Why do you lease to a carrier?

No one is talking about a lease purchase. Please dont confuse the ishue. Were talking about leasing onto a carrier. If you rent a trailer while leased on you can still walk and take your truck anyware.

 

I own my truck out right. Paid cash for it. This is not the same kind of lease purchase your thinking of. This is using my truck and pulling the carriers trailer and loads, using their authority, insurance, dispatching, and fuel. My settlements are paid weekly,.. not 30 - 90 days after I do a load and then have to chase down the broker or shipper in order to get paid if they havent made a deposit yet.

I am free to do pretty much anything I want to do. The only limiting factor is me. For example,.. dropped a load not far from Moab UT. My wife was in awe of the scenery so I called and said I needed a couple days off. Parked the truck. Rented a Jeep, then some ATV's, did some hiking, had some great food. Called in when we were ready to go. Did the same thing when we dropped near Vegas. I dont know of any other job where I have this much freedom.

Hurst

 

I use to be leased on to a major carrier. I liked it. Not to many complaints. I made good money to. But I wanted a new challenge and more home time, and more control of where I ran. As a full independent, I make a lot more money, but it wasn't always like that. It took time to get the customers I wanted, trucks, and all the things I personally set out for. Couple times a year I get frustrated and think of how easy it was when I was leased on, but I still love what I do, and wouldn't give it up. It's all in what you want out of your business model. Some people, being a lease operator is perfect for them.

 

As all said before in simple terms....an independent owner operator has ALL the responsibility such as (finding freight, licensing, permits, IFTA, collections of freight bills, etc.....) where when you lease or contract your truck to a carrier that is already established then much of that burden is off your back especially having to collect on freight delivered....as all companies do not pay timely. And an independent has to be able to weather that cash flow issue, which many single operators cannot do without a butt load of cash in the bank. Hope all that helps.

 

I have access to rates and freight that wasn't available when I only had 4 trucks running under my own authority. I still enjoy the same freedom and actually make more on the lucrative loads due to a fixed percentage taken out of the load compared to a broker selling a $5 p/m load for $2.50. Your results may differ, but I do very well. When you add in not having to deal with compliance and their audits, collections, etc. it's a win for me and where I live. If I lived in a more typical market (not FL), my view might be different as well.

 

I'm 100% owner operator if this ship sinks it's my falt can't say the company I'm leased to got slow or didn't run me or rates dropped, I set my own rates I go where I want when I want and have a good understanding about what's covered under my insurance.

When I leased a truck with mercer I always thought big fleets had better paying freight boy was I wrong I get $3/-$4.40/mi on my direct customers I was thinking that even if I was paying 25% to someone I'd still be getting $2.50/mi + wrong $2/mi and 150mi dead head on every load didn't do it for me.

I have averaged $2.87 all miles this year on 46,000miles as of 8-1 yes It cost me for insurance and tags but $12,500 a year for insurance and the $1,800 for plates is a drop in the bucket and is less than 7% of what I make for less than 25% I'd pay being leased to someone.

Being a 100% owner operator isn't for everyone with all that said if I didn't have mostly direct freight than yes being leased on to someone would be a better choice because broker freight and leased rates to the truck run about the same.

 

Let me give you a example why I think it's crazy to lease on to someone if you have your own truck.....

120000 miles a year Times 2.00 a miles equals 240000.... Minus 27%= 175,200 to you B4 expenses... Fuel-Maint- Etc....

Times that by 3 years and you just paid someone close to $195,000 to rent you a trailer n pay for your permits n insurance....


Crazy talk if you think I am giving away that sort of money......

 

That's a good way of looking at it, but to every upside there is always a possible downside. By the numbers you mentioned, the money to the truck would be $1.46 per mile, in my opinion that is not a number that has any sustainability, but there are folks that average that and are happy doing so. The thing that you have to keep in mind is that there are a lot of folks that, if they were running under their own numbers don't have the negotiating skills required to greatly improve that number. That then leads them with much higher costs to operate, as they are paying for all of the insurance, instead of just a percentage of it. With that in mind, I think that you can see that for some, it does make a lot of sense to lease their truck to a carrier.

 

What makes you think you think you're getting 100% in the first place, unless all of your freight is direct from the shipper. If you're working mainly off brokers, typically the cut is 15-20% or much more if it's a lucrative load. I try to explain that to the guy with their own authority constantly pulling for brokers but they just don't get it. Not saying that's you, but there are a ton of them out there. If you pull a Landstar brokered load, they're taking AT LEAST 18% off the top. So let's say you like pulling for LS because they pay in two days for 1.5%. Most loads go out at 20%, +1.5% = about 21.2% of the gross freight bill. So for every $100 the customer pays, you see 78.8% on normal freight (almost what a LS truck gets paid). Now when you get some awesome paying freight that broker is going to try to move it for as little as possible, pocket that big profit. Maybe he moves it at 50%, it happens every day.
So from my experience, if your a small time authority holder getting most to all of your freight from brokers, you can do BETTER at a quality carrier. If you're getting all of your freight direct at going rates, stay on your own.

 

I know plenty of guys with their own authority that would be way better off being leasing to a good company, whatsmore they probably cause more damages to trucking industry and rates by being blindly independent