It sounds to me like you are looking at this as an hourly employee. In the expediting world pay is by the miles driven and the size plus weight of the load. The larger and heavier the shipment the greater the revenue is. A truck that is capable of carrying a larger load earns more money. C trucks are generally limited to 5,000 lbs while the standard for a D is 13,000.
When is a D is better than a C
- Thread starter InIdaho
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jaminjim
Veteran Expediter
tblount said:
The same logic could be applied to the choice between buying a $20,000 used van vs. a $72,000 used 22ft box truck. While you have a lot more options for loads and maybe 10 - 20% higher pay per mile with the 22 ft truck... you have to make $1,000 extra PROFIT every week to break even at the end of the year.
The pay is more like 35% higher for a "D" unit.
The same logic could be applied to the choice between buying a $20,000 used van vs. a $72,000 used 22ft box truck. While you have a lot more options for loads and maybe 10 - 20% higher pay per mile with the 22 ft truck... you have to make $1,000 extra PROFIT every week to break even at the end of the year.
The pay is more like 35% higher for a "D" unit.
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That is true in some cases and untrue in others. I know of C units in the FedEx Custom Critical fleet that outperform comparably equipped D units. There is more to the revenue equation than truck size alone.
Just one example would be a C unit with a bigger sleeper that enables a team to stay out more, compared to a D unit with a small sleeper that motivates a team to take more time off because time out of the truck is needed to recharge.
Another example would be a D-unit team that turns down marginal runs that a C-unit team would take. In the end, the C truck may very well make more money because of the differences in load acceptance strategy.
For newbies reading this and trying to decide between C and D, I would recommend D. Unless you have very strong opinions about C units and/or a strong desire for the extra sleeper space a C unit can provide, D is the safer choice.
When we built our CR unit, we did not do it because we felt it would make more money than a DR unit. In fact, we expected the opposite to be true. We built a CR unit and put lots of unecessary and expensive extras on the truck (like tandem drive axles) for one reason alone; personal comfort.
Before we committed to the truck, we first made certain that we could afford it and meet our financial goals. It is so far, so good in that regard.
That is not because of the truck. It is because of how we approach our work, live our life, and manage our money. Short story: We live within our means, maintain financial reserves and save money for the future.
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Point taken. When it comes time to discuss indicators of business health in my Business Planning for Successful Expediters series, it will be apporpriate to include ROI. But do not expect my definition and use of it to match yours. You are of course free to promote your definition and use of this indicator as it suits you and believe it to be of benefit to others.
Because I consider ROI to be less important than other indicators of business health (and virtually meaningless in our own one-truck expedite business), I prefer to say little about it here.
Money in the bank matters most to me. When we retire and go to buy a new sweater, the clerk will not ask for our ROI number. The clerk will ask for money. More than successful expediting is about the ratios, it is about the money. ROI is an abstract concept. Money is as real as it gets.
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Ateam wrote
Money in the bank matters most to me. When we retire and go to buy a new sweater, the clerk will not ask for our ROI number. The clerk will ask for money. More than successful expediting is about the ratios, it is about the money. ROI is an abstract concept. Money is as real as it gets
What do you think ROI means? It is about the money.
Maybe this will help
In finance, rate of return (ROR) or return on investment (ROI), or sometimes just return, is the ratio of money gained or lost on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net income/loss. The money invested may be referred to as the asset, capital, principal, or the cost basis of the investment.
For the rest.
Rate of return - Wikipedia, the free encyclopedia
Money in the bank matters most to me. When we retire and go to buy a new sweater, the clerk will not ask for our ROI number. The clerk will ask for money. More than successful expediting is about the ratios, it is about the money. ROI is an abstract concept. Money is as real as it gets
What do you think ROI means? It is about the money.
Maybe this will help
In finance, rate of return (ROR) or return on investment (ROI), or sometimes just return, is the ratio of money gained or lost on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net income/loss. The money invested may be referred to as the asset, capital, principal, or the cost basis of the investment.
For the rest.
Rate of return - Wikipedia, the free encyclopedia
That's funny. I have to agree that the 45 foot land yacht is what is needed for the camping trip.
Well yes, I'm looking it that way... time is money. If you don't look at the bottome line and compare profit in relationship to time invested, what formula would you use to make an educated business decision ?
Even people on welfare make the same evaluation. Many do the math and conclude they are better off trying to raise kids on $1,000 a month than to get a job PAYING $2,000 a month and after taking deductions get $1,500 take home pay, then paying automobile and insurance payments, hiring a baby sitter and ending up with $700 a month of less if their car needs tires or repairs.
Thanks... that is very important. With that information one could make a
more informed decision. 1,000 miles would pay a "D" driver $350 more
per week than a van driver putting in the same miles. Ok.. looking at
fuel cost (with the best info I have found)... the D 22 ft diesel trucks
gets 14 miles per gallon. The E 350 6L diesel van gets 25 miles per
gallon.
Takes the D truck 70 gallons to make the 1000 miles Takes the E350 40
gallons to make the 1000 miles
30 extra gallons times the current national average price of a gallon
of diesel - about $3.83 = $115
We still are making $235 more per week in the D.... now let's estimate
a used D truck cost $52,000 more than the E 350. Paying off the D truck
- over 2 years - with 0% interest would work out to about $50 per week
more than the van.
We are still making $185 more per week in the D
But there are still some very important factors to consider... 1. Empty
miles... the D truck will be drinking twice the fuel. If 30% of the
time it is not loaded.. that is 330 extra miles (to put in 1000 loaded
payed miles) times half the price of a gallon of fuel. 20 extra gallons
of fuel times $190 ... nearly $40
We are still making $145 more per week in the D.
2. Insurance rates... let's guess that the rates for the D coverage is
$10 more per week.
We are still making $135 more in the D
3. Tires, repairs, oil changes, truck washes routine maintenance ...
Let's just guess the bigger truck will average $20 more per week
We are still making $115 more in the big truck
4. Speed... the average speed difference is probably going to be around
2 to 4 hours per week since the smaller vehicle can move faster through
congestion and is usually has a higher speed limit.
5. Loading and unloading. How much extra time does it take to load a
22 ft truck than an 8 ft van? Another 4 to 6 hours a week?
6. Weigh stations - the 22 ft truck has to stop, show logbook unless you
are under 500 miles from where the vehicle is registered... unless laws
have changed since I was diving a moving truck. Not much extra time but
probably an hour a week.
What else?
My conclusion...
Maybe 10 extra hours of work in the big truck for $115
That's overtime pay of $11.50 per hour
...which could be a lot less when interest rates on a $50,000 loan are
figured in.
...and much less if you don't always get $.35 cents per mile more than
the van.
Even if both vehicles average 2,000 miles a week, the ratios (except
insurance) remain constant.
On paper it looks like true PROFIT is nearly identical. More money is
possible in the big truck only by working longer hours.
I'm posting this so I can be criticized and corrected by the folks who
have experience.
Other self-employed expediters may look at it differently, but Diane and I don't even think about how much money per hour we make in our one-truck expedite business. We think in terms of gross revenue per month and per year, and profits after expenses.
In this business, as with most self-employed endeavors, it is hard to tell when you are on the clock and when you are not. When you are driving down the road or making a delivery, that is easy. You are on the clock. But what about when you are sitting at home doing your income taxes? Are you on the clock or off?
Maybe you can divide it up. Are you on the clock only when gathering info for your Form 1040 Schedule C and off the clock when working on the rest of your Form 1040?
What about if you are between loads on a Saturday and you decide to take the truck in for an oil change. Are you on the clock? Do you add those hours in to your total hours to calculate your pay per hour for the week?
If you arrive at a consignee's driveway dock at midnight but cannot deliver until 8:00 a.m., so you park and go to sleep, are you on the clock while you sleep or not? If the freight is such that you must remain awake to be in attendance of the load, does that then put you on the clock you would use to calculate your hourly rate?
Say you deliver on a Friday morning and wait for your next load offer, which does not come until Monday night, and it is for a Tuesday morning pickup. Is any of that time on your clock?
The only expediters I have heard seriously consider their hourly rate are those who are not doing well and are coming to terms with the fact that they may do better as an employee in an hourly job.
greg334
Veteran Expediter
This IS THE statement that says more than Phil has said in the thread.
Just taking it apart, bottom line, compare profit, relationship to time invested and educated business decision - all mean a lot and should to everyone who reads this.
Phil, I don't know where you had your financial training but again, what works for you don't work for others. You have been successful in your business but really...... re-defining ROI.....plaeeeese?
Come on don't be so obtuse about the subject, you know how to define work time and off work time. You know how important this is...... come on....
I know someone who is more successful than you and he figures his hourly rate based on the time he spends with that truck, on duty, drive time and sleeper time - because these are requirements for logging.
Many don't understand that their ability to serve the customer or company they are contracted to when they tie up their hours (meaning Hours of Service). Balancing hours is very important to how well you perform in this business.
Also just to throw this in, many are not the financial wizards that others are and need to think in terms of hourly rates to help them balance things out and make decisions, nothing wrong with that.
Time is money in more ways than most can realize.
Time is money, but money isn't everything.
When we entered the expedite business, we did so with five stated goals. Only one of them was financial. If expediting was for us ONLY about the money, we would be in an ER-unit powered by a tractor with a modest custom sleeper. By moving into a truck like that, we could substantially increase our revenue and net. But with the five goals we have, the truck we have is the perfect choice.
When we entered the expedite business, we did so with five stated goals. Only one of them was financial. If expediting was for us ONLY about the money, we would be in an ER-unit powered by a tractor with a modest custom sleeper. By moving into a truck like that, we could substantially increase our revenue and net. But with the five goals we have, the truck we have is the perfect choice.
The number of hours you work has nothing to do with the choice of C or D truck. You work almost the same number of hours in either truck... except the larger truck probably takes a little longer to get from point A to B and probably takes longer to load and unload. But the higher freight rates offset the extra time.
Let's look at the choices like a roofer might make to evaluate a bid on roofing a house....
Say the homeowner offers the roofer $3,000 to do the job.... or gives the roofer the option to take $4,000 and pay for the materials. Given the choice he would estimate how many bundles of shingles and felt would be needed, along with the cost of delivey to the jobsite. If he can aquire these materials and pay for delivery for $750 he would take the $4,000 offer and make $250 extra. If the materials cost $1,000 or more he would take the $3,000 offer and maximize his profit.
When you compare the Profit of a D vs C truck they seem the same. So the decision would hinge on other factors... like comfort, ability to put in overtime, lamount of manual work loading and unloading... etc.
The roofer may go with the option that makes less profit IF it makes sense... such as ... he buys the materials and does the job WHEN he has help available. Maybe his brother can help him on weekends, maybe he has rented equipment for another job and can use it for free on the new job before he has to turn it in. Maybe it is going to rain next week and if he doesn't get it done now he will have to wait 2 weeks.
A driver trying to chose between D and C trucks should go through a similar evaluation process. I think the person who started this thread was asking for the advantages and disadvantages of owning a D or C vehicle.
I personally like the comfort of a D vehicle while I hate stopping at scales and keeping records for the man.
I like the option of getting more (and larger) loads with the D.
I like the much lower price and financing of the van because it is far less risky should the economy take a sharp decline.
I like having double the fuel mileage of the van. I don't think freight rates will rise nearly as fast as fuel prices.
Perhaps running a van and pulling a small travel trailer would be the best of both worlds. Is anyone doing this? I would always be at home althought the towing would take more fuel and slow me down. Yeah.... I sometimes think outside the box.
arkjarhead
Veteran Expediter
I went to sleep last night and woke up to find out it was 2029 already!!!!!! Rich gave a prediction in a post about 2029 that dealt with Phil subitting a two line post. Man how time flies.
Jefferson3000
Expert Expediter
What looked and started like a good legitimate question got derailed by someone with a foot in their mouth.