GMAN,

Could I trouble you to justify your figure of $1.50/mile?

If you agree with Rawlco's figures, that's fine, but I really am wanting to be completely fair an honest with future O/Os - but we (the carrier) have to make a few bucks too.

The reason I am a bit persistant here, is because at the moment, I feel confident that we can roll teams pretty much as many miles as they want at my current proposed rates and the truck can make a fair dollar- at the same time, we'll make a few bucks.

With the current national average price of fuel, if we were to up the rate to agree with the popular $1.50/mile, I feel that trucks will be sitting - and dead heading more - while seeking the higher paying freight. Of course, that senario will get worse as fuel prices rise.

In the end, I feel that sitting time + dead head miles would make that $1.50/mile alot less than my propsed $1.26 / mile.

Thoughts?

 

I am. I have every thing all set to go and picking up my truck on Thursday. I did research on being leased onto someone in case I couldn't get insurance and that was the best I could find for a person without experience.

 

Once again, that "blinding" gross # game! :sad:

Example, let's say cost per mile=$0.90.
Truck#1 $1.50 a mile, 2000 miles, gross revenue $3,000, cost $1,800, net $1,200

Truck#2 $1.26 a mile, 3,000 miles, gross revenue $3,780, cost $2,700, net $1,080!

Now, tell me, who in a right mind, would run extra 1,000 miles, to make $120 less? :roll:
Yet, it's very common! :sad:

 

I haven't seen anybody offering $1.50 for a leased on owner operator. It's nice to talk about but can anyone actually point to a company that is advertising that rate?

 

Ok,

Truck needs to sit for 48hrs per week waiting for higher paying freight.
With fuel at $3.00/galon, that means approx $144.00 per week gets idled away.

Right off the bat, that's $24 extra dollars - even though the per mile rate is less.

In order to get to the higher paying freight, dead head might be an extra 300 miles per week - or more, but for now, let's use 300 miles.

At .90 per mile to roll, that is an additional $270.00 burned up for dead head.

So here we are making $1.50 per loaded mile - but grossing $294.00 less per week thanks to sitting/dead head vs @ $1.26!

Go figure.

Per mile figure is not all it's cracked up to be. - Agreed?

 

My figure is very simple. It is based in the actual cost of operations plus a fair profit to the truck. When you break all the costs down there isn't enough profit to run for less. You are forgetting some expenses in your figures. There is nothing for maintenance, such as tires, oil changes, etc., And that doesn't include a maintenance fund for major expenses. Tires and oil changes will run about $0.07-0.08/mile. Just taking out these two expenses will reduce their wages to the point that they could make as much or more driving a company truck. Money should be put aside for major repairs, such as replacing an engine, transmission, etc., There is not enough to put money in a maintenance fund. An owner operator should be able to put in $0.10-0.15/mile until the fund reaches at least $15-20M. The owner operator will also have his own insurance costs which will run approximately 3-4% of the states value of his equipment. I am not even talking about any taxes, such as Social Security, etc., Then there is fuel taxes, if the owner operator pays those. I have no doubt that I could start leasing on owner operators and take a percentage and they could still make at least $1.50/mile. If you cannot make it work and pay the owner operator at least $1.50 then perhaps you are booking freight at too cheap of a rate. There is plenty of decent paying freight. There is no need to haul cheap loads. Supply and demand will dictate prices. If you reduce capacity by not hauling cheap loads, prices will come up. Most of the percentage carriers seem to pay around 8% more to the owner operator for using their trailer. I have no doubt that you will make money paying these rates to owner operators. The problem is that the owner operator isn't going to come out. One reason so many owner operators get into trouble is that they think they are making money because they have cash flow. To me, it isn't worth the effort to buy and maintain a truck if all you are getting out of the deal is drivers wages, if that. We have broken some of these costs down in previous posts, but if you want to break things down further, we can certainly do so. However, with just the basics listed and using your numbers, I think you can see that the owner operator isn't going to do very well.

 

It's not the company, it's you!
The company, only should give you an ability, to make it!
For example, at LS, some O/O make that, and above, and some barely go over "buck a mile"!

The company, i'm leased to, advertise $1.35 average, yet just this week, i exceed $2.00 a mile(hub) including dead head, and going home! :wink:

 

Those #, you did post, is very arguable!
First, if i sit for 48 hours, didn't mean, i'd idle for 48 hours, and if you have to, it will be cheaper to rent a room, in a most areas!

Second, i assumed, that dead head, is included in those miles, and we are talking average revenue per mile, that's how i always figured mine!

And last, but not least , even if your "adjustment", is correct, it's still lives you with extra $174 net, for an extra 1,000 miles.... :roll:

 

I believe that you ignored a lot of expenses NoProblem. I posted:
And you are proposing to take that out of the operators $0.50 per mile wage. . . :shock: I don't think so.


I will take a few more minutes now to list individual estimated expenses.

Fuel I'll accept for the minute your $0.51 per ACTUAL mile and the $1.26 rate including FSC to be adjusted when fuel does go up. The problem still is that IF only 90% of the miles are paid, and IF we include idling consumption, THEN the actual fuel cost per PAID mile is going to be around $0.60 for last week only.

Operator wage. We agree $0.50 per paid mile. This will include personal taxes, Social Security, etc.

Truck Payment = $0.25 per mile This is for a new truck under warranty. (less if you get more paid miles)

Plates, insurance, = $0.08 per mile.

Operator health insurance and workers comp (or similar) $1,000 per month/10,000 miles per month = $0.10 per mile. A company driver will get this in addition to their per mile pay, so that should be in addition to the $0.50 operator wage above.

Maintenance costs tires, oil changes, minor repairs (tractor only) = $0.05 per mile.

Maintenence rainy day fund = $0.05 per mile (Again this is for a new tractor under warranty, a used tractor will require more maintenence)

Trailer rental costs (or are you going to be providing the trailers?) = $0.10 per mile.

Tolls and incidental expenses such as fuel tax, highway tax, permits. . . = $0.10 per mile.

So I get $1.83 per mile for a more realistic cost.

You can quibble all you want and try to split pennies but unless there is a lot of stuf paid for already out of that $1.26 per mile you are offering I doubt anyone will seriously take you up on that offer.

You do realize that C.R.England is going to start paying their independent contractors up to $1.50 per mile now AND continue with the $1.25 per gallon fuel price at terminals, don't you? And that United has a division that pays $1.50 plus fuel surcharge for all hub miles. Your $1.00 plus FSC doesn't come close.

This is not to say that you won't get a few owner operators to sign on at that price, but you won't have them for long when they find a better deal.

 

That's why, to avoid any confusion, i've always counting my revenue, per ACTUAL, HUB mile, including every mile truck run, w/o any exceptions!
It's sure, didn't look that good, as a "LOADED BOOK" mile, but it warms my heart, when i'm going 120 miles to the house, and still getting the same revenue!
BTW, my actual fuel cost for the last week, was $0.43 cpm! :P