VICTIMS OF OUR OWN SUCCESS ??

[RichM]

Phil also wants to know about the money we all earned back in the 80's,90's and early 2000's and what we did with it. Now why should I tell what I did with my profits. Why should I divulge my lifestyle to someone whom I don't know.

What has happened is that simple inflation has taken it's toll on net revenue.
Example: 1986 D Unit $36,000
1991 D Unit $41,000
1996 D Unit $52,000

Fuel 1986-1995 .80 per gallon average
Decent meal at A 76 T/S $5.00
RedRoof Motel $28-35.00
Labor rates for maintenance $30.00 per hour

Now truck revenue: Roberts Express in 1987:
D Load $1.42 per mile
C Load $1.21 per mile

Now FedexCC 2007 D Load $1.45 maybe
C Load $1.15 maybe
1987 3 major Expediting companies split the pie
2007 6 major companies and about 25 smaller ones.
Phil it doesn't take a rocket scientist to see that profits were much greater with less demands then exist today.

Also back in the 80's,90's the big three were going full bore. You could deliver into Livonia and 2 hours later you were gone with a new trip. There was no NLM bidding wars,it was not unusal to offload,get on the Detroit board,be #10 in line and be gone in 3 hours.

 

[hedgehog]

A-Team wrote:

"Everywhere we drive we see urban sprawl and real estate development. Without trucks, none of that would be possible. The pie is not fixed in size. It is continually growing. If it were otherwise, the number of expediting carriers and the number of expediting trucks on the road could not be sustained for as long as they have."

That's the whole point. We are no longer sustaining the number of units expediting. The returns are diminishing. As for urban sprawl, they have that in China, India, etc., etc., and you would be hard-pressed to make a living even with your super truck in that "urban sprawl".


Rich M:
Thanks for those numbers. It provides data from a successful veteran such as yourself. I've only been at this fulltime for about 7 (seven) yrs. And while I don't have your experience, I know for sure that for every new driver(s) my company hires, I spend more time waiting in between runs and my overall income is less each year, even though my on-duty hours are the same and sometimes more.

Be safe and Happy New Year to all.

 

[x06col]

Jeez Hawk, is that you typ'in?? Outside the comfort zone?? Couldn't be. Where in the world did you ever get these ideas? to reply to the original post, yes, you can be a victim or, an example, depending on how you handle what you face each day. I certainly remember the days when a run is completed and go make a withdrawl from the ATM for a hundred bucks and fill er up for the next week, and have feed money left over. Were you better off then? Dunno! I'm certainly not longing for the good old days of being leased and buying fuel for 80-90 cent.

 

[OntarioVanMan]

slfisher45....exactly if rates were higher I'd have to work less! Isn't that evryones goal if possible? Live within your means.

greg334...well duh! Beam me up Scotty??? Unless you got a crystal ball I can't see anything other than a truck moving goods in the next lifetime or so!


Rich...I think Phil was just generalizing as usual. By your numbers that you supplied one can see thier was money to be made back then. The cost of living figured in we've digressed since the early years.

hedgehog said "I know for sure that for every new driver(s) my company hires, I spend more time waiting in between runs and my overall income is less each year, even though my on-duty hours are the same and sometimes more."

Not always so...just wait for a few months and most of the newbees leave!
Last year my company put on 6 vans around Christmas 5 were gone before summer! This year 7 vans in Nov and Dec. Things slowed down but Thats when I take advantage time off and PM and wait it out till 5 of them leave.

 

[Tennesseahawk]

Colonel, somehow I knew you'd respond. LOL Although I don't agree with all your philosophies, your main ones are tough to argue. Make money on stuff others can't or won't.

IMO, there will come a time when a 22' dry box just isn't enough to make it. You'll either have to become more innovative in finding freight, or your equipment will have to change. I still think the Argosy is the ultimate machine. Add to the 30' box a reefer and liftgate, and you've captured many more opportunities. Without decking, that's four more skids than a 22', plus reefer and liftgate possibilities. It's almost twice as much capacity as a 16' white glove box.

I'm still tempted to try the 40' reefer trailer w/liftgate idea.

One other thing I learned while out here, in the last year. I set a timeframe in which to run. If nothing is planned at home, I set it around 5 or 6 weeks. As long as I'm constantly moving, I don't want to go home. Before I know it, the time comes to tell dispatch to get me home. No second guessing whether to beat feet to the house. I have full support from my wife, who while misses me, likes the money I bring home and knows I'm pushing myself for higher goals.

"If I claim to be a wise man, it surely means that I don't know." - Kansas

 

[slfisher45]

OVM, If that is all you got from me you are not very perceptive. One has to work to reap, in most cases, not wish.

 

[greg334]

OntarioVanMan

Man look around, rail is now moving toward the orignal concept of trucking/rail. not big now but I see a future for rail especialy when you get less consumption per ton mile with rail than trucks.

 

[OntarioVanMan]

greg...I see where ya coming from expedite trains? Interesting concept?
And they don't have to stop for car traffic.

 

[terryandrene]

Our first full year with Roberts Express was 1990. I no longer have records for that year so the following numbers are the best I can recall.

We grossed $48,000 to the truck.
A 1989 cargo van was $10,000.
Gasoline was 80 cents a gallon.
The standard non-discounted rate to the van was 99.8 cents (actual) per mile.

We were as busy as we wanted in those days and seldom waited more than 24 hours for a run offer. We were given $48.00 for a hotel receipt if we had no runs between 1000 and 1800 during a workday; the company didn't pay for many rooms.

Our van averaged about 80 cents per loaded mile which was about comparable to that which a non-expedite tractor/trailor O/O received.


$48,000, in 1990 dollars, adjusted for a 3% annual inflation rate would be a respectable $77,000 today. While we earn about a 62% increase in revenue, fuel costs have trippled, a van purchase price has trippled and repair costs have about doubled.

In comparison to over the road trucking, expediting was quite lucrative and people earned a decent living with only one truck. Therre were very few families that owned as few as three truck and if I recall correctly, Roberts Express would not sign on any more than three trucks to a family. I never met anyone that retired to the Hamptons after a few years of trucking, but the opportunities for the average person were considerably greater than today.

 

[chuckwagon]

We can all sit here and discuss the economy and the direction expediting is going to go.
The point I want to make is no matter what the economy is doing, no matter if it is going into the tank or taking an upturn, do matter if the expediting field is going to the toilet or some how staying alive, we all need to be flexable yet build our 'method of operation' in which we will move product.
What I am saying is that some of us in straight trucks may move freight for under $1.00 - believe it or not. That is fine if that person can profit, move and operate at such a rate.
For myself I will not touch it, it has nothing to do of 'moving out of a bad lane' as I tend to have a 'method of operation' which keeps me away from the bad lanes.
Part of my 'MO' is I have a set rate per mile I must have, I don't care how far I have to drive to get it, as long as the overall rate per mile hits my level - I will go get it.
My point is - no matter how much we discuss this I do not feel there is any set method that works for everyone. We all have our different needs and wants - what works for one does not work for someone else.
Be flexable within your own framework - don't worry about what the guy next to you is doing, he has a different lifestyle, different bills, family, etc........work for your self and for those you feed!

 

[nightcreacher]

Terry
In 1984 I use to go from Euclid oh to Linden nj discount Gm load,paid about $1.37/mile,I would then pick up a B load,in nj,take it to flint mi,paid .98 cpm,load in michigan and go back to linden nj,and for the same GM rate,and then get my B load back to flint.wasnt an exciting week,but use to laugh all the way to the bank,if I remember,was doing around $140k in those days,to bad the fun ended,and had to produce a co-driver
Happy NEW Year Everyone,
See you all at Pfizer,Memphis

 

[ATeam]

>Yes, the pie is continually growing...But what is the cost
>of that piece of pie?
>Longer away from home? More miles to be driven then what the
>"old timers did"?
>
>I realize you Phil have your home on your back (turtle) and
>away time time is not a real factor.
>
>But hows about quality time off with no financial penalty?
>
>Can the majority really afford to time off and still make a
>living?

I guess it all depends on one's expectations, lifestyle choices and definition of "quality time off no financial penalty."

Many people with "normal" 9-5 jobs receive paid holidays and vacation days off. The longer you are on the job, the more paid vacation you receive, up to a point. As self-employed expediters, we NEVER receive a paid vacation. There is always a financial penalty for taking time off.

For example, we declined a load before Christmas because it took us away from home, not toward it. Instead, we deadheaded home. While out of service there, dispatch called us with offers, which we also turned down because it would interfere with our quality time off. All totaled, we have declined over $12,000 of business to stay home. THAT is a financial penalty by any definition. But quality time off is more important so we made that choice.

If expediting is not providing time off and the income to afford it, a 9-5 job that keeps you home and provides paid vacations, and maybe even health care and retirement benefits, may be the better choice.

 

[ATeam]

>Phil also wants to know about the money we all earned back
>in the 80's,90's and early 2000's and what we did with it.
>Now why should I tell what I did with my profits. Why should
>I divulge my lifestyle to someone whom I don't know.

Rich,

You have talked publicly here in the Open Forum about your income and lifestyle. You have posted that you grossed over $2 million dollars in your 20+ years as an expediter. You have also talked about how you took it easy in the winter, which explains the over$2 million dollar figure, which seems low for a team without the additional info you shared about your take-it-easy time.

($2 million a year over 20 years is $100,000 a year. No fleet owner I know would keep a team on for long that produces those numbers. Only an owner-operator would have the luxury of taking quality off time like that. Which is one of the beauties of the expediting business. It is a business where you can make lifestyle choices like that.)

Regarding your points about inflation, I agree. Inflation is certainly part of the story. But you are not specific enough with the numbers you provide to make the case that contractors in the good old days had it better than today. It is human nature that memories about the good old days in any field get enhanced as the memories of the stress and challenges fade. Numbers do not lie and Rich is not providing a data set complete enough to make the case that the good old days were better than today.

>Also back in the 80's,90's the big three were going full
>bore. You could deliver into Livonia and 2 hours later you
>were gone with a new trip. There was no NLM bidding wars,it
>was not unusal to offload,get on the Detroit board,be #10 in
>line and be gone in 3 hours.

Rich mentions NLM, which is very, very important. Yes, inflation was a factor. Yes the greater number of expedited carriers in the market today was a factor (to a point, perhaps, since the pie grew too). Technology was a factor too...and a huge one. The invention of the Internet made NLM possible. From automotive shippers' point of view, the internet made it possible to locate trucks faster, easier and cheaper than before. It also made it easier for smaller expediting carriers to enter the market and get in on the NLM bidding process. Yes, automotive freight has become less profitable to haul, but there is far, far more to the expediting story than automotive freight, is there not?

Also, is it really true that there is less automotive freight than before? Yes, the big three are a shadow of their former selves. But what about all the new foriegn auto manufactures that have built plants in the U.S., and what about their suppliers? Diane and I have hauled more automotive freight to those plants than we have hauled for the big 3. it seems to me that automotive freight has not declined in volume. It has simply been displaced to other locations and foreign-owned plants.

That disbursed-freight point is an unresearched observation on my part. Call it through-the-windshield research. I may be wrong on that and am open to any facts and figures others offer on the topic.

 

[ATeam]

Chuckwagon said, "Part of my 'MO' is I have a set rate per mile I must have, I
>don't care how far I have to drive to get it, as long as the
>overall rate per mile hits my level - I will go get it."

That method is used by many expediters, including Diane and me. it works.

Financial management also figures into profitability. When our truck is paid off and we drive a paid-for truck for several more years, our set rate per mile number will decrease. We will be able to haul freight at a lower price and be more profitable than drivers who drive less-expensive trucks but are trying to make high truck payments. If real bad times come, we will be ready and profitable too.

 

[greg334]

>I guess it all depends on one's expectations, lifestyle
>choices and definition of "quality time off no financial
>penalty."
>
>Many people with "normal" 9-5 jobs receive paid holidays and
>vacation days off. The longer you are on the job, the more
>paid vacation you receive, up to a point. As self-employed
>expediters, we NEVER receive a paid vacation. There is
>always a financial penalty for taking time off.
>
>For example, we declined a load before Christmas because it
>took us away from home, not toward it. Instead, we
>deadheaded home. While out of service there, dispatch called
>us with offers, which we also turned down because it would
>interfere with our quality time off. All totaled, we have
>declined over $12,000 of business to stay home. THAT is a
>financial penalty by any definition. But quality time off is
>more important so we made that choice.
>
>If expediting is not providing time off and the income to
>afford it, a 9-5 job that keeps you home and provides paid
>vacations, and maybe even health care and retirement
>benefits, may be the better choice.

Phil,
The word that comes to mind is Opportunity Cost - giving up one thing to get another.

As a contractor, you are compensated for a service that you provide at a given time and given place, outside of that there is no compensation.

Now also as an expediter contractor, opportunity cost can't be applied when you take time off, simply because you are not contracted to take loads at a given time on a given date but rather have to wait for offers – hence the opportunity cost for taking time off can’t really be measured because there is no way to predict the offers.

Also $12K? stop that!!

 

[ATeam]

>Our first full year with Roberts Express was 1990. I no
>longer have records for that year so the following numbers
>are the best I can recall.
>
>We grossed $48,000 to the truck.
>A 1989 cargo van was $10,000.
>Gasoline was 80 cents a gallon.
>The standard non-discounted rate to the van was 99.8 cents
>(actual) per mile.
>
>We were as busy as we wanted in those days and seldom waited
>more than 24 hours for a run offer. We were given $48.00
>for a hotel receipt if we had no runs between 1000 and 1800
>during a workday; the company didn't pay for many rooms.
>
>Our van averaged about 80 cents per loaded mile which was
>about comparable to that which a non-expedite
>tractor/trailor O/O received.
>
>
>$48,000, in 1990 dollars, adjusted for a 3% annual inflation
>rate would be a respectable $77,000 today. While we earn
>about a 62% increase in revenue, fuel costs have trippled, a
>van purchase price has trippled and repair costs have about
>doubled.


Terry's numbers combined with what Rich's generalized numbers get us closer to answering the question, "Did yesterday's expediters have it better than today's?"

To fully explore this, we'd have to factor in things like Qualcomm units, cell phones, and internet access that are now standard but were not used back then. While accurate baseline numbers like Terry provides are helpful, I think it is also fair to say that the B-unit world is nowhere near the same today as it was then; and that for a true today v. good-old-days comparison, it would be better to compare D or E units.

It is probably fair to say that for B-unit drivers, the good old days were absolutely better than they are today, and that in addition to simple inflation, numerous factors have come into play to produce that result. Identifying those factors would inform any D or E-unit analysis we'd make.

>In comparison to over the road trucking, expediting was
>quite lucrative and people earned a decent living with only
>one truck. Therre were very few families that owned as few
>as three truck and if I recall correctly, Roberts Express
>would not sign on any more than three trucks to a family. I
>never met anyone that retired to the Hamptons after a few
>years of trucking, but the opportunities for the average
>person were considerably greater than today.

Notwithstanding Terry's observations about then and now, I still wonder why we don't see any expediters retiring in the Hamptons, so to speak. A hard-working and smart working team can today gross $200,000 a year in a straight truck. The cost of that truck brand new would be the same, give or take $10,000 to $50,000 for lifestyle choices.

In a business where you can obtain all the capital equipment you need and gross the price of it back in a year, and then use that same equipment for as many as 9 years more if you maintain it well, why are expediters not doing better?

$200,000 a year for ten years is $2 million. $2 million minus $200,000 leaves $1.8 million. Fuel does not cost $1.8 million. Truck care does not cost $1.8 million. While there are, of course, finance costs and operating expenses, they won't total $1.8 million in 10 years, will they?

It seems to me that profitability is as possible as it was in the good old days for expediters who manage their business well and make good market decisions. It also seems to me that expeditiers who manage their money well after they make it can indeed enjoy an upper-middle-class retirement lifestyle. Though, the Hamptons would remain out of reach.

 

[ATeam]

Greg said,
>Now also as an expediter contractor, opportunity cost can't
>be applied when you take time off, simply because you are
>not contracted to take loads at a given time on a given date
>but rather have to wait for offers – hence the opportunity
>cost for taking time off can’t really be measured because
>there is no way to predict the offers.

OK. I have too much time on my hands and am caving in to the temtation to pick the fly doo doo out of the rice with Greg.

Opportunity cost does apply. See the two definitions below (Source: http://www.InvestorWords.com):

idle

Situation in which production has shut down or is simply not working, or one in which cash is inactive (not invested). More generally, this term can apply to any asset that is not being put to productive use. Being idle is usually an undesirable situation, since there is an opportunity cost of not earning returns on the idle asset.

opportunity cost

The cost of passing up the next best choice when making a decision. For example, if an asset such as capital is used for one purpose, the opportunity cost is the value of the next best purpose the asset could have been used for. Opportunity cost analysis is an important part of a company's decision-making processes, but is not treated as an actual cost in any financial statement.

Opportunity cost is not about predictability. it is about the difference between one choice and another. In our case, opportunity cost could be measured before the fact too. Simply take our average daily production over a meaningful period of time and multiply that number by the number of days you are out of service to take time off.

 

[RichM]

Real simple, How do you know and further more why do you care where in the Country people have retired to. I think we have a severe case of low self esteem here.

 

[terryandrene]

Whoa...Step back, and once again take off the rose colored glasses.

I think it's quite possible for a team in a D truck to gross $2 million in 10 years, but to suggest that a large portion of 1.8 million, minus a few dollars for fuel, finance and operating expenses is a bit of a stretch, even for the most frugal of people.

I suspect that every bit of 1/3 - 1/2 of that 2 mil will be needed for business costs, generously leaving $1.0M - $1.3M. Does the typical Mom and Pop, single truck expediter net $100,000 a year? I don't know because I have no experience or first hand knowledge of C or D truck profits.

$100,000 a year is a pretty decent wage, even for two people, but since nearly all expediters have a home and other personal expenses with which to contend, such as rent or mortgage, utilities, medical/dental expenses, clothing, insurance, automobile costs, childrens education, IRA, etc, etc, etc.

When all is said, spent and done, what's left? No more than the slightly above average two wage earner family.

 

[greg334]

Ah... when you get into this in depth like Phil has, the one thing that has been forgotten is taxes.

Bravo Phil......