Why you can not compete with big carriers

So he’s buying fuel from the carrier? And they are using creative accounting to charge the owner operator . So you can run for $2 a mile…
All I know first hand is I hauled fuel for years and only once did I see how much the customer paid for the load of fuel . This was from Exxon to a 10 million gallon plus customer, and I was surprised that they weren’t getting it cheaper. So when fuel is $4.50ish and someone says they are getting it for $1.25 I say fake news

 

Is it fixed pay or percentage? What do they base their fuel price from? Fuel price isn’t all its cracked up to be. Hirschbach advertises people in their lease purchase only pay 95 cents per gallon for fuel.

 

I looked at the pay stub you posted and unless I missed it I didn't see anything saying what you paid for fuel

 

Ya it say 12xx liters for $540. I don’t really care about how the carrier bills it , I’m saying they aren’t getting the fuel for $1.2whatever from the majors….

 

Click on this link and you can sign up for 5 days free and get fuel rack prices.

Gasoline & Diesel Wholesale Rack Pricing - OPIS
Gasoline & Diesel Wholesale Rack Pricing - OPIS Gasoline & Diesel Wholesale Rack Pricing | OPIS

 

I agree

 

Tscott already said all that needs saying. Your trying to compare a pineapple to a ww2 battleship here. The type of freight one of these megas gets is very diffrent then what we do. They go after diffrent freight then us in every sense of the word. In the end we make about the same money per rig. Megas actully can make a bit less but were as we have 1 or if we are lucky a few rigs they have hundreds or even thousands and can asorb the LoR of a slightly worse deal. Plus due to having so many rigs they can entirely cover a customer which helps keep the customers costs low by only dealing with a single entity rather then dozens or hundreds of individuals or small groups. Additionally being so big they can also send spare trucks if one borks where smaller operations likely cant which gives these megas a lot more clout.

However refering back to the secruity guard vs an army refrence. What we O/Os can offer is fast direct service for oddball and/or 1 off loads. Plus while we often arent as cheap we are far more flexable. Afterall you wouldnt hire an army to guard a warehouse when 1 or 2 guards would do the same job and for far cheaper even if the individuals are more expensive. Same with hireing a mega vs a indy for low volume or 1 off loads.

 

Nobody is buying fuel for these deep discounts claimed. Here's 3 major oil companies rack pricing listed right on their websites.
English (Canada) Loading Rack Price
Terminal Rack Prices | Shell Canada
Petro-Canada Rack Price - Terminal Rack Prices
*Note - rack prices do not include IFTA tax rate, or sales tax.
My price today at the pump, all taxes in is 1.545 (cdn$/L)
Take the sales tax out (I will get it back) and the IFTA rate off and you come up with 1.22 as the raw cost of fuel. This is only a few cents, perhaps sometimes a dime, higher than the rack price. The truck stop and the fuel hauling truck need to make a profit too.

The big carriers are using more complex equations to come up with rates. Why? Because their customer knows fuel goes up and down, the big carriers are all in competition with each other, so, in the interest of staying competitive, must offer a sliding rate based on the fuel expense (since all trucks need energy and nobody can do much about the price), so the big carrier makes a contract something like this:
Fuel base cost (at a fixed cost per L or gallon) say 1.25 per gallon and their fleet averages 7 mpg. The fuel base cost is 0.1785 per mile.
FSC is calculated as Price carrier pays say 4.25 minus fixed fuel cost 1.25 in this example the math would be 4.25-1.25= 3.00 / 7 mpg = 0.4285
The "linehaul" cost will be determined by the carrier's cost of truck depreciation or rental, maintenance, insurance, interest on money borrowed, office overhead, paying a company driver, etc. *any additional one time expenses may be added on a per load basis - think NY bridge tolls or special permits*
Linehaul (cost per mile + Fuel base cost) + FSC (0.4285) = price the customer will pay. This will change every week, perhaps every day, as the price of fuel changes.

If the big carriers are leaning on the Pilot/ TA/ Love's of the world so hard that those chains are indeed offering a cost MINUS price for their business, then the truck stops raise the price for everyone else, anyone who isn't with the big carrier buying that deep discount fuel all they are doing is subsidizing the large fleet's fuel cost. This is one reason I do not buy hardly any fuel from the major chains. On my card, the smaller stops offer the best discounts, and beyond that, I prefer to support the small business, just like my customers support my small business.

The big companies also typically offer these oversimplified "owner operator packages" to attract the oversimplified "owner operator." All the truck owner has to do is as many miles as he can, and get the best fuel economy he can. This is exactly how they claim to offer "You will only ever pay 1.25 a gallon!" Yeah, you will also only ever collect a fixed rate per mile as well. Ever notice how the carriers who offer a fixed fuel cost also will never offer a "all fuel surcharge collected is paid to you!" You can't have it both ways.

Maybe some of the big carriers are indeed playing the futures game when it comes to fuel prices. I would bet most of them are not. Yes, you can make a ton of money in the futures market, if you get it right. You make the wrong deal, and you can also lose everything. Anyone who can predict the futures market, or any stock market type of investment, isn't in the trucking business. The same as these folks claiming to be buying fuel way below pump or cardlock or even rack price. If they truly were, why operate trucks? Just give me and everyone else here a fuel card and mark up your 0.50 cent fuel to 1.00 and make money that way. You'll make way more money than you will trucking just because you have cheap juice.

 

Look I am going to say this all again, AND I wish some of you get it in your head - YOU DO NOT COMPETE WITH THE MEGAS OR LARGE/MEDIUM FLEETS.

YOU COMPETE WITH OTHER OWNER OPERATORS AND SMALL FLEETS. ​

What you miss is this fact. when you go to the load boards, there are no megas or large/medium fleets there undercuting you.

These fleets have different sources for the work, one is contracted work. Another is brokers who work for the shippers/consignees, not scraping work off the load board. YOU never see those loads, never. They are offered to fleets that are working within the system the broker has setup.

Your competition is you looking in the mirror, it is the person just like you, or worst, it is a marginal owner who is scraping by and undercutting everyone to pay the bills and live in the truck like an animal.