On your way out of business?

He is basically saying most good carriers take 25 percent. A load paying two bucks is only a buck fifty after that twenty five percent. And the reverse is true, when I say I average two bucks, that means the load actually paid 2.50. plus all the savings that come with partnering with a good carrier. This is why when someone with their own authority is pulling for two dollars a mile, my response is, why be content on such a cheap rate?

 

I'd be all over the cheap $2 per mile rate with 3000 miles per week

 

Ok but that is not what I said. He gets paid $2 per mile to the truck.

 

That's about the equivalent of 1.50 leased to a carrier

 

The actual cost to the carrier to lease on a truck is far less than 25%.

When my son-in-law decided to start trucking he considered leasing to me. We figured it up and the cost to me as a carrier was around 12-13%. all above that would be profit to me.

He decided to get his own authority which has worked out well for him. Of course the fact that my daughter used to work for me as a dispatcher and at one time had her own brokerage helped him. Also me giving him all my contacts didn't hurt either.

Point being, the profit margin for carriers who keep 25% is pretty good. That is why you see so many carriers wanting to lease on owner/operators.

 

I used to run 8 trucks 6 leased on to me, that's a bit off. even at your figures though, you are only figuring the actual costs, but having the loads available on a loadboard, the staff looking for loads etc is worth a good bit of that percentage. for a one truck operation, the costs will be more than one with several trucks. fact is that 2.00 a mile for a one truck guy with authority isn't anything to get overly excited about

 

with him having authority

 

spyder, this is exactly what we talk about. guys with authority running for the same or less than us leased on, but nevermind we both had authority for many many years, and know just a wee bit about what we are saying

 

You guys have not said anything except that it is the same as running for $1.50 leased onto a carrier. You have yet to explain how you come to that conclusion. You just say well we know better. Not a good enough answer for someone that has seen the numbers.

Whether you are running your own authority or leasing on to a company you still have to pay the same expenses so $.50 a mile difference is quite a bit of difference.

 

Ok, let me try again.
But first, you need to understand it is not the same expenses of being leased vs having your own numbers. The two big savings is much less insurance cost, and better fuel savings due to purchasing power of a larger company. We get substantially better fuel discounts that what an independent can get. There are more savings, but those are the two big ones.

I'm averaging just under two bucks for all miles on the year. But I'm going to use an even 2 for the purposes of this discussion cause it makes the math a lot easier.

I get 75 percent of what the customer is billed, so if I'm getting 2 per mile we can do a simple math equation to find out that the customer is being billed 2.67 per mile. tge algebra formula is 75X=2.00 And in reality it's a lot more because no one gets billed for all the empty miles. But to be fair my contract is actually 75 percent of the line haul plus 10p percent of fuel so that brings the total number biked to the customer down a bit since Mercer takes nothing out of the fsc or extras like tarp charge. That's why we said it's really more like 2.50 gross for a lease guy. But let's keep it simple for this discussion.

Using your example of your buddy getting two per mile, that's what he is biking his customer. We are pulling freight that is billed at 2.67.

Does that help explain why I say a guy getting two a mile under his own numbers doesnt impress me?

At the end of the day, it is not a bad gig, considering its paid round trip and he comes back empty. And assuming he is getting about 2500 miles a week. After all, the extra expenses of having your own authority only adds up to about 12k a year plus the difference in fuel costs due to our better discounts. plus or minus some depending on how cheap you can find insurance for. Now if they wait thirty days to pay, and he has to factor at 3 to 7 percent cause he doesn't have enough on hand cash to run his truck while waiting for checks, it gets less appealing.

also, please remember I never said it was a bad deal. I said it wasn't a really great gig. It's basically a so so gig in my opinion. I certainly wouldn't mock a guy or call him stupid for getting his own numbers for that run. But it's not that awesome of a run either. Just not the kind of gig that qualifies as few and far between if that makes sense.

Edit to add: I'd also like to emphasize that people not get caught up on what percentage a carrier takes. If they have good paying freight it doesn't matter if the keep ten percent or fifty percent. Ok, fifty is a bit extreme it better be really good paying freight for that. the reason is simple, unless you have direct freight you will be getting lads from brokers. Vet few guys with their own numbers ever score a direct customer, and only a fraction of them score a good paying direct customer. A huge chunk of their lads comes from a broker, who will be taking money off the top of the load. When leased to a good carrier, most of your freight will be with direct customers so you get your percentage of the entire freight bill. So what happens in reality is when I'm picking up a load of pipe, the independent getting an identical load is really only getting a few dollars more than me. I can't count the number of times I've been waiting to get loaded and talking shop with an independent next in line and the topic gets to freight rates and he says what he is getting, and it's a measly fifty dollars more than what I am getting.