What would you do?

[slacker]

It's been a while since I've been on the board. My password would't work and couldn't get it fixed so I've got a new name. I used to go by "jonboy".

I'm leased to a carrier for .93 plus .14 fuel and run about 3000 a week. I've got an opportunity to go back under my own authority and haul produce for 2.25 out of California to Texas year round on that rate. It will double my income and actually lower my fuel costs a little. I've been shopping trailers and got some insurance bids and it all looks ok to me.

The reason I'm asking is I've only been in this business for 2 years and I went on my own a year and half ago and the rising fuel forced me into leasing to save myself, which btw, hasn't been the worst thing that has happened. I have a lot of freedom in what I'm doing now, but the rates are fixed and that still bugs me. I can continue this from now on, but the business man in me gets a little frustrated at times with being leased. This broker I'll be dealing with is stable and reputable and I have a friend who has been working with him a long time, so I know this is legit. The thing that makes me nervous is the extremely low rates I'm hearing around the industry, and what would I do about a backup plan?

I guess I'd be right back where I am now.

Now or never? Or maybe later?

slacker aka jonboy

[solo379]

I don't even want to go into details. Cause there is way too many, and it's very subjective.
One thing for sure;-It's not a good time for a job hopping. But like I've said, only you could make an informed decision.

[Orangetxguy]

I don't even want to go into details. Cause there is way too many, and it's very subjective.
One thing for sure;-It's not a good time for a job hopping. But like I've said, only you could make an informed decision.

+1

[allan5oh]

I will say though 1.07 PM including FSC is a very cheap rate. Who is the carrier if you don't mind me asking?

[poster]

Perhaps you should figure out which opportunity will actually have any work for you down the line. Can you better hussle work independently in the future or will your present company be more likelyto provide you with work. IMHO the big question for everyone in the very near future is "Do I have a job." Not necessarily "Am I making enough money."

Twilight's Last Gleaming? The End of America As We Know It - Chuck Missler - Koinonia House

[rank]

$2.25 per loaded mile? What happens when you get empty in Tejas and have to get back to Cali?

[solo379]

I will say though 1.07 PM including FSC is a very cheap rate.

If you convert it in Canadians, it will sounds better....

[GMAN]

It's been a while since I've been on the board. My password would't work and couldn't get it fixed so I've got a new name. I used to go by "jonboy".

I'm leased to a carrier for .93 plus .14 fuel and run about 3000 a week. I've got an opportunity to go back under my own authority and haul produce for 2.25 out of California to Texas year round on that rate. It will double my income and actually lower my fuel costs a little. I've been shopping trailers and got some insurance bids and it all looks ok to me.

The reason I'm asking is I've only been in this business for 2 years and I went on my own a year and half ago and the rising fuel forced me into leasing to save myself, which btw, hasn't been the worst thing that has happened. I have a lot of freedom in what I'm doing now, but the rates are fixed and that still bugs me. I can continue this from now on, but the business man in me gets a little frustrated at times with being leased. This broker I'll be dealing with is stable and reputable and I have a friend who has been working with him a long time, so I know this is legit. The thing that makes me nervous is the extremely low rates I'm hearing around the industry, and what would I do about a backup plan?

I guess I'd be right back where I am now.

Now or never? Or maybe later?

slacker aka jonboy

We can fix your old name if you want. Just let me know. As to what you should do about getting your authority that is another matter. If you have confidence in this broker and he will guarantee the rate then that might be a good way to go providing he can keep you busy year around. Even if you turned around and deadheaded back to where you pick up you would not be any worse off than you are now. About the only difference is that when you have your authority you will need to pay your insurance. The advantage of running your authority is that you are not limited in whom you can get freight. When you lease to a carrier you are usually limited to freight they get for you. That can work to your advantage in some instances if they have a good freight base. You have an opportunity to negotiate better rates when you run your authority but you could also lose your shirt. It depends on your comfort level.

I have two good friends who have been in this business for many years. Both recently gave up their authority. Neither is doing all that well leased to other carriers. One leased on to a carrier for what he felt was the greater availability of freight. The other due to high insurance costs. Both may go back to running their authority. Neither are doing that well with those to whom they are leased. One is on the fence as to going back to running his authority. The other I expect to get his authority as soon as he can afford to reinstate his insurance.

There are pros and cons to both. I have been discouraging people from getting their authority right now due to the economy. You seem to have a good opportunity that would double your income. If I felt comfortable with the broker as to the freight consistency and felt that I would not have to worry about my money, then I would probably go for it if the freight was consistent enough. If he doesn't have return freight you can always find something to take back. Whatever you get is better than you are doing now. I should not try to influence you either way. We are in a very troubled economy which is of concern to us all. I would suggest that you sit down and think it over very carefully. Get some insurance rates and look at what additional costs you will incur running your authority. One major concern is when you can get paid. Bankruptcies are rampant. I will caution you on one thing. It can be very dangerous to rely solely on one shipper or broker. If they go out of business or decide to go with someone who will carry their freight for less then you could be out of business without a back up plan.

[slacker]

$2.25 per loaded mile? What happens when you get empty in Tejas and have to get back to Cali?

Actually, I could go back empty and make about the same as now, but surely I could find even a dry load that would pay $1. I ran my own authority last year so I know what you are talking about concerning the rates out of Texas.

I already decided I will never pull a dry trailer again because of the limitations. I even considered putting tie downs inside the trailer to haul equipment or other misc. stuff.

slacker

[slacker]

We can fix your old name if you want. Just let me know. As to what you should do about getting your authority that is another matter. If you have confidence in this broker and he will guarantee the rate then that might be a good way to go providing he can keep you busy year around. Even if you turned around and deadheaded back to where you pick up you would not be any worse off than you are now. About the only difference is that when you have your authority you will need to pay your insurance. The advantage of running your authority is that you are not limited in whom you can get freight. When you lease to a carrier you are usually limited to freight they get for you. That can work to your advantage in some instances if they have a good freight base. You have an opportunity to negotiate better rates when you run your authority but you could also lose your shirt. It depends on your comfort level.

I have two good friends who have been in this business for many years. Both recently gave up their authority. Neither is doing all that well leased to other carriers. One leased on to a carrier for what he felt was the greater availability of freight. The other due to high insurance costs. Both may go back to running their authority. Neither are doing that well with those to whom they are leased. One is on the fence as to going back to running his authority. The other I expect to get his authority as soon as he can afford to reinstate his insurance.

There are pros and cons to both. I have been discouraging people from getting their authority right now due to the economy. You seem to have a good opportunity that would double your income. If I felt comfortable with the broker as to the freight consistency and felt that I would not have to worry about my money, then I would probably go for it if the freight was consistent enough. If he doesn't have return freight you can always find something to take back. Whatever you get is better than you are doing now. I should not try to influence you either way. We are in a very troubled economy which is of concern to us all. I would suggest that you sit down and think it over very carefully. Get some insurance rates and look at what additional costs you will incur running your authority. One major concern is when you can get paid. Bankruptcies are rampant. I will caution you on one thing. It can be very dangerous to rely solely on one shipper or broker. If they go out of business or decide to go with someone who will carry their freight for less then you could be out of business without a back up plan.

GMAN, Thanks for offering to fix my old username, but that's ok, the other guy was way to blindly optimistic, and he picked the worst time to get into trucking. We'll just leave him buried.

I forgot to mention I have my own authority (on hold), or otherwise, I probably wouldn't even consider it right now.

Alan, I really don't want to mention the carriers name on here and cause the bashing to begin, and also because, they have been real good to me. I go where I want, when I want and go home at the drop of a hat. Of course it's on my dime if there is nothing going that way. As far as the rate goes, it is the same as a dozen others hauling for the same customers (refrigerated).

The difference is, it's a square deal lease with no hidden or bogus expenses. I own my own truck, but their truck lease doesn't look that bad either. They are a debt free company and very conservative financially. They will not cut their rates, and I've been told, will walk away till the customer comes back. One of their managers told me they will be the last man standing when more carriers fold due to excessive debt. They have good customers. I also have a good working relationship with dispatch and planning. About the only thing that could make it better would be a better rate and direct access to their boards. Oh well....

I cannot access internet truckstop without renewing my insurance so I am in the dark on rates right now and I am really shocked at what you guys have been quoted.

If I had to make the decision today, I'd stay put, but jonboy keeps telling me to go for it.

I sincerely appreciate all the advice.

btw, insurance quotes came in at $8000.00 for 1 million liability, 100,000 cargo (refrigerated or whatever) , 30,000 on the truck. That's with my two years of driving. It was $14,000 last year for 48 states. This is the other reason I leased, to let some time pass. For some reason the two year mark is significant???

slacker

[GMAN]

Two years seems to be the magic number with these insurance companies. I am currently talking with one insurance company who requires 3 years experience. That isn't a problem with my current drivers or myself. Some have dropped their rates but I have been told that they plan on raising them in the 4th quarter of this year. They planned to do it last quarter or the first quarter of this year but didn't due to the economy. I suppose someone forgot to tell my insurance company.

[slacker]

I was paying Progressive $900 a month for liability with a 500 mile radius of Dallas. It was just impossible. I was averaging about $2500-$3000 after fuel per week, but when the fuel went over $4, and the rates went to the $1.25 range, I leased on. I second guessed myself a few times, but it looks as though the rates didn't come back up.

I'm actually making a little less now, but I don't have to cash flow anything or chase any money. I actually did better when the fuel was around $4.80, although I couldn't idle my truck much. Now the fuel is such a smaller part, compared to the mileage rate, idling is no big deal.

The most money I've made, in the two years I've been doing this, is the money I've saved by listening to you guys. I know things could have gone much worse, and I'm thankful to have survived. At one point I thought about throwing in the towel, but after all I'd gone through to get where I am, I just couldn't.

Despite the bad economy, I can see light at the end of the tunnel.

slacker

[GMAN]

$900/month is a high insurance premium, slacker. The high cost of insurance coupled with the cheap freight rates have driven many independents to lease their trucks on to another carrier. I don't know if one is really better than the other right now. You may not be much better off leasing other than saving the cost of insurance. That in itself can put more money in your pocket. With the down payment you paid you are probably saving more than $10,000/year by leasing on to another carrier.

[rank]

Actually, I could go back empty and make about the same as now, but surely I could find even a dry load that would pay $1. I ran my own authority last year so I know what you are talking about concerning the rates out of Texas.

I already decided I will never pull a dry trailer again because of the limitations. I even considered putting tie downs inside the trailer to haul equipment or other misc. stuff.

slacker

So with the $1/ mile back haul your average per loaded mile on the rounder is $1.62. Deduct a little for dead head....$1.45 for all miles.

In the OP you said 3,000 miles a week I think. So you're paid on 1,500 loaded miles right? 1,500 x $2.25 = $3,375 weekly revenue? 3,000 all miles x $1/mile cost = $375 a week pre tax. Looks like you would need a back haul to make it work unless I'm missing something.

[slacker]

So with the $1/ mile back haul your average per loaded mile on the rounder is $1.62. Deduct a little for dead head....$1.45 for all miles.

In the OP you said 3,000 miles a week I think. So you're paid on 1,500 loaded miles right? 1,500 x $2.25 = $3,375 weekly revenue? 3,000 all miles x $1/mile cost = $375 a week pre tax. Looks like you would need a back haul to make it work unless I'm missing something.

Rank, My weekly revenue would by 1,500 X 2.25 plus 1,500 X 1.00 (minimum) = $4875, minus fuel (3000/ 6.75= 444 X 2.00 = $1000 worst case) and fixed expenses. That would leave $3875 after fuel. I missed something on your $1 mile cost. My costs are not that high yet, although I haven't bought a California legal reefer either. Please explain. You are correct, I need a backhaul regarless.

Please elaborate further.

What I was hoping for was 1,500 loaded at 2.25, and 1,500 loaded at 1.00 minimum, but I still don't think it is a better deal than my lease, given the other expenses, ie insurance, reefer fuel, higher fuel costs, liability, etc. etc.

My truck gets about 6.75 heavy, and 8.75 empty, but even taking that into consideration, I 'm going to wait until the rates come up so I can get something decent both ways.

Thanks for the input.

slacker

[BanditsCousin]

2.25 loaded well, a buck a mile loaded on the way back, and no calculation for deadhead between the loads is what I missed. If you can find a better backhaul, you might be doing pretty good. My fuel costs going 75mpg in a T600 with 3.70's is less than 45cpm.

Now might not be the perfect time, but its the recipe for something good. $2.25 loaded EVEN with fuel at $1/mi (Summer '08') you were still making money. That doesn't mean I justify running for $1.00 a mile.

Do some research on backhauls. Maybe drop and hook with a 2nd trailer and a 2nd shipper under your authority? I think they key piece to your puzzle is out there.

[GMAN]

I would check around on insurance. You should be able to find a more competitive rate than you were paying, especially since you now have 2 years experience. If you can get a lower rate on insurance and can make at least as much running your authority as leasing (after paying insurance costs) then you may be able to make it work. At least the opportunity is there. From a timing standpoint this would be a good time with produce season just a few weeks away. I would sit down and look at the numbers. Be honest with yourself. If you go out on your own you will also need to consider the cost of buying a trailer and if you pull a reefer there will also be additional fuel expense.

[moondog89]

You gotta strike when the Irons hot,there have been tricklings here and there of freight opening,if it were me I would do it whats the worst that could happen?

[glctrucker]

I was paying Progressive $900 a month for liability with a 500 mile radius of Dallas. It was just impossible. I was averaging about $2500-$3000 after fuel per week, but when the fuel went over $4, and the rates went to the $1.25 range, I leased on. I second guessed myself a few times, but it looks as though the rates didn't come back up.

I'm actually making a little less now, but I don't have to cash flow anything or chase any money. I actually did better when the fuel was around $4.80, although I couldn't idle my truck much. Now the fuel is such a smaller part, compared to the mileage rate, idling is no big deal.

The most money I've made, in the two years I've been doing this, is the money I've saved by listening to you guys. I know things could have gone much worse, and I'm thankful to have survived. At one point I thought about throwing in the towel, but after all I'd gone through to get where I am, I just couldn't.

Despite the bad economy, I can see light at the end of the tunnel.

slacker

$900 per month with 500 mile radius insurance -- ouch! I didn't realize Progressive was that high. I guess that was before you had the experience you have now?

For what my opinion's worth (which may not be much), if you can get your insurance cost down considerably, I'd be inclined to take the deal.

I've seen it posted on this board many times that the insurance companies base their rates on the amount of time you've had your CDL rather than actual work experience. Does anyone know if it's that's true? Do they not ask about driving experience, just the date you received your CDL? Is that true for Progressive?

[slacker]

$900 per month with 500 mile radius insurance -- ouch! I didn't realize Progressive was that high. I guess that was before you had the experience you have now?

For what my opinion's worth (which may not be much), if you can get your insurance cost down considerably, I'd be inclined to take the deal.

I've seen it posted on this board many times that the insurance companies base their rates on the amount of time you've had your CDL rather than actual work experience. Does anyone know if it's that's true? Do they not ask about driving experience, just the date you received your CDL? Is that true for Progressive?

You are exactly correct, it's time on your CDL not necessarily miles or experience. I guess they have no easy way of measuring the latter. My rates dropped from $14000 to $8000 just by the passing of the 2 year mark.

The current insurance rate I've been quoted is $8000 for 48 states, which includes bobtail, physical damage, and cargo for refrigerated.

I don't know if you guys have paid attention to reefer prices right now, but with this June 09 enforcement date in Cali, the price of 04 and up reefers has increased considerably.

We'll see what spring and summer does for the rates and the industry itself. I figure this stimulus money has got to start leaking out into the trucking industry at some point.

Thanks for the great advice,

slacker