Some Numbers For Those Considering Lease Operation

I recently had a guy I know ask me to help him decipher some numbers for him regarding the lease op program he is signed onto. I put together a simple spreadsheet for him based on the numbers HE gave me. I have since fine tuned the numbers somewhat.

The bottom line is that these various lease op companies use different metrics, or smoke and mirrors as I call them, in the way their particular program functions. It can be very confusing to the average person looking at those numbers on face value. Because the numbers are always presented by the recruiter in the optimum way.

The bottom line for the majority (not all) of them, the lease op guy/gal are taking it in the shorts. The assumed risk & liability pale in comparison to what is actually gained in these programs. Remember, ALL, & I mean ALL of the liability & risks are being shifted by the leasing company onto the lessee.

The first spreadsheet represents the numbers he gave me. He receives either 90% of the line-haul rate or in some cases a flat rate which includes fuel surcharge. The numbers were obtained on the typical round trip(s) this guy does each month. 11,000 miles at $1.68 ALL miles dry van rate.

The bottom line is his gross revenue take per mile is around $0.59 per mile after expenses.

The second spreadsheet is what the top tier line-haul company driver makes at the same place with benefits. I included some rough numbers on what the company employee overhead expense would be on that employee driver.

The bottom line is that the company driver labor costs are $0.52 per mile after expenses.

If someone can justify to me that the difference of $0.07 per mile is worth assuming ALL liability & risks, have at it. Don't try the "well, he's buying the truck and will have some equity at the end of the lease" either. The residual buy out on that truck at the end of 5 years is over $35,000.

Hope this helps

 

As you can tell, I like using the phrase "The Bottom line"

Because after all is said and done, the bottom line IS the bottom line.

 

As to my smoke & mirror assertion, just take a look at this Mega company lease program .pdf outline.

I can't imagine the average company driver (especially one's with very little experience) sitting in the recruiters office understanding, let alone grasping the severity of signing on to a lease program like this.

Btw, I grabbed this pdf file from here Crst and their "new" lease purchase outline

 

Will respond in a bit.

 

So, you would assume all liability, including cargo & physical damages on the truck & trailer with a $2,500 deductible on each item, pay a higher self-employment tax, provide your own health insurance for pennies on the mile extra? Wow!

 

In reality, I was being kind to his numbers. He doesn't gross $1.68 a mile consistently. I know that for a fact. But as I said, I was being generous