Why you can not compete with big carriers

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I don't do business with Landstar. And no matter what the market is, you always should keep your expenses as low as possible.

 

Cool story bro....

 

if 2.20 is the gross per mile and the profit is .97 then really the question becomes "How do they run a truck for 1.23 per mile?"
What does a driver (and employer's contribution of taxes) cost these days? 0.65? We are down to 0.58.
Fuel? If they are getting 8 mpg and pay 2.00 they are at 0.25. (I don't believe these numbers for a second, but anyway) Down to 0.33.
Let's say they drive the truck 500,000 miles and then get another truck. At 500,000 miles and 0.33 leftover you have $165,000.
What is the cost of the truck, minus what they get for it at trade in?
How much are trailers? How long do they last?
How much interest is paid on the money borrowed to finance equipment?
How much insurance is paid? IRP? 2290?
How much is spent on maintenance and repairs not under warranty? How much down time for warranty repairs?
How many more small and incidental expenses factor into this?

I hope anyone reading this can see these numbers are all best case scenario.

GOOD LUCK

 

That's what our competition did, every two years dust off the box at the ballpark in Houston and the 60/40 was re-shuffled, again.

One customer started to pay his own freight to avoid seeing the other carrier's trucks.

 

This is why some choose to lease onto a carrier. We get deep fuel discounts cheap insurance. Its not uncommon for a mega carrier to profit under $2 a mile loads.. Reasons being they get these trucks way cheaper then you do fuel discounts and if they have there own insurance its a huge win win.
So lets say they are getting $2.20 per mile
at $1.23 per mile is what it cost to move the truck and lets say paying the driver $.65 a mile. Thats about a $.32 a mile profit for the company after paying the driver..

 

I think the OP's post is possible, but one will probably never know.

Different industry but as a tradie the product retailed for $140. As a "preferred" customer best I could get was $115. One day at the trade shop standing next to a guy who worked for a national company, he paid $80 on the account. My trade teacher gave an example from when he worked for the manufacturer, that would suggest the product was worth $35 to make including the packaging.

To be honest I suspect fuel to be no different. Tyres, trucks, insurance, service cost probably all a bit the same. Part of being a big fish and their success or growth, is they won't swim in the pond unless they get a better deal. Small fish can play the same game, but one sale makes no difference in any of the ponds generally.

 

If you dig into my company's earning reports with a little inside knowledge you find that net profit is about 15 CPM that the truck moves.

It's been a good bit since I went spelunking, but back when we were leasing out trucks valued at $140,000 we were paying $110,000 a truck. At that time we were selling used trucks for about $35,000 after 6 years.

I have zero clue what we pay for trailers, but they hit the sell list after 10 years and all are sold by 12 years (in theory).

Our internal shop labor rate is $65 an hour. Warranty work charges out slightly higher. Figure $100 a day for each day the truck is down.

Very little equipment is bought on finance, most of the debt is secured by real estate at a much lower interest rate than any O/O can get on equipment. However all the equipment is 'owned' by our finance company and is 'leased' to the operating company. It allows the company to both take depreciation AND write off the 'lease payments'. As an aside, a company our size can borrow $100 million at a lower interest rate than someone with an 800 credit score borrowing 60% of a home's value. Interest payments are almost a rounding error.

We pay about 1/3 of retail price for tires when changed at a company shop and about 40% retail when changed at a 'tire bank'. Plus we get about 100 Goodyear Blimp rides a year.

Fuel discounts are hard to fathom. We pay .15/gallon less at the Pilot in Hebron, IN than the Flying J across the street. According to the computer I was just under our 'fuel compliance' standard which impacted my bonus for 4th quarter. My records had me just over, so I requested the underlying data. On one load I delivered into Rogersville, MO then picked up in Springfield, MO going to Rockford, IL. The fuel solution had me detouring 8 miles over to the Pilot in Springfield, MO. I had plenty of fuel so elected to ignore the fuel solution and run to the end of my clock and tank in Alorton, IL which is a regular fueling point for us. The cost difference was .70/gallon.

Fleet average is 7.5 mpg.

Most of our $1.23/mile freight are loss leaders. We bid on and won a dedicated account for a small plant of a major nationwide paper and paper products company. There were 5 trucks on the account. We lost money on that account for two years. Not much in the grand scheme, but more than @Midwest Trucker or any company with less than 100 trucks could afford. Eating that loss got us a second plant that we've had for three years now. Break even was one year into having the second plant, and that includes the cost of bringing in 130 trailers to the second plant at 260 miles per trailer.

Then we have our third party vendors who haul our cheap freight for even cheaper. A 'family company' contracted with us to do inter-plant transfers in the Chicago market. The pay structure for our company drivers makes these runs extremely unattractive for company drivers, so we 'sub let' the freight to a 3rd party using our trailers. The owner of that company has done a great job of building his company to cover that freight and a lot of our 'Big Blue' LTL loads in the Chicago market but will never be able to poach the freight from us for a couple reasons. First off he won't be able to build a trailer pool capable of handling the freight, but more importantly he can't handle the other loads. Those loads are part of a package deal with OTR loads that we use company drivers to cover; loads that make a solid profit. In order to 'steal' the freight from us he would have to either cover the other freight or under cut his current price - neither of which he can do. Rough math says we're profiting about 20 CPM off those loads. Yet the drivers for that company swear they make more than us "company schmucks".

Offset against that we have the IDJITS who somehow drive into the slow maneuver course and get stuck requiring a tow. Last weekend a company driver managed to get wedged in between fixed objects to the point he needed a rotator to get him out. How and why he decided to drive into the training area is beyond me, let alone how he got stuck to the point he couldn't get out.

 

I sorry I really have no clue what you’re talking about.A mileage or percentage program what does that even mean?what do you mean by sitting do you mean no driver in it. If it’s registered I wasn’t aware you have the ability to drop insurance on it without turning the tag back in.to me it sounds like you’re talking about someone leased to a carrier.if not how does a person running his own authority work on a percentage.Myself I keep the entire rate there is no one to share it with.

 

He pays that but does not get fsc also tied into a low rate per mile .. Wilson collects the fsc and pays a much higher price .. many carriers run that motto . Some also have a minimum mpg expected to give you that fuel cost if you don’t meet the minimum you pay FULL price on the overage .

 

Then you know very little about how insurance works with multiple trucks. Liability/Cargo charged by the mile(or % of gross sales) No insurance cost on a truck that's sitting. Been on a mileage program for 22 years.
200.00/month average per unit is an easy target to hit.

You don't keep the whole rate, part of it goes to pay your insurance. You're just paying by the unit/month.