New O/Os

The following post is pertaining to O/O's with own authority, no leased on, completely on their own. What puts people out of business is Maintenance. It's the killer. Obviously, if you don't drive and choose to set at home more time than you should be, then that can obviously crush anyone, but the most common thing is the 10,000 dollar hits that you get about 4 of over a 6 month or 8 month period. I've said this many times and I swear by it, and many say I'm nuts, but I stand buy it and that is....

NEVER buy a used Truck. Some are falling out of their chairs when reading that sentence. As high as truck costs are right now (if you can even find a new truck, there are very few on the lots right now) but if you have 50,000 dollars, put that down on a new truck instead of putting it down on a 100,000 dollar truck that feels good. Feels good meaning......you put down 50 and you know you only owe 50, so you feel great about it. But, you can be dam* sure that truck is going to have issues. All trucks do. If you put down the 50 on a new truck and yes, you owe 150 plus financing percentage, it feels bad. But, if you take 1,000 truckers that do it like this compared to 1,000 truckers that put down 50K for the 100K used truck, the truckers who bought the brand new truck will come out THOUSANDS ahead over a 5 year period. The problem with things breaking is not just the cost to fix them, it's the dollars you are losing by setting around waiting for the repair. If you buy a new truck, you have that one time only option to purchase all of the bells and whistles relating to extended warranties and something that at least approaches an all inclusive maintenance plan. There is no such thing as all inclusive Maintenance plan, but there are plans out there that are pretty dam* close to it for the first 500,000 miles of the truck. This is where you save thousands by have somewhat controlled maintenance and there is no way to control the variable of maintenance, but you can get something close to it by purchasing a new truck.

I will try and post an article I have right now from a year ago in the Seattle paper. They surveyed owner operators average maintenance costs who bought new trucks and purchased the most advanced/top of the line warranties and maintainence plans that were allowed from the manufactorer, and they took an average of their total truck maintenance per year over a 5 year period from 2015 to 2020. Guess what they averaged per year in maintenance? 16,000 dollars per year and that included new tires when due. So, that's 80,000 dollars in ALL maintenance including Tires, everything over the first 5 years of a truck. I promise you, if you buy a used truck that costs 100,000 bucks which has anywhere from 400 thousand miles to 550 thousand miles on it, and you pay 50,000 dollars down on it, I can assure you, you are paying FAR, FAR more than 80,000 dollars over the next 5 years for tires and maintenance. You are going to pay more like 150,000 over this 5 year period.

So, I stand by this. I know many people disagree and I respect that. I'm just giving my take. But, I stand by it, NEVER buy a used truck. You have a one time golden chance to purchase top of the line warranties and maintenance plans when you buy a new truck that is not an option with a used truck, and it's worth paying-financing the extra 30,000 dollars price of the warranties/maintenance plans for the first 500,000 miles or 5 years of the truck. Yes, your truck payment is clearly WAY, WAY HIGHER per month when you purchase a new truck compared to purchasing the used truck above, but that cost is FIXED. It's not changing. Maintanence changes at the drop of the hat, so anything and everything you can possibly do to control maintanence is often the different maker in staying in business and getting out of business.

 

One more things regarding trucks. The very successful owner operators do the following, and I admit, it's not easy to do, everybody doesn't have this luxury or capability to do, but here is the secret for owner operators with own authority that continue to make big money, they make big money on the down years, and they make incredibly big money on the very good years. It is exactly this.....
1. Purchase brand new truck and buy the absolute top of the line warranty and maintanence plan offer that approaches something as close as you can get to an all inclusive maintenance plan. There is no such thing as an all inclusive maintenance plan, but there are plans out there that are pretty dang close.
2. A top of the line warranty and maintenance plan will go for 5 years or 500,000 miles, whichver comes closer,
3. Trade the truck in at the 500,000 mile mark and rinse and repeat, buy another brand new truck. There is a reason you see so many trucks out there used that have 450,000 to 550,000 miles.
4. Major Costs for a Truck are Fuel, Maintenance, Insurance, and Payment of the Truck (if you have one). Insurance can be controlled with good driving and you know that the next year, your insurance will be roughly the same. Fuel and spot rates are obviously difficult variables that we can't really control. A truck payment, whether you have one or not is fixed and controlled. This basically leaves 3 uncontrolled variables......Spot Rates, Fuel, Maintenance. It's critical that all 3 of those variables are controlled as best as possible, and maintenance is the one variable that actually can somewhat be controlled, but only with buying a new truck.

Last thing, when you hear of an owner operator going out of business. How often do you here, "the spot rates were just to low, or fuel just got out of hand."? Sure, you here that occasionally, but you and I know what the reason usually is, and that is......"I just kept taking hit after hit, 10,000 dollars to fix this, then two months later, 20,000 to fix this, etc, etc." It's maintenance that is usually the tipping point, it's the fracture point, it's the last straw that flips someone over the top (figuratively, not literally) and they go out of business.

Folks, I know it sounds counter intuitive, but do anything and everything you possible can to BUY NEW Trucks, not used ones.

 

New or old doesn’t matter. If you’re not putting a good stack of money away for equipment replacement or equipment rebuild you’ll be in the same boat after a few years.

 

Good point. No doubt about that.

 

How does one pay 16,000 dollars per year and that included new tires when due on a new truck over a 5 year period with a warranty? Want to see these numbers as that makes no sense unless they run a team and out of miles after first 3 years?

 

Very well said. I personally think that people hear about all the money that can be made, and that prevents them from seeing the the big picture. Especially when they only have 1 or 2 years experience.

 

I look at it as a trade-off. With 2 trucks we were just under 5.9 for the last qtr but when the summer blend comes back around that will go up to 6.5-6.75. I agree 100% if you run older trucks that are paid off and rebuilt you're still ahead of the game. The 93 I'm in has less than 200k on a rebuilt engine/trans/injection pump

With the rest of the truck in solid condition. The only other big ticket item that hasn't been rebuilt are the rears and they're still in good shape.

Edit: that's local running with that fuel mileage. Lots of stop and go traffic everyday with quite a bit of idling. If we were pounding the pavement all the time I'm sure we would be 6.5-7.0 avg

 

Well it really depends on your situation also. If you have the ability with your own two hands to repair your truck it's kind of silly to buy a new truck. Older trucks are much easier to work on and they are much more reliable and less expensive to repair.

But there's a catch. You can't just buy an old truck and turn the key and think you're going to work everyday and have no problems. That is a terrible idea.

You work for a few weeks if you're lucky maybe a few months and then you'll have to stop for a repair. Then you work for a few weeks again and you'll have to stop again. Then you'll work a little bit and you'll have to stop again. Then you'll work again and you'll have to stop again and work again and have to stop again. That's not the way to make money. Instead of scheduling your work you'll be more concerned with stopping and scheduling all the repairs that are piling up on top of each other.

If you have the mechanical skills, before you put a truck into service you need to go over it from front to back and spare no expense and make that truck as bulletproof and dependable as you can.

When you start out with that truck, you'll be able to turn the key and just work. When things come up, which they will come up, if you really have done your best to make it Dependable they will be small things that are not a big deal, and it won't be a thousand things at once.

If you're willing to put the money and time into it if you have the mechanical ability, you will never have the need to buy any kind of a new truck.