Lease Purchase Programs Good or Bad and Why?

Okay. You want 'frank'? You got it.

Lease operator, or, more appropriately, FLEECE operator, agreements should be avoided like the plague. Why? Well, let me tell ya in several paragraphs' worth of postage. Pull up a chair and devour these tasty, yet FRANK, morsels:

1. If a company will accept just any ol' Tom, Dick, and Rubber Duck to be a fleece operator, then that reflects their confidence in said driver's ability to succeed in the program. Companies advertise NO credit checks and bad credit is 'okay'? Sounds like to me they're trying to entice those with very little business sense to begin with into becoming fleece operators and the owners of their 'own' businesses. In other words, the drivers are setting themselves up to fail, and the companies are taking advantage by encouraging drivers to set themselves up for that failure. Sorry, but if you want to be a successful O/O, you must have good credit and probably a nice slush fund from which to draw when times are lean. Best of all, you'd better have your own rig that is already paid for.

2. The companies enjoy certain economies of scale, the magnitude of which depends on the size of the outfit, that allow them to buy things such as parts and fuel in bulk at lower per-unit prices than an O/O on his own can buy those. Companies will use this fact to pick the pockets of their fleece drivers. When a fleece operator driver must pay for an item at his company's terminal, he usually must pay a premium price for it, even though he's buying it from his master. The company buys the item for a discount, then marks it up to a premium price when the fleece operator buys it. Is it any surprise outfits push the fleece operator deals so hard? It's a good way to cut costs and make those companies' stockholders jump for joy. I'd jump for joy, too, if I could sucker somebody else into paying a lot of my expenses.

3. Fleece operator drivers are handcuffed after they sign on the dotted line. What? As a fleece operator, you thought you were going to be your own boss? Dream on. Forget being your own boss if you're a fleece driver. Fleece drivers can be and very often are the whipping boys at any outfit, by design. If a company has problems covering its loads to places like New York City, it can simply put fleece drivers on those loads. What will the fleece drivers be able to do about it? NOTHING. Company drivers can refuse and quit when and if their outfit makes them its New York City #######. Fleece drivers can't. Fleece drivers MUST accept whatever bones their outfits throw them, which could very well take the form of sitting for days in truckstops. If you go fleece operator, be ready to accept whatever your outfit sticks you with, which may be nothing but sitting if you piss off the wrong person by, say, not driving illegally on a hot load somewhere. If you're going fleece operator and your company delivers to New York City, well, see if you can make a contact in New York who can get you some cheap tickets regularly to the Letterman Show or to the musicals there, as you are going to see Gotham City a LOT. Better become a Yankees' or Mets' fan when you sign on the dotted line.

4. If you do manage to discover an account with a customer that will bring some good profit, it won't be long and your outfit will also discover the account is profitable. Your master company will then remove you from that account and put one of its company trucks on it. Forget trying to make contacts you can milk later when you become an actual O/O.

5. If you decide to walk away from the scam that is fleece operator, your master company will try to hose you. It will find all sorts of things wrong with the truck you return, and it will try to take full advantage of its potential to more or less empty your pockets completely by filing bogus damage claims. Understand that most drivers don't know how to properly quit a company and return a truck, so it's no surprise they get the hose treatment when they do quit. Your simply parking it and walking away without taking pictures and without going over the checklist with a company schmuck is what the companies are counting on.

6. It is rumoured that SwiftQuit has set a goal to convert a large portion of its fleet to O/Os by around 2010. I'd bet it will try to ensure most of these new guys are fleece operators. Again, this is a rumour that is more than likely just a wild claim, but there may be something to it. I don't know the percentages, but given the nature of fleece operator agreements, I'd say this outfit has figured out a new way to screw fleece drivers. When that outfit starts succeeding in doing just that, expect the other big outfits to start behaving the same way. With fuel at 4 bucks a gallon or more, the new screwjob probably involves fuel in some way. Whatever it is they have up their sleeves there, it won't be pretty for the incoming fleece drivers.

So. Do you still want to be a fleece operator driver?

 

yes i do

right now with fuel # $4.09/gallon

$1.27/mile...without paying myself.

and before you spout off with you must have high payments...i dont. matter of fact a new pickup payment is bigger than my big truck's.

Fuel is killin us all right now and combined with low rates...well do the math...trust me it equals broke.

 

I've heard about what's goin' on, Bronc, and you're right. I think there was some sort of truck drivers' strike a week or two ago, but it was swept under the rug. The strike's getting very little media coverage meant it had very little effect. I made a prediction a few weeks ago that most O/Os will be gone by the end of 2009. I think the true independents will be out by then. Those who lease on with big companies may be able to weather the storm until rates increase, depending on whether or not their outfits give them fuel discounts.

 

this year is gonna be a ruff one thats for sure

 

Know I'm rooting for you and everyone in your boat, Bronc, which includes myself, in a way. I used to drive and may drive again someday (union ONLY), so I'm definitely interested in what is going down in trucking.

Best of luck. I hope you don't need that luck.

 

I think I know what you are trying to do with this thread, but I'll bite anyway.

Here are some numbers I got from Prime L/O drivers on their web site.

Fixed cost, including leases payments, truck ins, tags, permits, and misc. $950.00-$1000.00 per week for a new truck with an APU.

There is a tire fund of .015 per mile.

From what I can make out there is appx .08 per mile charge for mileage and other misc.

There is an excess mileage fund of .05 for mileage in excess of 2900 per week. After 3601 miles per week the rate increased to .07 per mile. This applies only to miles above the 2900 threshold.

From what I can figure fuel is .64-.70 per mile at $4.05 per gallon, based upon 6 mph, which most seem to be getting.

You pay for the reefer fuel you use.

You pay for repairs not covered under a new truck warranty.

Most drivers say they avg. 1.45-1.49 per mile LOADED. No one seems to know what their total miles are, just dispatched miles.

If I am correct with all those figures, then a 3000 mile week would cost appx. $3605.00 in expenses, including reefer fuel and a very few dollars for extra expenses. If the truck brings in 1.48 per mile for all dispatched miles, which is what I set all other figures at, the the income would be $4440.00.

I did not include fuel expenses for unpaid miles.

So at these figures I calculate this:

$4440.00 income
$3605.00 expenses
------------------
$ 835.00 net

Keep in mine you pay all of your taxes and health insurance, and sick days, insurance, and you now have unpaid vacations.

If my figures are wrong, I am sure someone will let me know. I am not sure if the.08 charge is correct or not, but these figures came from the source. I figured the fuel cost at todays fuel price.

 

They can not and do not cover even most of those expenses. The companies get their loads hauled cheap, without them having to make a single truck payment or maintenance/upkeep expense. On top of that, they don't have any of the high cost and risk involved with keeping an employee.

Leasing is a win-win for the trucking companies. It appears that the Prime walk away lease is the better lease that I have seen, but in reality the drivers are only making around what a company driver does if you count all of the benefits and taxes that the company pays for an employee.

What I hear the Prime lease operators say as to the advantage they have over company drivers is that they don't have forced dispatch, and can go home when that want. The bad thing is they can't afford to go home, for it is still $1000.00 per week if the truck sits. Most I have read of have not had to pay out any big repair bills, or even have to sit a week or so getting their truck fixed, even if under warranty.

The payments keep coming wether the breakdown is warranty covered or not. I know this is also true of an O/O, but I have only owned one truck that had a payment of over $1000.00 per MONTH. The last three I paid for in cash, and money still doesn't roll in like people think it does.