Looking to become OO. Am I doing right math?

[AMikonis1980]

Seems like economy is getting better so I am thinking about becoming owner operator again and would like to ask the same questions I asked before. I went to talk to one small company in Michigan who pays 90% gross and updated my calculations based on hauling a van and the prices they provided me. Please let me know if I’m doing a right math.

The one most important I would like to know is Average pay for 1 mile (loaded + empty). If you would take income of a year or two and divide it by all the miles of your truck of that period of time does it come out around $1.20 a mile?

The maintenance cost was just my guess. Would you be able to share how much do you spend on all of the maintenance of the truck per year including how many miles you drove per year and what is the mileage on your truck.


Volvo 780

Truck price out of the door $30,000.00

Trucks mileage 670000

Trucks mileage after its paid off 982000

Lifetime of the truck (miles) 1000000


Loan Interest (%) 10

Loan term (years) 2

Payment $1,384.35

All interest $3,224.35



Average miles (loaded + empty) per week 3000 156000 /year
Average pay for 1 mile (loaded + empty) $1.20

Fuel ($/mile) $0.45 mpg 6 fuel $/gal $2.70
Maintenance ($/mile) $0.10 $15,600.00 /year
Truck value decrease ($/mile) $0.0909 truck price divided by truck's left lifetime
Toll Roads ($/mile) $0.0300 $30.00 every 1000 miles
Fuel tax ($/mile) $0.00564


Interest ($/week) $29.31 whole interest divided by truck's left lifetime
Bobtail insurance ($/week) $38.46 $2,000 /year
Cargo insurance ($/week) $159.00
Truck registration ($/week) $47.95 $2,500 /year
Permits ($/week) $5.75 $300 /year
Highway tax ($/week) $10.55 $550 /year
Trailer rent ($/week) $159.00 $681 /month
Cell voice + data ($/week) $23.33 $100 /month


Weekly income $3,600.00
Weekly expenses $2,503.00

Weekly profit $1,097.00

1 mile cost $0.83
1 mile pay after expenses $0.37


Truck value decrease + Interest (ends up close enough to actual payment)
$1,312.43

[Sabine]

while I am not an owner operator, the one thing I believe you are wrong on, is depending on 3000 miles a week, and every week. And that for 52 weeks a year.

You will take time off, you will break down, and bad weather will cause you to have to stop.

I would not bank on 3000 a week, but a more realistic 2200 to maybe 2500 a week.

[AMikonis1980]

while I am not an owner operator, the one thing I believe you are wrong on, is depending on 3000 miles a week, and every week. And that for 52 weeks a year.

You will take time off, you will break down, and bad weather will cause you to have to stop.

I would not bank on 3000 a week, but a more realistic 2200 to maybe 2500 a week.


Im a company driver right now and my average year to date is 3220 miles per week. Didnt take a vacation yet :)

[jagerbomber3.0]

Im a company driver right now and my average year to date is 3220 miles per week. Didnt take a vacation yet :)

Being tied onto a GOOD company and not taking time off is one thing. Being an owner and running load boards and booking all of your own loads and doing all of the involved paperwork and scheduling and taking care of all of your own maintenance and everything that goes along with it is another. I have been doing my own research and planning for next year and I am not even getting in the ballpark of 156,000 miles for the year to estimate my numbers. I think that is a pretty unrealistic number for MOST people. In my own opinion I think it is far more realistic and practical to plan for the lowside on mileage and the highside on any potential expenses and anything that comes over that is a good bonus to your business. I think it is far more realistic to PLAN for somewhere between 110 to 125 thousand miles on the highside when figuring up a business plan.You gotta prepare yourself for the worst and the low end and when things are running good it will be smooth sailing. Dont over extend your profits before you even start getting them coming into the truck. just MY opinion and some of the actual owners here my disagree but it makes sense to me that way. And oh yeah, I'm not so sure about that economy currently improving much if at all right now as you pointed out.

[AMikonis1980]

this is what it ends up if driving only 2200 miles a week.


Volvo 780

Truck price out of the door $30,000.00

Trucks mileage 670000

Trucks mileage after it's paid off 956000

Lifetime of the truck (miles) 1000000


Loan Interest (%) 10

Loan term (years) 2.5

Payment $1,134.34

All interest $4,030.27



Average miles (loaded + empty) per week 2200 114400 /year
Average pay for 1 mile (loaded + empty) $1.20

Fuel ($/mile) $0.45 mpg 6 fuel $/gal $2.70
Maintenance ($/mile) $0.10 $11,440.00 /year
Truck value decrease ($/mile) $0.0909 truck price divided by truck's left lifetime
Toll Roads ($/mile) $0.0300 $30.00 every 1000 miles
Fuel tax ($/mile) $0.00564


Interest ($/week) $26.87 whole interest divided by truck's left lifetime
Bobtail insurance ($/week) $38.46 $2,000 /year
Cargo insurance ($/week) $159.00
Truck registration ($/week) $47.95 $2,500 /year
Permits ($/week) $5.75 $300 /year
Highway tax ($/week) $10.55 $550 /year
Trailer rent ($/week) $159.00 $681 /month
Cell voice + data ($/week) $23.33 $100 /month


Weekly income $2,640.00
Weekly expenses $1,959.32

Weekly profit $680.68

1 mile cost $0.89
1 mile pay after expenses $0.31


Truck value decrease + Interest (ends up close enough to actual payment)
$985.80

[rank]

When you say O/O, do you mean you'll be leasing to a carrier? If you have your own authority you will spend a huge amount of time doing administrative tasks. Doubt if you can average those miles.

IMO, anytime anyone buys a used truck, they need to set aside at least $15,000 for repairs in the first year. That's in bank, not a line of credit.

I don't see anything for meal expenses in there. To me this is an operating expense, but of you're over the road already I suppose you know that.

If you are pulling a van under your own auth, I think you should budget for $1 loaded mile in revenue and 10% dead head. So ~ $.90 for all miles.

[mike3fan]

I would be hard pressed to name 5 dry van general freight jobs that you could make $1.20 a mile for all miles. Maybe $1.20 a mile if you include the fsc, but not averaging in all miles ran. If you can find someone like that especially in MI I would be very surprised.

I think you are pretty realistic in your operating cost at .80-.95 cpm, but I also wouldn't plan on 156,000 miles a year in my buisness plan.

Why would anyone want to run those kind of miles anyway? Too much pressure if you ask me. Concentrate on finding a better company to lease onto (if that's what you are talking about) and get into a specialty type of work ie: Oversized, step deck, tanker or anything that doesn't involve dry van.

2 years ago I averaged $1.70 a mile for all miles and last year was $1.90 a mile for every mile my truck traveled. I don't have the exact break down for the cost per mile with me but my mileage was pretty close to 125,000 each year. I pull chemical tanker.

[Bigmon]

$159 a week for cargo is way to much.

You might need to rent a trailer in the beginning, but you can buy one and pay it off pretty quick.

[AMikonis1980]

When you say O/O, do you mean you'll be leasing to a carrier? If you have your own authority you will spend a huge amount of time doing administrative tasks. Doubt if you can average those miles.

IMO, anytime anyone buys a used truck, they need to set aside at least $15,000 for repairs in the first year. That's in bank, not a line of credit.

I don't see anything for meal expenses in there. To me this is an operating expense, but of you're over the road already I suppose you know that.

If you are pulling a van under your own auth, I think you should budget for $1 loaded mile in revenue and 10% dead head. So ~ $.90 for all miles.


I will be first time truck buyer so i will not go to own authority right a way. I take food from home and dont eat at any restaurants. I calculate $0.90 per mile is expence. So where is the profit?

[Hoyt602]

Do yourself a big favor and look farther for trucks. 30k for a Vulva with 670k miles is a bit high. I found some used Mcelroy trucks, 05 International 9200s with miles from 421k to 588k for 18k to 21k. Very basic flatbed trucks. Actually went and looked at them last week in Meridian, MS. Might be buying two, which they said they would go lower. Keep in mind these trucks aren't being sold through the International UTCs which would bring up the price further. The salesman named Clint told me that Mcelroy was paring down their fleet since they don't have as much business through Lowe's and the like. UTC wouldn't buy them because they have enough trucks now. I haven't seen trucks this low with the miles anywhere else yet... always looking though. Do some good research and you'll find some good deals on trailers as well. Talked with a manager at Nalley Motor Trucks two days ago and he said there is a possibilty that Swift will be dumping an enormous amount of Volvos into the market. That means if Volvo is your thing your 30K truck will be worth about 7K. Maybe wait and see if this comes true, I know they are in a hurt right now.

[AMikonis1980]

I would be hard pressed to name 5 dry van general freight jobs that you could make $1.20 a mile for all miles. Maybe $1.20 a mile if you include the fsc, but not averaging in all miles ran. If you can find someone like that especially in MI I would be very surprised.

I think you are pretty realistic in your operating cost at .80-.95 cpm, but I also wouldn't plan on 156,000 miles a year in my buisness plan.

Why would anyone want to run those kind of miles anyway? Too much pressure if you ask me. Concentrate on finding a better company to lease onto (if that's what you are talking about) and get into a specialty type of work ie: Oversized, step deck, tanker or anything that doesn't involve dry van.

2 years ago I averaged $1.70 a mile for all miles and last year was $1.90 a mile for every mile my truck traveled. I don't have the exact break down for the cost per mile with me but my mileage was pretty close to 125,000 each year. I pull chemical tanker.


I never tried flat bed before. Do you think I would be better off starting with flat bed or reefer rather than van?

[Hoyt602]

I guess it all depends on what part of the country you live in and what kind of customers you could get in that area. If you are going to lease to someone then just pick the one that will keep you busy and pay well. If you are going to get your own authority then you would choose what segment you feel would be easiest to find loads off the load boards in the begining. I've done dry van as a company driver and flatbed as an O/O and co. I'll probably never pull van again unless I work with an LTL carrier or something specialized (trade show, etc.). It just seems that you are competing with all the big players (Swift, JB, Etc.) out there doing van and a lot of dry crosses the divide on rail.

In the flat sector you are more suspectible to economic swings as we have seen as of late. Seasonal flow also is a factor as we are soon going to be in the "dead months". Flat or "open deck" historically will pay more than the other arenas. The more specialized you go the more you should get. It can and usually is physical work, so if you don't like sweating you need not apply. Not too many huge flat companies out there, the majority of the open deck capacity is serviced by small carriers of 20 trucks or less. The big flat co.s that come to mind include Melton, Arrow, TMC, ATS, Maverick, Mercer, and a few others. However there individual tractor counts don't rival the large van operators.

By the way, you can view information about most public carriers at Transport Topics (subscription required). You also should look at the financials of any perspective carrier you are desiring to lease with. You may be suprised to see a few big name ones that have been bleeding for some time. How some of them have been in the red for so long and still operate puzzles me. YRC has been selling real estate to raise cash and leasing back the same terminals. After they blow through that cash where are they going to get more? Covenant has been bleeding since last year, maybe before, don't remember off hand. I read somewhere that is was predicted, 4 large long haul and large LTLs that you have heard of will cease operations by the end of this year. The news media says we are out of the depression. Somebody forgot to tell the shippers...

So we have been through and still going through the worst times in this industry that anyone alive has ever seen, as a whole. Coming out of this we should see the best times ever as demand should outweigh capacity for some time.

Don't where all that came from, time to get off the soap box.

[Hoyt602]

Also, I didn't see where you factored in liability ins. with your estimate. You included cargo at $159/ week. Was that cargo and liability both? I would assume so as it comes too around $8200 a year. Keep in mind on the insurance, if you are going to finance it (make payments) they usually require 25% down and pay the rest over 8 months. You can spread the cost over a year for your calculations, but for your cash flow and start up you'll need the money sooner. Of course, if you lease to a carrier you usually don't have to pay (outright) for the ins. They'll either deduct it from your settlement, typically they should be paying a higher than normal % to you if they do it this way. The ones that normally pay btwn 70-85% usually cover the liabilty and cargo with their portion ( which is really you anyways).

And... to pick it apart further (read help you) I would include your wage and profit to the company seperate. If you get your own authority you are building a company, correct? The company should show a profit (in particular for future borrowing needs). Come up with a wage that will pay your household bills and the rest let the company (you in the end) have. When you are small, of course everything left over goes to you after expenses. If you are a sole prop. all that money is taxed at your rate and you of course pay self employment tax. At some point you should consult an accountant and possibly tax attorney to decide if forming a corporation is viable for you. It has helped me greatly in keeping more money then giving it away.

[LOAD IT]

Im a company driver right now and my average year to date is 3220 miles per week. Didnt take a vacation yet :)

Only a few company drivers can average 3000+ miles per week and you are a money maker for the company when you are doing it the right way. Not running legal, 2 logbooks, etc will only cost you and the company in the long run and the company throws you under the proverbial "bus". When you become an O/O that all changes and you will not want to run 3000+ miles per week average.

[rank]

I calculate $0.90 per mile is cost. So where is the profit?
I think you're starting to get the hang of this. You are way ahead of many others that have been through here. Some didn't believe us and have parked their trucks.

I honestly don't know a small van operation survives. Actually, I don't know a single one that has survived. Speaking about those that have their own auth.

[Musicman]

Maybe I missed it, because I admittedly didn’t read all of the above replies, but I don’t see anything budgeted for INCOME TAX, SELF EMPLOYMENT TAX (meaning double Social Security), ROAD TAXES (NM, KY, OR, NY) (if you run in OR a lot it will bankrupt you), and I didn’t see anything budgeted to make up for the benefits you are losing by being self employed (have you checked out what quality private medical insurance goes for these days?)

[BanditsCousin]

With just a brief rundown of your numbers, I see you buying yourself a 30cpm driving job.

Not that it is any of my business, but what do you make as a company driver? (if you don't mind me asking)

[Red Clay Rambler]

Volvo 780

Truck price out of the door $30,000.00

Trucks mileage 670000




My truck had 630,000 miles on it when I bought it for $12,000 cash. 99 International 9200.

Correct me if I'm wrong, but it sounds like the company you want to lease to is charging YOU for cargo insurance, which is normally something THEY would pay, although it doesn't surprise me that companies are trying to pull this on new/inexperienced owner-operators. I would not lease to a company that required me to pay THEIR cargo/liability insurance for their loads.

[BanditsCousin]

I pay 250 a month for my BIPD, but then again, most o/o's with belly boxes do :)

[AMikonis1980]

Maybe I missed it, because I admittedly didn’t read all of the above replies, but I don’t see anything budgeted for INCOME TAX, SELF EMPLOYMENT TAX (meaning double Social Security), ROAD TAXES (NM, KY, OR, NY) (if you run in OR a lot it will bankrupt you), and I didn’t see anything budgeted to make up for the benefits you are losing by being self employed (have you checked out what quality private medical insurance goes for these days?)

for road taxes i included
Permits ($/week) $5.75 $300 /year
would that cover it?

how much more do you pay on INCOME TAX, SELF EMPLOYMENT TAX comparing to W2 otr driver?

i dont like the health insurance at my company so i dont have it anyway.

[AMikonis1980]

With just a brief rundown of your numbers, I see you buying yourself a 30cpm driving job.

Not that it is any of my business, but what do you make as a company driver? (if you don't mind me asking)

34cpm

[AMikonis1980]

My truck had 630,000 miles on it when I bought it for $12,000 cash. 99 International 9200.

Correct me if I'm wrong, but it sounds like the company you want to lease to is charging YOU for cargo insurance, which is normally something THEY would pay, although it doesn't surprise me that companies are trying to pull this on new/inexperienced owner-operators. I would not lease to a company that required me to pay THEIR cargo/liability insurance for their loads.

i gues they do it that way so they could pay 90% of the load.

[heavyhaulerss]

this is a great time to get into trucking IF,IF, you have a lot of money. when the industry is as slow & the worst(unpredictable) as it is now, you have to have financial resources set aside to make it. when the freight is moving at good rates & there is plenty of loads, then you have a better chance of starting out on a shoestring budget & making it. it is all about available work. for the most part. i.m.o. even if freight is not paying top dollar or fuel is a lil high, if you can do 4000 miles a week, you can pay for some of the things you need as you go. as the cost of living has gone up I have to work longer & harder to maintain the same lifestyle. as long as the work is available for me to work the longer hours, I can still keep things going. no or slow freight changes everything. when I used to run 3000 miles a week, buy a set of tires did not bother me. running 600 -900 miles a week is a slow death. you can work for months making just enough to get by, but have nothing to fix anything that goes out. that is why it is important to put aside some money when the times are good.

[AMikonis1980]

anybody else wouldnt mind to share info on these two most important questions for me

The one most important I would like to know is Average pay for 1 mile (loaded + empty). If you would take income of a year or two and divide it by all the miles of your truck of that period of time does it come out around $1.20 a mile?

The maintenance cost was just my guess. Would you be able to share how much do you spend on all of the maintenance of the truck per year including how many miles you drove per year and what is the mileage on your truck.

[Rev.Vassago]

anybody else wouldnt mind to share info on these two most important questions for me

The one most important I would like to know is Average pay for 1 mile (loaded + empty). If you would take income of a year or two and divide it by all the miles of your truck of that period of time does it come out around $1.20 a mile?


That is virtually impossible to answer, as there are far too many variables. Everything from the type of trailer pulled, to the area of the country you run, to who your contacts for loads are. For the one guy who claims $3.00 per mile for all miles driven, there will be another who claims $1.00 per mile. Does that mean the average is $2.00 per mile? Hell no.

IMO, if you have no idea how much your average revenue will be, you have no business getting into business for yourself. If you are relying on what other people earn to determine what you are going to earn, you've failed already. The same holds true for calculating expenses. What the guy parked next to me earns or spends has no bearing whatsoever on my operation.

[rank]

The one most important I would like to know is Average pay for 1 mile (loaded + empty). If you would take income of a year or two and divide it by all the miles of your truck of that period of time does it come out around $1.20 a mile?I have posted my quarterly numbers here a few times. They wont be of much use to you though. Mine are all brokered loads and drop decks.

The maintenance cost was just my guess. Would you be able to share how much do you spend on all of the maintenance of the truck per year including how many miles you drove per year and what is the mileage on your truck.
$47,000 / 300,000 miles / 3 trucks + 4 trailers. You would be less since you'd driving your own truck. Maintenance costs go way up the minute to start hiring drivers. I think $10,000 would do it...$15,000 the first year. You may not need that much, but you best be prepared.

The first year for a used truck seems to be a killer. Not only do you need to get the truck set up that way you want it, you have to fix all the surprise reasons why the previous owner sold it. Bought a '98 T800 a few years back and dropped $13,000 in two months on a turbo, cylinder head + main and rod bearings. If you don't have that money, it can get ugly.

[Justruckin]

anybody else wouldnt mind to share info on these two most important questions for me

The one most important I would like to know is Average pay for 1 mile (loaded + empty). If you would take income of a year or two and divide it by all the miles of your truck of that period of time does it come out around $1.20 a mile?

The maintenance cost was just my guess. Would you be able to share how much do you spend on all of the maintenance of the truck per year including how many miles you drove per year and what is the mileage on your truck.

With the cost of fuel, when loads were running at $2.50 a mile plus for ALL miles, up to mid 08 in my racket, things were manageable with my own authority. When rates got down to your numbers, $1.20, end of 08 to present, it was a slow lingering death. I had to drop my authority at that point and leased on to an outfit for that $1.20 a mile freight, I kept 85% and had my own plates. There was no way in hell I could make it on that, my last load paid me $79 from NC to Lansing MI after fuel and expenses (ins., food and a shower)

I just sold our last trailer in August. All of my equipment was paid for, 07 Volvo 780 with an APU, avg right around 7 mpg +, along with an 06 Great Dane Conestoga flat and an 03 53' Blanket Wrap trailer, all had clear titles. I walked away clean, but I saw this coming, unlike some of my friends who have pretty much lost everything.

If you are crazy enough to try, good luck. I just could not justify working for free, because that is what it all boiled down to at $1.20 mile. If fuel were around a $1 a gallon and freight was falling from the trees, I would have rode it out. But after 20 years of this cr@p and seeing where this current administration is taking us, along with more rules, regs and taxes that look to be coming our way, I said enough is enough. Like I said, I cut my losses and have not looked back.