Leasing truck to company question
 

:?: :arrow: Ok here it is. We found a 93 Freightliner with a newly rebuilt engine in it for a very good price from a private owner. Only has 350 miles on it. It would need 3 tires replaced and a different windshield put in in order to be DOT inspected. Everything else looked pretty good.We figured it would be a good starter truck for us. I just need my road test and we would be able to team it. My husband has his CDL and the experience to help me get through it. He also is mechanically inclined and has done some mechanics on deisal engines. Beings it is an older truck we would probably have to lease on with a smaller co. I have heard that larger co. want newer trucks for their O/O to drive. When your leased on what is a good % to get, and what other things are usually added in by the company your leased on with. With fuel being so high we want to make the right choice. Done the company driving thing before but always heard we needed to get our own truck to make any money. Any advice?

It may be difficult for you to get leased on with a smaller carrier due to insurance. Most will likely require at least 2 years experience. Some carriers don't care about the age as long as it looks decent and will pass a DOT inspection. Landstar and CRST Malone are two who don't care about the age. I am sure there are others. It also depends on the type of freight you want to haul.

Most carriers seem to pay about 65-68% with power only and 73-78% for tractor and trailer. Some carriers furnish base plates. Others will advance the money and take a fixed amount from your weekly settlement check. You can usually save money if you purchase your own base plate. You will need to purchase either bobtail or unladen liability insurance with most carriers. You will also need to either purchase workers comp or an occupational accident policy. Some carriers can offer you discount rates on bobtail and accident policies. OOIDA used to have a decent price on this type of insurance.

Whoever told you that you needed your own truck to make any money might have the best advice. You can still make a good living doing the company driver route, but the same is true for being an o/o.

Percentage wise, shouldn't be an issue. I make 55%, and am happy with it. Granted, my frieght is pricey. Gman's figure are very close to what one can expect hauling a skateboard, reefer, or van. Without knowing a few companies you might like haul for, you have your first hurdle. Same goes true for the commodity. Sounds like you've found a decent used truck that can make you money.

We do have a few smaller companies in mind that we could get leased on with. One of them the company used to own this truck before it was purchased and was also a company that my husband drove three years for. They dont have any empty trucks that he could company drive for but would probably let him drive O/O for them. I know I would have to get behind the wheel and get my CDL first, but would be able to do that in our own truck. I would be able to not only practice in our own truck but also take my road test in it. This company also would,nt require all the OTR experience that most do. When they hired my husband he had no OTR experience at all. He had truck driving experience so they hired him and sent him on his way learning it all on his own..What an experience that was. Ok so if a company is paying lets say 55% what is that in c/p/m ? WE have looked at spread sheets for O/O but they were for those with their own authority. I would like to see one that would fit more in line with a leased on O/O. I checked on bobtail insurance a while back and it seems like it was around $100 a month.Does that sound about right? And as far as base plates what do they usually cost? I think this company pays for them but still would like to know. So when leased on the company would have to take care of all the permits also right? I think my husband is going to call them today and find out if he gets this truck if they would let him run it for them. If they say they pay by the mile what is good and what is'nt. It seems like they paid 87c/p/m for O/O but i could be wrong as it's been 3 yrs. ago since he drove for them. How much is the workmans comp insurance usually run too? I know I,m full of questions but thats the only way to learn is to ask.

Bobtail insurance should run somewhere between $30-60/month. Workers comp will vary from one state to another. I suggest getting an occupational accident policy. OOIDA has one that runs about $140/month. Most states have a minimum number of employee's that you must have before requiring workers comp. Carriers will usually require either workers comp or the occupational accident policy. The policy is usually much less expensive to purchase than workers comp. Most carriers will take care of the base plates and permits. Some will pay for them, others will prepay and deduct a fixed weekly amount from your settlement check. I would look for a carrier who pays percentage and had good rates rather than mileage. If you try to run for $0.87/mile with the current fuel prices you will go broke very quickly.

:D Thanks GMAN , you've been very helpfull.

It can be anywhere from 0 cpm to 10 bucks a mile or more. Sounds like you got an "in" with this company, so the best way of finding out would be to talk to them directly and let them know what your intentions are before buying the truck. Find out if they have o/o slots available and then discuss the pay, whether it be a flat rate per mile (loaded and empty, or just loaded?) or if they do %. Simple math means you want the highest percentage, but that's human nature to always want more :wink: I get 55%, The Rev is getting 65%, Gman is getting 100%, and Solo I belive is gettig in the 70's (% wise). The amount that the freight is going for will determine the cpm. If Gman is hauling for $1.25 ( I seriously doubt he is :lol: ) , me pulling $2/mi freight at my 55% would yield similar cpm.

Gman hit the nail on the head about what he said about 87cpm mileage rates in todays business climate.

Buying the truck would be a great way to get experience at your convenience (day/night) and you've already got the trainer, something hardly noone has starting out and having to go to school. Since your husband has a few years of first-seat driving experience, getting you on as the team driver shouldn't be a problem at all. I started at an outfit that threw me out on the road with no experience, and those are great stepping stones into the industry.

Your base plates depend on what state your company is or where you will be plating it (ie: your homestate). And the occupational hazard is a great idea too.

What kind of trailer do you plan on pulling?

Lucky2,
I'm a contractor with Fikes; they pay 78%. I provide unladen insurance which, combined with physical damage, costs me $174/mo. through Progressive. I run with the carrier's plate which is registered in KY and costs $1600/yr. and is deducted out of my weekly settlement at $75/wk. I will buy my own plate this fall in CO and it will cost roughly the same. All permits are provided by the carrier. I purchased occupational accident insurance through the carrier and I don't remember right off the top of my head what it costs (I'm way too lazy to get up and look in my files) but it's somewhere in the $140 - 160/month range. I pay for prepass and satellite rental, both of which are deducted from my weekly settlement.

Keep this in mind: You'll hear "Plates paid, permits paid, etc..." All carriers get a percentage of the gross pay for the load. So, essentially, contractors are paying for everything still. We are giving them money to do something or provide something that otherwise would be done by the contractor with the percentage that we give them. They book our loads, handle liability and cargo insurance, process paperwork, etc. All of these things and more we could do ourselves with our own authority, but we choose to give a percentage of our income to a motor carrier to do the office work. And I think it's worth it.

Ok I think we're understanding the % and c/p/m as far as how much your making on each load. But how do you figure in all the other exspenses in c/p/m ? My husband talked to a couple of smaller companies today. One of them does have a slot for him . They pay 80% of the load. Not sure if thats empty or loaded though. We would have to get our own base plates that are $1800 in Michigan. They rent their trailers for $149 a week. They run flatbeds and haul lumber and steel which is what we are used to hauling. I,m checking on bobtail and occupational insurance to see what that is going to cost . From what you said it should'nt be too much though. So what do u think?

This can be expressed in weekly, monthly, or yearly terms. In monthly terms, get a total dollar amount of all of your monthly expenses. Then estimate your monthly mileage. Then divide expenses by mileage.
For example: $2000 (expenses) divided by 8000 miles (estimated monthly miles) equals 0.25 (twenty five cents per mile)

Loaded. You won't get paid to drive around empty. Besides, if you're empty, you'd get 80% of what?? 8)

I rent mine for $145/week deducted from my weekly settlement. Seems to be a standard rate.

Thanks for the info. Yea I quess you cant get paid for unloaded miles when your an O/O. What was I thinking... :oops:

Another question is how much should be put away for maintenance/tires a month for the truck? My husband can do the oil changes himself so that will help. I thought I heard once to save out 5 C/P/M for maintenance. Does that sound about right?

Plan on around $500/mo on maintenance. Maybe more if you are running taller miles. If you did it at 10cpm, you'd have plenty of extra after a while to cover regular maintenance and unexpected breakdowns. A new tire is $400-$500 for just one. My oil changes at Speedco run me $250. Clutch adjustments, wear and tear on pigtails, torn mudlfaps, etc all add up.

Carrying some things like the mudflap, air line, alternator, etc can help you minimize buying from a truckstop at an inflated rate. On a similar note, they can save you from being shut down and/or DOT fines from faulty equipment.

More or less, you're going to need $1.20/mi to the truck to stay afloat. You'll need $1.21 and up to start making a profit. This includes your FSC and linehaul portion payable to the truck. These numbers are pretty generic but can serve as a base model for you, and can be scrutinized.

A team should be doing at least 18,000 miles a month, or 4500 miles per week. You can base your expenses on the weekly or monthly mileage projections. More miles does mean more money, but also the maintenance and wear and tear that goes with it.

Have one more question. How much does fuel tax run? Is it paid quarterly and to whom do you pay it too. Also do we pay the heavy road tax or does the company pay that. Just trying not to leave anything out of the exspenses. So far I have bobtail or unladen insurance, occupational accident ins.,base plate,fuel,maintenance/tires,fuel tax?, and food listed.Anything else I,m forgetting?

You will pay the heavy road tax. Some companies will file and pay the fuel tax for you, some will just file it for you but you pay it. Also figure a little for accounting fees/tax prep, cell phone, office supplies, truck supplies, etc.

I believe the 2290 (Heavy vehicle raod use tax) is about $600 annually. The fuel tax rates are in the Rand McNally road carrier atlas I think, or you can easily find them online. They are based on a state by state basis.

I think the 2290 is $550. I've been running for about a year and a half and my IFTA has ranged from $.60 cents to $220.00 per quarter. It depends on where you run and where you buy fuel.

All of this info is pretty good. I would throw in that having a good laptop computer with office software would make keeping track of numbers and avoid getting "broadsided" financially would be a wise investment.

You don't have to "break the bank" to do this. There are a LOT of decent new laptops that can be had for a reasonable price. Check out the offerings at Wally World. Also the best software for the price is:

www.openoffice.org

A software suite that rivals Microsoft Office, and best of all, it's totally FREE!!! Set up some simple spreadsheets and keep track of things. As you go along, you can tweak the spreadsheets and make them more complicated as you need them. When you get really into it, you can set them up as "relational" like I have them, so that when I add or change a value in one sheet, it is reflected on the another. I have one sheet for fuel data, one for expenses, and one for trip information. They all "send" their data to a "recap" sheet that then calculates cost per mile, revenue per mile, gross expenses and income and net income. Sure helps me keep track of things and the numbers are available at a glance.

Boy.... I am starting to feel like one of those office "dweebs" :shock:

Are the heavy road/tax and fuel tax the same thing? From what I understand that has to be paid by the quarter year and cost somewhere in the range of $500 a year for that. Is this correct?

The 2290 heavy road tax is about $550 per year and is paid around June. Most states are now requiring you to prove that you paid it each year before renewing your plates.

The IFTA is a quarterly thing and is a huge pain in the AZZ. Thank God for Tequila.

As far as laptops are concerned I would buy a Dell and the cheapest one for around $500. Unless your in to gameing there is no need for a killer laptop.

HVUT info.....

http://www.irs.gov/pub/irs-pdf/f2290.pdf

Anyone want to quess on what kind of miliage a 430 rebuilt Detroit is going to get loaded. We are thinking somewhere around 5 m/p/g. Kind of hard to know from the previous owner as it only has 350 miles on it. So at 5mpg we should be able to go 1000 miles on 200 gal.which is over $900. So in order to go 8000 miles a month it sounds like we better plan on spending over $7200 in a month just for fuel. Assuming the 2290 cost $600 annually that would be $75 a month. $500 a month for maintenance(but we will probably up that) $61 for bobtail, $130 for occupational hazard,$149 for trailer,plus I added in for cell, food,and supplys. I come up with a rough estimate of exspences of $8515 a month, devided it by 8000 miles and came up with $1.06 a mile. Hopefully we can run it more than 8000 miles a month, but used that as a base to start from. The carrier that we plan on leasing the truck to said alot of his loads are in the Tx. Co. Iowa . Does anyone know how much their paying for loads in those areas? What is a good rate to go by? If we are getting 80% of what the truck makes that means that if the truck is making say $2.50 a mile then we get 80 % of $2.50. minus exspences. I love pushing a pencil, let me know if i,m pushing it the right way. Everyone has been really helpfull on here in trying to help us get our ducks all in a straight line. Thanks All.

I have a Detroit 500 hp and I get at least 5.2 and sometimes 6.2 if I pay attention to driving it the right way. I pull a flatbed and am pretty much always loaded close to 48k.

I think if you plan on 8,000 per month your on the right track. I ran 3,800 last week but that was rare and not what I like to do. I usually do a consistant 2,500 to 3,000.

Your figures seem to be right on and very realistic.

Like I said above- a team should be doing at least 4500 mi/week or 18,000/mo. Solo, a driver should be doing 2500/wk or 10,000/mo. Hard running teams will do 5-6000 mi/week, and hard rnning drivers solo will do 3500/wk.

Hope this helps as a base for expenses to estimate your net income.

lucky2, you list 149.00 for trailer as you are listing other monthly estimates. If that is a trailer rental fee, it's more likely 149 per WEEK. Or maybe I am misunderstanding you?

Opps my mistake. yea the trailer is $149 a week rental not a month. I,ll have to go back and refigure a little. Thanks for bringing that to my attention.

This is variable. What are your usual lanes and how heavy will you be? What's your rear end gearing? I have a 460 hp Mack E-Tech engine, 18 speed tranny, and 3.55 rears. I mainly run TX, OK, AR, and gross right at 80,000 lbs. My average mpg is 6.6, but I've got 7+ mpg many times.

I think you'll do better than that.

I think 8,000 is fine. Remember, O/O is a whole different ball game than being a company driver. Focus on $$ per mile, not on miles, miles, miles.

Loads into CO usually pay good; coming out sucks. I run a lot of intra-Texas loads, and I see plenty of $2+/mile freight. I pick up a load Monday from New Boston, TX to Garland, TX that pays a gross of $450 linehaul plus $75 FS on 145 miles. I'll take these good-paying short hauls any day.

Your 2290 runs $550/year and is payable in July. If you put your truck in service after that time it will be prorated. We used to be able to pay it quarterly until a couple of years ago. President Bush decided that we need to pay in all in one payment. You can find trailer that you can rent for about $350/month and up. If you rent one from a carrier they may charge as much as $165/week. I would allow from $0.05-0.15/mile for maintenance. When I estimate costs I like to use 10,000/month. That is in the range of what the average solo driver should be able to run when factoring in a few days off from time to time. I use 0.025/mile for oil changes. $0.05/mile for tires. You also need to calculate the cost of your truck. Again, I would use 10,000/month when doing my calculations. For instance, if your truck payment was $1,000/month, then your cost per mile would be $0.10. If you rent a trailer and the payment was $350/month, then the trailer payment would cost $0.035/mile. If you run team then your maintenance costs are going to be higher than as a solo. Teams should be able to drive 5-7,000/week.

We plan on puting our truck in service hopefully by the first part of June. Becouse it is a first time plate we will have to go through the IRP in Lancing if we want to get it the same day. They are sending the application to us. We also have to go to Lancing for the IFTA sticker which is no charge. Also waiting for that app. One thing nice is with what we are puting down on the truck we are going to have it paid off in 6 months and our payments are only $500 a month and then it will completly paid off and ours free and clear. We are figuring like you said at least $10,000 a month for exspenses and 10,000 miles while we're still solo. Of course that will change alot when we start teaming it. We're just trying to figure after all is said what kind of money will be left in our pockets. Someone said focus on $$ not miles. After driving for company that is going to be different to get used to. But by knowing how much everything cost c/p/m is'nt that actaully letting you know how much your making in the end when your getting paid a % of the load.

You will experience a huge relief when you make that last payment on your truck. When you are paid percentage you need to know what the load pays and your part before committing to the load. You will make mistakes starting out. We all do. The important thing is to learn from them. Everyone has somewhat different operating expenses. After you run for a while you should come up with an exact operating expense and be able to calculate that by the mile. I NEVER take a load that doesn't pay enough to cover my expenses and make a fair profit. I am in business to make money not just see the country. If you keep your nose to the grindstone and watch your expenses you will have half the battle won. The other thing is to set a minimum haul rate. One other thing to keep in mind is that your truck will break down. You will blow tires. Things just happen to trucks, whether they are new or used. It is important to put as much money aside, as quickly as possible, to take care of any contingency. Unless you have the funds available to make needed repairs, you are out of business. That is how many owner operators lose their business.

One thing we will have to figure out is what is a decent load pay is and what is not. Where my husband was a company driver he was very rarely told what a load was paying. From what we know right now he will be pulling a flat bed hauling lumber from northern Mi. and they do alot of Tx. Co. Io. lanes. What amount per mile for loads are decent and which are not?

What is decent to one individual may not be decent to another. Colorado and Texas are not the best areas in which to go with a flat bed right now. It isn't difficult to get runs into those areas but may be challenging to get out. A decent load is one in which you make a profit and takes you to a fairly decent area to get reloaded. When you lease to a carrier you are normally limited to using their agents or dispatchers for your loads. Most percentage carriers will allow their owner operators to refuse loads. Your best bet would be to ask the carrier what they are currently getting in those lanes. I would estimate that you will need at least around $1.60+/mile or more to break even including driver pay. My suggestion would be to see what the carrier is averaging in your travel lands and then compare your estimated travel expenses. Once you start running you will see what your exact expenses will run.