Leasing A Truck: Do The Rewards Justify The Risks?

The point I always make to anyone considering buying or leasing a truck is a simple one: the risk/reward ratio is awful. It just doesn't add up. Let's take a quick look at the profit potential and risks involved in buying or leasing a truck.

Razor Thin Profits

The trucking industry has an average profit margin of about 3%. Essentially that means that on average, a lease driver or owner operator who is doing well will make about 3% more than a company driver. Unfortunately, by the definition of average that also means that a ton of lease drivers and owner operators are either making the same as a company driver, or less. Many are even losing money. And yet they're putting in way more work, suffering through endless amounts of stress, and risking their financial future for many years to come.

And for what? The opportunity to potentially make 3% more than a company driver? That doesn't sound like a pot of gold at the end of the rainbow now does it?

Profit Margin Numbers For Perspective

• Average experienced company driver salary: $48,000 per year
• 3% of $48,000 is $1,440 per year
• Divide the extra $1,440 per year into weekly numbers for perspective: roughly $30/week

Are You Crazy???

Would you be willing to dedicate the time, energy, and money it takes to own and run a highly competitive, capital-intensive business with razor thin profit margins while risking everything financially just to make an extra $30 per week? I hope not. The math is simple. The potential is awful. The risks are enormous.

Lack Of Control

In case the profit margins didn't scare you away, it gets worse. You don't have the most important thing you need to successfully run a business - control. Sure, you can park the truck wherever and whenever you like. You can also refuse freight. But the reality is simple - you need the company that is supplying your freight to keep your wheels turning. If they stop feeding you enough freight you're going to go broke in short order. So try aggravating the people at the company you're leased on with and see how long your business stays afloat.

The things you do have control over won't help you get ahead and the things you need control of will not be under your control. You're totally at the mercy of the company you're leased to. They're taking very little risk. For them, it's almost all profit right off the top. You're the one taking all the risk. If they "shut off the freight switch," you're sunk.

I don't see how anyone can make an ounce of sense out of buying or leasing a truck. The economics of the industry are awful, the potential is extremely limited, the risk is unlimited, and you lack control over the things you count on for survival.

Trucking can be an awesome career for the right person and a company driver can earn a solid living. But I don't think you need an MBA from Harvard to figure out it's a terrible business to own and operate.

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