A Husband And Wife Trucking Journey

Topic 19008 | Page 11

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Brian's Comment
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Owner Operator Salary

Owner Operator:

An owner-operator is a driver who either owns or leases the truck they are driving. A self-employed driver.

∆_Danielsahn_∆'s Comment
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Are there successful o/o? Yes, but it also boils down to how a person interprets success. To some, they can only see the bottom line in their interpretation. Other people see the freedom they have, in how they run their own truck/company. Some see their super flashy show trucks, some even are simply happy that they can pay bills, drive a truck, and live a simple life. What one person calls success, another may call it a failure. It is an emotional topic, on both sides of the fence. If it weren't, these discussions would be very simple and easy.

Everyone here wants to see you succeed, and wishes you well, they mainly want you to be aware of the risks. If you decide the risks are worth it, then go for it. I would suggest, like Old School did, to talk to an accountant who specializes in our industry. They will really be able to lay out the numbers for you.

Either way, good luck, and keep the rubber side down.

Larry K.'s Comment
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So the information that Grumpy Old Man just posted is all information that I’ve read before (numerous times in fact). That being said that information would appear to validate my points rather than negate them. If the 2017 average marginal cost per mile reported by motor carriers increased to $1.69 per mile, and if the combined cost of driver wages & benefits accounts for 43% of that cost per mile, then we have the big boys reporting a driver expense of $0.727 cpm which leaves the overall cost of equipment operation at $0.963 cpm. Now that operational cost is $0.053 cpm higher than what I was figuring. The question then becomes can an individual husband/wife owner-op team operate an individual truck at less expense than the big boys can with all their resources and buying power? I’m sorry but to me the answer to that would be you bet your butt they can! I have yet to have ever been in the financial sector of a business, manage a business, or own a business (and I’ve done each) that didn’t see it’s per unit profit margins decrease (drastically in fact) with the increasing costs associated with scaling up that given business. To operate as the current company drivers we are we have the support of dispatchers, planners, a customer service department, a breakdown department, a routing department, safety department, compliance department (list goes on and on obviously) all working from multiple large facilities which themselves represent massive overhead. The overwhelming vast majority of the tasks these individuals perform will be conducted by us as owner/operators from a “facility” in which the overhead is represented by our current residence and the very equipment we will be operating. In addition to that I have to consider that our particular company, and I assume probably many of the large companies, are often criticized by owner-ops as being willing to undercut the little guy and haul cheap freight. In our particular case part of that comes from being a team based company, however we will be a team as owner-ops as well. Despite the willingness by these big carriers to haul cheap freight OOIDA still reports that of all trucks on the road 90% are owner-op or, more specifically, independent carriers operating fewer than ten trucks. This would imply to me that our real competition comes in the form of our being able to establish ourselves as being within the upper crust of that 90%, something I have complete confidence in our ability to do given our experience thus far.

As far as their use of the word “salary” in that graphic, I would agree that there are likely numerous individuals out there who would look at those numbers and believe they were going to average $184,803 in PERSONAL gross income as an individual owner-op and fail to understand the difference between salary and revenue. Such individuals would be of a level in which they really have no place in this conversation however.

At this point in the conversation I’m afraid I have yet to see an individual who appears to be a truly experienced owner-operator provide me with information which would indicate that a reasonably intelligent person cannot turn a greater profit as an owner-op than one can as a company driver. Nor have I seen anything indicating there is a major flaw in my preliminary calculations. (Not to mention my wife and I see numerous financial benefits that do not necessarily equate directly to cpm. Like being able to utilize our HOS clock much more efficiently when we are self-dispatching. As company drivers this makes a MASSIVE, quantifiable, difference in our income when our planners/dispatchers utilize our hours efficiently. Unfortunately, we are one of many trucks and often our individual efficiency is not their top priority. It would however be ours.)

Dispatcher:

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.

OOIDA:

Owner-Operator Independent Drivers Association

Who They Are

OOIDA is an international trade association representing the interests of independent owner-operators and professional drivers on all issues that affect truckers. The over 150,000 members of OOIDA are men and women in all 50 states and Canada who collectively own and/or operate more than 240,000 individual heavy-duty trucks and small truck fleets.

Their Mission

The mission of OOIDA is to serve owner-operators, small fleets and professional truckers; to work for a business climate where truckers are treated equally and fairly; to promote highway safety and responsibility among all highway users; and to promote a better business climate and efficiency for all truck operators.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Grumpy Old Man's Comment
member avatar

Grumpy Old Man, that was an awesome reply and super helpful. Where did get that information in the image? I didn't see it in your links.

Man, those numbers in that image are grim to say the least.

What kills me that they use the word "Salary" to describe an owner operator's revenues. Salary and revenues are not the same thing and that confuses a lot people. In fact, it confuses people who don't understand the business world very well, which is the majority of people who lease or buy trucks in the first place.

A lease driver in a conversation the other day used the word "Paycheck" to describe his revenues. I've also heard a lot of people describe their revenues as the money they "bring home".

All of that wording makes people think they're going to make a lot more money than they really are. I wish they would stick with the word "revenues" when describing revenues.

Sorry, I should have provided a link. I believe it was truckdriversalaries.com. I’ll diuble check later when I am at my PC.

I don’t know if it is all that accurate to be honest. I would think it would be slightly more than an OTR driver, and as a team a bit higher than a company team.

OTR:

Over The Road

OTR driving normally means you'll be hauling freight to various customers throughout your company's hauling region. It often entails being gone from home for two to three weeks at a time.

Owner Operator:

An owner-operator is a driver who either owns or leases the truck they are driving. A self-employed driver.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Grumpy Old Man's Comment
member avatar

double-quotes-start.png

Grumpy Old Man, that was an awesome reply and super helpful. Where did get that information in the image? I didn't see it in your links.

Man, those numbers in that image are grim to say the least.

What kills me that they use the word "Salary" to describe an owner operator's revenues. Salary and revenues are not the same thing and that confuses a lot people. In fact, it confuses people who don't understand the business world very well, which is the majority of people who lease or buy trucks in the first place.

A lease driver in a conversation the other day used the word "Paycheck" to describe his revenues. I've also heard a lot of people describe their revenues as the money they "bring home".

All of that wording makes people think they're going to make a lot more money than they really are. I wish they would stick with the word "revenues" when describing revenues.

double-quotes-end.png

Sorry, I should have provided a link. I believe it was truckdriversalaries.com. I’ll diuble check later when I am at my PC.

I don’t know if it is all that accurate to be honest. I would think it would be slightly more than an OTR driver, and as a team a bit higher than a company team.

I see Brian found the source. Thanks

OTR:

Over The Road

OTR driving normally means you'll be hauling freight to various customers throughout your company's hauling region. It often entails being gone from home for two to three weeks at a time.

Owner Operator:

An owner-operator is a driver who either owns or leases the truck they are driving. A self-employed driver.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Grumpy Old Man's Comment
member avatar

I will say that of all the people I’ve seen talking about going O/O, you at least have the business knowledge. If it can be done, you at least have the background. I am just not sure that there will be the level of profit to make it worthwhile with only one truck.

Grumpy Old Man's Comment
member avatar

Are there successful o/o? Yes, but it also boils down to how a person interprets success. To some, they can only see the bottom line in their interpretation. Other people see the freedom they have, in how they run their own truck/company. Some see their super flashy show trucks, some even are simply happy that they can pay bills, drive a truck, and live a simple life. What one person calls success, another may call it a failure. It is an emotional topic, on both sides of the fence. If it weren't, these discussions would be very simple and easy.

Everyone here wants to see you succeed, and wishes you well, they mainly want you to be aware of the risks. If you decide the risks are worth it, then go for it. I would suggest, like Old School did, to talk to an accountant who specializes in our industry. They will really be able to lay out the numbers for you.

Either way, good luck, and keep the rubber side down.

Agreed, it isn't always about money. Being satisfied and happy is more important, at least to me.

And yes, I wish you well, but I would follow Old School's advice and talk to an accountant with experience with O'Os.

Old School's Comment
member avatar
we have the big boys reporting a driver expense of $0.727 cpm which leaves the overall cost of equipment operation at $0.963 cpm. Now that operational cost is $0.053 cpm higher than what I was figuring. The question then becomes can an individual husband/wife owner-op team operate an individual truck at less expense than the big boys can with all their resources and buying power? I’m sorry but to me the answer to that would be you bet your butt they can! I have yet to have ever been in the financial sector of a business, manage a business, or own a business (and I’ve done each) that didn’t see it’s per unit profit margins decrease (drastically in fact) with the increasing costs associated with scaling up that given business.

CPM:

Cents Per Mile

Drivers are often paid by the mile and it's given in cents per mile, or cpm.

Old School's Comment
member avatar

Larry, the above portion of your comments that I quoted would be where I think you're making a miscalculation. I know exactly what you are saying, and for the most part I would agree with you. I even have used the same logical argument to close the deal on some fairly sizable bank loans when my business was needing some capital to see it through some situations we found ourselves in.

Here's the problem in a commodities business though. The margins are really thin. You make several comments that show a good understanding about being efficient in business, but while they appear logical and knowledgeable, they aren't really accurate for the real world scenarios that you'll face in this business. The economies of scale, which you carefully describe as making a business top heavy, are actually (when managed carefully) advantageous to the bottom line.

When you're dealing with situations that interrupt your cash flow, or your revenue streams it is much more efficient to have all that "support" behind you. Here's only one small example. Recently at about 500,000 miles my truck had to have the entire rear axle/differential assembly replaced. I am consistently the top producer in my fleet. The repair was estimated to take seven working days from the dealer. That's typically in the neighborhood of $1,700 income for me and $7,000 dollars revenue for the company.

Now, for some unforeseen reason, it took the dealer about twelve days to get the truck back to us, and the issue had to be taken care of at the dealer, as it was under warranty. None of us, the employer or the employee, felt a bit of the pain. We simply seated me into a different truck on the same day that I parked mine at the nearest terminal. I kept the revenue stream flowing as well as my personal income. I didn't even bother with removing all my stuff from the truck. I grabbed a few necessities and put up with a small and temporary inconvenience.

There are also huge discounts that these larger competitors use to muscle their way into working at a tighter margin than the independent contractors can afford. A commodities business is geared toward aggressive efficiency, and regardless of the logical sounding arguments going on in your mind, they gain their advantages through careful management of their operations and their assets.

We realize we can't convince you on these matters. People do what they want to do, and we are fine with that. We do enjoy a civil discussion on the subject, but have pretty much made a policy to not discuss it, as it usually goes downhill when there is such disagreement on the facts and the results.

I will tell you this though. We have made several attempts over the years to get folks to provide us with actual evidence that they are making considerably more money as owner operators. Guess how many have taken up our challenge with real evidence?

That answer would be NOT ONE! I don't get it. How hard could it be to give evidence rather than proud declarations? So far, no one has given us any proof other than their unproven claims.

Larry, thanks for the civil discussion, but while your calculations look accurate, your expectations are not. I am confident we aren't persuading you, but maybe some day you'll be kind enough to give us a five to seven year report on how you are killing it out here. We would be happy to hear it. If anybody can do it, you would be the ones.

Terminal:

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.

Owner Operator:

An owner-operator is a driver who either owns or leases the truck they are driving. A self-employed driver.

OWI:

Operating While Intoxicated

Grumpy Old Man's Comment
member avatar

I found an article today on this subject. It appears there are at least some making money at it, but the average is not much higher than I have seen quoted for company drivers. Link may be slow to load.

Owner Operator article

0013956001539707918.jpg0096898001539708038.jpg0137936001539708098.jpg

Owner Operator:

An owner-operator is a driver who either owns or leases the truck they are driving. A self-employed driver.

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