Question for Prime Solo Lease Ops

That's what it worked out to... gross revenue, pre-tax.

 

Well ironpony, at $1.73 per mile, assuming thats an average year, at least you have a chance. Personally, going in, if I knew beyond a shadow of a doubt that I could average that much revenue, I'd still be a company driver. After being in business for myself for 20 years, its just too darned easy being a company driver. I'm a big fan of risk/reward type scenarios, always have been. But in this case, the potential reward isn't worth the risk to me. And I really don't see much of a risk, which is perfect. But the more important part is that I don't see enough of a reward to even want to make the effort.

Using the $1.02 guarantee + FSC, or whatever it is these days, you're dead. Period. Thats what made the decision so easy originally to choose the company side. Thats really all you have to go on, all you can depend on anyway, and the numbers simply do not work. I did and still do believe that your actual revenue will exceed any guarantee given by Prime. Otherwise they wouldn't have a guarantee.

But there's no way to definitively determine exactly what your revenue will be. Thats nothing against Prime, its just the nature of the business and the situation. I figured to even entertain the prospect of leasing, I would want to be reasonably certain that my revenue would be in the range of $1.35 per mile + FSC which is quite a bit more that the guarantee which I believe at the time was .95 per mile. It sounded like quite a stretch at the time and much more of a leap than I was willing to make. And after seeing the struggles both of my trainers were going through just to make ends meet, well like I said, it was an easy decision.

Seeing the $1.73 number lets me know it can be done though, and should give hope to others thinking of going the leasing route, so thanks for posting that.

 

You need to have the "drive" within you to make it work. If you're into it for "easy," "I want to make more money," or "I want more hometime" - something along those lines - one probably shouldn't consider doing a lease.

The guarantee is there as a hedge to keep you whole in case of a severely depressed economy. No one even talked about it until early 2009, and prior to the spring of '08 everyone was making too much money to even care about it. BTW... 95-cpm plus FSC is what you get at most carriers that offer any sort of lease/purchase arrangement - period. Certainly no more. You end up chasing miles - and a constant stream of 3000+ mile weeks in order to make enough to pay for the truck is insane, IMO.

And is the guy at the corner store in business for himself in any better shape to do that? That's part of the nature of business. You might ask the genuises at Circuit City how that worked for them - oh, yeah - you can't. They went bust!

My own projections on that ran to something on the order of $1.43 per mile, and my discussions with Sazook and Dr. Z prior to jumping in confirmed this actually was achievable in a solo truck. The revenue is certainly there, but the trick is to contain your costs enough to make it work. Both of those guys made it through the economic frivolities we enjoyed a couple of years ago in good shape.

It helps to have an economy on the up-swing, an adequate cash reserve, and timing is everything. The freight cycle picks up around the end of the first quarter, so that's a good time to jump in, and then you can ride it until after the holidays. I can't stress enough that if you don't have a cushion of cash to help buffer the ups and downs, its going to be a rough ride. Speaking of which, if you're going to do this for any length of time at all, one needs to be planning for the next recession... its part of the business cycle.

 

All good stuff ironpony as usual. And in my particular situation, the "drive" simply is not there because the reward is not great enough. The "drive" exists to deliver more freight than any other company driver at Prime. That part comes natural. No effort required. Its easy. Compared to what I have done in the past anyway.

But to have the "drive" to go through what you have to go through to possibly eek out a few extra cents per mile? Not hardly. Not at this point. I've been doing that for the last 20 years so I guess the gauge is on empty. It would take a much more substantial reward to revitalize the "drive" factor in that area.

You mentioned in another thread that $1.25 per mile would be a reasonable number to use as an estimated cost. $1.73 - $1.25 = 48 cents per mile. I'm not too excited about that. Especially when you consider that I could be making 46 cents per mile as a company driver in the NE division. Of course 8 cents of that would be tax free and I also wouldn't be required to pay the 15.3% self employment tax as an independent contractor.

I'm not sure what the reward would need to be, but it would have to be substantially bigger than what I'm seeing. I'm really having too much fun right now to want to change anything, but at some point, I may get bored and want to take the next step just for the heck of it. But I will never lease a truck. I might buy one though. How much better off would I be then? Or would I be worse off? Haven't done a lot of research, but I would think I would have the potential for more earnings with possibly more risk. And if the money's there, I would not be concerned with the risk. We'll see. For now I'll keep rolling down the road as is.

 

I said it would be reasonable. I didn't say it cost me that much to run my truck.