New owner op too be. Need honest assessment

I just did a cursory look on DAT. 2 weeks out from today. Chicago 300 mile radius to Dallas 300 mile radius and back for a dry van.

Barometer shows about $1.75 a mile average.

 

Bottom line. It’s a very bad time to get into it right now. Goodluck.... most don’t take the advise lightly.

 

1.70 seams high operations costs good luck in all your adventures

 

Before you start trying to put together some form of plan, take a serious look at your initial post.

I see a couple red flags here.

This is the first one, you should seriously see if you can reverse those number, your starting captial needs to be as much as the outlay for your truck.

This is another per peeve of mine, who cares what they pay, your concern is to have that number as high as possible through the TO THE TRUCK (ttt) rate.

It doesn't matter if they take 75% of the load, the only thing that counts is what you get out of it and if that number fits YOUR needs.

Example - I have a few trucks with a carrier out west (California), these drivers live just on the other side of the Nevada border and have work in a triangle between Cali, Arizona and Nevada. My ttt number is good at a consistent $2.45 a mile no matter what. They give more when the customer is charged more but they are the one with the contracts, not me.

Now the problem is this, my cut is less than 60%, it isn't 90% or anything like that but because they have yet to have a problem finding work for my trucks, I don't give a crap what they get, my trucks are making money, and has for the last four years and I was asked in December to get a couple more trucks out there, they will give me all the work I want for those trucks.

So again it isn't what they take to do other work for you, it all matters what you get.

Who is "we"?

This is important for a few reasons.

I would also suggest you work with this spreadsheet from OOIDA ...

http://www.ooida.com/OOIDA Foundation/Tools/docs/OOIDA-Cost-Per-Mile-Calculator.xlsx

Use this for your projections. If you need help with it, get someone to teach you how to unlock the sheets and modify it for your needs.

Yes, you can but you need to know exactly what your expenses are going to be and how to limit the expenses to make it reasonable for you to reach that number.

Now for my bit of criticism ...

Got to be blunt, and a lot of others will scream at me for being an ***, this crap does NOT matter RIGHT NOW. YOU need to be flexible with what freight you can get, you are a new owner and it will not make much difference if you can pick and choose freight, because you will have a hard time doing it without knowing what you can do or not do.

Does this make sense?

OH ..... Please ... this isn't rocket science and those who have acted like it is a secret are those who are the most insecure people around. Crap I still have people tell me that one way or another is the only way to make it ... and then I think, this is just like the crap I heard back in 2003 when I came back. NO secrets, just a lot of work and the truth is nothing will ever change.

Why worry about it, go where the freight is, if that means going out west for good paying work, go for it.

BUT this all depends on the carrier you are going to be leased too.

AND A HUGE SUGGESTION.

when you find a truck, don't become attached to it or emotional over it. Most new owners seem to act like it is like a car or a pickup, it isn't.

IT is a tool, it needs to be treated as a tool.

YOU do your Due Diligence when you find one that may work for you, you take the time to get it checked out - which means getting a dyno done, blowby numbers are important as percentage of rated HP, get a full ECM dump and read it against the info on the dash and get the maintenance records. AND GET OIL ANALYSIS DONE FOR ALL COMPONENTS. - trans, drive axles and engine.

I won't get into any more of that because people tend to ignore it all and buy crap then cry about it breaking down on the way home from picking it up.

 

You asked for honest so here goes. honest no sugar coating truth. I'll try to break this up into separate points.

What is your sales experience? Real sales. Not retail/auto type stuff dealing wth the general public where customers walk in the front door but real business to business/industrial/manufacturing sales where you make 250 contacts a day hoping one might turn into a real lead.

Make no mistake, owning a truck is a sales position. Any dumb monkey can drive a truck. That's the easiest part of being an owner operator.

And this leads into....90% pay carrier. rarely are these better or even as good as the good 75% carriers. "Geewhiz spyder can't you count? 90 is more than 75!" Not often and here is why. 90 percent guy and i both load at the same big manufacturer(let's say firestone insulation plant for this example) going to the same place and the customer is paying an even 1k to ship it. First lets see what i get out of that 1k. "Duh its 750$ didn't you pay attention in 3rd grade math class". It's actually 787.50$ and here is why. That 1k was broken down, 50 $ for tossing a smoke tarp on and 100 for fsc, both of which i get 100% of. That leaves 850$ on the linehaul, which at 75% is 637.50. 637.50+50+100= 787.50 $.

Now let's look at the 90% guy. He got his load from a broker because the big manufacturing shipper doesn't want to bother dealing with 500 small carriers, they submit by fax/email their loads every morning/once a week to a handful of big careers and brokers. The broker keeps 20%, which may sound high but he can get away with it. Why you ask? Cause mr truck driver has no real sales and negotiating experience nor the education to even know how to find the current market rates. How many truck drivers study morgan stanley's monthly published rate index? Heck how many even know Morgan Stanley publishes a rate index every month?! That 1k the shipper is willing to pay just became 800 to the carrier. 90% of 800 is 720$. That's right. Mr 90% guy is getting paid less than the 75% guy. "But but spyder what about the tarp and fsc pay, my contact says i get all of it". Ya in theory. In practice the broker is quoting you an all in number and that's exactly how it will read on the rate confirmation. Why? Because it's faster,time is money plus the same reason he can expect to keep 20% average. his phones are backed up with guys willing to take the all in number of 800. And this durst even factor in the cost savings of being lessed to a good 75% carrier. Ill touch on that subject farther down.

Remeber that. No matter how hard you are willing to work at educating yourself and becoming a better negotiator to get better rates there are literally tens of thousands of owner operators that have never even taken a single business class or even read a single book about sales and negotiations. How do you plan on selling your services to that broker at a higher rate than the masses? Seriously how do you convince him he needs to make less money? That your transportation service is worth it?

I'm not trying to bash your choice in carrier to lease to, i don't think you even said who it was so how could i form an opinion about them. Im sure there are some really good 90% carriers out there with strong sales teams and good paying direct freight. I just would like you to consider some of the established 75% carriers with strong sales teams negotiating long term contracts for steady good paying loads. Factor everything in to your decision making. Fuel discounts, tires discounts, liability insurance provided at no additional cost, group rates on unladen/non trucking (commonly called bobtail) insurance. Group rates on physical damage insurance for your truck/trailer. Ifta/ny hut/ nm, ky, or ton mileage taxes. Etc etc.

Some numbers just for comparison sake. My physical damage on my truck is 91$ per month. 39$ for my trailer. Bobtail is another 20$. If memory serves me correctly i have my trucks value listed at 50k including the apu and headache rack. I saved 47 cents per gallon this morning when i filled up vs posted cash price. And last time i bought tires they were 383 each for Bridgestone 283A steers. That includes fet tax.

Good luck on your endeavor and i hope it works out for the best.

 

What is your fixed weekly/monthly costs, and how many miles do you plan on running per week?

 

Honestly i think using monthly averages are better than weekly. Both for costs and revenue. Taking a single day off or for getting some maintenance items done can really throw weekly numbers off while minimally affecting monthly numbers.