Prime's lease deal. The math gets done.

I'm doing fine... and I'm certainly not being paid cents per mile. In OTR it boils down to the revenue per day the truck brings in.

So if you want to play with a dump truck, that's fine. I'll take my tractor and a reefer trailer paid on a percentage basis of linehaul and 100% of accessorial payments.

 

nope I don't do dump trucks just saying that in most of these lease deals or any deal the final equation is time/money to see if your going to make any
percentage is at least a good way to make sure you think it is equitable but of it self not as 100% doesn't mean jack if the time/money equation doesn't work out
I don't care if its reefer ,flatbed or what it all boils down to that

 

Well thanks for your concern. The time/money equation works just fine at Prime as long as you watch your costs - the most important being fuel. And yeah, if you're paying more in costs than you're bringing in on the gross revenue side, it stands to reason that you're loosing your a%$.

 

yep I just mention these things as I see many getting the shaft as they just don't know better as many get in without the benefit of experience
so those are my rules of thumb when I shoot a bid on a run and your company has there own rules I'm sure
but one of the downfalls about being a lease op is the company you run for is worried about there profit margin not yours as long as you make enough to keep running they are fine
it is like so many seem oblivious to the fact that the only reason all these big companies are all trying to lease the majority of there trucks out is because it is cheaper then having a company driver the simple fact that you are now a 1099 instead of a 1040 lets them put an extra 15% in there pockets as well as others cost savings for them , Did you know Swift made more money of truck sales then transportation last year
Now your probably wondering why the hell do I care if you lease ops are getting screwed or not , Simple because there business practices are like an infection and for a long time I didn't as I was not worried about them getting into my ballpark as I thought I was insulated by the special nature of my gig but I was wrong a fact brought home by the fact I was doing a run along with 10 swift trucks and those swift lease ops thought they were doing great although they where doing it for about 30% of what I was although they were limited by the fact they have no clue what they where doing the writing is on the wall the largest carrier in my field now as the old CEO from swift at the helm
So I take every opportunity I can to point out when and where folks are getting screwed by these outfits and one way to do so is to shed daylight on rates
now never having looked in to prime I would just guess that you are running at 65-75% of the gross on paper but if you could really know I bet 50% is more like it now you say but I see the gross and I get x % so it has to be x% wrong the other little trick thanks to corporate person hood is they broker there own loads to themselves and you never get to see the % there brokerage arm retains as profit

 

that is exactly what goes on at most of these companies. here is another fact to chew on....
there is more money in brokering then putting freight on your own truck. so even if they aren't brokering the frieght to themselves, they are brokering some of it to other carriers.
the trick there is to give the better paying freight to the other carriers. instead of paying you the 60% or 70% or whatever they tell you they're giving you, they can put whatever rate they want on it when they broker it to another carrier. so if the load pays them 1000, at 70% you are entitled to $700. there is no law to what kind of profit they make on brokered freight. so they can throw it on a load board for $600, and put $400 in their pocket, vs. $300 having a lease op haul it. the freight that they pick up too cheap to broker is what they give their lease ops.

thats the downfall of the companies having ownership of the trucks. if my company starts getting cheap freight and im not happy with it, i take my truck and trailer and go elsewhere. they know the driver can't do that if they own the equipment, so they can do what they want. and they market it well enough that if you don't like it and walk, there are plenty of drivers willing to take your seat. this has been discussed over and over again on here,and there are still tons of drivers on here talking about how well it works. that's a testament to their marketing. yet you rarely hear of anyone successfully completing a lease and taking the truck. everyone swears they know someone who did, but you rarely hear from that guy himself.

 

I did but that was a long time ago and not one of the mega fleets it can be done a buddy of mine just bought one of his lease trucks
That said you are playing against a stacked deck

 

Its a little different at Prime. My FM makes a meagerly base salary, and can afford his mortgage on commission. That commission is based on how well his fleet does - net revenue. We don't make money, he doesn't make money. So there's a little incentive for him to do more than just "keep running." I also picked a board that was financially successful in the recent economic unpleasantness. Figured that might be a bit of a indicator...

Well, yeah! That's the whole point of this isn't it? To make money. I hadn't heard that trucking companies in particular were being used as social welfare agencies yet! And how is this supposed to bother me?

Why should I care what Swift does? I don't pull for them, and don't intend to start any time soon.

Uh huh... so what you're saying is that Swift Inc... a corporation that isn't particularily good at controlling their costs manages to pull freight for 30% less than you do - and still makes a profit. Sounds like a bonanza for your customer. Of course "doing great" is a relative thing - maybe they were "doing great." Ya know... capitalism is a cruicble of economic darwinism. The strong survive, and the weak go bankrupt...

I get a copy of the original freight bills with each settlement. Don't see any skimming going on from there. As long as I keep my costs in line with the revenue I generate, it really doesn't matter does it?

Gross Revenue - Costs = Profit (or not)

Sorry dude... as long as I keep stuffing dead presidents in my bank account - i.e., my costs are less than my revenue, I'm a happy camper. You can throw around that nonsense that somehow I'm getting screwed without knowing it, but at the end of the day, the bank ballance is what it's about.

BTW... sounds like the Swifties want to eat your lunch. Maybe your dinner too. You might want to think about that a little.

 

Swift is really good at cost control and no swift was doing it for the same rate I was it was there lease guys doing it for 30% of that

No swift does not want anything to do with my line of work at the moment but there theories are creeping into my gigs and that is a problem for all of us

Fright bills are manipulated in many ways if your doing fine good
But I would find it interesting to see one as I would bet lunch they are not as original as you think

Look I have been doing this for most of 20yrs have been a lease op and now run my own numbers and yes the bank balance is what it boils down to and I prefer my rates to yours by a long shot if your wondering mine work out 4-4.50 a mile and I have paid for equipment that does very specialized work

I have learned a lot about this biz in the years I have done it and it has been very good to me listen or don't up to you and none of this is even directed at you per say it is just to point out some of the crap they do
I leave it up to you to decide if you can do better or not as all I am giving is my knowledge so that those considering this route are informed about the things they don't want to tell you

In this biz we as a group tend to be our own worst enemy and one of the chief ways we are is by constantly undercutting ourselves and driving the rates down

 

I'm sure you do prefer YOUR rates to mine. But then again, I'm not in the market for a lot specialized mine equipment, nor do I have the money built up to pay for that.

My rates are fine... my profit/loss sheet shows me making a nice profit, and my bank ballance is positive. And yeah, I'm sure I will be able to do better in the future. I also think its better to LEARN this business inside and out before I jump into the deep end with a cheap 10-year old tractor that will be in need of an inframe within a year, no dedicated customers, and praying for enough cheap freight off of some load board to keep me afloat long enough to go bankrupt. That seems to be the "model" that most folks who claim what I'm doing is stupid would have me jump into - and you can go back and read lots of threads filled with people taking this advice and loosing it all. If and when I get to the point where obtaining my own equipment makes sense, I'll make a change - but for right now the money is good, and I'm doing fine.

 

on many of these points you are correct and it is not a bad overall plan the best thing you can do now is build yourself a good rep so you can line up future customers
and I don't claim that you do the model that most do as load boards and brokers are just as bad if not worse then some of the mega fleets
That said one tidbit it is cheaper to find a good piece of older equipment they have less upkeep expense at least until the get this round of emissions figured out now I prefer to find 98-05 stuff as they seem to be the most reliable also buy it before you need it and take some time and work the little bugs out before you have to depend on it
otherwise it is all about finding the nitch to fill as the gig is the hard thing to find