Looking to become OO. Am I doing right math?
#1
10-09-2009, 01:08 AM
Looking to become OO. Am I doing right math?
Seems like economy is getting better so I am thinking about becoming owner operator again and would like to ask the same questions I asked before. I went to talk to one small company in Michigan who pays 90% gross and updated my calculations based on hauling a van and the prices they provided me. Please let me know if I’m doing a right math.
The one most important I would like to know is Average pay for 1 mile (loaded + empty). If you would take income of a year or two and divide it by all the miles of your truck of that period of time does it come out around $1.20 a mile? The maintenance cost was just my guess. Would you be able to share how much do you spend on all of the maintenance of the truck per year including how many miles you drove per year and what is the mileage on your truck. Volvo 780 Truck price out of the door $30,000.00 Trucks mileage 670000 Trucks mileage after its paid off 982000 Lifetime of the truck (miles) 1000000 Loan Interest (%) 10 Loan term (years) 2 Payment $1,384.35 All interest $3,224.35 Average miles (loaded + empty) per week 3000 156000 /year Average pay for 1 mile (loaded + empty) $1.20 Fuel ($/mile) $0.45 mpg 6 fuel $/gal $2.70 Maintenance ($/mile) $0.10 $15,600.00 /year Truck value decrease ($/mile) $0.0909 truck price divided by truck's left lifetime Toll Roads ($/mile) $0.0300 $30.00 every 1000 miles Fuel tax ($/mile) $0.00564 Interest ($/week) $29.31 whole interest divided by truck's left lifetime Bobtail insurance ($/week) $38.46 $2,000 /year Cargo insurance ($/week) $159.00 Truck registration ($/week) $47.95 $2,500 /year Permits ($/week) $5.75 $300 /year Highway tax ($/week) $10.55 $550 /year Trailer rent ($/week) $159.00 $681 /month Cell voice + data ($/week) $23.33 $100 /month Weekly income $3,600.00 Weekly expenses $2,503.00 Weekly profit $1,097.00 1 mile cost $0.83 1 mile pay after expenses $0.37 Truck value decrease + Interest (ends up close enough to actual payment) $1,312.43 
#2
10-09-2009, 01:25 AM
while I am not an owner operator, the one thing I believe you are wrong on, is depending on 3000 miles a week, and every week. And that for 52 weeks a year.
You will take time off, you will break down, and bad weather will cause you to have to stop. I would not bank on 3000 a week, but a more realistic 2200 to maybe 2500 a week.
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#3
10-09-2009, 01:49 AM
while I am not an owner operator, the one thing I believe you are wrong on, is depending on 3000 miles a week, and every week. And that for 52 weeks a year.
You will take time off, you will break down, and bad weather will cause you to have to stop. I would not bank on 3000 a week, but a more realistic 2200 to maybe 2500 a week. Im a company driver right now and my average year to date is 3220 miles per week. Didnt take a vacation yet 
#4
10-09-2009, 03:16 AM
Being tied onto a GOOD company and not taking time off is one thing. Being an owner and running load boards and booking all of your own loads and doing all of the involved paperwork and scheduling and taking care of all of your own maintenance and everything that goes along with it is another. I have been doing my own research and planning for next year and I am not even getting in the ballpark of 156,000 miles for the year to estimate my numbers. I think that is a pretty unrealistic number for MOST people. In my own opinion I think it is far more realistic and practical to plan for the lowside on mileage and the highside on any potential expenses and anything that comes over that is a good bonus to your business. I think it is far more realistic to PLAN for somewhere between 110 to 125 thousand miles on the highside when figuring up a business plan.You gotta prepare yourself for the worst and the low end and when things are running good it will be smooth sailing. Dont over extend your profits before you even start getting them coming into the truck. just MY opinion and some of the actual owners here my disagree but it makes sense to me that way. And oh yeah, I'm not so sure about that economy currently improving much if at all right now as you pointed out.
#5
10-09-2009, 12:45 PM
this is what it ends up if driving only 2200 miles a week.
Volvo 780 Truck price out of the door $30,000.00 Trucks mileage 670000 Trucks mileage after it's paid off 956000 Lifetime of the truck (miles) 1000000 Loan Interest (%) 10 Loan term (years) 2.5 Payment $1,134.34 All interest $4,030.27 Average miles (loaded + empty) per week 2200 114400 /year Average pay for 1 mile (loaded + empty) $1.20 Fuel ($/mile) $0.45 mpg 6 fuel $/gal $2.70 Maintenance ($/mile) $0.10 $11,440.00 /year Truck value decrease ($/mile) $0.0909 truck price divided by truck's left lifetime Toll Roads ($/mile) $0.0300 $30.00 every 1000 miles Fuel tax ($/mile) $0.00564 Interest ($/week) $26.87 whole interest divided by truck's left lifetime Bobtail insurance ($/week) $38.46 $2,000 /year Cargo insurance ($/week) $159.00 Truck registration ($/week) $47.95 $2,500 /year Permits ($/week) $5.75 $300 /year Highway tax ($/week) $10.55 $550 /year Trailer rent ($/week) $159.00 $681 /month Cell voice + data ($/week) $23.33 $100 /month Weekly income $2,640.00 Weekly expenses $1,959.32 Weekly profit $680.68 1 mile cost $0.89 1 mile pay after expenses $0.31 Truck value decrease + Interest (ends up close enough to actual payment) $985.80
#6
10-09-2009, 01:11 PM
When you say O/O, do you mean you'll be leasing to a carrier? If you have your own authority you will spend a huge amount of time doing administrative tasks. Doubt if you can average those miles.
IMO, anytime anyone buys a used truck, they need to set aside at least $15,000 for repairs in the first year. That's in bank, not a line of credit. I don't see anything for meal expenses in there. To me this is an operating expense, but of you're over the road already I suppose you know that. If you are pulling a van under your own auth, I think you should budget for $1 loaded mile in revenue and 10% dead head. So ~ $.90 for all miles. Last edited by rank; 10-09-2009 at 01:19 PM.
#7
10-09-2009, 01:34 PM
I would be hard pressed to name 5 dry van general freight jobs that you could make $1.20 a mile for all miles. Maybe $1.20 a mile if you include the fsc, but not averaging in all miles ran. If you can find someone like that especially in MI I would be very surprised.
I think you are pretty realistic in your operating cost at .80-.95 cpm, but I also wouldn't plan on 156,000 miles a year in my buisness plan. Why would anyone want to run those kind of miles anyway? Too much pressure if you ask me. Concentrate on finding a better company to lease onto (if that's what you are talking about) and get into a specialty type of work ie: Oversized, step deck, tanker or anything that doesn't involve dry van. 2 years ago I averaged $1.70 a mile for all miles and last year was $1.90 a mile for every mile my truck traveled. I don't have the exact break down for the cost per mile with me but my mileage was pretty close to 125,000 each year. I pull chemical tanker.
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#9
10-09-2009, 07:50 PM
When you say O/O, do you mean you'll be leasing to a carrier? If you have your own authority you will spend a huge amount of time doing administrative tasks. Doubt if you can average those miles.
IMO, anytime anyone buys a used truck, they need to set aside at least $15,000 for repairs in the first year. That's in bank, not a line of credit. I don't see anything for meal expenses in there. To me this is an operating expense, but of you're over the road already I suppose you know that. If you are pulling a van under your own auth, I think you should budget for $1 loaded mile in revenue and 10% dead head. So ~ $.90 for all miles. I will be first time truck buyer so i will not go to own authority right a way. I take food from home and dont eat at any restaurants. I calculate $0.90 per mile is expence. So where is the profit?
#10
10-09-2009, 07:52 PM
Do yourself a big favor and look farther for trucks. 30k for a Vulva with 670k miles is a bit high. I found some used Mcelroy trucks, 05 International 9200s with miles from 421k to 588k for 18k to 21k. Very basic flatbed trucks. Actually went and looked at them last week in Meridian, MS. Might be buying two, which they said they would go lower. Keep in mind these trucks aren't being sold through the International UTCs which would bring up the price further. The salesman named Clint told me that Mcelroy was paring down their fleet since they don't have as much business through Lowe's and the like. UTC wouldn't buy them because they have enough trucks now. I haven't seen trucks this low with the miles anywhere else yet... always looking though. Do some good research and you'll find some good deals on trailers as well. Talked with a manager at Nalley Motor Trucks two days ago and he said there is a possibilty that Swift will be dumping an enormous amount of Volvos into the market. That means if Volvo is your thing your 30K truck will be worth about 7K. Maybe wait and see if this comes true, I know they are in a hurt right now.
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