No if you want to lease more power to you, but its hard to argue the numbers. I went to school for accounting Im fairly decent with numbers and I can't get them to add up...for me.
I agree. They don't add up. That's why these major companies have students run with lease operators for a while - so the lease drivers can keep making those payments.
I dont think some understand that what the load pays isn't what you keep, and all the other expenses, I just feel like these guys who suggest lease to their trainees should at least explain that, and that they are making money by training as well.
You're right - a lot of people would love to own or lease their own big rig and run their own business. They fall hard for the hype and it's hard for me to watch quite honestly. The numbers you'll get from lease drivers and owner operators are almost always revenue numbers and they never give you honest facts about their profits, or lack thereof. I think the hype you'll hear about leasing or owning a truck is some of the most disingenuous garbage you'll find anywhere.
To me the big red flag that people seem to miss should be simple and obvious. Companies exist to make money and they're going to do whatever it takes to make as much money as possible. They keep telling people you can make more money if you lease or own a truck. So the question is why would they allow you to make more as a lease driver than as a company driver? Isn't that what they're saying? We'll pay you X amount as a company driver but if you'll lease from us we'll pay you even more. Why would they do that? It doesn't make sense. Obviously the company is going to make more money from lease drivers and owner operators than they will from company trucks or they wouldn't be promoting it so hard, would they?
People who understand the business world should know that no company is going to give away their money making opportunities. If a company is pursuing a particular strategy it's because they figure that's where the profits are. If a company is trying to convince you to buy your own truck and haul their freight then obviously it's because they don't want to be the ones who own the trucks and hire drivers. That's not where the money is. The money is in the brokering side of it. They'd rather book the freight, take their cut, and give the rest to a lease driver and let him worry about turning a profit from it. It's not their problem anymore. They've made their money.
Not to mention the companies make money reselling services to lease drivers. They finance the lease for you, provide you with bulk fuel & tire discounts, resell insurance, sell you parts & service, and take a cut for logistics and brokering fees.
For anyone considering leasing a truck from a company there's one question you must have the answer to before you can pull the trigger - "Why does this company want me to lease a truck from them instead of being a company driver?" If you can't answer that question then you don't understand the economics of this scenario and you're simply going to become another victim of the game.
An owner-operator is a driver who either owns or leases the truck they are driving. A self-employed driver.
You make a lot of good points that hadn't even cross my mind.
Another thing that gets me is the taxes and other deductions.
As an independant contractor don't you have to pay 100% of social security, federal taxes and all those other deductions I know nothing about. Even at 5000 revenue a week, according to them not counting fuel and such they are paying between 1200-1400 here for truck payment, insurance, qc, etc. On top of fuel. That number was a week with a trainer in TNt so teaming. I agile that was quite a bit of miles so add fuel plus whatever will have to go to the various funds such as tire fund, emergency fund, etc. I don't see much room for a lot of take home not to mention that is pre tax.
Now what happens when a super single tire goes and they have to pay $1300 plus a new rim.
When I really do the math on a good week with good fuel mileage in a lightweight truck I would come out ahead.
I also noticed that when you have this conversation they talk like I have no clue what I'm missing and I just don't get it. Not all just a few.
I think people get caught up in new truck. Big numbers, because I noticed normally after saying that I get hit with something along the lines of the same load that might make you $300 will make me $1200 (not real numbers) and it seems short sighted thinking to just base anything off of that which gives me the impression they don't have the business skills necessary to be one of the few that make it as a successful lease op, and there are some but few and far between.
I apologize for griping on here but honestly it's a little disheartening that so many people that are just as green as I am, are adding all this stress onto themselves for what seems like not much to gain. Especially considering that they make no bones about it fuel mileage is your paycheck. Now in an industry with so many variables already I don't see how my main profit builder being fuel mileage which has one of the least stable prices around.
If you are a lease guy reading this I mean no offense if it works for you and you want to do it, more power to you I wish you the best but please be wary of how you portray it to others be realistic and remember that especially rookies know nothing about the freight lines and what times of year to be where and things like that.
Sincerely, A rookie with an .02 worth of thoughts and rambles
Prime Inc has their own CDL training program and it's divided into two phases - PSD and TNT.
The PSD (Prime Student Driver) phase is where you'll get your permit and then go on the road for 10,000 miles with a trainer. When you come back you'll get your CDL license and enter the TNT phase.
The TNT phase is the second phase of training where you'll go on the road with an experienced driver for 30,000 miles of team driving. You'll receive 14ยข per mile ($700 per week guaranteed) during this phase. Once you're finished with TNT training you will be assigned a truck to run solo.
Logan thinks he's griping:
I apologize for griping on here but honestly it's a little disheartening that so many people that are just as green as I am, are adding all this stress onto themselves for what seems like not much to gain. Especially considering that they make no bones about it fuel mileage is your paycheck. Now in an industry with so many variables already I don't see how my main profit builder being fuel mileage which has one of the least stable prices around.
No gripe, Logan! You mentioned you have some accounting knowledge, and you saw things about a truck lease that gave you pause. You know Fixed Costs, like insurance and truck payment go on, whether you drive 1 mile or 2000 in a week. And the variables, like fuel, maintenance and tires. Don't even mention capital and depreciation!
The bottom line is so razor thin that you need to seriously know the industry before you can play the game and come out ahead. Few drivers just past training can even handle their own finances, without mentioning their shiny new truck. The owner ops that play and win are the ones who have a deep knowledge of the business, and have worked out ways to play the game and keep money in their pocket.
Trucking Truth website says that leasing and owning, for the most part, is not for the new driver. Se they preach against it. I agree with that. Anyone who gets a few years driving for a company is more than welcome to get a tuck and work to make more money than a company driver. Just don't do it in your first year.
These are both part of their marketing plan:
I also noticed that when you have this conversation they talk like I have no clue what I'm missing and I just don't get it.
which gives me the impression they [the drivers] don't have the business skills necessary to be one of the few that make it as a successful lease op, and there are some but few and far between
You nailed it. What they're doing is marketing revenue numbers to people who don't have the business acumen needed to dissect a business model and determine its viability. They target people who aren't going to crunch the numbers and therefore won't realize that there's little or nothing worthwhile to be gained by leasing or buying a truck.
And how you define 'worthwhile' is what determines the level of success you feel you've had. To me it doesn't make sense to take on the tremendous risk, more work, and the endless pressure of running your own company without the potential for a sizeable financial payoff. And if I'm going to take a shot and put everything I have into a business I'm gonna make sure it's the perfect business for me to be in. So I have to be able to set myself apart doing something I do really well or there's no worthwhile profit to be had.
I went to this small business seminar years ago and the guy talking was retired from General Electric after like 25+ years, ending in upper management. He only talked for like 20 or 30 minutes but in retrospect it was incredibly well thought out because probably 10 things he said have stuck with me all these years. One of them was, "Never buy yourself a job".....in other words, if you can make a certain amount of money as an employee, don't start your own company just to end up making the same amount of money. You have to make significantly more to make it worthwhile.
He also said, "Never get into a commodity business where only the lowest price wins because the lowest price provider wins and everyone else goes nowhere. But even then there's not enough profit in it for the winner to really call it a win most of the time. You're just surviving."
There is no such thing as easy money in any industry because competition will quickly swoop in, cut the price, and take it from you. It's hard to make money in any business. So it's critical that you pick your industry wisely. Otherwise you're going to be putting in more hours, taking on more risk, and enduring more stress with nothing gained financially. You're going backward is what you're doing.
Logan,
I agree with most everything that has been presented here about leasing.
In the case of Prime (I was a lease op for them), it all depends on what you want out of the whole scheme of things. You are correct when you say that lease op's make about the same money as a company driver, I agree. But for me, it wasn't about the money so much as it was the little added freedoms you have as a lease op for Prime. I could fuel where I wanted, take whatever route I wanted, could turn down loads I didn't want and a few other little perks I can't remember. Now with those little things, they came at a cost. I saw that as an added incentive for me (but that's just me). I also had an FM out of Pittston PA terminal that I just couldn't get along with no matter what I did. I could not get transferred to another fleet as a company driver so my options were limited on what to do about the problem.
Bottom line, it's all about what you want out of your driving career as to what is or is not important.
Me being retired military and my wife having a good solid career has a lot to do with how I approach life when it comes to money issues.
So just because it was good for me does not mean it is good/right for you. That is a decision that only you can make for yourself.
Ernie
A facility where trucking companies operate out of, or their "home base" if you will. A lot of major companies have multiple terminals around the country which usually consist of the main office building, a drop lot for trailers, and sometimes a repair shop and wash facilities.
All of you make very good points. I can see the advantages of wanting the flexibility and you understand it comes at a cost and of your ok with that then it works for you and that's great!
It's really great to hear that you guys have many of the same thoughts I've had about this subject.
My plan for my rookie year is simple. I don't want to hit anything and I don't want to be late. Other than that I'll be ok. Money isn't my main concern at this point I'm more focused on learning the basics, even though I've been through training I feel like I won't really know what it's like until I'm out there and doing it on my own. Maybe one day I may decide I want the same perks that a lease offers and would be willing to do it but as a rookie I don't see it.
Brett, you give amazing advice and I really enjoy the info you pass on! "Don't buy yourself a job" really sums my thoughts up well, as well as what you are saying about commodities. Very well put.
I would also like to point out to anyone reading this I am not bashing prime inc. I'm very happy with my training, it hasn't always been easy but I made it and I think I might have learned a few things haha. But seriously company wise I have no complaints when I mention what a lot of people are saying I'm talking about drivers not the management or other office employees. Just wanted to put that out there so nothing gets misunderstood.
Hey Logan...I'd bet 85% of these new lease upgrades won't make it till Dec....Lease can be awesome way to make some extra money but only when YOU ARE ready and know the business side and have some reserves built up...I did a year as a company driver, went lease and it's been working out for me but the little extra money sometimes isn't worth the risk..Winter is not the time to learn how to run a truck as a newbie, take the .43 cents and fuel bonus and enjoy being positive on payday...
Ken C.
That was another thing with winter coming up... they have concerns (as do i) about our first winter be in that we didn't do any winter driving with a trainer so if they're anything like me I'm going to be running extra cautious and I don't want to have to worry about making a payment so much that I would be distracted when on the road.
Now today I had nothing to do but the computer stuff because I got here when lease guys upgrade company drivers get here yesterday morning. I happen to run into another guy from my orientation class. Asked what he brought home the last couple weeks, he said $2800. Ok not bad money, but here is my math if (and I know it fluctuates) I run 2500 miles on average at .43 cpm I would gross 1075 per week now if I ran good fuel mileage I could make up to 1280 a week (that would be maximum fuel bonus added to the .43 cpm base.) Now that's gross before taxes, deductions, and such, which is basically what a lease guy is bringing home.
Now he also has had the truck a month and had in the shop in pittston for 6 days. Now he didn't have to pay for that (first 30 days of lease) but the lease payment had to be made. With $1400 in fixed costs I don't see bringing anything home worth mentioning with that.
Now with the figures above I would be averaging $2560(maximum) at least $2150 gross every 2 weeks that means the lease guy brought home between $120-$325 more per week. But he was down for 6 days before that where If I was down I would be out a day of earning or so but at least would get breakdown pay AND not going in the hole.
I know great miles for a rookie out of the gate isn't really realistic but I was using the average to make theat simple
Drivers are often paid by the mile and it's given in cents per mile, or cpm.
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Im doing my solo upgrade at prime I was of course asked if i would like to lease I declined. No pressure after except from other lease drivers, out of a room full of upgrades theres only 3 company drivers. I was talking to a couple guys from my orientation week, talking like I went stupid because Im going to go company, suck it up in a lightweight truck and be content with the .43 cpm plus fuel bonus.
No if you want to lease more power to you, but its hard to argue the numbers. I went to school for accounting Im fairly decent with numbers and I can't get them to add up...for me.
Now im not totally against lease ops but I feel sorry for the rookies like me, that were on a lease op truck and saying that after everything their trainers were bringing in 5 grand a week. I dont think some understand that what the load pays isnt what you keep, and all the other expenses, I just feel like these guys who suggest lease to their trainees should at least explain that, and that they are making money by training as well.
On the other hand Im impressed by the lack of pressure to lease from the workers here at prime. They asked which one I was doing, said ok and that was it. I did have one fleet manager (on the lease side) stop to tell me about how much money I could make, but even that was really more of a sales pitch for his fleet vs pressure to lease.
Sorry if this is a little whiny but I just felt like getting that out there.
Fleet Manager:
Dispatcher, Fleet Manager, Driver Manager
The primary person a driver communicates with at his/her company. A dispatcher can play many roles, depending on the company's structure. Dispatchers may assign freight, file requests for home time, relay messages between the driver and management, inform customer service of any delays, change appointment times, and report information to the load planners.CPM:
Cents Per Mile
Drivers are often paid by the mile and it's given in cents per mile, or cpm.