What are the estimated operating costs for an O/O?

Dave you are dissecting this industry very well. Call me homo, i will pm you my number

 

They do that to the farmers and their duallies around here at the livestock sale barns.


It's a target rich environment........the tax boys never fail to catch a bunch of them running tax free fuel in their pickups.

 

Your truck payment and trailer payments-
Interest on the loan(s) are treated as an expense, but principle payments are not.
Equity in your equipment is carried on the books as a capitol asset, part of your net worth.

The best way to figure it is to subtract what you paid from what you eventually sell it for. If your plan is to sell or trade your truck in, say, three years then estimate what you think it will be worth in three years. Then estimate how many miles you will be running annually and compute your actual cost per mile.

Truck original cost: $40,000
Selling price, three years later: $21,000
Actual cost: $19,000

# of miles driven in three years: 330,000

19000/330,000= .058 cents a mile

Figure interest on your loan the same way, add it to .058 a mile, there's your true cost. If you drive more miles per year your cost per mile will be lower. If you drive less, it will be higher, but your truck will depreciate less.

So your truck payment is not a true monthly cost item. It's subtracted from you cash flow, and treated differently.

 

That's some awesome information, THANK YOU! I am currently setting up my Quickbooks file and planning it like this is invaluable. I know that most truckers go broke because of inadequately identifying their true costs and that is what I am trying to get a decent grasp on. At he end of the year I will be able to have a more adequate understanding of my personal costs but I want to Start things right.

BTW, what are the expected average costs of maintenance and tires? Assuming a decently well taken care of used tractor/reefer with about 600,000mi/10,000hrs. I can make a good estimate of compliance fees, fuel costs, office costs, and taxes...but not sure about maint/tires.

 

Could somebody explain what "factoring" is (from the original post)? I've never heard that term.

 

Im sure youll get many diferent responses, and it all depends on who you haul for, what you haul and weather you take flat mi or %, but i see you want exapmples, so the above was cut and paste as you requested and the numbers are what i do each month pulling dry van for mi, all depends on what you like, your own auth, leased to someone else, thier fuel card and disc? thier plates? theres give and take just depends what you want to spend and the comfort of a large co dispatching you

my future plans will include a reefer btw... im doing ok, but i could do better !! hope it helps

 

factoring:
is a company handling your accounts recievable. If you dont haul for a carrier or a broker offing quick pay, often BOLs wont pay for 21-45 days, sometimes 90. factoring companies pay you for your shipments and then they collect from the shipper. usually they change you 10-15%, Eagle Capital charges 4-5%
so if you haul for company A a load to wherever, and they are going to pay you 2,000, the factoring company will pay you a percentage of that from 85-90% then bill the customer for you

 

Helpful??? That was awesome! Excellent response, it really helps to see real world numbers from real world drivers. Gives me a great base for estimating. BTW, that insurance at $400ish is SWEET! Good luck getting anything in Florida for under $600. I myself am forced to pay $910/mo because of not having the longevity of you seasoned pros. And had to go to another state to find that rate too. Next year it'll be better
P.S. I am driving under my own authority and not leasing to any other company. My goal is to learn as much as possible and grow my own fleet, hopefully achieving approx 15 trucks in 2 years time.

P.P.S. If you're interested in a reefer, I just secured 1 out of 4 for $29k. 2004 Utility Trailer with ThermoKing SB-190 Units, but the kicker is that they all have re-manufactured engines directly from ThermoKing compliant as 2011 with as little as 10 hours of use and CARB compliant until 2018. 50% tires and brakes. They have financiers that can finance 80-85% of it. And it's directly from the Utility dealership so I'm sure they know how to pick their own trailers that are in excellent shape for resale.

Like the post above me mentioned. Factoring is a way to get your money immediately rather than wait until a Net 30 or a Net 60 payment (amount of days to get paid). Of course, this convenience comes at a fee. Many brokers will offer a QuickPay option but most of them come at some sort of fee too. If you can wait for the payment and have somebody at home following up with your accounts payables then you should try to avoid factoring. But if you need to get paid ASAP then they are a necessary evil and can save your butt when you need to pay your mortgage.

Questions for the experienced O/O's: Do MOST brokers/shipper provide a pay advance of say, 40%, to cover gas and incidental costs? Or is that a rare thing?

@Stringer: I actually have two factoring companies that are both willing to factor loads at 2.5% going up in 0.5% increments every 30 days the account remains unpaid. And they work with either starting O/O's or larger fleets. Orange Commercial Credit and FirstLine Funding Group. I won't post their contacts cause I don't think I'm allowed to, but if you want them send me a PM.

 

Just don't haul cheap freight!

crusin

 

word of advice from a former fleet owner (5 trucks) dont get too big too quick, especially if your new to the industry.
They say the quickest way to make a million dollars in trucking is to start out with 2 mil