Lease/Purchase Tips

You have no reason to read it, you aren't looking for a lease. It has plenty of good information for someone that is.

 

This is why you don't want to even think about leasing onto a deal like this. Running as an IC for mileage pay and FSC is a loosing proposition.

 

IP, I usually don't call you on stuff, but this is a ridiculous statement. You have never run for mileage+FSC. Therefore, you wouldn't know.

I have run under the identical conditions you are under, with the same company you are with now. It didn't work for me. Mostly because I had a lemon for a truck and I was stuck with it. Largely because my FM ran his fleet under "forced" dispatch and thought the world ended at the borderline between the Central and Mountain Time Zones. It was a miracle to get into the West. And partly because I didn't turn down crap loads like I should have. You have to be very careful where you haul when under percentage.

Since I switched companies and now run for mileage+FSC, my business has taken off. I may not get the $2K+ weeks I got on rare occasion before' but neither am I floundering for three weeks in a row, begging for dispatch to throw me a bone.

It is very possible to not only make a little money running for mileage, it is possible to do quite well. Considering I never have to worry whether my next load will make or break my week. I already know what it will pay and most of the other variables have been removed from the equation: like tolls and lumpers.

My average gross revenue per mile went up by roughly 25cpm while at the same time, my expenses dropped by over $500/week. And I'm only talking about fixed cost. None of the variable costs like tractor fuel and reefer fuel. Yes, I ran OTR under both rate methods. I much prefer mileage.

I'll get into specifics later. I'm too danged tired right now.

 

I have real reservations about that formula under lease, lease-purchase or owner-op scenarios. I know you're doing well, and I know your history at my carrier - and I completely agree with the reasoning for your exit. At my carrier, the quality of your driver-manager can completely determine your level of success or degree of failure - and that is one of the pitfalls in many lease or lease/purchase situations. In my case I had the opportunity to observe the results of a group of DMs under severe economic stress ('08 and '09) and chose one of the better performing boards on the basis of who survived the financial razor.

Need to play with the numbers from BigJohns post for awhile to support that statement. It's an intuative hunch at this point that I'm working with, but will post something more after I've had a chance to develop the idea a bit. It ties into how this all works out.

I know you're doing well there... and applaud you for that. This is a tough business, and anyone who manages to survive the cut deserves a standing ovation... no matter how your individual situation is structured.

 

Prime pays 72% to the driver of what is actually billed to the shipper. But doesn't that or couldn't that vary? Do you get to see what the bill is before accepting the load?

Mileage pay + FSC is the same as percentage; the carrier Injun and I work for charges an amount to ship a customer's product then pays us a percentage of that on a per mile basis.

 

You're always chasing miles though. A straight percentage, FSC and assesorial is not based on mileage - just flat out what the shipper is paying. My loads have varied from $1.53 per mile to $2.67 per mile (when you do the math) this week. A little book keeping with my settlement every week allows me to keep track of my costs and bottom line, so I'm more concerned about my gross income for the week rather than the per-mile-rate.

Do I get to see the freight bills up front? No, but I don't need to either. I get a QC page that details the various payments that are involved and a total. That's all I need to accept the load. If you're implying that my carrier may not be playing above board on this, get that out of your head right now. I get a summary of the freight bills supplied by a third party on every settlement, and have yet to see anything vary from exact on my cut by more than a penny one way or the other.

There's also another advantage in this... per Federal law, I can ask to see the original billing documents at my carriers primary terminal any time I'd like to see them - but only because of the way I'm paid. You have to accept your carriers word on that - carriers who pay on a per mile basis have no requirement to let you know what the actual cost-basis of your loads are.

 

I don't care what Swift is getting paid for the load. I will get the same whether they get $4.00/mile or 50cpm.

You had an outstanding week....unless that revenue came with a lot of sitting. Which is something I ran into a lot over there. I know I will make the truck bills at xx miles. After that, it's pure profit.

Chasing miles? Not really. Dodging them is more accurate. They'll run me as long and hard as I want to run.

 

The reason I was asking is because a guy who owns 5 trucks and a few reefers is looking for an owner operator. I'm a little reluctant because it's a whole bunch of new stuff to me at once ie. percentage pay, reefer freight, no qualcomm, etc.

Those are great numbers Ironpony. I was doing some hypothetical math on a $2 bucks a mile load at 69% of 98% and that is the same per mile pay a Swiftie O/O gets.

 

I'd be asking why only 69% and only of 98% instead of 100%.

You forgot to figure in the surcharge which the company shouldn't get a cut of. After you figure in .50 cpm, give or take, surcharge, your just a tad bit higher than Swift's mileage pay.

And if 2.00 per mile is all that guy is getting with surcharge........ run!

 

No sitting... freight is good. Injun, your FM was obviously an idiot - they are paid base plus commission - based on your results. He can only increase his income by making sure you are successful.