Can Hauling--Need Honest O/O Advice

[Back on the Road]

Ok guys, this thing is racking my brain. Let me run by this scenario and see what you guys think and let me know what I am missing. I am looking seriously at hauling containers with the hopes of running lanes that will give me adequate home time. I ran 48 states with Tmc and other than not making the salary that I had anticipated, I think they were a decent outfit to work for, plus I learned a lot about load securement. I also left on good terms and was told I can return, however I want to consider the following;

** Buy and pay cash for a Truck w/warranty. (Hopefully it will be last until I retire)
** Log approx 2500 miles per week at 1.35 per mile. (lets say fsc included) Total gross=3375 per wk
** Lets say I get 5.5 mpg, so I use 454 gal. per wk in fuel at a cost of 3 per ga. (lets hope it goes down)
...so thats 1363 per wk in fuel cost
** 3375 less 1363= 2012 dollars
** Lets say I deduct 600 per wk for 48 wks( 28,800 pr yr) to cover maint, rprs, any and all taxes, insurance etc.
** Remember I am retired Fed service so I do not need any benefits per say, other than I will deduct x amount evry month and stash in my 401k.
** So basically given the above scenario, my net pay for the week would be 1412 dollars. I would take out 400 dollars per week and divide this up between savings and 401k.
** I would like to do this for approx 7-8 yrs and hopefully I can roll whats left of the 28,800 per year of the maint/rpr fund over for a surplus every yr until retirement.

What do you guys think honestly ? Am I missing something here ? To me at this point it does not seem too bad given the fact I am currently drawing a monthy federal pension and just need to supplement it.
Thanks in advance for any/all input !
Joe (Back on the Road)

[GMAN]

If you don't want or need to make a profit you can probably get along on $1.35/mile. There are other expenses that you need to consider when looking at operating costs. You need to look at other costs, such as tires, oil changes, etc., I consider those costs separate from maintenance fund. The maintenance fund should be considered for major repairs, such as an engine, transmission or rears. There are some who throw all of their maintenance expenses together. I don't count things that I can or should be able to pay out of my pocket into a maintenance fund. I figure $0.02/mile for oil and pm's. I also estimate tires at $0.05/mile. I like breaking down cost by the mile since that is how most are compensated in this business. Collision insurance usually runs between 2-4 1/2% of the stated value. If you lease to a carrier you will be required to furnish bobtail insurance. That should run between $30-65/month. If you get it through your carrier they can probably sell it to you on the lower end of that figure. They will also likely require you to have either workers comp or an occupational accident policy. OODIA has one you can purchase for about $140/month. You can break those costs down by the mile to find your break even point. There are other costs. While not directly attributable to operating costs, you also need to figure costs of eating and miscellaneous expenses. You can save money by eating out of your truck. If you eat in truck stops expect to spend about $12+ per meal. OOIDA has a spreadsheet on their website you may want to check out. It will be a good start. You can simply plug in your own numbers. www.ooida.com

[rank]

How much are you paying for a truck?
You buying your own container chassis?
I suppose with cans you are port to port and therefore have pretty close to zero dead miles so that should help.

[Back on the Road]

How much are you paying for a truck?
(I would like to find a Great Deal on a fairly new one like a T-600, spec'd w/475 Cat 13sp 3:36 rears in hopes to get at least 6 mpg)
You buying your own container chassis?
( This depends on the carrier I would sign on with and what condition there equipment is. I'm new to this chasis thing as I have only pulled Dry Van (Mayflower/Bed Bugging) and Flat Bed with TMC and a local scrap yard years ago)
I suppose with cans you are port to port and therefore have pretty close to zero dead miles so that should help.

( I would certainly hope to be port to port, something like running to the Va area and drop/pick or run empty back) Home on weekends and 2-3 during the week.)

*** I have done some research on the internet on a few carriers hauling containers and from what I have found it appears they are paying around 1.03 loaded and .85 empty not including fsc. Definately not enticing money for an O/O however, I feel I'm in a somewhat fortunate position as I stated above. I am 48 with a decent pension coming in every month and if I can net 1100-1,400 per wk, after fuel and after stuffing away 500/600 per week in a ''maint/rpr/ins, etc fund'' I think it wouldn't be a bad gig for me given my situation.

** Now, this is just my opinion but if what I read is to come true regarding the amount of Container work that is suppose to come out of the northeast fl area soon, these rates may rise. I also truly believe that Diesel prices will come way down. The barrel of oil has fallen to approx 70 per and I think its going a lot lower. This should reflect at the pumps within 3-6 months in imho.
Joe

[GMAN]

I read something the other day which suggested that fuel is expected to rise next year. I suppose it will depend on the economy.

[rank]

$103 huh? That leaves $.48 after fuel assuming 0 empty miles. Gotta luv trucking.

Well let's say your goal is to get out after 3 years with a million miles on the truck. If you do 125,000 miles a year you really don't need a truck with less than 625,000 miles on it.

TRUCK:I suppose you could find one like I mentioned above that for ~$25,000. It might be worth $10,000 when you're done.
MAIT/REPAIRS: $10,000 a year for 3 years = $30,000.
INSURANCE: $25,000
MILEAGE: 125,000 miles x 3 years = 375,000 miles.

COSTS:
truck: 25,000 - 10,000 = $15,000
maitenance: $30,000
Insurance: $25,000
TOTAL COSTS: $70,000

REVENUE:
375,000 x .48 = 180,000

EBIT: 180,000 - 70,000 = $110,000/3 years = $36,000/yr before tax

I have left a ton of expenses out of this scenario, but it shows you'd be making about the same or likely less than a company driver, plus you have to finance the operartion for free.

[Back on the Road]

$103 huh? That leaves $.48 after fuel assuming 0 empty miles. Gotta luv trucking.

Well let's say your goal is to get out after 3 years with a million miles on the truck. If you do 125,000 miles a year you really don't need a truck with less than 625,000 miles on it.

TRUCK:I suppose you could find one like I mentioned above that for ~$25,000. It might be worth $10,000 when you're done.
MAIT/REPAIRS: $10,000 a year for 3 years = $30,000.
INSURANCE: $25,000
MILEAGE: 125,000 miles x 3 years = 375,000 miles.

COSTS:
truck: 25,000 - 10,000 = $15,000
maitenance: $30,000
Insurance: $25,000
TOTAL COSTS: $70,000

REVENUE:
375,000 x .48 = 180,000

EBIT: 180,000 - 70,000 = $110,000/3 years = $36,000/yr before tax

I have left a ton of expenses out of this scenario, but it shows you'd be making about the same or likely less than a company driver, plus you have to finance the operartion for free.

Rank,

For sake of argument, lets average the loaded (1.03) and empty (.85) and add a .30 cent fsc and we have a wopping 1.24 average per mile. -- Average say 2400 miles per week for a gross of 2,976 per week

--Less 1300 per wk in fuel leaves 1676 per week. Minus 600 per week for all expenses except drivers salary which will be the 1076 per wk.
--- Ok, certainly agree that I am just working for a pay check, and as a company driver I may be able to do about the same. The big advantage here that I see is the ability to park the truck for a month out of the year or when I feel the need to do so, so I can enjoy boating and fishing or Family time. Can't really do that as a Company driver. I also hope that the above scenario is a lot better financially. Time will tell...
Joe

[GMAN]

There are a couple of other expense items you may want to include in your figures such as base plates and permits and heavy highway use tax. Some carriers pay the base plates and permits. If not, I would expect to pay about $1,600-1,800/year. I pay a little over $1,600 in my state. I would expect it to be at least as much in Florida. The hut runs $550/year. You cannot get your base plate without proof that the hut has been paid. Most carriers don't pay for the hut whether they pay for the base plates or not.

[rank]

Rank,

For sake of argument, lets average the loaded (1.03) and empty (.85) and add a .30 cent fsc and we have a wopping 1.24 average per mile. -- Average say 2400 miles per week for a gross of 2,976 per week

--Less 1300 per wk in fuel leaves 1676 per week. Minus 600 per week for all expenses except drivers salary which will be the 1076 per wk.
--- Ok, certainly agree that I am just working for a pay check, and as a company driver I may be able to do about the same. The big advantage here that I see is the ability to park the truck for a month out of the year or when I feel the need to do so, so I can enjoy boating and fishing or Family time. Can't really do that as a Company driver. I also hope that the above scenario is a lot better financially. Time will tell...
Joe

I missed the part about the FSC. That changes the picture somewhat. I say go for it. You're near the end of our working life it seems like, so you should give it a shot. Don't do it for the money tho. And don't do it for the free time either because you won't have any of that. You wight be home more, but you'll be doing paperwork.

[BanditsCousin]

You can't just park it when you want (most of the time) as an o/o. A friend I know at a railyard says you have to do 1 move a month to keep your contract. Granted, that gives you 29 or so days to fish, your FIXED expenses don't stop working (against you).

R u realted to Mr. Booth?

[Sparks280zt]

Back on the Road, OPEC is cutting production this week. Fuel will go back up and will in the long run for sure.

[Pirate]

For you experienced business owners, please hang with me here for a few - this might be some old re-hash.

An interesting thing many people tend to forget is the ROI, or Return on Investment. As an O/O, you can look at your income as coming in three parts. First is the portion that would basically compensate you as the driver. For sake of argument, you can equate this to what an experienced company driver could be making.

The second portion is the owner's portion. This is the compensation you get for assuming all the joys and headaches associated with running your own business, as well as compensate you for the additional time spent running the business (finding loads, maintaining equipment, paperwork, etc).

The third portion is the Return on Investment, or ROI. This is the return you get for the capital you have invested in your business, including equipment and operating capital needed to pay for fuel and other expenses until your get paid by your customer.

Typically, to determine an acceptable ROI, you would estimate the amount of money you will have tied up in the business and compare what you could get on it for return elsewhere. 20%+ is probably a good target. (for comparison, investing long term in the stock market gives you 10% back with less risk than trucking).

So - some assumptions:
Total investment (used truck if purchased cash, working capital, other equipment) - $100,000
Desired minimum ROI - 20%, or $20,000/year
Expected miles / year - 120,000
ROI/mile - .166
Amount you could make as an experience company driver - .50/mile

Add ROI/mile and experienced company driver rate .50+.16 = .66/mile

So - in this example - if you aren't able to clear above .66 cents/mile after ALL expenses are paid, you would be better off taking a company job paying .50/mile and investing the money elsewhere. And that doesn't even begin to address all the time and effort spent running the business. :eek:

And please, before y'all start picking on my numbers, I just picked some for sake or argument - desired ROI could be 15% and total investment could be $250,000 or whatever.

[GMAN]

I would use 100,000 miles/year as a basis to do my calculations. Most owner operators will take time off from time to time. That will affect the number of miles you can drive. There is no reason to spend $100,000 for a truck and operating equipment starting out if you plan on leasing to a carrier. I would count on no more than 1/2 of that amount. And most company drivers are not going to receive $0.50/mile. I would say that most will be around $0.35-0.40/mile. With the economy in a tail spin that figure could actually go down over the next year.

[sidman82]

Hey, Back on the road. If you don't get hub miles paid to you, you will be way off in your figures. Then you will be taking home like $200- $300. Be carefull.

[Pirate]

I would use 100,000 miles/year as a basis to do my calculations. Most owner operators will take time off from time to time. That will affect the number of miles you can drive. There is no reason to spend $100,000 for a truck and operating equipment starting out if you plan on leasing to a carrier. I would count on no more than 1/2 of that amount. And most company drivers are not going to receive $0.50/mile. I would say that most will be around $0.35-0.40/mile. With the economy in a tail spin that figure could actually go down over the next year.

Good point on the total investment. Trucking is an interesting business in that there isn't much pricing power to the carriers right now, although according to an article I read on Traffic World that will probably change and rather dramatically once the economy starts rebounding in 8-14 months or so. However, the costs to get into trucking are very, very low compared to most businesses, and it is a very fragmented industry. So - a smart person can find plenty of opportunity.
I guess the entire long-winded point I was making, though, is the same one that GMAN and others have made - if you aren't making more as an O/O than as a driver, than why take on the financial risk and additional headaches?

[GMAN]

--Less 1300 per wk in fuel leaves 1676 per week. Minus 600 per week for all expenses except drivers salary which will be the 1076 per wk.
--- Ok, certainly agree that I am just working for a pay check, and as a company driver I may be able to do about the same. The big advantage here that I see is the ability to park the truck for a month out of the year or when I feel the need to do so, so I can enjoy boating and fishing or Family time. Can't really do that as a Company driver. I also hope that the above scenario is a lot better financially. Time will tell...
Joe

Back on the Road, I am curious as to whether you plan on paying yourself a salary when you are not running? If so, it could skew your figures.

[GMAN]

Hey, Back on the road. If you don't get hub miles paid to you, you will be way off in your figures. Then you will be taking home like $200- $300. Be carefull.

Before signing with any carrier who pays mileage you need to find how much deadhead they have to get more accurate figures. In fact, it would be a good idea to check with a carrier who pays percentage to see how much deadhead they have as well. I try to keep my deadhead at around 10%. Right now that figure is higher due to the slow down in the economy. I am deadheading more to get a better rate. It costs money to deadhead. Those miles should be accounted for when doing projections or calculating your costs. For instance, if you are running for $1.30/mile and your deadhead miles are 10% then you are actually running for $1.17/mile when you include the deadhead.

[Back on the Road]

Before signing with any carrier who pays mileage you need to find how much deadhead they have to get more accurate figures. In fact, it would be a good idea to check with a carrier who pays percentage to see how much deadhead they have as well. I try to keep my deadhead at around 10%. Right now that figure is higher due to the slow down in the economy. I am deadheading more to get a better rate. It costs money to deadhead. Those miles should be accounted for when doing projections or calculating your costs. For instance, if you are running for $1.30/mile and your deadhead miles are 10% then you are actually running for $1.17/mile when you include the deadhead.

The above is certainly a good point and well taken. I have asked this question with the mileage carriers and they pay approx pay .85 deadhead I believe, could be a bit more. I was told by this particular carrier that 70 percent of the time your loaded, so 70,000 miles loaded and 30,000 miles dead-headed looking in terms of driving 100k miles. I have not asked the question to the carrier who pays percent but that will be on my agenda to do so.

Thanks again for all the input both poditive and negative. Keep them coming to keep me more educated !!