miles last week. $500 for fuel and you owe the company a $200 to $500 for the rest of your lease payment, trailer rental, and insurance.Passload Thanks this.
Much appreciated! it certainly makes sense that some people pick the Company Driver Route, it seems the more sensible way.
The scenario above looks like a quick road to insolvency, unless you know the industry pretty well, and are somehow able to buffer the tractor/trailer lease and fuel expenses.
Regardless of what any recruiter claims for any company, there is no way that you should ever consider being an owner operator untli you have several years of experience in this industry. There is no worse scam out there than to take someone brand new, with no practical experience, and put them into "ownership" of a truck. You need time to learn the job, you need time to learn the routes, you need time to learn so many things that are essential to the simple act of being a trucker.
I would recommend a minimum of 3 years of steady work as a company driver before I would ever even suggest that someone should consider buying a truck. This allows you time to get some experience, talk to other people that have experience, and learn the job that you are going to do. Then, by the time that period has elapsed, you have a reasonable chance of owning your own truck.
Also, very rarely does anyone recommend a lease purchase program, since they are usually structured very poorly for the driver and very much in favor of the company owning the truck. If you want to own your own truck, then the best way to do so is through a cash purchase or through traditional financing methods.
At it's very best, a lease purchase is a questionable deal, and the main reason is that you are handing too much control of your fate to someone else. The very same people that hold the lein on your vehicle also control how much freight you are going to move, the rates you get paid, and the miles you drive. it's too easy for an unscrupulous company to freeze you out at the end of a lease, leaving you unable to make the payments and losing your entire investment.
In my opinion, any company that comes into a training class of new drivers and offers to lease them a truck is not someone that I would ever want to do business with, regardless of how sweetly they phrase it. It simply isn't something that any reputable company would do.
Burky's right. A lease program is little more than a way for the company to pawn off all of the operating expenses of the truck on to some sucker while they continue to pocket most of the profits. No matter how they try to present it, a scam is still a scam.
You have been given some awesome advice here. You should listen carefully to what the guys have said.
In order to survive in this industry when all the costs fall upon your shoulders, you need several things.
Knowledge is definately the key.
Learn the industry from O/O's and personal experience. O/O's have no interest in glorifying what is truely involved in surviving. Personal exerience is priceless.
Things aren't always as neat and clean as the numbers seem to make it. There are always unexpected incidents and occurances that can make or break you.