Owner Operator Question ?

apollo · Jul 22, 2004

I have a questions about income from a truck.

I know there are a zillion variables because I have read a ton of info here on this forum.

Basic scenario; 24 foot straight truck, good condition, not a maintenace problem kind of truck.

Roughly what does an owner hope to see each month out of his/her truck as total profit? I see trucks selling for $50k + and owners are putting solo or teams out on the road with them. Are owners generally making a couple hundred bucks a month after all bills are paid or is it a few thousand dollars income from each truck?

It seems it would need to be around the $1k mark each month to make it worth the time and effort, plus taking the risk with their investments in these trucks.

I appreciate any feedback and info. I know this is a broad question considering there are so many companies a owner could sign with, fuel prices, etc. I am just looking for kind of a general idea what one could expect to make on each truck.

Apollo

DooWop · Jul 22, 2004

Though, not an expediter yet, from gleaning this forum almost daily, and others like it, for nearly 10 (Ithink) years, from talking to expediters, from Frank Katz's excellent conference, TaxTips for Expediters, I have finally come to the conclusion that after taxes, and all expenses, the net revenue to the owner operator is in the range of 48-52% of the gross revenue to the truck. Hope this helps, but I am sure that there are others who can tell you more, literally who forgot more than I know.

Regards

DooWop

terryandrene · Jul 23, 2004

Apollo - You're right. There are so many variables we all know about, and there probably are an equal amount that only you know about. nearly all of these are discussed in recent past posts. But, your question "is $1K per month for the owner reasonable"? Probably, if all the variables and the phases of the moon are in alignment.

seriously, I'd say a good truck with good drivers with a good company should work out if you can overcome all of the negative variables. I'd also say your example of a 24% net return on a $50K truck investment is pretty good.

BigBusBob · Jul 23, 2004

So, in laymans terms, how much "profit" and/or "extra income" could an owner see from a truck? speaking not in percentages, but actual dollar amounts, what could/would be the range?

The ranges in actual dollar amounts for team and solo???

Monthly or yearly.

davekc · Jul 25, 2004

Over the years we have seen many make a 1k a month per truck with no problem. That is when the economy was doing well. Also seen when the economy was down, many losing 1k per truck, per month. 3 years ago when economy was sagging, truck repos, bankruptcies were at a all time high in trucking. Dealers were flooded with these types of trucks. Drivers are in high demand right now so finding good ones is more difficult. As read some of the posts on here you will quickly realize that a good experienced driver can make you money, but in the same breath, a poor or inexperience one will cost you plenty.

ATeam · Jul 25, 2004

>It seems it would need to be around the $1k mark each month
>to make it worth the time and effort, plus taking the risk
>with their investments in these trucks.

When I look at the revenue my wife and I produce for our fleet owner (his 40% portion of the gross) and compare it to the total cost of owning and operating a truck (well researched now as part of our owner/operator business plan), I think,

"Man! this guy must be dripping with dough!. Maybe we should become fleet owners ourselves! Instead of buying just one truck for ourselves, why not leverage our assets and buy a few of them? We could overcome the driver recruitment problem by spec'ing out fancy trucks and paying the drivers a few percentage points above the going rate. That would cut into our short-term profits but enhance our chances of long-term success. To aid long-term driver retention, we could set up driver incentive programs that would enable them to get into their own trucks over time...and I mean true win/win driver incentive programs that are designed to help the driver succeed and achieve owner/operator status of his or her own (not the ones that favor the fleet owner and sometimes result in disaster for the driver)."

In other words, it seems possible to me that one could research the fleet owner business, develop plans to manage the risks, buy a few trucks (assuming good credit and available capital), and be on your way.

Why don't we do it? Three reasons: 1. Personal. 2. Economic. 3. Risk.

We got into expediting because we wanted to simplify our lives. That part has worked out better than we dared hope. A sure way to turn that around would be to own multiple trucks and then deal with the driver issues (good and bad) that would follow.

We have no interest in fleet ownership because we enjoy our free time and simple lives too much. One thing I noticed about our fleet owner is we can call him day or night. The last thing we want in our lives are 2:00 AM calls like, "Help! I'm under load in the middle of nowhere in New Mexico and the truck won't run! What do I do?" (fictitious scenario).

The economics are not appealing either. If $1,000 per month per truck is a reasonable expectation, that turns out to a 10% to 20% return on capital per year. That's a very rough estimate that does not fully factor in a specific truck's cost, depreciation schedule, revenue potential (depending on how it's equipped), upkeep costs, etc.

If I was going to invest say $100,000 of capital (or leveraged credit) into a business and then pour my life into it too to make it work, I'd want a bigger return than that. For a tenth of that amount I could set up a very nice nice office for myself and pour my life into selling insurance and realize a return on capital of many times my investment. The point is, fleet ownership is a capital-intensive AND labor-intensive endeavor. It's not just about the money you invest. It's about the labor you pour into the endeavor and the skill you have (or lack) in doing so.

You pointed to the risk of the investments in trucks. Personally, I don't see how fleet owners sleep at night. They have several trucks on the road at once and at any moment one of them could be involved in an accident, abandoned by a driver, burnt to a crisp by an errant cigarette, vandalized by a tagger in a city (graffiti painter) etc.

Yes risks can be managed. We have a risk management plan of our own built into our owner/operator business plan. It's just that these are risks we're not willing to take and manage on multiple trucks. That goes back to the freedom and low-stress life we've come to love as single-truck expediters.

I know there are fleet owners out there that are running a number of trucks and making a lucrative go of it. More power to them. They earn every penny.

davekc · Jul 25, 2004

Ateam lists some very good points. It is not a recommended path for the inexperienced or financially strained to travel.
Under current economic climate, real estate in the the right market will bring you a much better return for your dollar. That will change slowly as interest rates start to climb. Here in Florida, oceanfront property is increasing at a rate of 35% per year. Very tough to get that return from alot of other investments. Property out west is at the 25% mark which isn't bad either. Hard to get those numbers out of the stock market any more.

BigBusBob · Jul 25, 2004

My thoughts... instead of becoming an owner:

Drive team for 6 months to a year.

Make that money - roughly $30,000 (very big ballpark)
in 6 months or so.

Invest it into real estate. Buy 2 to 3 acres with zoning to split it up and/or sell parts off if you wanted to. Make that property into a rental property with a small home on it. And/or, use it to rent to people for their horses and/or cattle out there and charge people rent for the land use. So, you have income property, without the hassle of being an owner operator.

Or, Drive entertainer coach/private motor coach and make $165 to $185 a day... then that money comes in even faster.

Trucker don · Aug 3, 2004

Going Broker by the Moment. I still own 4000.00 CDN on some Motor Repair. I did 6000 Mi last pay period. I only got 1000.00 in home account. I'm OTR that lease my truck from the company I run with. I like the company but I'm starting to look at Expediting was a way to go. I've got to Feb 2005 before Truck is paid for.

I'll be putting my .02 in now and then. However I will be mostly sand bagging.
Thanks to the A Team I would not have know about this web site.

Don
3678 ;-)

terryandrene · Aug 5, 2004

but I'm starting
>to look at Expediting was a way to go.

Don: Most companies are happy to lease on a Canadian O/O because you'll always be eager to take a load from anywhere into Canada.

On behalf of Expeditersonline, please accept my invitation to join us at the Expediter EXPO at the Detroiter Truck Stop in Woodhaven, Mi next week, Aug 11 and 12. You'll be able to meet with most of the company reps with whom you'd be interested in doing business. They can sure explain the peculiarities/restrictions, if any, of a Canadian operating commercially in the USA, eh.

Hope to meet you there. I'll be the guy in the white truck.

Terry

Tom Robertson · Aug 16, 2004

ateam you seem to have a very well thought out understanding of truck ownership and the expediting business. i noticed that you respnd to many of the post in this forum and thought i would ask for your advice.
my wife and i own a small expedited freight company in Louisville KY. we have been in business for 20 years, and have contracts with DCX and GM for three years now; participating totally in the NLM automotive freight. through insiders with NLM we know that we are the highest rated carrier for on time performance, and that is out of over 350 competing companies! we arfe expanding and finding that our most difficult challange is finding reliable hardworking teams. there is soooooo much B/S being slung by recuiters that i know many of our numbers are questioned and doubted by potential teams. our teams are averaging just under $2,400 a week in gross pay, and paying for fuel, tolls and truck washes themselves. we pay per mile, not by a % of revenue that can never be checked out. we pay weekly, on a comdata card, with no deductions on each wednesday following the week of work,,,, we do not hold driver pay until paperwork is recieved... we do not use qualcomm... and we treat ouwr drivers as the partners they are. we know all of our drivers by name, not a truck number.... that being said, what is your advice on meeting with or contacting experienced teams that want to earn serious money? we have found that many teams after having earned 3 to 4K in one week will decide to take the next week off! we are attemting to find drivers that want to earn over $100K a year and understand that one week of making $4k does not guarantee that you will continue making that amount and for drivers that do not have to take a week off to celebrate a week that is well above average...
what advice do you have for us?
thanks
Tom

Trucker don · Aug 18, 2004

Unfortunately I was in Dubuque,IA. I'm very much interested. These web site have application forms in them. I'll get a cahnce to chat with drivers at the different truck stops.

I'm not sure if they will allow an older truck on their fleet. It's a 2000 FLD. I'm 55 yr/young but the Ontario DOT says at age 65 one must take a physical and rewrite there licences. If you are operarting a Big Truck.

I'm still debating. I started out as a courier with Atripco in Toronto. I sort of know the business on that end. I had to sell my van to pay for my Gas Bill. I had contracts, but the paying frieght dried up. This was back in the late 70.
It's the bottom line!!

thanks..
>
>On behalf of Expeditersonline, please accept my invitation
>to join us at the Expediter EXPO at the Detroiter Truck Stop
>in Woodhaven, Mi next week, Aug 11 and 12. You'll be able
>to meet with most of the company reps with whom you'd be
>interested in doing business. They can sure explain the
>peculiarities/restrictions, if any, of a Canadian operating
>commercially in the USA, eh.
>
>Hope to meet you there. I'll be the guy in the white truck.
>
>Terry

RobA · Aug 18, 2004

>
>I'm not sure if they will allow an older truck on their
>fleet. It's a 2000 FLD. I'm 55 yr/young but the Ontario DOT
>says at age 65 one must take a physical and rewrite there
>licences. If you are operarting a Big Truck.
>
>I'm still debating. I started out as a courier with Atripco
>in Toronto. I sort of know the business on that end. I had
>to sell my van to pay for my Gas Bill. I had contracts, but
>the paying frieght dried up. This was back in the late 70.
>It's the bottom line!!

Don: I don't know if the major US Expediters hire Canadian owner ops. Obviously, Thompson Emergency and TST will, not to mention the smaller carriers. I think the big problem, and it's there for OTR and expedite, is the fact a Canadian citizen driver can only go to and from Canada,and can not do interstates. Schneider(or Swift I can't remember for sure) were advertising for Canadian owner- ops but at a lower mileage rate than they were paying their American contractors. I think it was .76 compared to .82 but they were paying in US funds, that was the carrot.
The limitations for Canadian drivers are what beats down the rates that Canadians get paid. x(

ATeam · Aug 19, 2004

In response to Tom R's question....

I'm humbled that a person of your experience and accomplishments would ask a newbie like me for advice. The driver productivity challenges you reference (taking time off after a great week) are not unique to trucking. When I worked as a financial planner and securities broker I saw the same thing. When a representative had a great week, the temptation was to bask in the big sale at the next sales meeting and then take a cruise or go shopping for a new car. A few months or years later, they were out of the business.

What's lacking is the long term perspective and/or the lack of goals. As a financial planer, I spent many working days helping my clients set goals and see their long-term situation. I educated them about how a tiny action today -like saving $10.00- would translate into big dollars ten years from now. Then, year by year, I'd visit with them about their goals, actions to achieve them, and results to date.

I am 100% convinced that a married-couple team of ordinary ability and good will can enter expediting, work it for two decades or less and retire as financially-independent millionaires. Doing so would require discipline and some sacrifices. The trick is getting them to see it and adopt it as their goal. With a retire-as-millionaires goal in front of them, and the belief they can do it, I believe most driving teams would have no trouble persisting through the good times and bad.

As you pointed out yourself, it's not always the bad times that take a good team down. Giving in to the temptations of short-term prosperity can be just as fatal.

Also note that not everyone can handle prosperity. It's generally accepted that 20% of the people control 80% of the wealth in America. If by some stroke of magic you could instantly redistribute the wealth in equal shares to all people, it would only be a short time before the 20/80 split went back into effect.

Most people simply don't know how to manage their money or don't care enough to do so. Those that do will quickly develop ways to acquire the money of others. Bankers will charge interest. Merchandisers will mark products up 300% and them put them on sale for 250% over their cost. Many people with their newly-found money from the equal-distribution magic will beat paths to their doors. Travel agents will charge high premiums to design "only-for-you" vacation packages. Etc. Most folks with their found money from the magic redistribution would beat paths to these doors.

pellgrn · Aug 19, 2004

I think ATEAM and Tom need to get a room.:*

Dreamer · Aug 19, 2004

>I think ATEAM and Tom need to get a room.:*

Ok.. that was uncalled for.

ATEAM may not be a driver of many years experience yet, but everything he wrote in that post had to do with financial truths.. and I think we can all agree.. it was true. I'm a former stockbroker, my family owns small businesses, and I run a small home business on the side myself.. . I know myself how easy it is to slack off the week after a record week.

Can you imagine what we'd do if we approached every week as if it was a 'make it or break it' week for our business?

ATEAM may have things to learn yet about trucking, but I can tell he knows what he's talking about on finances.

Let's judge the message on IT'S merits.. not personal feelings you may or may not have about the poster.

Let's TRY to keep it professional, ok?

Dreamer

ATeam · Aug 19, 2004

In further response to Tom R's question, and after some additional thought, it seems to me that the fleet owners that have the best relationship with their drivers, and the most productive drivers, are those that take an interest in the drivers' long-term success and take pride in helping drivers work their way to either owner/operator status of their own, or a successfull long-term driving career.

Most fleet owners I've talked to agree that the good drivers go on to become truck owners in their own right. The best you can hope for from these folks is a year or two of them driving for a fleet owner. That's not true in all cases. I've met a couple drivers that are very good but have no desire for a truck of their own. They've been driving for fleet owners for years and intend to keep doing so.

I recently interviewed a fleet owner that I think had a good approach. He has created a team mentality among his drivers. They know exactly how much money they need to produce to help the fleet owner make it into the black. They also know how each driver is doing and how they compare. Don't know much more about it, but it sounded like an approach that works. The genius in it, I think, is it gives drivers the opportunity to be part of something bigger than themselves. There part of a team that shares info with each other to support each other.

pellgrn · Aug 19, 2004

I don't mean to be crude,it's a joke and my way of saying they should put there talk into action.Lead,Follow,Or Get The Heck Outta The Way.Tom needs a driver,Ateam is a driver,they seem to share the same business mantra or model,or what ever the word is nowadays.Maybe they can form a marketing system for drivers and owners,they can do seminars and make big money selling there proven system,i don't know.I do know that talk is cheap,and action costs.

Trucker don · Aug 20, 2004

> stuff snipped out>
>thanks..
>>
>>On behalf of Expeditersonline, please accept my invitation
>>to join us at the Expediter EXPO at the Detroiter Truck Stop
>>in Woodhaven, Mi next week, Aug 11 and 12. You'll be able
>>to meet with most of the company reps with whom you'd be
>>interested in doing business. They can sure explain the
>>peculiarities/restrictions, if any, of a Canadian operating
>>commercially in the USA, eh.
>>
>>Hope to meet you there. I'll be the guy in the white truck.
>>
>>Terry
>

I'm already an OTR trucker all ready. I've seen the expedited trucks from both sides of the line. I live in the Golden Horse shoe of Ontario. I've been a Courier in late 70. I've worked Schnieder Nation for a 1 1/2 yr. I've been lease on with my present comapny for amost 3 yrs and a company driver for 2 yrs.

I'm thinking of Landstar as I do not have to deal with a dispatcher.

From the sounds of it, it learning the system. Since I'll have ownership of the Truck. I will not have a lease payment to content with. Right now I have 1000.00 left to pay on the repair of the motor on the Truck. That should be paid off by the next two pays. I'm getting a short pay because of time off.

I've seen TST. and FTI. I've delivered Loads for TST Overland. I'm not sure if TST and TST Overland are the same company.
I've got 6 months Truck paidment left, then will wait a couple or three months to get cash behind me. If I make the leap.. You all know..

:9 :9

wide load · Aug 22, 2004

You made a comment in your reply to the gentleman question and just courious if you knew how to get started in driving the motorcoaches that you mentioned in the last statement of your reply. I would be interested in finding out who I would need to talk to about doing something like that.

WIDE LOAD