New Article From Old School About Buying Or Leasing A Truck

I have also stated that I do a little bit better than I would as a company driver

No, I won't ask for your statements because what you're saying is reasonable. I would expect someone that has been leasing for quite some time and is really putting in the effort to run his operation efficiently to at least do as well or better than a company guy. I would hope you're not choosing to pay the company money out of your pocket for the privilege of taking on such a burden and a commitment. But when guys claim they're making $150,000 of profit off of one truck I would love to see the proof of that and find out how they're doing it so the rest of us can get in on it!

I asked Brian for last year's number because I know this year he's running himself (and his students) to death. That makes me suspect things weren't going so well with the lease in the beginning, which is normally what makes lease drivers take on students and run like that.

One question I would ask is to clarify "a little better than a company driver". Specifically, are you making more profit per mile than you would be as a company driver, or more profit per year. The difference being, are you running that truck harder as a lease driver than you might as a company driver to make the profits worthwhile? Are you taking a little less time off, maybe pushing for a few hundred more miles per week? Because in the end, if you're doing more work for more money then you're not doing better than the guy doing less work for less money. You're both earning the same per mile, or per unit of work.

Of course you do have more work to do, more responsibilities to handle, more risks to take, and a greater commitment to make with leasing and that all amounts to doing more work and taking on more of a burden for that extra money. So again, the question of "doing better than a company driver" may or may not amount to making more profit for the same amount of work and burden in the end.

And my follow up to that would be, if you're making more profit per mile than a company driver, what are you doing special to make that happen? You have a brand new, very expensive truck. You're getting your freight through the company and using the company's fuel discounts. You're running the same highways and going to the same customers as everyone else I presume. I'm sure you're watching your fuel mileage closely and keeping your idling to a minimum. But so is every driver on the planet that's trying to make a go at this. So if you're doing a little better than a company driver would be, that means you're certainly doing better than most lease drivers would be, so the question is what are you doing differently than the rest of the guys out there to make that happen? Where is that extra profit coming from?

And lastly, what will happen to the escrow you've built up when the time comes to turn in the lease? That's always an interesting situation, considering the company will have 10,000 reasons to keep it all for themselves as part of their business plan and an army of lawyers to make sure they do.

May I ask what are your reasons for leasing vs being a company driver. If by your own admission you are not doing much better than you would as a company driver, then why take on the additional headache and risk? It is not like you have purchased a truck and you at least have the emotional attachment of it being 'Your truck'.

In a nut shell, I have more control over my destiny as a L/O at Prime than I do as a company driver. As a L/O at Prime, I'm not force dispatched meaning I can (and do) turn down loads as I deem to fit my way of wanting to drive. That is just one example of why I am not a company driver at Prime (now company drivers can turn down loads, but have to have a very compelling reason for doing so). There are other things as a L/O at Prime I get to do, but I'm sure you get the picture. More freedom to do things how I want, not what is forced onto me.

Ernie

One question I would ask is to clarify "a little better than a company driver". Specifically, are you making more profit per mile than you would be as a company driver, or more profit per year.

I have not really taken the time to be able to answer this question. I can however tell you that even with the weeks that I make little or no money that week (a negative paycheck does happen from time to time), I have been able to average about $1200 - $1500/week before taxes overall. For a L/O at Prime I don't worry too much about the miles each week, I look at my gross pay from the loads I run. In the end that what it really boils down to, not the miles but gross pay before all deductions are taken out.

Of course you do have more work to do, more responsibilities to handle, more risks to take, and a greater commitment to make with leasing and that all amounts to doing more work and taking on more of a burden for that extra money. So again, the question of "doing better than a company driver" may or may not amount to making more profit for the same amount of work and burden in the end.

For me, I don't do any more work as a L/O here at Prime than I did as a company driver. I do the same as far as paperwork/trip planning/etc as I did before. I really don't worry too much as to if I'm working more or less as a L/O, because when I'm out, my time is what I make it to be as far as that goes. I see this as having more freedom to make my own way. As long as I make my pickup/deliveries on time, I don't get bothered by my FM about the other aspects of this adventure we call trucking.

And lastly, what will happen to the escrow you've built up when the time comes to turn in the lease? That's always an interesting situation, considering the company will have 10,000 reasons to keep it all for themselves as part of their business plan and an army of lawyers to make sure they do.

This last lease I just completed I did very well all things considered being as it was a short term lease (14 months). I have always taken very good care of my equipment no matter what. When I see something that needs to be fixed, it gets done so that I don't have bigger problems later. I have seen where L/O's here at Prime did not do what was needed, and ended up being very disappointed with the end of lease payout they received. I have seen guys who were really upset because of having a small payout in the end. And when I asked them what happened the answer has almost always been the same, the final inspection of the truck Prime found a laundry list of things wrong with the truck that had to be repaired because the driver beat the hell out of the truck and didn't care. Then they had the nerve to complain about their lack of doing their part to ensure that the truck is turned in as close to what you would expect a used vehicle to be when you are using it as a trade in on your next vehicle (no different than you going to a car dealership and buying a new car).

The average payout here at Prime for a full term lease is estimated to be about $15,000 - $20,000 (give or take) before all repairs/deductions have been made for someone that has been mostly solo the entire term of the lease. That is based upon excess miles/tire fund/etc that is withheld each week and put into escrow. That amount varies based on how well you did your part to maintain the truck during your lease. Some end up towards the top of that scale, others below.

So time will tell as to where I will end up at the end. As long as I do my part, I expect to be somewhere in that range once it's all said and done.

Ernie

I can however tell you that even with the weeks that I make little or no money that week (a negative paycheck does happen from time to time), I have been able to average about $1200 - $1500/week before taxes overall.

So even without receiving any "payout" at the end of the lease term youre still coming out slightly ahead of a company driver on a weekly basis. I'm pretty impressed. Given the leasing rates I see thrown around for Prime you appear to be one of the few able to make this work, and as a solo driver at that! Pretty clearly a testament to your work ethic and ingenuity. Good for you, sir!

So to be fair, let's put out real company driver numbers, both as trainers and not training.

I just emailed Brett my TnT training statement. With driving 5400 miles as a team trainer, received $500 for a referral bonus, fuel bonus, safe and OTD bonus, and pay for trailer repairs...

I grossed $3,000 in one week. Put $575 into my 401k, and banked $1773.

My last solo pay I went home and only drove 2100 miles, Grossed $1000, put $168 in my 401k and took home $685.

My last normal solo week was 2988 miles, grossed $1370, including fuel bonus, detention, safety and OTD bonus.

I put $226 in 401k and took home $797.

Keep in mind this is after all my health insurance, disability, life and vision insurances.

When considering the numbers, keep in mind I have my first trainee. Trainers who have been doing this awhile get the bonuses from their past students (upgrading to solo, staying 6 mos, staying one year).

Many drivers pass out business cards and get big bucks on referrals. We get $100 when the person makes his first load, $500 when they stay six months and $500 after a year. Three people staying six months gets you $1500, AND you get .25 CPM on all.miles they run while you both work at Prime. I have not done this, but I know lease ops who are big time recruiters at fuel pumps.

Many lease ops train because they have to, not because they want to. I don't have to, I want to.

As for choosing loads and going home...I do have some say as a company driver and as a trainer. I wasn't going to make my trainee drive through Yonkers her first week. Heck, I don't want to go to Yonkers period. Lol but when my FM realized it, he took us off the load.

I'm a driver, so what's the big deal about choosing where to go?

Home time? I get time off when and where I want it. Is four days a month always enough? No, but I often grab a suite at the Prime owned hotel with a great discount and go swimming, get my spa day, order room service, and relax while having my truck repaired.

And taking time off does not put me in the hole.

As for choosing where to fuel, I do that as well. I just find a location whose fuel price is comparable to where they wanted me to go. I use their route as a guide, but often choose my own.

When I took my trainee on, I asked my FM what bad habits I have that he didnt want me training her to do. He said "none". That was the perfect opportunity for him to say I go out of route too often or don't fuel properly.

But, if you go 500 miles out of route to stop and see the wife then make the load late? Yeah, you'd be in trouble and get a bill for the fuel. Lol

It was also pointed out that the walk away lease does not mean you are off the hook for expenses owed.

I know a company driver who wanted to give it a try. He was expecting the big bucks promised. He wound up in the hole, so decided to take on a team mate. Still in the hole but now paying someone else.

He finally threw in the towel after six months, owing Prime about $6,000. Now he is training as a company driver and two months later is still paying on that $6,000 of a walk away lease.

And a major complaint by some lease ops trainers "I'm in the hole, but my trainee got paid $700."

It makes me laugh these same people I know and love often try to convince me to go lease. I still don't understand why.

Boy am I confused. I guess time will straighten me out. I liked the idea of O/O due to another parent on my son's water polo team discussing it last year at one of the tournaments. He runs So Cal to AZ 3-4 times a week dedicated and nets $10k a month. Net, after taxes, maint, fuel, etc... And now owns his truck outright. I'm trying to find him to discuss details but don't remember which one is his son and haven't seen him over the summer season yet.

Also have a contact looking for aggregate trucks to run Corona to Vegas and back at $1500 per trip. Crunched numbers with my friend and depending on how you ran looks to be $300--$600 profit (after taxes and expenses) per trip x 3-5 trips per week.

Seems to me you would need a dedicated run to make O/O work consistently and be sure you got the miles you needed. Or work for someone like Acme or an O/O only company

Thoughts?

Boy am I confused. I guess time will straighten me out. I liked the idea of O/Odue to another parent on my son's water polo team discussing it last year at one of the tournaments. He runs So Cal to AZ 3-4 times a week dedicated and nets $10k a month. Net, after taxes, maint, fuel, etc... And now owns his truck outright.

Natedog, one of the biggest problems we run into in these discussions about being an Owner/Operator is the extremely difficult task of getting what we consider to be the truth out of Owner/Operators. That statement is in no way an indictment of their character, but rather is the problem of truly understanding what "Net" is in this business. Okay, so you had a discussion with a guy who claims he is netting 10K a month, and he now has his truck paid off - WoooHooo! that does sound good doesn't it - who wouldn't want to be in that position?

Here is the problem. To get to that point you are going to put a lot of miles on that truck, and every major trucking company out there has consistently reliable data on how a truck at a certain threshold of miles is going to start costing you more in maintenance and repairs. Many truck owners do a lot of their own repairs because of this. They do not usually even count the hours they spend in doing such work into the numbers they share with us or you. And any form of realistic accounting has got to take those things into consideration. So they have parts and labor expenses that they knowingly ignore. Those numbers count against what they call net, but they never seem to want to realize that or share those things with us. Some may say, "Well they don't have labor expenses if they do the work themselves." I say any decent business person puts a value on their time, and the problem with most truck owners is that they just don't seem to value their time the way I do. If I'm taking my home time, I sure don't want to be spending it servicing my truck and turning wrenches. I'd much rather snuggle up with my wife than be out their in my shop changing out bearings, and doing brake jobs, or whatever it is that my truck is needing at the time.

The other big accounting mistake they make is they boast about having their truck paid for, and yet they have no designated revenue stream that is working toward the inevitable need for purchasing a truck to replace their aging truck with. When it comes time to purchase new equipment they don't have a strategy in place and therefore that money comes right out of the salary they have been paying themselves. All of a sudden that net amount seems paltry when most of it is being consumed by a debt to the bank. They should have had some sort of escrow account that was being paid into to build up some revenues for future equipment needs. For most of them, that money is considered net or salary, and it really is not.

These are really just a couple of examples of how truck owners cheat themselves and steal from themselves without ever realizing it.

If you read through our discussion above you should have noticed how one lease operator came into the discussion disagreeing with us and then boasting with big numbers. When Brett tried to pin him down on a realistic number, or just tried to get the truth out of him he became indignant, and stomped out of the discussion, accusing us of calling him a liar. That scenario has proved itself out countless times in here. It shouldn't be that hard for us to get the truth out of some of these guys. The way it appears is that they just don't want to face the truth themselves at times. We are pretty big on getting the truth out in here, and that is why we are a little stubborn in these discussions.

Seems to me you would need a dedicated run to make O/O work consistently and be sure you got the miles you needed. Or work for someone like Acme or an O/O only company

Thoughts?

I hope you actually followed the link and read the article. We actually addressed some of this in the article.

Here's a quote from the article:

The Competition Is Cut Throat In Trucking

One thing that newbies jumping into this business don't think about is just how cut throat the competition is. Owner Operators have got to find niche markets to get into if they even have a prayer at success. Guess what? Everyone is eyeing those niche markets now days. J.B. Hunt has specialized in that kind of thing for years. So now all the little guys are having to try to compete with the big players like Schneider, Swift, Prime,etc... If you don't think that someone else will jump in and cut your bids for freight just to run a few more loads on their trucks you are willfully blind.

When I came up with my own scenarios for running loads, and knew that I needed to charge at least 1.75 per mile, I then started researching what loads were going for around the country. Well, that was a shocking revelation! Some of these big time carriers were doing them for sometimes as low a 1.10 - 1.25 per mile! Not only that, they were getting huge discounts on fuel, tires, and maintenance that I had zero leverage to negotiate for. It is a commodities business - in a nutshell that means that the cheapest price gets the bid. It literally is a game of making pennies out here in the very vicious world of trucking.

And just to point out how much you don't understand about the business as newbie, many new lease ops think miles matter. They don't as lease/owner ops because many companies pay a % of the freight.

The miles matter to fuel and maintenance for the trip. But you can get a short load paying big money or a really long load that barely pays the fuel costs. If the driver doesn't understand this, they could be accepting the wrong loads!

Thanks again, i am reading as i go and studying as well among dealing with family and getting ready to leave. I will complete the article not to worry. I understand shipers pay a percentage, seems to be in the low to mid 70s from what ive seen. And yes, im a greenborn i will agree.

1.75 per mile seems rough, my buddy with his hotshots hits that and upwards of 2.00/mile, and id imagine with considerably less cost on the trucks as well. Another reason hotshots are on the future potential list. Either way, im looking forward to driving, as much as id like to buck the info regarding leasing or ownership im no fool and greatly appreciate the truth spoken here. Its the reason i keep coming back here.

So now need to decide on reefer or dry van , any thoughts? More money per mile on reefer but more potential to sit too.