Time to park the truck?

[LDB]

There has been a lot of discussion lately about various topics that all lead to a central theme. Is it time to park the truck and quit the business? My crystal ball is still broken so I can only make some observations that hopefully will help at least one other individual. I don't believe it's time to park. I do believe it's time to work smarter than ever before.

Fuel prices are ridiculous. Unfortunately there is absolutely nothing we can do to change that. We must work smarter so we optimize the situation. It is imperative to know the operating cost for your vehicle. If you are an owner you must have detailed records and compute the overall cost. If you are a driver you have it easier in that you only have to know the cost of fuel plus tolls. Either way, you must know what it costs for every mile that vehicle moves. You don't walk into a store and say you'll take that pair of shoes or that dvd or anything else without first knowing what it costs you. Why would you move your truck without knowing the same thing?

Once you know your cost per mile you must decide what you are willing to run for. My truck costs .347cpm for fuel and tolls. If I were a driver only it would be easy to take .35cpm from what the load pays and make a determination. At $1.20 per loaded mile and 60/40 split a driver would have .72cpm base plus fsc so in this truck the job would pay .37cpm plus fsc.

It is IMPERATIVE to calculate deadhead into the run. Every deadhead mile costs .35cpm with no offsetting income if you are a driver. Owners pay more than that per deadhead mile.

Everyone operating a vehicle should look seriously at deadhead miles and fsc in deciding to take or refuse a load. Obviously the company wants us to have a 100% availability, acceptance and on time rating. Equally obviously we should have a 100% profitable job ratio. That doesn't mean they'll all have the same or even a good profit. It just means the bottom line to every job should be black ink.

My general rule is to divide the paid miles by 5. If the deadhead is a number no larger than that I pursue the load. If the deadhead mileage is higher than that number it has to have special circumstances for me to run the load. My next general rule is to divide the cost of fuel by 16 to determine the minimum fsc. If the fsc is at least as high as that number I pursue the load. If it is lower it again requires special circumstances to run the load.

Lastly I compare where I am to where I will be after delivery. If I am in Podunk and will be in Romulus after delivery I will bend the rules because I'll be in a good place to get a good load. If I am in Romulus and will be in Podunk after delivery I will stick to the minimums and perhaps even require a little better to offset the bad placement for subsequent runs.

I do not believe quitting is the answer unless there are personal reasons involved as well. While I agree this isn't rocket science I also believe it is an intelligent persons business. You can't just turn the key and go and presume all will be well at the end of the year. You MUST know your business. You MUST analyze your offers and take the ones that profit you.

OK, I probably went way past my .02 but there it is and I hope it helps someone. Good luck to everyone.

Leo Bricker
OOIDA 677319
truck 4958
73's K5LDB
Support the entire Constitution, not just the parts you like.

 

[FIS53]

You are correct that it is definitly time to look at costs. I have been doing it for awhile. First thing I did several years back was to cut my speed down to 60-65 doing the run and as 90% of my runs are deadhead back I run slower to conserve fuel further. Other costs as well. Sourcing decent prices for maintenance also help. I'm with a small company so we do have several customers who are not really profitable to do their calls as they are short and you have to get there and do it then deadhead back.
I have looked at the money over the years (been at this since 1979) and have found that since 1991 (recession) costs have escalated and incomes have basically remained the same. I'm making the same money as back in the 80s only back then I have more take home.

 

[ATeam]

Great post, Leo! It's nice to see someone talking about how to stay in the business, instead of why people should get out or not enter it in the first place. Your heart is in the right place. So is your mind. Sharing specific numerical information that people can put to immediate use rises above general statements like "Know your cost per mile" and "Treat your business like a business." Your not only saying what to do, you'r saying how you do it. While LDB may be your screen name of choice, "RoleModel" also works!

 

[x06col]

Not necessarily a good thing to think only of yourself. Seems we are all in this together [o/o and company]. I have read here many times that the customer and freight is "their" (the companys) freight. Don't you people take any ownership at all for your livelyhood???? Don't you want to help in some way satisfy that customers needs so they will keep calling you to carry it??? I understand you cannot be right on top of where the freight is, but, the next one might be a home run. It seems a little known hard fact of business, that you cannot hit a home run, or, make bundles on everything you touch. It just can't happen. Somedays you get the bear, and, somedays the bear gets you.. I understand excessive DH for a short run is no good at the rates you are getting. However, would you rather be setting at the truck stop scratching your #####, or satisfying a customer and probably be placed at the top of the dispatch board? Regardless, you folks just keep making yourself "profitable" by not taking care of your freight and we, the mom and pops will continue to run it profitably and you can continue to scratch your #####.

 

[TJ959]

I really don't think anyone is in business and doesn't want to make a profit. My method of doing business has always been to think of the company overall first. That doesn't count last week when I was told I had sold my truck so I sat all week making arrangements for my new truck. Boy that was a lost week and nothing was accomplished.

Normally if dispatch needs a favor I'll do it. Looking back I see that it is the reason I haven't been profitable. The favor has to be returned. It doesn't do the company any good if the driver has to quit because he can't afford to run. I have a little experience in dispatch in a general freight brokerage. If we had a truck stuck somewhere no-one went home until he was loaded or we paid to relocate him. I know expediting is a lot different but we had loyal drivers and very good retention. A little of that attitude could go a long way in this business. I know I'd be a lot more likely to take a bad run if I thought dispatch was likely to feel responsible for getting me there.

So yes the drivers should be out for themselves. It's their livelihood. I for one am through taking a loss on a run to help out only to sit for 24 hours and then deadhead major miles to get into the freight lanes. The drivers and the carriers need each other. Thing is, both sides need to know that.

 

[highway star]

Every year I ask Santa for the expediter crystal ball. Maybe this year...

Part of being fuel smart is obviously idling. I'm at a J this weekend and am making good use of their facilities. I shut my van off Friday night and have'nt started it since. It's been close to 90 this weekend. There's a Con-way van, gas engine, thats been idling since 10:00 this morning. Making more than I am, apparently.

Keeping the customer happy is very important. And, I'm sure that making a profit is just as important to their business as it is ours. The job of sales and customer relations is to help them understand what we are going through. Anyone who does whatever is asked without regard to profitability will, at some point, see their business go under. Profitability isn't important? Puh-leeze...

 

[LDB]

I had no intention of implying one should be totally self centered however if we don't look out for ourselves nobody else is going to. I did say we should make sure the ink is always black. That could mean helping out the company and making only enough to pay for lunch on a run but that's still black ink. My main point was people need to know their costs and analyze their runs to be sure they are running black and not red. Giving up isn't the answer, knowledge is.

Leo Bricker
OOIDA 677319
truck 4958
73's K5LDB
Support the entire Constitution, not just the parts you like.

 

[greg334]

Leo, Thank you for the formula.

Ok here is what I have been saying all along; you need to understand what you are doing and how you are doing it to make money. As much as some have said you don’t need a business plan, this is THE post that validates having one. Yes some have been in this business for a long time but it is not the same business as it was three/five or even ten years ago.

I spent a couple days sitting and I talked to the other cargo van expediters who rolled in and I asked them how much does it cost to run their trucks per mile? You know not one of them even thought about it. They through about fuel in, miles driven and that were about it. The sad thing is that they could not even figure out what their fuel cost per mile was with the FSC added in because they did not even figure out their mileage when they fill up. SCARY!

With everything added in, insurance, loan payments, etc… my van cost .48 cents per every mile regardless what I do. When I idle the truck, it cost 2.50 an hour, it don’t like to idle.

Well my 2¢

 

[davekc]

I would add to this thread a couple of items.
Depending on the company, the number of trucks in a given area (singles or teams), amount of loads per day, day of the week, time of day and whether or not your a team has to be considered.
If this is not calculated, you are now having to figure the cost of sitting a day or longer if you refuse that load.
That number varies, do you have a generator?, do you idle all the time? Alot of items effect that number.
One has to look at the big picture, and not part of it.
Leo's system works for him, but I follow a much different model.
One must find what works for them.
In addition to loads from Panther, I use my own load sources. His plan would only work for me in certain applications.
We run very limited deadhead. Podunk to one may mean the gravy train to another.

Finally, while apparently discounted by some, you do need to know your cost per mile. Everyone's situation will be different based on a variety of factors. Alot of questions are quickly answered once you know that number. For the new folks, that is why it is referred to as often as it is. Some advice could be tainted without that information.
Take my word for it, it is good to know that number.
To do your own calculation, go to www.ooida.com for the worksheet.
It is easy to follow.
Would I quit? Not as long as there is a profit.

And yes, with todays fuel prices. "businessman first, driver second"

Davekc
owner
21 years

 

[tiredofsittn]

just saw where the irs adjusted the mileage to 48.5 because of fuel cost and they said would raise it again next year. also saw in the news section the article by the ata about fuel cost yet they were against the mandatory fuel surcharge.