Our experience with Success Leasing

meaning the trucker cpa should handle the other stuff fine but ask

 

Cool will do Just have to ask these questions

 

Yes... & yes... that is net, after taxes.

I know IP stresses it a lot, but I don't think enough actually pay attention... the little things DO add up.

That was another thing my trainer illustrated as well... we had some downtime in Springfield one day while waiting for the shop, so he went up to payroll & had them print out 3 months worth of his settlements... we went through a half dozen cups of coffee & half a pack of cigarettes each going over the details of them... that was a real good education that day.

 

This is one of the most informative, educational, "spot-on" posts I've read, so let me ask a question that has intrigued me about leasing.

We all talk about leasing one of the company's trucks. Can I go to, say, Penske, and lease one of their trucks and bring it to work? Does the company care as long as it meets their requirements?

The reason I ask is that leasing from Penske or some other company whose business is leasing, not moving freight, can be less expensive than leasing through a trucking company who has to make a profit on the lease agreement they sign with their providers.

 

Must be within two model years of the current year (i.e., no older than a '09 this year,) within the maximum wheelbase specs, etc.

Now, that being said, there is a reason why Prime uses the trucks they do. The engineering specs for these vehicles is matched to the kind of freight we pull, and there is a certain reliability requirement to be met in order to maintain the on-time reputation of the company. That is something sales uses to leverage our accounts.

From what I've learned over the years, Penske, Ryder, etc., buy a lot of generic trucks that are not really geared (and I'm talking drive train here) for what we do. Most of them get horrible fuel mileage compared to what we are expected to do as company drivers, and what we must achieve in order to be profitable as lease operators. Fuel is your number one controllable expense, and a mis-spec'ed truck can drive you out of business faster than anything. From what I've managed to figure out, most of the Penske/Ryder type of trucks are more suited for in-city delivery than the kind of OTR operation that we run. And don't even think for a minute that you're getting out of one of their leases without consequences.

Breakdown is on you - the logistics contractors are expected to deliver, and your ability to remain contracted to Prime is judged on whether you and your truck make it where its supposed to be when its supposed to be there. Keep in mind that the lease payment includes quite a bit more than just a truck payment - all of our insurance is paid through this one fixed cost as well. The rental outfits do cover maintenance, but they are in charge of how that truck is maintained. If I'm broken-down for anything over 24-hours I can be assured of a couple of things... one, my load will be delivered; and two, I'm going to get breakdown pay to cover my fixed costs and enough left over to make a dent at expenses. And if I'm anywhere close to one of the terminals, I can have a shot at a loaner to generate income while my machine is being repaired.

Insurance is another thing you should consider as well. Most insurance companies are not going to insure a new independent driver, and even low-time drivers find the cost to be prohibative. Then there is just plain experience in the industry. There really is a lot more to this than just grippin' the wheel.

Now, one last thing you should ask yourself. When you are looking at a class 8 commercial vehicle, do you have the slightest idea of what you are looking at mechanically? I mean much more than just a pretrip inspection. The worst thing a new driver can do is walk onto a truck lot, see a nice shiny whatever that gets your juice flowin', and start plunking down money, or signing contracts. At least with Prime you have some recourse if that tractor is a pig. Do you have any idea what an "in-frame" is? What about a reasonable spec for the leak rate of a CAC? What's blow-by? Is it even important? What does idle time percentage have to do with the health of an engine? Would you care if there is any fuel dillution in an oil sample? Why or why would you not trust an oil sample report generated by a bench-top machine at a truckstop? Would an ECM dump tell you anything about a truck? Is 80% of rated horsepower delivered to the drive wheels enough? How would you go about measuring that? What is rolling resistance? If your drive tires are brand new with a rolling resistance as measured by Michelin of 145, would it make economic sense to junk them and buy new ones? How much cash reserve is a reasonable amount to have set aside to deal with the inevitable breakdowns that occur? Do you have any idea what kind of money is involved in towing a commercial vehicle - that's covered under the lease warranty if its drive-train (meaning anything that makes the truck go) related; logistics guys are on their own.

If you can't answer these at this stage of your apprenticeship, you have no business even thinking about operating a truck on your own at this point.

 

Man, what great answers! That's why I ask them of the experts and read the answers very, very carefully.

 

I looked in to ryder and penske 2 years ago when I was looking for a second truck. If you think primes payment is high, you would drop dead if you seen those lease agreements. Then you have to purchase a maintance program. I could build one cheaper.

 

If you want something instructive about how this lease and owner-op stuff works, go to post no. 1 of this thread and start reading. No offense to Bill's Girl, but these guys weren't ready, and didn't know what they were getting into. Then search for "Coastie" on this forum, and read the thread about him going O/O - ALL THE WAY THROUGH. Don't skip any of it.

I've started a couple of businesses, operated a retail store. The businesses that failed taught me more about how to run a business than any amount of success - and its real easy to do an epic fail in this business. So, here's a little nugget for y'all. LEARN HOW A INDUSTRY WORKS, AND LEARN HOW THE GUYS WHO ARE PROFITABLE AT IT GET IT DONE BEFORE YOU JUMP IN THE DEEP END. That's the end with the sharks!

There aren't any short cuts to this. Read what Gator's posted about numbers, and the guys he's helped. Not one of them was doing what was necessary with their business numbers to even KNOW if they were making a bloody red cent. Money gets deposited, spent, and they're all wondering why there isn't any money. DUH!

If you can't make sense of your settlements, and didn't opt for the weekly accounting breakdown attached to it - DUH! It'll take you at least a few hours to do that on your own EVERY WEEK. And that doesn't include constructing a P & L report - that is reasonable concerning the time you put into it, that generates at least monthly, quarterly and yearly reports. You have to do this to know whether you're working to your plan.

Plan? You don't have one?? DUH!!!

Getting the picture? And you want to go "rent" a truck and make millions without even knowing what's involved, let alone the concept that there are millions to be made?

One of the best quotes I took away from the ACE-II class (if you're leasing and haven't been through it, get your heiny back to SPRIMO, and get er done!) is that this is a business of pennys. That's how you make money in trucking. Its about the pennys.

 

Sho' nuff. A penny here, a penny there, and soon enough you're talking real money.

 

Could you write out the answers to these at some point? I'm really interested. Some of them I know the answer to. Tow bills can reach near $1k, or more, depending on how far away from civilization your truck's turbo dies. I know to have at least $5k and closer to $10k (our comfort zone) for the truck and $5k - $7k for the household expenses socked away. But the rest ....