Realistically

It actually does make a huge difference if your equipment is paid for. The first difference is it shifts that expense from time to percentage. IF you have a loan, it doesn't care if you ran 500 or 2500 miles last week, still needs to be paid. When your stuffs paid for it is much easier to wait for better loads, it hurts less when your truck is in the shop, you can take time off easier, etc... If your equipment isn't paid for you need to make that payment AND set aside for replacement. And no, I don't plan on calling all my broker's and telling them, "good news, I paid off my loan, I can start hauling for 0.12/mile less now !!" lol. But it does lower your operating cost and increase your profit margins as well as gives you more options.

 

IMO you would have a very difficult time getting $2/mile on 2500 miles/week just starting out if you have no other plan than calling load board postings with a van trailer. I've only been in business a year myself and feel like I'm just now getting the connections I need and figuring out how to make it work.

I know you're probably not going to believe me and wait until someone tells you something you want to hear, but unless you can afford to just break even or even lose a little money your first year you better look for a good lease deal or just drive a truck for someone else.

 

Danny you FAILED to realize that eventually you will need / want to replace your EQUIPMENT.

So having a paid of LOAN as you put it is nice and you can take things easier and all the rest but you still need to GENERATE income as does any business that wants to stay in business.

I do not think you would want to put my 34 + years as a owner up against your 1 year.

 

I'm listening to what you are saying because I respect your 34 years, it's true, I can't even say with certainty if I'll be in business a year or two from now. I don't think we disagree, of course you have to account for replacement. What I'm saying is when you don't have your stuff paid for you have to account for replacement + pay your loan. Some guys don't do this, they just think about making that payment. Then they wind up with run down equipment and have to take out another loan for more equipment. In my mind, you MUST put aside just as much for replacement cost whether your stuff is paid for or not. That is the only way to get out of the hole. So if you are already putting aside the money for replacement, and at the same time pay your loans off. Then when your loans are paid your operating cost goes down, right ??

What you are saying, if I understand correctly, is that some people may not be putting aside for replacement. Then if they happen to pay off their truck they may think they are done paying for equipment. Of course, I agree with you.

I guess to explain even further, I have a loan which I pay $2000/month on. (it's not a lein, but it's still a business expense). In addition to paying that loan, I also figure 0.20/mile replacement, 0.10/mile repairs, 0.06/mile tires, and 0.02/mile pm's. That's in addition to the loan payment, do you understand ? When my loan is paid those numbers don't change. So my operating cost will go down, get it ? My strictly timed expenses will also go down from $104.71/day to $40.38/day. That's the really big factor, right now if I don't find the load I want but I can find a load that I can make a couple hundred on I feel obligated to roll, when my loan is paid, it will be much easier to shell out the $40 and wait for a better load the next day.

 

I've done better than $2 a mile on 2,500+ miles in a week but I could count the times on one hand, that with some big deadhead 25-30+ % last spring. And $2 a mile is really at the low end of where one wants to be after deadhead is figured in. Yes there is plenty of "$2 a mile" freight out there and brokers are very proud to offer $2 a mile on 100 miles, you can run lots of freight like that.... ...you won't make any money and it won't cover any deadhead but they are very proud to offer up "$2 a mile that is great money driver". I shoot for whatever the market will bear. With paid for equipment you have such a huge amount of leverage over these brokers.. ..that means you don't run for less, it means they pay more or you don't move the truck. Cause your choices are go broke hauling the freight for less than nothing, and they love trucks that do that, or go broke at the house enjoying family, eating a good home cooked pot roast, or whatever... I can outlast them, the down cycles come and go same as the upswings... Realistically you might average 1,500 miles a week at over $2 a mile or possibly as much as 2,000 miles if you've got the connecttions... There are just too many trucks out there and rates are just, well, they're hard to come by...

 

Good tires are more like 4,000 dollars. I think your op is too low. With unexpected down time and added maintance cost figure to net between 40 and 53,000 thousand . Dependes how hard you run, if you get paid by the broker, and luck of downtime/maintance/other..

 

Realistically you might be lucky to break even for a year or two. Can you skate on ice that thin for that long or longer? Yeah you can average $1.70 a mile to the truck it's not all that difficult but it's much easier to run many more miles and do $1.50 to the truck. You could easily run 3,500+ miles a week at $1.50 off loadboard freight. There's no money in either of those scenarios. Some will argue there is, I tried it myself and I know. They are fooling themselves and slowly bleeding out if they are lucky. You won't net anything at those but you can do it. When you have this vague idea of $2 a mile freight you're not even considering deadhead or any of that. Brokers take advantage of that and offer up $2 a mile on 200 or 300 miles like that is some kind of fantastic rate or something, all of them do it. If I could simplify how I see it and put it in a message here I would. There's no easy way you just have to get out there and learn. You will have difficulty getting above $2 a mile average to the truck starting out as a new o/o. There are some who have difficulty who have been doing it a long time. If you have lots of bills to pay and boatloads of debt you will most likely never have the patience necessary to play this game. Now this is being realistic. You might go out there and make it happen from day 1 but that would be very unusual and not realistic to expect.

 

SmartDriver, I haul a reefer trailer, and at the end of this week (knock on wood), $37,372 for 17,288 miles, which is only $2.16 for every mile. I set aside about 25cpm for repairs, but I own my truck outright and it's an '06 (repairs are expensive, and you need the money on hand to pay them).

The truth is, take whatever you can get. Don't lowball yourself. Just because you called on a load, doesn't mean you have to take it. And if you're TRYING to get somewhere, don't let them on to it, and DO NOT take it if it isn't worth taking.

As for $3/mi freight. I get that regularly. You can get that (and much more) going to the Northeast. The problem is not knowing your freight lanes, and what the expected pay should be. You might think $2.20/mi is great, but it's dirt cheap if you go to the northeast. But, $2.20 to Chicago would be astounding.