Owner Operator vs. Driver

I'm just curious what part of the business side me as an o/o (allright L/P but I am going with the mindset that this is my truck and I am buying it) leased to a carrier doesn't know. I'm making truck payments, trailer payments, insurance (cargo, liability, comprehensive, and bobtail), permits and plates, ifta and road use, maintenance account and taxes, tolls. Plus aquiring my loads, negotiating rates, planning my trips, buying my fuel, and doing mountains of paperwork. I make a profit and loss statement every month tracking all my costs.

What am I missing? I know probably a bit on the maintenance side since I can't do things like choose my own tires, do my own PMs, or fix much of anything on my own.

 

You don't negotiate anything as a L/P. you get to run a ton of miles for about .85 a mile. That's it. Your still micro managed.

 

The mountain of paperwork is a start.. Having EVERYTHING in your name is a a BIG responsibility, being leased on, you can always walk away should something happen. When you lease on, you may have the option of picking where you want to run, but its not quite the task of approaching a customer or broker seeking out a load, pricing it (competitively) so you make money, and getting it.

Having someone else foot the bill, then deduct you weekly for maintenance, plates, insurance etc... is also a part of what I meant. Having to shell out 2000 at once for plates, shelling out 500-600 every month for insurance, unexpected stuff, like last month, i was in the middle of nowhere when my water pump decided it felt like pi$$ing $200 of antifreeze on the roadway, and having to pay $1400 to Reno Freightliner to get back rolling... I got nobody to depend on but myself. I didnt notify the broker of my troubles, I handled it and made delivery ontime.. I have no option of re-powering the load, its me, myself and I out here. Leased on, you have somewhat of a safety net.

Also, keeping up with accounts... Depending on my customer or broker, sometimes i've gotta wait anywhere from 15-30+ days to get paid. Chasing MY money when someone is dragging their feet on cutting a check.

 

You'd get a kick out of some of the "prospects" contacting him looking to lease on. Yesterday it was a communist. Yeah really...

 

The paperwork isn't so bad once you get used to it. When you drive a truck you do most of the basic paperwork, anyway. When it is your authority you are the one who is responsible for paying the fuel taxes, insurance, etc.,

One thing that I have noticed over the years with those wanting to buy their own truck is that most want an exact cost of what it takes to operate a truck. The truth is that the costs are different for everyone. There are some basic things that will be the same, such as your 2290. We all pay the same whether we own 1 or 10,000 trucks. Fuel mileage can vary from one driver and/or owner to another. One may get 5 mpg while another could get 7 mpg. One owner may pay cash for his equipment while another has a $800/monthly payment. There could be another who has a $2,400/monthly payment. The break even on those three scenario's is completely different. Maintenance is another issue. Typically, you would expect an older truck to require more maintenance. That may or may not be true. Oil changes can also vary. I have seen them range from $200-350. I change my oil around 15,000 miles. I know some owners who change their oil at 10,000. Some fleets change oil between 25,000-50,000 miles and only add oil or change filters in between. Costs will vary on each of those instances.

Anyone who survives being in business must be flexible. Things can change quickly. For instance, you may be running certain lanes and business starts to soften or rates could decline. In order to prosper or survive you may need to change lanes or stay out longer. Some people continue doing the same thing regardless of what is going on in the marketplace. Those are the ones who will not be able to survive.

 

Uh, I beg to differ. I negotiate every one of my broker loads. As for company loads, if I find one I like on the load board or call an agent I'll take it, but if not I'm hitting the boards and calling brokers.

I think you guys are just assuming that everyone leased to a company is a glorified company driver who is just given loads and picks which ones they want. I am given nothing, I have to search out just about every load I haul excepting the occasional agent calling me offering a load. I have a broker at Worldwide I have made a relationship with and have made a couple runs for. As for direct customers, as I understand it very few shippers will deal directly with a 1 truck outfit. Not saying they aren't out there, there just aren't many.

Ok I grant you in that I do have a bit of a safety net in that if I fail I can walk away mostly clean (I am still on the hook for all my securement equipment and tarps until they are paid off). And yes I get to spread the cost of my expenses across the year rather than paying it all up front. As for getting a load repowered, that is not an option for me. I am responsible for that load from pickup to delivery. If something happens to that load I am responsible, if there is a damage claim I pay the deductable.

Ok I will also give you this as a big one, I get paid every week, but I pay for this. 25% of the linehaul goes to my company for every load I haul. They basically act as a factoring company, which any o/o can use if they choose. And like a factoring company, they do limit what brokers I can work with. Brokers with bad credit, or brokers that the company has had issues with are on the no haul list. I'm sure every o/o out there has a list of brokers they won't haul for either.

I guess what it mostly boils down to is risk. A o/o out there has more risk involved than me, but as for the business decisions....I don't see a whole lot of difference between what they do and what I do. Does that mean I'm ready to get my own authority? Hells no, I am not financially sound enough for that. I do have a financial plan that will leave a substantial amount in my operations and maintenance accounts in 2-3 years allowing me to get my own authority if I choose to go that way.

 

So clearly I was generalizing. So just make sure the information you are getting is current and relevant. Talking to a guy who abandoned his authority 5-years ago is probably not a good person to take advise from on what is happening with independents and small carriers today. So much has changed in the past 2-years that all they could really provide is a history lesson (and there is value in history lessons) but wouldn't want to build a business plan on this outdated experience.

 

Yeah, im scratching my head on that one too!

 

I have a truely different situation than most L/P'S. I am gonna give you O/O's a scenario and you that are real O/Os not Lease Purchase guys I want your honest opinion!

I have a company that wants me to lease on with them i will make payments once a week on a truck and trailer, insurance, permits, base plates, and authority! This all will cost me 1,000 a week.

I have been in college and I have taken accounting 1 and accounting 2, I was working on my bachelors degree in Software Engineering til a Light came on and said no jobs in America worth taking cause they won't pay you what it will take to make it in the places that are hiring for them, also Every place I found hiring for them wanted atleast 5 years if not more experience in that field!

So I turned to trucking, now back to my scenario!

1000 a week for the basics, I can either put a refer trailer, or a hopper! Don't know much about the hopper side of the industry. I will get paid by the mile, I will get paid 82% of the gross load!

I know how much it costs for regurlar maintance and unexpected emergencies! I am 31 years old and I have future plan that my local community is going to help give me some free money to help start up my very own small fleet!

I have contacted blue cross and blue shield for a group policy, and I have looked into hiring my own book keepers, accounting, safety, dispatchers, and managers. If I am missing a department please let me know!

Now I have figured out how much it will cost me a week on diesel fuel for one truck I will run from one to two years out there on the road along side with my company drivers!

My question for O/Oo's should I go for my American Dream, or just stay as a Company Driver? and With what the loads pay to each truck could I make it as a small fleet? And my very last question is with my drivers getting top of the line insurance, what should I start my drivers out on pay rise? I don't want to start to low to where drivers are barely making it, but I aslo don't want to pay them so much that my company starts to struggle to survive! So what would be a good starting point on paying company drivers?

 

$1,000/wk is pretty high, I'm around $840/wk and that includes maintenance.

So you say you are getting paid by the mile and percentage? Not sure what you mean by that. 82% of gross is decent, will they break out accessory charges like detention, or a fsc?

You may have an estimate how much fuel will cost but that cost will be fluid (pardon the pun). Fuel prices change as will your use depending on how far you go each week and where you drive.

Does this company have customers lined up for this fleet of yours? Where are you getting the rest of the trucks and trailers? You may want to just try it by yourself first before thinking about taking on the challenge of a fleet just to see if it's something you even want to do.