Dollars & Sense

Time is Our Biggest Asset

The owner operator has costs that the company driver does not.

One of these costs is “Fixed Expense”. This is the cost of ownership. This expense is unrelenting. It is spent every day regardless if the tractor is moving or sitting. A typical fixed expense is about $80.00 and it happens every day until the last tractor payment is made. (After that last payment is made there will still be fixed expense, although it will be reduced.)

Unlike the company driver, when the owner operator takes time-off, this relentless expense of about $80.00 a day is still incurred even though the truck is sitting. Because of this unyielding “penalty”, time-off has a fresh meaning for the owner operator. But there are a few clever things an owner operator can do to lessen the shock of this “penalty” of fixed expense while still having time-off.

First, look ahead for a full year and set goals based on what isreasonable and what is possible.  There are 365 days in a year. Many drivers will say they would like about 550 miles per day.  Do the math and that comes to 200,750 miles. But, we’re human so that’s not possible. However, is 255 working days possible? Is 550 miles a day average reasonable? If these are feasible, then the miles would total 140,250. Not bad!

Are 100 days of time-off right for you? (Remember to allow time for mechanical, weather, layover & holidays). We’ve seen trends that say if operators commit less than 255 working days per year that their success is marginal, or worse. Some operators may need 290 working days to be successful. We suggest you figure out now how many working days remain in 2003 for you to work and then do the same for all of 2004.

Then you’ll be better prepared and you’ll be “working forward” by mapping out the number of working days you need to succeed, instead of working to catch up without having a plan.

Understanding and using freight cycles gives you another advantage. Freight cycles have been happening for years and aren’t likely to change. There is a yearly freight cycle, a quarterly freight cycle, a monthly freight cycle and a weekly freight cycle. Every sector of the trucking industry (van, flat, reefer, HHG, tank) will have different cycles and even individual companies in the same segment may have differences.

Yearly. The yearly fright cycle depends on the industry you are in. For one segment of the industry it might be; slow in the first quarter (Jan-Feb-Mar) of the year. Then the next two quarters (Apr-May-Jun & Jul-Aug-Sep) things pick up and are more normal. Then the last quarter (Oct-Nov-Dec) is often the busiest quarter of the year.

Quarterly. A quarterly freight cycle is where the first month of the quarter will be slowest, the next month will be more normal, and the last month will be the busiest month of the quarter.

Monthly. This is where the first week of the month will be slowest, the next two weeks will be more normal, and the last week will be the busiest week of the month.

Weekly.  Friday is the busiest day of the week and Monday is the next busiest day of the week. If you consistently fail to use these two days it will be tough to be productive.

You can get in synch with freight cycles and use them to your advantage. Match your time-off with the slowest time of the calendar – yearly, quarterly, monthly, weekly. Then take your time-off when it won’t hurt you as much such as the first quarter of the year, the first month of the quarter, and the first week of the month. And give yourself the advantage by being available for work during the busiest time on the calendar.  

•         Ask your Fleet Manager or Operations Manager to explain your company’s freight cycles to you in plain words. Write those cycles down on a calendar and then plan your time-off and plan availability for work for the rest of this year and all of 2004 by matching your work and matching your time off with those freight cycles.

•         Plan vacation time (& major repairs) in the 1st quarter when it is usually the slowest.

•         Stay out & stay in-service during the busiest quarter of the year.

•         Never take time-off during last week of the month or last 2 weeks of the quarter when it is the busiest and when you have your best opportunities.

•         Set out to make each week profitable. Then get four good weeks for a terrific month.

–        Be available for work on the busiest days of the week - Friday is the busiest day of the week – be under load on Friday & run over the weekend.

–        Try to deliver on Monday, it sets up the rest of the week and Monday is the second busiest day of the week. NOT using Friday and Monday makes it tough to have a profitable week.

–        Every day of the week is different. Think carefully about what loads you’re tempted to refuse on Wednesday, Thursday, and Friday. The “Bad Load” may be the one you really need to be profitable that week.

–        Try staying out for a longer period before you take time-off and then make it up by bundling more days off together. This might work really well if you run hard the LAST three weeks of the month when there is more freight available and then take time-off during the FIRST week of the month when it is slower.

–        Take loads through home instead of to home. Once you stop productivity, it’s harder to get up to speed again and it takes more of your time to get restarted.

–        If you lose a day on the road, stay out an extra day and make up for it.

  

The owner-operator has to look at “time off” differently than the company driver.  If a company driver takes a week off, he loses only the opportunity to make a weekly paycheck.  But if an owner-operator takes a week off, not only does he lose the opportunity to make a paycheck, he also has fixed expenses that are costing him money,.  When he returns to work, he not only has to replace the lost income, he also has to quickly cover the fixed expenses that were spent during his time off. 

Look at old habits. What will it cost if you don’t change? Did you become an owner operator to make more decisions? To have more control over your life? To take more risk and also to reap more rewards? If so, operating like a company driver can be a disaster. Instead, try matching your time off and your work time with freight cycles for the next six months and also the next year. It will mean less conflict and better productivity. 

American Truck Business Services • PO Box 1000-Kittredge, CO. 80457 • 888-640-4TAX • www.attrucktax.com
Used With Permission © Copyright 2003, ATT • American Truck Tax, LLC.