Nationalease

A way to remedy this would be to pay the driver 63% of gross, but the driver pays for fuel. Any out of route miles or idling would then no longer be the concern of the truck owner, and there would be no need to audit for correct routing.

 

I don't understand what the concern is under the deal I described, the "truck operator" is essentially renting the truck and is already paying for the fuel if I didn't make that crystal clear. The owner is going to be paid (one more time) $210/wk (this is based on $7000/yr insurance, $1800 plates, $550 highway tax, $150 drug consortium, and $76 UCR). Whatever the actual cost of these items converted to weekly. I intentionally said this would be weekly so the owner gets exactly the correct amount to pay his fixed costs right off. This way if the truck operator decided to take two weeks off the owner still gets his money to pay the bills. Therefore has no incentive to get into the operator's business.

0.30/odometer miles truck replacement. This may be a bit high, but hey after a couple years if there is plenty of money in this fund and the truck operator wants to keep driving the same truck another couple years. good for him, he can negotiate a lower rate and make more money. The other genius thing about this fund is if the truck operator flops and goes home crying to mommy about how the evil brokers are killing him with their low rates after six months at least the truck owner is left with something for his troubles.

0.15/odometer miles repairs / 0.15/odometer miles to owner. for all purposes this is both going to be money going to the owner, but I figure on a typical truck he could be hopeful that 0.15 would cover repairs over time. This is the thing that would have to be negotiated carefully, but the bottom line is the owner is choosing to reduce his workload by allowing the truck operator to be the driver, the dispatcher, the load planner, and the accountant, etc... all in one, a trucking company in the cab. So he is just looking for a simple return on his investment. Hey if you can invest $50,000 and get a steady return of $200/wk assuming the driver runs steady, should work. The other thing is he can still fire the guy anytime as well.

So you are concerned the owner is going to get screwed if the truck operator runs 350 miles deadhead. No, he is paid off of the odometer. He could care less if the truck operator deadheads to California and back every week. (other than it's obviously not sustainable) I mean, I think if the guy was smart he would want to see the truck operator making good decisions so he wouldn't have to look over his shoulder and could trust him to keep things filed and everything else. The idea really is to get away from percentages, the owner gets paid as his truck depreciates. That way, the better the truck operator does the more money goes in the truck operator's pocket. The worse he does, doesn't affect the owner. This is important, because it gives the truck operator the chance to be truly independent. And it removes any reason for the owner to get into his business. The truck owner would have to be resigned to the fact that he is simply going to make 0.10-0.15/mile off the truck or whatever rate is negotiated. I figure if the lease operator does well, the truck owner will pocket $200/wk with little involvement, or about a 20% return on his investment, and since the replacement fund is in place he gets extra if the guy quits or he fires him, and it insures he will continue to get a return for years to come if the guy stays. Am I missing something ? Because you guys sure are, lol.

 

Not doubting you but the numbers you offer are realistic from a credible place or what you have drawn up?

Just trying to understand is all.

 

A couple weeks like I have been operating here lately, high revenue, no miles, the owner would be screwed.

 

how so ? his out of pocket costs are covered in the weekly amount. Sure, he gets a bigger check if you run more miles. But I wouldn't say he is screwed in any way, shape, or form, if you run less. It's not like he is paying a dispatcher or a bookkeeper. I can't see where the guy would get too concerned as long as you are averaging 1000 miles or better. Does Penske or Ryder care if you only run 500 miles/week ? Does Penske or Ryder care if you deadhead 350 miles to go to a family function ? The problem you guys are having understanding this, is this truck owner is not typical. He has given up on the idea of maximizing his profit on this truck in favor of a fairly hands-free investment with a fairly dependable return. I would say as long as the truck operator is taking good care of the truck, not racking up violations, and keeping the paperwork in order the owner is going to be pretty happy. Now if week after week you were running less than 1000 miles, sure, he may be disappointed. But he's still not losing.

Just think of it like Penske or Ryder, but the operator is renting the authority as well.

@ aiwiron, the numbers are just my calculations. But the weekly amount would be actual weekly cost of insurance, plates, etc... I figured $210 based on what I pay on these items.

0.30 replacement, hey, if you can't replace a truck with $30,000 every 100,000 miles you are doing something wrong. this number could be 0.25 or maybe even 0.20. But I figured it would only make sense to start a little high and the operator would have a chance to negotiate that down once he got it built up a little.

0.30 to the owner, out of which he pays repairs and whatever overseeing or bookwork the operator cannot do. I think over time $15,000 every 100,000 miles should cover tires, brakes, repairs, etc... What do you think ? This is the variable and what would require some negotiation. But the way I see it is even if repairs run a little high on the truck, say 0.20/mile, the owner is still clearing 0.10/mile. With a lucky truck I think he could clear as much as 0.20.

IDK, I guess I'm getting myself pretty sold on the concept. The reason I like it so much is because I think the traditional model is inefficient and ineffective because oftentimes you wind up with a bunch of people working phones all day trying to book loads for trucks. dispatching and load planning is a tough job and the people doing it don't have a real financial incentive to fight for the best rates. Oftentimes drivers become paranoid that their dispatcher is out to get them, or that they are getting all the junk. Fine, do it yourself and you have noone to blame.

 

The OWNER is screwed out of money if he's only paid off that 75 cpm as you describe.

I drove all of about 1200 miles this week and another 1300 miles the week before. I had almost as much revenue though on months that I had driven almost 2700-3000 miles each of those weeks.

So the owner would have earned 1/3 the income those two weeks.


Yeah, I hit some cherry loads and stuff. High revenue, low miles. Exactly what an O/O wants too.

 

I knew you'd find your niche, just happened later than I expected.

 

congrats on a couple good weeks ! you're right in a sense. Let's assume that you were running under this program. First of all the owner is pretty tickled because you've been running 3000 mile weeks and not taking much time off. Now you run two weeks @ 1250 miles. Let's say the guy is pretty confident that his 0.15/mile for repairs is going to be accurate. (If I'm not mistaken MNdriver you've been running about a year and have had $14,000 repairs. Assuming you've put about 100,000 miles on the truck then it's almost on the nose) So this guy has already put $15,000 in his pocket over the last year. Now you run 1300 miles and 1200 miles. he's getting 0.15/mile so he gets $195, and $180 for those two weeks rather than his usual $400-$450. I think the guy is still happy, you made more money so that helps keep the deal sustainable. You're doing a good job keeping up with all the paperwork and taking care of the truck. This guy is doing a lot better than sticking his money in mutual funds or something. Not to mention there is $30,000 built up in the truck replacement. That makes the guy happy because if you quit the depreciation on his truck is more than accounted for and you are inclined to keep the deal going so you can use that money towards a new truck in a couple years, etc...

 

That's funny stuff right there....

 

What? That was meant to be a compliment.

I was genuinely surprised that you were struggling when you were with F2F.