Please experienced O/O give your opinion......

[Tadpolly66]

I've been surfing this board for a few months now, and would like to jump in and post something for consideration. I'll keep it as short as I can, I'm thinking about going for it with my own authority (2 of us together actually) and need to purchase a truck. Here are my rough figures or business plan if you want to call it. I think if you don't know what it's costing you to operate, you're screwed from the get go, which is why I've laid it out like this. The "Company Investment" is a $ amount that we've agreed to try and put away for future expansion and is totally optional at this point. I understand there will be some deadhead miles, but I'm hoping the better paying loads will average that loss out.

ASSUMPTIONS:

2500 MILES/WK AVG
FUEL--$2.50/GAL
FUEL ECONOMY--5.5MI/GAL
LINE HAUL RATE--$1.20/MILE

EXPENSE COST PER MILE
TRUCK PAYMENT (743/MTH) 0.074
TRAILER LEASE (300/MTH+MAINT) 0.05
FUEL 0.45
TRUCK MAINTENANCE 0.1
INSURANCE (8000/YR-W/2500 DOWN) 0.04
LOAD BOARDS 0.01
FACTORING(@ 3% OF INVOICE) 0.036
INTERNET 0.01
TOLLS 0.016
FUEL TAX 0.002
HIGHWAY USE TAX 0.004
BASE PLATE 0.012
COMPANY INVESTMENT (5% OF GROSS) 0.06

OPERATING COST PER MILE 0.864
LINE HAUL RATE 1.2

PROFIT PER MILE 0.336

WEEKLY GROSS 840


Three Questions:

Do these numbers look reasonable?

Have I missed anything?

Alot of guys I talk to are scared of the VED12 & the Cummins ISX engines. WHY? The truck I'm looking at has the ISX.

I know freight is down right now, and I feel I've been conservative on my estimates, but would like some opinions from others if I may ask. I've been a company driver for about 2years, but this ain't the same animal.............and truthfully its less per week than I'm making now, but I pull automotive and my route is going away in October with no new prospects from my current company.......

Any and all opinions are welcome for consideration as to aid me when I make my final decision.


Warmest regards to All,

Tadpolly66

[mike3fan]

I think you're operating expenses are pretty reasonable, I think you will find it hard to avg. 2,500 miles a week though at this time. Also from what most are saying I'm not too sure you will get to $1.20 a mile off the load boards pulling a van on an avg.

I would rather lease to a company with established customers, but that is just my personal preference.

[Tadpolly66]

I would rather lease to a company with established customers, but that is just my personal preference.

This is the next scenario I will be looking at, I think you may(and I stress may) approach $1.20/mile with some companies that pass the surcharge to you, plus your expenses are a little less, as well as the possibility of more miles. This was suggested by one of my close friends as a way to kinda " get my feet wet" on the O/O side, especially in this economy.

TY for the reply.

Stay tuned......

[mike3fan]

It would have to be a place where I was guranteed some great hometime (nightly) for me to lease on for $1.20. I did $1.93 and $1.88 for all miles traveled the last 2 years. I pull chemical tanker, and that is something you should consider to get into something specialized either over dimensional, step deck ltl, or something that not everyone and there Grandmother isn't doing (dry vans).

[Rev.Vassago]

Your fuel costs seem a bit low. As a single truck O/O, you're not going to have the luxury of major fuel discounts. I'm currently seeing cash prices hovering around the $2.70 per gallon mark, and rising. You also have no employee wages in your calculations, nor are you factoring in any quarterly tax payments. So your "profit" really isn't.

[GMAN]

I like the way that you have broken things down. There are a few items which I think are off. Your insurance should be $0.08/mile rather than $0.04 if your premium is $8,000. You may check on your base plate and permits costs. I pay $1,600/year just for the base plate. You will also pay $39/yr for UCR, $550/yr for 2290 (Heavy Highway Use Tax), and there are a couple of other states such as New York or New Mexico where you need to pay an annual tax or buy their permit. I would count on spending between $1,800-2,000 for base plates, permits, UCR, etc., Your factoring fee is probably in range if you plan on doing recourse factoring. In fact, you may be a bit high for recourse. However, in doing recourse factoring you need to consider that you may have some charge offs during the year. If you go with a non recourse factor then you could be looking at somewhere between 5-8%. I would not pay more than 5%. Some people may pay early for a cash discount so that you won't need to worry about factors for those accounts. Lastly, you need to remember to pay yourself if you are the driver. There should be enough profit to pay yourself as you would a driver and still have a profit. In today's business climate, the main thing you need to do is survive. That means running for a profit. One thing that I particularly like in your figures is the low equipment payment. I would check on the trailer lease or rental. Trailers usually rent for a little higher rate than you are noting. If you have a company who will rent you a trailer for what you noted then that is great.

[BanditsCousin]

Unless you've got the truck picked out already, I think your truck payment might be a little low compared to an average. But then again, it depends on the equipment and financing.

The other numbers look good, but to come out on top with 33cpm and change, it's less than a lot of company drivers make.

At least you're realistic in your projections.

[rank]

-2500 miles week in and week out seems high. It's tough to dispatch yourself and run lotsa miles and get a good per mile rate. You can have 1 or two but not all 3.
-5.5 mpg in the summer maybe. Might want to budget less in the winter if you're running up north.
-Got a bunk heater and A/C? Idling can cost you ~$25 a day.
-Don't buy a 2008 ISX. Trust me on that.
-$1.20 seems high.
-You really need to factor in some DH....at least 10% if it's a van and more of it's something else.
-You really need to factor in some OOR miles. Your actual mileage will be ~15% higher than your "paid" miles.
-What about health insurance? If you get hurt you lose your equipment.
-You going to eat in the truck every meal? Could cost $20/day minimum to eat.

[robertt]

GMAN, I gotta say, there isn't a whole lot in this world I would back down from but a brain fight with you over something in the trucking industry wouldn't interest me in the least. I know you have been in this buisness a whole lot longer than me but your reasonings and opinions blow me out of the water sometimes. I think it's pretty cool the number of people you have helped out here. Just my .02 worth.

[RostyC]

You might want to make a few phone calls for insurance mine was cheaper than that for first year authority. You also might want to factor in a few overweight tickets, something I'm learning first hand about. If you're going to run the north east a lot you'll need more toll money, MD just raised all the tolls, Harbor tunnel just went from $8 to $12.

I don't want to sound harsh but I wouldn't touch those numbers with a ten foot pole. I also wouldn't try to start off just running load boards, I've read on another board where people are seeing .73 a mile and someone posted .20 a mile.

Try to network a little and make a connection with a reputable broker that will work with you, they are out there. It will take some of the pressure off of you starting out.

[GMAN]

GMAN, I gotta say, there isn't a whole lot in this world I would back down from but a brain fight with you over something in the trucking industry wouldn't interest me in the least. I know you have been in this buisness a whole lot longer than me but your reasonings and opinions blow me out of the water sometimes. I think it's pretty cool the number of people you have helped out here. Just my .02 worth.

That is very kind of you to say, robertt.

[Tadpolly66]

Thanks to all that replied to this post offering insight and advice regarding the issue. I am still undecided at this point as to what to do. I have two weeks off starting Monday, and the phone calls and emails will be flying I'm sure.

The bottom line is if I cant pay myself and turn a small profit after the fact, whats the point? With the additional responsibilities and expenses..........OUCH!

I want to look at companies like Landstar, CH Robinson, etc. These have established frieght and customer bases, and may be easier for me to transition to due to their structure.

From the responses to this post and others, I'm assuming $1.20 mile is unrealistic at this time. Would this be true with the above stated companies as well? Is the economy that bad that van O/O are making the same or less than company drivers after expenses?


Best Regards,
Tad

[GMAN]

Rates will be better if you run your own authority (usually) since you will keep the part they normally receive. No matter what you may hear, nearly all of the major carriers use the loadboards or brokers to some extent or another. Few carriers are able to use 100% of their own shippers. I know of Landstar trucks that have hauled CH Robinson, Schneider and JB Hunt loads. There are other carriers who do the same. This is not a new event. They have been doing this for many years. It isn't that the larger carriers don't have any of their own shippers or freight, but it is difficult for any of them to sufficiently service each shipper. Some of them only use a broker to get their trucks back to their shippers.

CH Robinson is a broker. They don't have any trucks running under their authority. Landstar and others are carriers who are also brokers. If you have your own authority then you can broker freight from any broker or haul for shippers direct.

I called about some van loads this morning. I had a few offer less than $1/mile going into Florida. If I booked this load as a carrier and put it on an owner operator truck then that owner operator would have less than $0.75/mile. That isn't enough to run the truck. Even a $1/mile is not enough. I would say on average that van rates are less than 1.20/mile running your authority. If you lease to a carrier you are likely to be running for $1/mile or less unless you can afford to do a lot of sitting. If you can wait for about a year then rates will be up considerably and capacity will be down. Rates should be very good next year. Thousands more owner operators and many more carriers will not be able to survive these low rates. Carriers will be in the drivers seat once again. Shippers and brokers are enjoying the current cheap rates. They will be begging for trucks next year and be forced to pay a premium to get them. At this point it is a matter of survival to get through this year.

[GMAN]

From the responses to this post and others, I'm assuming $1.20 mile is unrealistic at this time. Would this be true with the above stated companies as well? Is the economy that bad that van O/O are making the same or less than company drivers after expenses?


Best Regards,
Tad

Rates can vary widely from one freight lane to another. If you lease to Landstar or broker from someone such as CH Robinson the rates will still vary according to the lanes in which you run and the time of year.

[LOAD IT]

Tadpolly, Where are you based and are you married to the idea of running dryvans?

[Auggiedoggy]

Gman, not to question your knowledge and experience, why do you say that next year the brokers and shippers will be begging for trucks

[GMAN]

Because many of the cheap freight haulers will be out business, Auggiedoggy. You will never get rid of all the cheap freight haulers, but there should be a significant reduction by next year. The economy should pick up next year and there should be a shortage of trucks. Fewer trucks should result in higher rates. Those who have pushed for the really cheap rates will not be able to find trucks to haul their freight. Had they been willing to pay a fair rate this year many of those carriers and owner operators who have gone out of business could have survived and rates would be more stable with a turn around in the economy. Now it will be time to pay the piper. Carriers will be in a much stronger bargaining position to demand and receive much higher rates. Shippers and brokers will be forced to pay higher rates if they want to move their freight. It is basic supply and demand at work.

[Tadpolly66]

Tadpolly, Where are you based and are you married to the idea of running dryvans?

Cleveland, Ohio and no, I'm not married.

[BanditsCousin]

I think LOADIT meant are you hell bent on hauling dry vans.

[Tadpolly66]

I think LOADIT meant are you hell bent on hauling dry vans.

Just trying to inject some humor into the situation. No I'm not bent on driving only dry van. In fact, I'm considering obtaining additional endorsements to my CDL to expand my marketability and increase my range of experience in this industry. I feel by only holding class A I'm really limiting myself and my opportunities. I'm also considering buying a couple of trailers and having someone pull them, although the same factors being discussed here would apply to that situation as well.

I couldn't help but notice how many EMPTY flatbeds I saw running between Cleveland & Syracuse yesterday. I must have saw at least 15, and these were just the ones I saw. How many vans are running empty as well?

Maybe its just not the best time to get into this business as an owner. Maybe I should get into tanker or something else for a year and learn that aspect as a company driver. At this point I'm leaning strongly towards NOT purchasing a truck at this time. I see alot of blood and tears down that road, at least right now. The freight rates & availibility I'm seeing and hearing are not conducive to having $700-1000/month truck payments to deal with.

I realize that being an owner and running your own trucks is not going to be a walk in the park, even by my unexperienced calculations and a paid off truck, best case scenario is you're only going to clear .5-.15 cents per mile putting a driver into the truck, and this is before taxes even, so it's not really "clear". In the current market, it may be even worse. I would have to have three trucks or a combination of trucks/trailers to eventually make any substantial dollars.
I haven't completed my research on having only trailers pulled by leased on trucks, but if I would do the standard 20% on some trailers being pulled by a leased on truck, I can't imagine making more than .08-.13 cents per mile after expenses and BEFORE taxes.

My eventual goal is not to become rich, but to be home more for my wife and son. I have no illusions about "getting rich quick", I just want to have enough to live on without financial worries. We live frugally, so that "magic $$$ number" for me may be lower than most. For me it represents a dream of being able to call your own shots, with the ability during the day to take 5 minutes off and hug your wife , or go outside and throw the baseball around with your son, and not running the rat race every day. To me that means more than the money.

Before I started driving, I worked in the automotive world. I started in 1989 when I left the military, with the last 14 years of my tenure as a manager. After losing all three jobs to bankruptcies, I decided to do drive. With the current state of the automotive world, I think that was a great decision. I will not go back, and will put in whatever effort it takes to succeed in this business. If not this year, than next. It's looking more and more like next.

I can work as hard as I want, but if the frieght dollars aren't there, they're not there. I can't make them appear. I agree with Gman, I certainly can't operate the truck for a buck a mile, I would be living in the truck and probably calling the bank within 3-6 months to come and pick up the truck. I love to play poker and gamble, but I try to get my $$$ in the middle when I have the best of it. Right now I seem to holding a flush to the other guys full house. Not a good place to be! When I take risks they're well calculated ones.

This board is a great learning tool for anyone interested in this business. I have picked up alot of things since coming here, and I thank all those that take the time to respond all the posts here, including mine. The willingness here to share knowledge and experience far exceeds alot of forums, trucking and otherwise. I continue to welcome any and all comments and advice.

I have the rest of this week to research and make my decision, so we'll see what happens.

Best Regards,

Tad