I've been driving for years but I've always been paid hourly, so I've never really payed attention to how the industry really works...

So here is my porblem, I just became the owner of a tractor (it was given to me), so I figured I'd look into O/O opportunities. Landstar tells me their average driver makes $1.63 per mile, Another company says they pay $.83 cpm. Obviously there is some fuzzy math going on. What am I missing?

What is a decent going rate for O/O's, What questions should I be asking these companies. How the heck do you make a profite at .83 cpm?

Somebody please point me in the right direction...cause the more I look into this...the more I'm confused.

Thanks![/b]

 

That sounds about right.

The $1.63 is including FSC, and the $0.83 isn't.

You don't.

 

Landstar and most other carriers who pay percentage have a wide range of rates.

 

Take a look at everything posted in this owner operator forum, and check out some other forums as well. There are good deals and bad deals out there, so you need to sort through them. Many people post their numbers, but always take them with a grain of salt.

It takes a lot of money to operate a truck. You also need a lot of working capital to pay for fuel for the three week or more lag until you get paid.


There is a lot of fuzzy math, especially with the companies that dress everything up so you will lease-purchase a truck through them. I recommend staying away from those outfits for the most part. You need to make up your own budget and estimate, then decide if it will work for you. Good luck.

 

Anything less than $1.25 and you're running for free. Get 1.30/mi and myou make 5cp,

 

If you are thinking about leasing to any carrier you need to talk to those who are currently leased to them. One thing I will caution you about is when they quote rates. A lot of Landstar BCO's (owner operators) quote the gross rate the load pays. In other words, it is the load pay before Landstar gets their percentage. Landstar also has an odd way of compensating their owner operators. They pay on 98% of the load in stead of 100%. It can make it a bit confusing to calculate the actual load pay. If I remember correctly, they pay 67% of 98% for power only. I think it is 75% of 98% with your own trailer. At 67% you are actually making just over 65% for power only and a little over 73% with your own trailer with Landstar. Confused? I was leased to them a number of years ago. At the time I did pretty well with them, but you will have to work to get the better rates. Even with the fuzzy math they use, it is still possible to make decent money with them. Just make sure when you talk to some of their owner operators that they are giving you "TRUCK MONEY" not gross pay for the load. If a load pays $2/mile that doesn't mean the owner operator is getting that much. For easy calculations you could say the owner operator would get $1.30/mile. The actual numbers could be a little higher due to the fuel surcharge.

A good friend of mine is lease to Universal AM CAN. He is doing very well. He also works on percentage. He nearly starved with them until he found some agents and lanes that have really good paying loads. That is the thing with percentage. You need to be on top of your game. Universal has about 8 other sister companies for which you can haul when you are leased to them. He also gets home almost every week.

Another carrier who pays percentage is Mercer. I believe they pay on 99% of the rate to their owner operators. I have met a lot of Mercer owner operators who have been with them for a long time. They are not as large as Landstar but rates should be comparable.

All three of these carriers have an agent based system. All three pay percentage. There are other carriers who pay percentage. All three of these carriers have a good freight base. If you can do well with any of them you can run your own authority. In fact, all of them have a brokerage department and you can haul loads for them whether you are leased to them or run your own authority.

When you talk to any carrier and they start throwing out average rates keep in mind that they may be quoting gross rates before they get their cut. Also note that when they quote "average" rate that you understand that there are equal numbers of those doing better and worse that that rate. All of them will have a learning curve. It will take time to learn where the better rates are and who has them. If you only want to run a specific part of the country you may do better or worse than others in those areas. I know Mercer has a limited presence on the West Coast. Landstar is stronger with more agents. That doesn't necessarily mean that you will get a better rate, but it could mean that you can keep moving if that is where you want to run. Personally, I prefer running where rates are higher.

 

There is a lot to take into consideration. You're saving all your receipts, now. You're making quarterly payment. You're paying all of the social security, not half of it (self employment tax) Your Highway Heavy Vehicle Use tax is due about now. I'm sure you've been plated, permitted, you've got your various insurances...

Comparing pay packages is complex as well. Mileage pay is usually around 90cpm, loaded AND MT. On top of that you get fuel surcharge.

As the Rev said, that Landstar rate includes fuel, it's computed on 'shortest miles' as opposed to the other industry standard, 'practical miles', and you don't get MT pay.

Another significant issue relates to who pays the plates and permits. Landstar doesn't, you do. There are some pay per mile carriers that pick that up.

Talk to people, sort... none of it's easy. :lol: The only thing being, things don't change too much year to year. Once you learn it, you've got it.

And then there is maintenance...

 

Thanks for the advice everyone...very informative. I've deffinetly got my work cut out for me before deciding to move foward.

 

Where are you...and what equipment do you know?