Lease Operator/owner Operator

Topic 2037 | Page 1

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Dennis S.'s Comment
member avatar

Still thinking about getting into trucking industry. I would need refresher cdl course. But was wondering about lease vs owner operator? What are my options? What to expect? And what scams I may need to watch for?

CDL:

Commercial Driver's License (CDL)

A CDL is required to drive any of the following vehicles:

  • Any combination of vehicles with a gross combined weight rating (GCWR) of 26,001 or more pounds, providing the gross vehicle weight rating (GVWR) of the vehicle being towed is in excess of 10,000 pounds.
  • Any single vehicle with a GVWR of 26,001 or more pounds, or any such vehicle towing another not in excess of 10,000 pounds.
  • Any vehicle, regardless of size, designed to transport 16 or more persons, including the driver.
  • Any vehicle required by federal regulations to be placarded while transporting hazardous materials.

Owner Operator:

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

Mike L.'s Comment
member avatar

I'll start off by saying I've never leased but I personally know a couple drivers that do.

Leasing is what is generally referred to as Owner Operator unless you already own a truck or you've used a 3rd party retailer to purchase the truck and you run independently with loads.

Leasing IS the scam but I say that loosely. With the right company, leasing can make you money but generally only a little more than a company driver. The best way to make money in leasing is to run with a partner on a dedicated route or something similar. The payments for the truck are huge (roughly $800-$900 a week) plus you pay for fuel and maintenance. So the best way to counter this cost is to keep your truck running as much as possible (team drivers).

The biggest gamble is going lease or O/O before knowing the company itself. A lot of companies (especially training companies) will push you hard to lease because they make money off of you instead of just paying you. Like I said before, you can still make money but the profits can be thin.

Dedicated Route:

A driver or carrier who transports cargo between regular, prescribed routes. Normally it means a driver will be dedicated to working for one particular customer like Walmart or Home Depot and they will only haul freight for that customer. You'll often hear drivers say something like, "I'm on the Walmart dedicated account."

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

OOS:

When a violation by either a driver or company is confirmed, an out-of-service order removes either the driver or the vehicle from the roadway until the violation is corrected.

Brett Aquila's Comment
member avatar

I always recommend that people stay far away from leasing or buying trucks. The average profit margin in the trucking industry is 3%. So what that basically means is on average, if you run your business really well, your potential on the up side is to make about 3% more than a company driver. Your potential on the downside is virtually limitless - you can get very, very deep into debt and go bankrupt.

So it makes no sense on any level to lease or own a truck. It's a commodity service with razor thin profit margins. You don't want to own and run a business just for the potential to make 3% more than you would as an employee doing the same thing when the potential on the down side is huge. The risk/reward ratio makes no sense and the economics of that business are terrible.

I recommend sticking to being a company driver.

Eric C. (Easy E)'s Comment
member avatar

I have spent the last 20 years in the management side of the tech industry and as I have been unable to find work in that capacity in recent months, I have been seriously considering OTR as a career change. I am married, have a teenage son at home, and have in recent years been working

I am actually in the process of getting my CDL school approved through WIA, and have been doing some research. In order to come out ahead on this I need to start making decent money -- fast. I am sure there are some flaws in my plan, but I need to get into a decent sized truck ASAP. Notice a theme here? smile.gif

So my plan is this: - Have the Fed pay for my school (no cash outta pocket, and no commitment to a carrier) [+/- 30 days] - Hook up with CRST, aiming for a flatbed trainer out of the Malone division. [+/- 30 days] - Spend the next 4 mos on a 20/10 team for more running experience. [+/- 120 days] - Refi the house and pull out the $50k or so in equity to purchase a truck. - Find a decent 140" sleeper for under $100k used, and put down $20k, holding $10k for start up costs, and another $10k for a repair/maintenance account, and $10 for misc expenses. - and this is where I am hitting a roadblock...

It sounds right to me, but I know I am missing a bunch. I know the sleeper will take a bit more in fuel, but I am hoping my skill at budget cooking, and having a shower on the truck will allow me some wiggle room. I need to be operating in the black, and be able to take the wife and son periodically for about 2 years, then when my son graduates and goes off to college, the wife wants to get her license and go out with me full time.

Ok, so if I can impose upon all of those experienced O/O's out there, please enlighten me... what am I missing? Did I get any of this right? Does it even make sense? Help! Thanks for any advice you can offer.

BTW, a couple side notes... I really have wanted to be a trucker since I was five. I met my wife more than 20 years ago on the CB. She and I have collaborated on this dream for more than a decade, and it is something we wanted to do, just didnt plan on it this early. We are both in our early 40's.

Thanks!

CDL:

Commercial Driver's License (CDL)

A CDL is required to drive any of the following vehicles:

  • Any combination of vehicles with a gross combined weight rating (GCWR) of 26,001 or more pounds, providing the gross vehicle weight rating (GVWR) of the vehicle being towed is in excess of 10,000 pounds.
  • Any single vehicle with a GVWR of 26,001 or more pounds, or any such vehicle towing another not in excess of 10,000 pounds.
  • Any vehicle, regardless of size, designed to transport 16 or more persons, including the driver.
  • Any vehicle required by federal regulations to be placarded while transporting hazardous materials.

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.

SAP:

Substance Abuse Professional

The Substance Abuse Professional (SAP) is a person who evaluates employees who have violated a DOT drug and alcohol program regulation and makes recommendations concerning education, treatment, follow-up testing, and aftercare.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Eric C. (Easy E)'s Comment
member avatar

Sorry, part of the first paragraph apparently didn't go: For the last several years I have been working away from home for a week at a time. I know this is a much longer time away from home, but I feel like it is a bit of preparation for what is to come.

Brett Aquila's Comment
member avatar

Welcome aboard Eric! I hate for this to be my first statement to you, unless it saves you from financial ruin, but if you go through with this plan you'll be in a world of hurt.

I am hoping my skill at budget cooking, and having a shower on the truck will allow me some wiggle room

Ok so your business plan to be competitive in the trucking industry is to save money on cooking and showers? Do you think any of the other 3.5 million trucks on the road may have already thought of this strategy or do you think you may have stumbled upon a truly innovative business strategy for the 21st century?

Showers are free when you fuel and food costs are about one millionth of the overhead of running a trucking business. Back to the drawing board.

Listen, husband-wife teams are highly coveted in trucking. Any company that runs teams will do anything to acquire as many husband-wife teams as possible. After a couple of years experience you and your wife could gross $100k or so without an ounce of financial risk or having to learn how to run a business by simply being company drivers.

But I know the lure of owning a truck and running a business is just too much for some people to resist, even when told financial ruin is highly likely. So if you're determined to own a truck, at least get a couple of years experience in the industry so you don't go broke quite as quickly as you will thinking that saving money on eating and showering is a viable business plan in the trucking industry. You're going to lose your house and get wiped out in 2 months going into it without any industry experience.

What you should do is go to school yourself and become a company driver. Most companies will allow you to take family members on the road with you. After your kid graduates from high school then have your wife get her CDL and you two can run team together as company drivers. That's what you should do. Remain company drivers so you can keep your house, stay out of further debt, and gross $100k or so while keeping your financial risk at zero. That plan will work.

CDL:

Commercial Driver's License (CDL)

A CDL is required to drive any of the following vehicles:

  • Any combination of vehicles with a gross combined weight rating (GCWR) of 26,001 or more pounds, providing the gross vehicle weight rating (GVWR) of the vehicle being towed is in excess of 10,000 pounds.
  • Any single vehicle with a GVWR of 26,001 or more pounds, or any such vehicle towing another not in excess of 10,000 pounds.
  • Any vehicle, regardless of size, designed to transport 16 or more persons, including the driver.
  • Any vehicle required by federal regulations to be placarded while transporting hazardous materials.
Daniel B.'s Comment
member avatar

Good luck. My friend leased with Central and I made twice more money then he did. You know why?

Well, I enjoyed my time. I went home every month. He went home very 3 months. And when he went home he had no miles that week so he went into debt. He couldn't catch back up because the miles were bad and his truck kept breaking. For months his paychecks were a few hundred meanwhile mine were almost a thousand. I know this because I asked him every week. He posted on FB for money so he can eat.

He paid for the truck payment and fuel. But he never could make a profit. He was literally just delivering loads for free and paying for the truck for the company. Obviously, the burden was too great so he quit. He broke his 1 year contract and his lease contract. Needless to say I don't ever think he will ever recover financially.

Good luck with your decision. I'm sure your wife will love driving with you and you guys not being able to live comfortably. I'm making around 31k for my first year. You both will make at least 50k as a team as company drivers. That's great money, why risk bankruptcy just to maybe make a few grand more?

You can look anywhere, leasing is a scam. Go to your local truck stop and ask the experienced drivers there.

TWIC:

Transportation Worker Identification Credential

Truck drivers who regularly pick up from or deliver to the shipping ports will often be required to carry a TWIC card.

Your TWIC is a tamper-resistant biometric card which acts as both your identification in secure areas, as well as an indicator of you having passed the necessary security clearance. TWIC cards are valid for five years. The issuance of TWIC cards is overseen by the Transportation Security Administration and the Department of Homeland Security.

Dave D. (Armyman)'s Comment
member avatar

If you should decide to go the o/o route, look at getting a truck INDEPENDENTLY of the company. That way, if it doesn't work out, you can at least recover some of the money on the truck.

But, Brett is right. Owning a truck IS A BUSINESS. You have to operate it like any other small business.

Dave

Eric C. (Easy E)'s Comment
member avatar

Listen, husband-wife teams are highly coveted in trucking. Any company that runs teams will do anything to acquire as many husband-wife teams as possible. After a couple of years experience you and your wife could gross $100k or so without an ounce of financial risk or having to learn how to run a business by simply being company drivers.

I definitely appreciate the feedback on this. I don't mind the idea one bit of being a company driver for a couple years. And you are certainly right about learning the industry, knowledge is power in anything. That may definitely be the best way to go in the end, however is there any freedom in being able to see family/friends around the country as a company driver? Or taking my granddaughter with us for a week or two? As a company driver do you have the opportunity to get into a larger sleeper or are you relegated to the standard manufacturer builds?

Please understand, I am not discounting any of what you have said. Even if I drive company for several years, I am still not going to know the hidden costs of being an O/O without more information from experienced and successful owners.

My family is currently living on about less than $2000/mo including a mortgage, so cutting a couple hundred dollars monthly in food costs by cooking instead of eating at truck stops & restaurants, is being able to put that money into savings. That was just a singular idea, and definitely not the premise of my survival plan.

So aside from the apparent relative ease of remaining a company driver (sorry I am a glutton for punishment), are there any recommendations from currently successful O/O's I might be able to glean from?

Thank you for having this website and forum, they truly are amazing resources.

guyjax(Guy Hodges)'s Comment
member avatar

Let me preface this post with I have had two trucks of my own plus i have 16 years of driving experience.

So if I am looking at your time line right you plan on doing in 6 months what takes most people at least 5 years to do? What you are talking about doing is like buying a space shuttle and never have seen the stars.

Seriously you can not gain the knowledge that is required to run a trucking company in 6 months. Your still learning to drive the truck for the first 6 months. And on top of that you plan on learning all the freight lanes for flatbedss and the high and low paying freight lanes in 6 months which can take an experienced driver years to learn? They change all the time depending on the brokers you use. What about the slow times of the year for freight? You did not mention a plan for that.

Sorry but the holes in your plan are big enough to drive an 18 wheeler through.

Now with that being said I will try to give you a direction if you are truly set on doing this.... Forget the big sleeper trucks. Weight to much. To maximize you profit you need to be able to hual almost anything that will fit on a flatbed and steel coils weight alot. Your wife will need to work to bring in a steady paycheck cause there are times as an O/O it can take 30-60 days for companies to pay the bill for the freight you hauled for them. Did not see that one coming huh?

Buying an older truck has issues all its own. 10k for repairs and the like is a good starting number but you should know that transmissions are at least 15k to 18k to replace and engine easily can run up to 30k to replace. Forget about warenty. Sometimes they work out but can take a few months to get the manufacturer to cover it in the mean time you have pay out of pocket to to get the truck fixed so you can continue to make money. Tires by themselves will easily suck that 10k a way. $500 times 18 is $9,000 alone and that's if you buy the cheap kind.

I could keep going on and on but I think you get the idea.

Now as pointed out a husband and wife team can easily make more than $50k a year and have zero risk as company drivers. Best route to take till you have the experience to make these type of descions yourself.

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