Is $1.26 per mile ok?
 

Local cpmpany is paying $0.93 plus $0.33 total of $1.26 per mile as o/o, they also pay all tolls, scales, bridges, trailer repairs if needed, and lumpers. Is this a good deal? Thanks.

I have actually called about 10 places so far looking to lease on as an owner operator and what you got quoted is the best I've seen so far. I'm sure people will tell you that you can do better but I've just LIVED this experience.

The best I came up with was $0.90 without a trailer and $0.95 with your own trailer and 74% of FSC.

This is under the assumption you are leasing on to them.

74% of fsc is total horseshit!, the truck should get all of it.


and I wouldn`t run for 1.26 a mile, well not unless I was just starting out and it was gonna open up doors for increased revenue.

So, what is your suggestion, some real numbers and company names?

hell its a hobby for you right, I suppose 90 cents a mile is just fine.

Re: Is $1.26 per mile ok?
 

Will you be using there trailer, who will pay for base plates and permits, any fuel discounts.
However, you need to know what it will cost you per mile to operate, it will be the only way you will know if the deal will work.

The base plates, bt insurance, commdate, accountant fees, and without looking it up a few other things come out to be around $300 per month that the company will deduct from me. I'll be pulling their trailers, i.e. such as wal-mart, target, and long haul freight, and yes there is a company discount for fueling at their terminal, it's like $2.85 per gal. For starters I will be leasing an older truck, 1997 which the motor was just rebuilt from top to bottom for 16k, new drive and steer tires, and $2,700 in shocks and springs. My payments will be $800 per month for 24 months. The terminal is only 45 miles from my house. The company is called BRISK TRANSPORTANT they are nation wide based out of Tx. I've researched them and talked to drivers who are really happy with the company.

Thanks... be safe!
Neckster.

Hey Steve any company that takes anything off the top fsc is scum,stay away from them kind of companies.The fsc is to be 100% of the gross to the truck that is buying the fuel no other way is exceptable.

This is an area I am very much interested in, because after many years in the transportation industry, we are entering the T/T arena, signing on O/O teams - and perhaps some solo drivers.

First, let me say that the whole FSC thing is a bit confusing to most drivers.

If the customer has agreed to a set rate for FSC, the driver should get 100% of the FSC - nothing less.

The FSC is actually an "over charge" to the customer to help pay for the fuel used to haul their load. Do not depend on any FSC to pay for all of your fuel - if it happens, thats great, but the FSC is only intended to help pay for the rising price of fuel, not completely cover it.

As for base plates, insurance, etc. - $300.00 per month sounds a bit low. I just got a bunch of quotes for those items and have not found it to be that cheap anywhere - but good for you! The cheapest I found was over $800/month - and I'm still looking.

Anyhow, we are still in the investigative mode, but are considering $1.00/ mile + FSC (approx .25/mile at today's prices) and a flat .70/mi for all dead head miles after the first 50 miles. Our FSC will change weekly with the national average price of fuel.

I would be very interested in, and value all constructive opinions, advice and views regarding the above rate structure - - - keep in mind we are at least a few weeks away from signing anyone on, and the above rates are merely a fore thought and, perhaps - based on replies, will be adjusted accordingly.

Thanks

It's depends on who you are, i mean experience, and record wise.
Basically, it's just a "survivor starter kit", like Brian said;-"just to open a door" :) , and yes, it's not too bad, for that.
Too bad, is that a lot of folks, make it permanent! :sad: :wink:

Coming in as a so-called "owner/operator" with NO experience at all, you should be happy with that $1.26 a mile. I would argue with the FSC though, that's something that should go to the truck 100%. $1.26 isn't horrible for a first timer though, ya gotta get your feet wet SOMEWHERE. My first gig was pulling a stepdeck at $2.00 a mile and 85% (supposedly) of FSC.

How much is the FSC? If the FSC is $1 per mile and you get 74% that's a different story.

I don't know how much the FSC was and I'm sure that's something they would say would be different for every load and I would take the short end. I guess it doesn't matter in my case since I was able to get my insurance. I applied to www.dotauthority.com yesterday and have my MC and DOT number and it should take less than 6 weeks for my authority to be in place. My offer on that nice red Western Star was accepted so I'll be heading to Oklahoma next week to drive it back to New Hampshire. I'll also be wearing Depends for the ride as I'll be having a fit on my own for the first time!!!

Yeah,that is a bunch of hog wash when companies rip the drivers of the FSC. Is the company buying that fuel,or is the driver? Hmm. There should not be any reason why any company should get an ounce of FSC. I'm not an owner opp,but I have friends that are,so I cant say a whole lot,but if I was,and if I was driving my truck,if I had one,I wouldn't touch anyone that didn't pay 100% on FSC.

Exactly! 8)
It's just shows, what kind of people, you'll be dealing with! :x

Im sorry,yall are gonna have to excuse me. Sometimes,I have a few bricks shy of a load,and it took me a minute to realize what Steve said.

Thank you Steve for the information :shock: :P :lol:


Seriously,Congrats on the new ride,and hittin the big road

$1.26 per mile is not enough in my opinion. All you will do is wear your truck out and never take any time off until you go bankrupt.

You need to consider all the expenses, and your expenses may be different from the next person?s. I recommend the Ooida cost per mile spreadsheet available at http://ooida.com/trucking_tools/CPM/cost_per_mile.htm or SteveBooth?s spreadsheet (perhaps he would post a link to it). It is not possible to say if $1.26 per mile is a good deal without more information.

NoProblem: Am I understanding correctly that you are going to pay $1.25 per mile to owner operators? I am guessing that $1.00 per mile plus fuel surcharge will come out to about $1.25 to $1.30. No pay for deadhead up to 70 miles? And you are going to charge for trailer rental, plates, insurance, etc? Not for me thanks. :roll:

I will start off with a few basic costs that may or may not be correct for your situation.

Fuel at $3.50 per gallon and 5.5 miles per gallon will cost you $0.63 per mile for every mile traveled. Consider that you may only be paid on HHG short miles for 90% of the paid miles and you run 10% of the time deadhead as well and the fuel cost per PAID mile will top $0.73.

Driver wage should be $0.50 per mile for a self employed person. A self employed person is responsible for all taxes, social security contributions. If they can earn in the mid forties as a company driver then they ought to be worth $0.50 self employed.

Tractor payment will run usually about $2500 per month. Divide that payment by an estimated 10,000 paid miles and that is $0.25 per mile.

So before we THINK about the trailer payment, Collision/cargo/bobtail/health insurance, business liability insurance (separate from truck), licenses, permits, accounting and legal fees, fuel, tires, preventative maintenance, repair, telephone/internet bills, tolls, fines, cargo claims, ? the list goes on, An owner operator needs a minimum of $1.48 per mile to think about leasing on.

Echo the sentiments about the truck should be getting 100% of the fuel surcharge.

Rawlco, thanks for your reply.

I agree that $0.50 / mile is a fair rate for an O/O.

A few differences we have is........the national average price for diesel this week, it's only $3.06 vs your $3.50. We use 6 mpg in our formula vs your 5.5 mpg.

The national average changes weekly, which of course will change the fsc weekly.

We are basing our fsc on the O/O paying $1.50 per gallon, as such, this week the actual fsc paid to the driver this week is .26/mile for a gross pay this week of $1.26 per mile.

Based on 2500 miles/week -

Insurance, plates, etc. is about .08/mile
Truck payments seem a bit high @ .25/mile, but perhaps that is a good average. I figured .20/mile as a good average.

So we deduct .28 per mile for those expenses and .51 for fuel for a total cost to roll of .79 per mile.

That leaves .47 per mile to the driver - pretty close to .50/mile.

Thanks again!

Re: Is $1.26 per mile ok?
 

Neckster, the only one who can really say whether you can afford to run at that rate is you. Personally, I think an owner operator leased to a carrier should be making at least $1.50/mile with fsc.

Steve, I thought you were going to run your own authority. Are you thinking about leasing on to a carrier? It kind of defeats the purpose of having your authority if you lease to a carrier. :?

GMAN,

Could I trouble you to justify your figure of $1.50/mile?

If you agree with Rawlco's figures, that's fine, but I really am wanting to be completely fair an honest with future O/Os - but we (the carrier) have to make a few bucks too.

The reason I am a bit persistant here, is because at the moment, I feel confident that we can roll teams pretty much as many miles as they want at my current proposed rates and the truck can make a fair dollar- at the same time, we'll make a few bucks.

With the current national average price of fuel, if we were to up the rate to agree with the popular $1.50/mile, I feel that trucks will be sitting - and dead heading more - while seeking the higher paying freight. Of course, that senario will get worse as fuel prices rise.

In the end, I feel that sitting time + dead head miles would make that $1.50/mile alot less than my propsed $1.26 / mile.

Thoughts?

I am. I have every thing all set to go and picking up my truck on Thursday. I did research on being leased onto someone in case I couldn't get insurance and that was the best I could find for a person without experience.

Once again, that "blinding" gross # game! :sad:

Example, let's say cost per mile=$0.90.
Truck#1 $1.50 a mile, 2000 miles, gross revenue $3,000, cost $1,800, net $1,200

Truck#2 $1.26 a mile, 3,000 miles, gross revenue $3,780, cost $2,700, net $1,080!

Now, tell me, who in a right mind, would run extra 1,000 miles, to make $120 less? :roll:
Yet, it's very common! :sad:

I haven't seen anybody offering $1.50 for a leased on owner operator. It's nice to talk about but can anyone actually point to a company that is advertising that rate?

Ok,

Truck needs to sit for 48hrs per week waiting for higher paying freight.
With fuel at $3.00/galon, that means approx $144.00 per week gets idled away.

Right off the bat, that's $24 extra dollars - even though the per mile rate is less.

In order to get to the higher paying freight, dead head might be an extra 300 miles per week - or more, but for now, let's use 300 miles.

At .90 per mile to roll, that is an additional $270.00 burned up for dead head.

So here we are making $1.50 per loaded mile - but grossing $294.00 less per week thanks to sitting/dead head vs @ $1.26!

Go figure.

Per mile figure is not all it's cracked up to be. - Agreed?

My figure is very simple. It is based in the actual cost of operations plus a fair profit to the truck. When you break all the costs down there isn't enough profit to run for less. You are forgetting some expenses in your figures. There is nothing for maintenance, such as tires, oil changes, etc., And that doesn't include a maintenance fund for major expenses. Tires and oil changes will run about $0.07-0.08/mile. Just taking out these two expenses will reduce their wages to the point that they could make as much or more driving a company truck. Money should be put aside for major repairs, such as replacing an engine, transmission, etc., There is not enough to put money in a maintenance fund. An owner operator should be able to put in $0.10-0.15/mile until the fund reaches at least $15-20M. The owner operator will also have his own insurance costs which will run approximately 3-4% of the states value of his equipment. I am not even talking about any taxes, such as Social Security, etc., Then there is fuel taxes, if the owner operator pays those. I have no doubt that I could start leasing on owner operators and take a percentage and they could still make at least $1.50/mile. If you cannot make it work and pay the owner operator at least $1.50 then perhaps you are booking freight at too cheap of a rate. There is plenty of decent paying freight. There is no need to haul cheap loads. Supply and demand will dictate prices. If you reduce capacity by not hauling cheap loads, prices will come up. Most of the percentage carriers seem to pay around 8% more to the owner operator for using their trailer. I have no doubt that you will make money paying these rates to owner operators. The problem is that the owner operator isn't going to come out. One reason so many owner operators get into trouble is that they think they are making money because they have cash flow. To me, it isn't worth the effort to buy and maintain a truck if all you are getting out of the deal is drivers wages, if that. We have broken some of these costs down in previous posts, but if you want to break things down further, we can certainly do so. However, with just the basics listed and using your numbers, I think you can see that the owner operator isn't going to do very well.

It's not the company, it's you!
The company, only should give you an ability, to make it!
For example, at LS, some O/O make that, and above, and some barely go over "buck a mile"!

The company, i'm leased to, advertise $1.35 average, yet just this week, i exceed $2.00 a mile(hub) including dead head, and going home! :wink:

Those #, you did post, is very arguable!
First, if i sit for 48 hours, didn't mean, i'd idle for 48 hours, and if you have to, it will be cheaper to rent a room, in a most areas!

Second, i assumed, that dead head, is included in those miles, and we are talking average revenue per mile, that's how i always figured mine!

And last, but not least :D , even if your "adjustment", is correct, it's still lives you with extra $174 net, for an extra 1,000 miles.... :roll:

I believe that you ignored a lot of expenses NoProblem. I posted:
And you are proposing to take that out of the operators $0.50 per mile wage. . . :shock: I don't think so.


I will take a few more minutes now to list individual estimated expenses.

Fuel I'll accept for the minute your $0.51 per ACTUAL mile and the $1.26 rate including FSC to be adjusted when fuel does go up. The problem still is that IF only 90% of the miles are paid, and IF we include idling consumption, THEN the actual fuel cost per PAID mile is going to be around $0.60 for last week only.

Operator wage. We agree $0.50 per paid mile. This will include personal taxes, Social Security, etc.

Truck Payment = $0.25 per mile This is for a new truck under warranty. (less if you get more paid miles)

Plates, insurance, = $0.08 per mile.

Operator health insurance and workers comp (or similar) $1,000 per month/10,000 miles per month = $0.10 per mile. A company driver will get this in addition to their per mile pay, so that should be in addition to the $0.50 operator wage above.

Maintenance costs tires, oil changes, minor repairs (tractor only) = $0.05 per mile.

Maintenence rainy day fund = $0.05 per mile (Again this is for a new tractor under warranty, a used tractor will require more maintenence)

Trailer rental costs (or are you going to be providing the trailers?) = $0.10 per mile.

Tolls and incidental expenses such as fuel tax, highway tax, permits. . . = $0.10 per mile.

So I get $1.83 per mile for a more realistic cost.

You can quibble all you want and try to split pennies but unless there is a lot of stuf paid for already out of that $1.26 per mile you are offering I doubt anyone will seriously take you up on that offer.

You do realize that C.R.England is going to start paying their independent contractors up to $1.50 per mile now AND continue with the $1.25 per gallon fuel price at terminals, don't you? And that United has a division that pays $1.50 plus fuel surcharge for all hub miles. Your $1.00 plus FSC doesn't come close.

This is not to say that you won't get a few owner operators to sign on at that price, but you won't have them for long when they find a better deal.

That's why, to avoid any confusion, i've always counting my revenue, per ACTUAL, HUB mile, including every mile truck run, w/o any exceptions!
It's sure, didn't look that good, as a "LOADED BOOK" mile, but it warms my heart, when i'm going 120 miles to the house, and still getting the same revenue! :D
BTW, my actual fuel cost for the last week, was $0.43 cpm! :P

Shhhh, don't tell anyone. 8) Better to estimate too high than too low and end up with nothing at the end. :roll:

A detail but most FSC's I've run across use a base price of $1.10-$1.25. Where did you came across $1.50 to use as a base?

It's also less if the truck is paid off or if its a used truck. I'll stand with .20 for mile on this. Seems the vast majority of O/Os with new trucks drive for swift, nearly everyone else has a used truck.

This is an option that drivers can pay for if they want - or it costs nothing to go without it. If an O/O wants this insurance, it comes out of their own pocket since it has no impact on whether or not they can do their job or carry out their contractual obligation of hauling freight.

To me, this cost can be bundled along with food, entertainment, house payment, electric bill, etc.

I understand your including this as an expense, as it is a necessity - I just don't see it as my obligation to provide an additional .10/mile for maintenence.

The best quote I got so far was about $800/month (.08/mile) for cargo, bob tail, trailor, etc. insurance. Plates, permits cost some $400 and is a once a year charge that the O/O is welcome to purchase on their own if they can get a better deal - same goes for insurance.

Tolls and incidental expenses such as fuel tax, highway tax, permits. . . = $0.10 per mile.[/quote]

Some customers pay a surcharge for extensive toll roads, others do not - either way, while that might cost .10/mile, that would be something that might happen only on a load by load basis that involved driving toll roads.

Thanks for your honesty. This is what I am talkng about. Rawlco is trying to make me go broke with his .73/mile fsc. :?

It is a figure we have been using for some +3 years - well before most of our customers even paid fsc, we were paying a fsc to our drivers out of our own pocket based on fuel prices above $1.50 per gallon.

I asked this question once before. Here's my understanding:

Basic freight charges assume that fuel costs $1.25/gal and that you are driving a truck that gets 6 MPG.

So the difference between $1.25 and the current cost - say, $3.05 - is the fuel sur-charge. That would be $1.80, right?

Then you divide that $1.80 by your 6MPG. That's 30 CPM. And the thought that it should go anywhere except to the truck is outrageous.

A Landstar agent told me a couple of days ago that they were paying $0.38/mile fsc. I agree Aligator. If I found out that a carrier I was leased to was skimming off the top, I would cancel my lease immediately. Most reputable carrier's pass the fsc along to their owner operators. 8)

This whole discussion is quite humorous. Thanks for the laugh, all. :lol:

And what's so funny about it? :roll:

That everbody's got gas,and they're charging for it :P

You apparently are not reading my posts carefully NoProblem.

You claim:
And what I am saying is:
This is actual fuel cost, not the fuel surcharge as you claim. Fuel surcharge is figured differently and Aligator explained it very well.

I have figured the fuel cost per paid mile because you have stated that you will not pay for deadhead miles, or rather only pay $0.70 per mile IF the deadhead exceeds 50 miles.

The $0.73 per paid mile fuel cost is based on $3.50 per gallon fuel which some states are seeing today.

You are free to set any rate and use any numbers that you see fit NoProblem. I wouldn't lease to a mileage pay carrier anyway.

In Michigan as O/O you are Required to Carry Workers Comp. but if you actually get hurt good luck trying to collect on it.
Big Scam