Questions in the grand scheme of things…Part 1

trobertson · Mar 14, 2015

Questions in the grand scheme of things…Part 1

(The first of a series of post to gather information from professional expedited drivers)

Many of the carrier members on this site participate in the major three elements of the expediting community…Carrier – Broker – Fleet Owner. In my discussions with these individuals it is apparent that most of us, regardless of our efforts to better understand the desires of the professional expedited driver, continue to struggle to understand what makes our drivers satisfied.

Part 1
This particular thread is an attempt to help me understand why some of you decide to become owner operators and others decide to become drivers for fleet owners.

Let’s address the Van - Sprinter type Van sized vehicle.

Let’s assume that you will be starting with a new van.
Someone must make an investment in the equipment, somewhere in the $40k price range. Once the vehicle is acquired other major expenses must be taken into consideration. The largest expense in this business is fuel cost, with today’s fuel cost averaging approximately .1475 cents per mile, for these vehicles. Proper insurance for nationwide coverage will average about $5.5K annually. The next major expense category is maintenance and repairs which can vary dramatically from vehicle to vehicle and from year to year.
These are the known expenses involved with ownership of these vehicles.

As a business owner, your income is figured on gross revenues minus expenses. The fleet owner has the additional expense of driver cost. The fleet owner should consider all costs to establish his return on investment. The owner operator considers only the costs associated with the vehicle before declaring his annual income.

The questions I am posing to you are:
What do you consider to be a fair annual income for your investment as an owner operator?
What do you consider to be a fair annual income for you as a fleet owner?
What do you consider to be a fair annual income as a fleet driver?

I will use your responses to develop a survey to further drill down on what other factors enter into the equation of “driver or owner/operator?”

Please realize that those who respond are expressing their opinions and that there are no right or wrong responses.

Tom Robertson
A. Blair Enterprises

geo · Mar 14, 2015

one reason to be owner o/o you have control of what you are going to make
the law say they can not give you a have time about not taking aload
but some do
you have to learn how to get around that by giving them a solution that would work
i wouldn't go to canada but would say where is near canadian truck at and take load to him and transfer the load, he was happy, fedexcc was happy

you have to learn system of company you are working for
when you figure that out things will come in place

blizzard2014 · Mar 15, 2015

In the grand scheme of things, the rates need to go up again. Think of all of the time you spend driving. What is our time behind the wheel really worth these days? What is your carriers time behind the computer really worth? There should be enough money in the cargo van/sprinter van freight that the company can make 50 CPM on every loaded mile, the van owner can make 50 CPM on every loaded mile, and the driver should make at least fifty cents per loaded mile after paying for fuel. I know this is a pipe dream, but everyone would make a really good living if that were the case.

The driver could make 2500 dollars off of a 5 thousand mile month. The owner would make at least 1500 a month after insurance and maintenance expenses. The carrier would make enough money to have a full staff of workers in the office, to pay for insurance, and the customer would have professionally vetted drivers moving their freight for them. That is the wish I have for this industry. Don't give your time away for free. Government workers make a pittance, but at least they can retire at age 53 with a full pension. What does a van driver have to look forward to after 30 plus years behind the van? Perhaps another 30 years behind the wheel to make ends meet? The entire industry as a whole needs to evaluate their priorities as a collective before everything is lost!

Tennesseahawk · Mar 15, 2015

blizzard said:
In the grand scheme of things, the rates need to go up again. Think of all of the time you spend driving. What is our time behind the wheel really worth these days? What is your carriers time behind the computer really worth? There should be enough money in the cargo van/sprinter van freight that the company can make 50 CPM on every loaded mile, the van owner can make 50 CPM on every loaded mile, and the driver should make at least fifty cents per loaded mile after paying for fuel. I know this is a pipe dream, but everyone would make a really good living if that were the case.

The driver could make 2500 dollars off of a 5 thousand mile month. The owner would make at least 1500 a month after insurance and maintenance expenses. The carrier would make enough money to have a full staff of workers in the office, to pay for insurance, and the customer would have professionally vetted drivers moving their freight for them. That is the wish I have for this industry. Don't give your time away for free. Government workers make a pittance, but at least they can retire at age 53 with a full pension. What does a van driver have to look forward to after 30 plus years behind the van? Perhaps another 30 years behind the wheel to make ends meet? The entire industry as a whole needs to evaluate their priorities as a collective before everything is lost!

As far as vans are concerned, you need to look at the skill required for the job, and the resulting influx of people wanting to drive vans for that reason. Beyond that, the only thing you have to sell is yourself... and people who bid .75/mi show exactly what they think they are worth. They are telling the broker they aren't interested in keeping a good appearance, taking care of their vehicle, and it probably won't make a difference to them if they're late. The brokers taking that rate tells us they don't care who hauls their customer's freight, as long as they can make as much as they can off of it.

davekc · Mar 15, 2015

Everything is directly tied to the rate. If a carrier is going to pay a fast food rate, that is likely the crowd they will attract. Vans by their very nature as mentioned require little skill. When that happens you are dealing with a more transient crowd. In that crowd you have retired folks just looking for some pocket change all the way to people that struggle in a structured work environment. That is why it is tough to get a handle on someone wanting to make minimum wage, live in a pop can, and make a 40k investment.
I would say it is similar in the larger vehicles. It really comes back to the rate and consistency. Especially when you are doing much larger investments. If the ends don't justify the means, they either move to another company, or become your competition. High turnover doesn't happen by accident.
The good news is, some are starting to get it. But there are some that try to pick their contractors pocket every change they get, and then pour thousands into a recruiting program.
As I have said before, the industry is sometimes its own worst enemy.
Being a old timer, there use to be a lot more comraderie, but as rates depressed/stagnated, that had a direct impact on that. People are making less than years past and it has become very competitive. Some carriers have that same expectations from years past but that has to change if your rates are still from that time period.

trobertson · Mar 15, 2015

Thanks for the responses so far...

We have been given a reason for wanting to be an owner operator (geo), an very good explanation for the overall van rates being lower than they should be (t-hawk), an actual figure of .50 plm after fuel as a target income (blizzard),and an overall look at the challenges of the fleet owner (davekc).

What I am trying to determine is if there are those who still feel that taking the risk involved in new vehicle ownership is still a viable option. Obviously the GROSS income potential is much greater than the gross income of a driver working for a fleet owner. But is it possible that a fleet driver could actually NET more than the owner/operator?

I personally think that Blizzard's goal is more than reasonable for an owner/operator driving a late model van or better yet a sprinter sized van. I believe that most if not all of the carriers participating on this site provide those opportunities.

Let's assume that the average van driver gets between 100K - 150,000 paid miles a year...the gross income to the owner operator would be somewhere between $50k and $75k a year.
From the gross revenue the driver must then make vehicle payments, insurance payments and pay for maintenance and repairs.

Now lets assume that the driver is working with an honest reasonable fleet owner. At what point does his income as a driver begin to blur the lines of the income of the owner operator...$35K, $40k, $45k?

What are the most important aspects of being an owner operator? Is it net income? Is it the pride of ownership? Is it the ability to make all decisions about when and where you go? Is it something else entirely?

thanks again for your responses

Tom Robertson
A. Blair Enterprises
Louisville/Cleveland

davekc · Mar 15, 2015

I don't really have a answer on vans, but with straights and tractors, the driver makes more than the fleet owner when looking at a individual truck. The fleet owner generally makes the money on volume. Multiple trucks if you will. Ownership by individuals use to be high but that is changing because of the rates and required investment. A new truck is somewhere between 120k and 160k. That prices many out of the market. Price in a wreck or multiple regen/repair issues, and it is a tough go for a single operator. Weeks of downtime will put many under.
They can go the used route, but if they are undercapitalized, same thing.
A fleet owner has other trucks running to absorb those kinds of hits.
The majority of our fleet are all former owner operators, and that is the biggest thing they bring up when going back to that setup. One of the reasons I like hiring them because they have a firm grip on the reality of costs to operate.
Its a high dollar hobby, that's for sure.

ntimevan · Mar 15, 2015

I 'm just curious Why an Owner of a company that pushes Drivers past Normal Human Limits 1500 miles straight for 35 cents a mile ...( info obtained from meeting your drivers dragging themselves in and out of your sprinters ) is wandering what other companies consider their drivers are making in comparison to themselves....

T270_Dreamin · Mar 15, 2015

davekc said:
I don't really have a answer on vans, but with straights and tractors, the driver makes more than the fleet owner when looking at a individual truck. The fleet owner generally makes the money on volume. Multiple trucks if you will. Ownership by individuals use to be high but that is changing because of the rates and required investment. A new truck is somewhere between 120k and 160k. That prices many out of the market. Price in a wreck or multiple regen/repair issues, and it is a tough go for a single operator. Weeks of downtime will put many under.
They can go the used route, but if they are undercapitalized, same thing.
A fleet owner has other trucks running to absorb those kinds of hits.
The majority of our fleet are all former owner operators, and that is the biggest thing they bring up when going back to that setup. One of the reasons I like hiring them because they have a firm grip on the reality of costs to operate.
Its a high dollar hobby, that's for sure.

Does two count as multiple...

Yeah those trucks are the cost of a house. Well unless youre in Detroit where they give them away.

golfournut · Mar 16, 2015

trobertson said:
Thanks for the responses so far...

We have been given a reason for wanting to be an owner operator (geo), an very good explanation for the overall van rates being lower than they should be (t-hawk), an actual figure of .50 plm after fuel as a target income (blizzard),and an overall look at the challenges of the fleet owner (davekc).

What I am trying to determine is if there are those who still feel that taking the risk involved in new vehicle ownership is still a viable option. Obviously the GROSS income potential is much greater than the gross income of a driver working for a fleet owner. But is it possible that a fleet driver could actually NET more than the owner/operator?

I personally think that Blizzard's goal is more than reasonable for an owner/operator driving a late model van or better yet a sprinter sized van. I believe that most if not all of the carriers participating on this site provide those opportunities.

Let's assume that the average van driver gets between 100K - 150,000 paid miles a year...the gross income to the owner operator would be somewhere between $50k and $75k a year.
From the gross revenue the driver must then make vehicle payments, insurance payments and pay for maintenance and repairs.

Now lets assume that the driver is working with an honest reasonable fleet owner. At what point does his income as a driver begin to blur the lines of the income of the owner operator...$35K, $40k, $45k?

What are the most important aspects of being an owner operator? Is it net income? Is it the pride of ownership? Is it the ability to make all decisions about when and where you go? Is it something else entirely?

thanks again for your responses

Tom Robertson
A. Blair Enterprises
Louisville/Cleveland

$.50 pm gross for a Sprinter o/o? LMAO Are you kidding me. At 100000 loaded miles, the gross should be closer to $121000 minimum, NOT $50000. At 150000 the gross would be $181500.00 for a Sprinter o/o. Wouldn't turn the key for less than that. Certainly not $.50 pm.

Dynamite 1 · Mar 16, 2015

I would have to agree with Ron. Really Tom, 100 -150k miles a year for 50 -75k a year gross. I realize there are some out there doing that but probably wont be for long or if they continue it is just a revolving door for income, no profit. Is that figure just something you pulled out or is that a figure you have experience with.

As far as the topic itself goes, I just cant comment cause what you think you should make and what you actually make depend on alot of uncontrollable factors. I will admit that there is a bottom line of income where ownership of any kind is not warranted.

golfournut · Mar 16, 2015

Dynamite 1 said:
I would have to agree with Ron. Really Tom, 100 -150k miles a year for 50 -75k a year gross. I realize there are some out there doing that but probably wont be for long or if they continue it is just a revolving door for income, no profit. Is that figure just something you pulled out or is that a figure you have experience with.

As far as the topic itself goes, I just cant comment cause what you think you should make and what you actually make depend on alot of uncontrollable factors. I will admit that there is a bottom line of income where ownership of any kind is not warranted.

You are so right Tom. There is no way a o/o can make it on $.50 pm gross in a Sprinter or something similar. At $40000 + for a new vehicle at 100000 miles a year and after 5 years depreciation with 500000 miles on it, at $.50 pm gross, the o/o can't afford to replace the vehicle. Might not even be able to properly maintain it at that point.
At best, minimum operating cost with no monthly payment and no replacement figured in is gonna be atleast $.30 pm just for fuel, insurance and very basic maintenance. Leaving $.20 for the o/o gross or $20000.00 gross for a whole year living on the road.

Throw in a $500 per month payment that leaves $14000.00 for the o/o gross. Flipping burgers or "Hi, welome to Walmart" sure looks good.

The question I have is, how much is a carrier grossing on that load? Surely a carrier wouldn't be bidding or have contract customers at $.75 to $.80 pm. That would be ludicrous.

golfournut · Mar 16, 2015

Surely he meant "net" and not "gross". If not, how in the world could any carrier keep o/os. The revolving door policy won't last forever.

OntarioVanMan · Mar 16, 2015

Tennesseahawk said:
As far as vans are concerned, you need to look at the skill required for the job, and the resulting influx of people wanting to drive vans for that reason. Beyond that, the only thing you have to sell is yourself... and people who bid .75/mi show exactly what they think they are worth. They are telling the broker they aren't interested in keeping a good appearance, taking care of their vehicle, and it probably won't make a difference to them if they're late. The brokers taking that rate tells us they don't care who hauls their customer's freight, as long as they can make as much as they can off of it.

is a van driver any different then a fully trained professional food handler?.....Not really...if both don't do their jobs correctly people get hurt or sick.....only real difference is we are on call 24/7 sort off when in service and that doesn't even ring true because we or I dont run when I've been up all day and a 700 milers comes up at midnight...so why is some think they should make 60-80,000$ an unskilled entry position other the a valid drivers license and maybe complete public school degree....to qualify

OntarioVanMan · Mar 16, 2015

BTW..you guys talking ALL mile rate or loaded mile rate?....

Moot · Mar 16, 2015

golfournut said:
The revolving door policy won't last forever.

Some companies believe it will.

golfournut · Mar 16, 2015

OntarioVanMan said:
BTW..you guys talking ALL mile rate or loaded mile rate?....

The OP was quoting loaded mile rate. So, I am quoting a loaded mile rate. $1.21 minimum.

golfournut · Mar 16, 2015

Moot said:
Some companies believe it will.

Yea, I know. Good luck to them. The smaller the company the faster they will be gone using that philosophy.

OntarioVanMan · Mar 16, 2015

Moot said:
Some companies believe it will.

after all these years it has showed no signs of slowing....looks like some have actually built a business on that revolving door....just look at the amount of people at the Expo in some of the booths and the amount of staff in recruiting...They should be actually embarrassed to have that big of staff....if they signed only stable O/O's they might lose their golf partner!!