Profile For Larry K.

So the information that Grumpy Old Man just posted is all information that I’ve read before (numerous times in fact). That being said that information would appear to validate my points rather than negate them. If the 2017 average marginal cost per mile reported by motor carriers increased to $1.69 per mile, and if the combined cost of driver wages & benefits accounts for 43% of that cost per mile, then we have the big boys reporting a driver expense of $0.727 cpm which leaves the overall cost of equipment operation at $0.963 cpm. Now that operational cost is $0.053 cpm higher than what I was figuring. The question then becomes can an individual husband/wife owner-op team operate an individual truck at less expense than the big boys can with all their resources and buying power? I’m sorry but to me the answer to that would be you bet your butt they can! I have yet to have ever been in the financial sector of a business, manage a business, or own a business (and I’ve done each) that didn’t see it’s per unit profit margins decrease (drastically in fact) with the increasing costs associated with scaling up that given business. To operate as the current company drivers we are we have the support of dispatchers, planners, a customer service department, a breakdown department, a routing department, safety department, compliance department (list goes on and on obviously) all working from multiple large facilities which themselves represent massive overhead. The overwhelming vast majority of the tasks these individuals perform will be conducted by us as owner/operators from a “facility” in which the overhead is represented by our current residence and the very equipment we will be operating. In addition to that I have to consider that our particular company, and I assume probably many of the large companies, are often criticized by owner-ops as being willing to undercut the little guy and haul cheap freight. In our particular case part of that comes from being a team based company, however we will be a team as owner-ops as well. Despite the willingness by these big carriers to haul cheap freight OOIDA still reports that of all trucks on the road 90% are owner-op or, more specifically, independent carriers operating fewer than ten trucks. This would imply to me that our real competition comes in the form of our being able to establish ourselves as being within the upper crust of that 90%, something I have complete confidence in our ability to do given our experience thus far.

As far as their use of the word “salary” in that graphic, I would agree that there are likely numerous individuals out there who would look at those numbers and believe they were going to average $184,803 in PERSONAL gross income as an individual owner-op and fail to understand the difference between salary and revenue. Such individuals would be of a level in which they really have no place in this conversation however.

At this point in the conversation I’m afraid I have yet to see an individual who appears to be a truly experienced owner-operator provide me with information which would indicate that a reasonably intelligent person cannot turn a greater profit as an owner-op than one can as a company driver. Nor have I seen anything indicating there is a major flaw in my preliminary calculations. (Not to mention my wife and I see numerous financial benefits that do not necessarily equate directly to cpm. Like being able to utilize our HOS clock much more efficiently when we are self-dispatching. As company drivers this makes a MASSIVE, quantifiable, difference in our income when our planners/dispatchers utilize our hours efficiently. Unfortunately, we are one of many trucks and often our individual efficiency is not their top priority. It would however be ours.)

Well that didn’t work! I put some “instert truck specs here” and things of that nature that were bracketed by “<“ and “>” which failed to post due to being interpreted as html tags. Hopefully you can figure out what I was getting at and read between the lines.

Gentlemen,

Far be it from me to give the impression that I am in any way blinding myself to some good advice based upon some emotional desire to be a hotshot truck driver as I assure you that is not the case. If it were I’d be out there looking at some shiny new Peterbilt rather than the boring old used trucks that make financial sense (or seem too) but are nothing to run around showing off. I am also well aware that the prevailing sentiment on Truckingtruth is to absolutely and unequivocally stay the heck away from going owner/op and stick with being a company driver. The question is...Why? And I don’t mean “why” in the sense that I’m looking for “just don’t do it, it sucks, you’ll go broke”, I mean “why” as in where, specifically, are my numbers so far off base. So I’m going to make a few observations/inquiries and please, don’t take it as an insult to anyone’s intelligence but rather an inquiry to you experienced guys from a guy who’d genuinely appreciate your insight.

1) I have to assume that if you gentlemen are so adamantly against going O/O that you have been there and done that. If I’m correct and that is the case then it means that at one time you felt it was worthwhile and you could make a decent living as an O/O and that upon doing so you found out otherwise. So my question would be this: After becoming an O/O what, specifically, turned out to be the error in your initial thinking? Meaning, when you thought it made financial sense you were failing to account for . Please, tell me your story (or refer me to where you’ve already told that story). Incidentally, it would be nice to know which of you have/have not been O/O’s yourselves.

2) We meet O/O’s all over the country who clearly don’t have a pot to **** in. That being said I’m pretty sure it was on this forum in which I learned of the term “terminal rat”. Much like the the numerous company terminal rat’s we’ve run into we can often talk to one of these clearly under achieving O/O’s and within a short period of time determine that it’s really no surprise that they are failing. (Many are leasing a truck from the very company they are driving for and calling themselves O/O’s) On the flip side, we also run into numerous O/O’s that appear and claim to be doing pretty dang well for themselves, and have been for many years. Now, as stated not far back in the thread my wife hates doing the forum/blogging thing, but she has read your comments regarding the anti-O/O sentiment and is asking “WTF? It’s as though they are convinced that it’s impossible to be a successful O/O!”. So my question is this: When my wife is standing in some truck stop laundry room talking to a woman who is telling her stories about running O/O for the past 20 years with her husband, and that woman is showing her pictures of her grandkids at her nice home on 100 acres in Kentucky...are we to assume they are full of it, lying to us, attempting to save-face, and secretly they’re living off some family trust fund?

3) Ultimately, it all comes down to the numbers. If your sentiment that one cannot make money as an O/O is accurate (meaning above and beyond that of a company driver) then it boils down to one of two possibilities. Either I am WAY off on the cost of operating the truck OR the freight rates are too low to support the cost of operation and still turn a decent profit. That being said most costs or fixed or at least semi-fixed in relation to miles run. (Truck pmt, insurance, fuel etc. can all be projected with reasonable accuracy) The big wild card is of course the maintenance budget (or again, some major expense I have completely and utterly overlooked). My question then would be: What budget, expressed in terms of cpm, would you say is a reasonable projection? I know it varies greatly, obviously. What I’m looking for here is experience. “I ran a for the past three years and when all was said and done my maintenance expenses worked out to over the past three years.”

Here’s the thing. If you think I’m one of these individuals whose lifelong dream was to be a truck driver to the point that I now have such an emotional need to own my own “sweet” truck that I’m willing to blindly walk into an impending bankruptcy...you’d be incorrect. I enjoy driving truck OTR, but the reality is it’s just a job to my wife and I. That being said I’m failing to see where your dire warnings translate into actual numbers. Furthermore, this is the internet. I love this forum and enjoy reading each of your posts (“your” referring to some of you who have commented specifically). That being said, for all I know I’m talking to handful of guys who utterly failed at running their own businesses or have corporate interests in dissuading company drivers from branching out on their own. (Again, no insult intended and I reiterate the “for all I know” and “this is the internet” part. Which I’d imagine you each could understand.)

Raelene,

Glad you’re enjoying. To be perfectly honest my wife absolutely hates the whole vlogging and blogging thing which is why she’s never chimed in here. She spends enough time behind the wheel that the last thing she wants to do is talk about it in her free time and she can’t even fathom why I want to! LOL! (Initially I wanted to do a video “vlog” on YouTube but if I pointed a camera at my wife in the truck she’d throw the dang thing out the window.) The answers to your questions are pretty easy though as she’s answered these same questions to numerous women in person. 1 and 2 are essentially the same. Her biggest challenges are without a doubt A) getting enough sleep on the road, and B) being away from home/friends/family as much as we are. Those were her issues from the moment we began training and remain the same to this day. As far as driving with your husband she’d say “you better like him!”. We’ve been attached at the hip for years and honestly we spend less time together on the road in the truck than we ever did running our own business. Even at that she wants to kill me at least 90% of the time! (And we get along a LOT better than many other husband/wife teams we’ve encountered!)

Old School - I genuinely and honestly appreciate your attempt to help and I very much enjoy your posts on this site. Unfortunately, some of your financial comparisons would imply that the business end of things may not be your particular forte. To liken the 5% profit margins of a major trucking company, operating a large fleet of trucks, to the profit margins attainable by a single owner-op driving his/her own truck is comparing apples to oranges. If a company driver is making $0.50 per mile and he manages to pull a profit $0.55 as an owner-op, after all expenses are said and done, he has increased his personal income by 10% (benefits being left out of this to make the numbers simple). I assure you he has neither pulled off a miracle nor is he “beating all the best and brightest” from the publicly traded trucking companies! Let me give you an example. When we first upgraded to drivers I believe they had us starting at $0.46 cpm. Now a couple months back I was at the Petro in Sparks, NV getting a CB peaked and tuned and there was a fairly GQ looking older gentleman, an owner-op, with a beautiful cherried out truck there getting his new Mack-daddy CB installed. Got to talking to him for over an hour about his truck and what he did for a living (specifically, aside from just being a truck driver). Turns out he’s been leased on to an entertainment transport company for the past decade (gave me the name and all the info). He began telling me stories about working the last three Presidential inaugurations, parking on the National Mall and dealing with Secret Service. He told me about being on tour with Reba Mcentire and Madonna (he can’t stand Madonna but loved that she paid an additional $1.00 per mile). Moral of this story? He drives an average of 1,600 miles per week at a minimum rate, to the truck, of $5.00 per mile! So let’s just say hypothetically that his truck expenses we’re running him a whopping $2.00 per mile (which would be nuts). That guys gross profit to the truck ($3.00 per mile) was over 6 times what we started at.

Now our trainer, who celebrated 20 years with the company recently, was making over $0.80 per mile (I believe it was $0.84 to be exact) as a company driver training husband/wife teams. (Saw his pay stubs at one point.) His per mile gross as a trainer would have represented an income increase of at least 74% over our starting wage.

The point? I don’t pretend for a moment to have it all figured out. Not even remotely close! That being said if you’re trying to convince me that an owner-op can’t pull a profit of at least at least $0.85 to $1.00 cpm, I’d have two things to say to that. One would be that I’ve met numerous owner-ops that I know are doing a heck of a lot better than that. The second would be...watch me, because I know those are attainable numbers.

Incidentally, regarding the truck. We’d be on a 39 month loan which we’d pay off in 24 months. We’d do so with a pre-established maintenance budget plus a minimum of $1,400 per month going into that maintenance budget (closer to $2k per month if we run the same miles we’re currently running). Truck is a used truck. We ran 212,000 miles in our first year so, based upon those kind of miles, we’re figuring replacing the truck between the 2 and 3 year mark. Figuring the truck at $0 value at that point. If we managed to keep it rolling for the full 3 years we’d really be stylin!

Old School - Well, I certainly appreciate where you’re coming from. My wife and I did however run a very successful business for eight years which we relinquished only due to regulation primarily (part of it was the market getting flooded and the subsequent decreasing profit margin that made the regulations not worth it). When I calculate our true gross pay as company drivers, and compare that to anticipated gross as owners, I obviously have to account for the company paid portion of our benefits as well. Taxes are a part of life that have to be calculated no matter what. The real question is am I missing some completely hidden cost of operating the truck? The rest is just running another business. Don’t get me wrong, I’m not anticipating getting rich. I do however anticipate that we should be able to achieve about a 63% increase in our overall income after all is said and done.

Also, if a trucking company were to say their average cpm were $1.70, wouldn’t that include driver pay/benefits, training expenses, plus the permits/licenses/tolls that our company would be covering?

Old School - My question at this point would be where the massive discrepancy is coming from then. Obviously truck pmt, insurance, and trailer lease are fixed. Fuel economy should be conservative in comparison to real world numbers we’ve experienced over the past year, as should the cost per gallon (if it went up to $5 per gallon that would add $0.21 per mile). As I’m covering the items we’d be responsible for upon leasing onto our chosen company this would imply that I should be figuring $0.90 cpm for maintenance or that there is a major hidden cost I’m completely overlooking. Any hints for me?

Old School....Actually I welcome any correction to my thinking that an experienced guy might have. I am calculating a high end cpm at $0.91 per mile. As a part of this conservative calculation I am figuring running 3000 miles less per month than we’ve averaged over the past year, paying an extra $1000 per month on the truck payment to kill some interest and expedite payoff, $0.10 per mile for maintenance budget, fuel at $3.50 per gallon, 7mpg fuel economy (we averaged 7.9mpg for the first 50k on our current truck and 8.0mpg for the last 56k miles. About 7.8 over 130k on our last truck.). Insurance and trailer lease are also calculated into that number as well of course. I am then reconciling that against the average anticipated rate quoted by the company we will be leased to and then comparing that to the published average rates for various freight lanes over the past few years (Average outgoing rates for the worst five states vs average outgoing rates for the top five states.) If I’m missing something major by all means let me know!

Finally on the 16th we were informed that a route had been found into Wilmington and that we were to be a part of a large, police escorted, convoy that evening. By about 4:00pm we were connected and staged to depart. While we were exempt from hours of service we had just changed drivers as we were trying to prevent the Qualcomm from showing violations as much as possible. A state trooper came to our window and instructed us to keep the convoy tight, keep lights and flashers on, and don’t stop for any lights or stop signs. My wife told them we had just changed drivers and were good to go, to which the trooper responded by saying “under these circumstances I don’t care if you change drivers while you’re going down the road”. My wife and I laughed as we figured that was something we’d never hear again! The drive into Wilmington was the most round about route one could imagine and, despite the police escort and no stops, it took 6.5 hours to get there...but we made it. To the best of my knowledge we were a part of the first convoy to make it to the coast. We were left on our own to make it back though and the total round trip took nearly 16 hours in total.

In the following days roads fell to flooding like dominoes. In all subsequent runs we were left on our own to figure out how to get the loads through. At one point my wife and I actually ended up leading a small convoy of five trucks in which she drove as I attempted to navigate the maze of closed roads. If the DOT said a road was flooded, you could bet it would be. If the DOT said a road was open, you probably had about a 30% chance of getting through. I have several stories from these runs but, as this is getting quite lengthy, I’ll refrain.

On September 22nd FEMA announced an end to night ops and therefore had no further need for teams. At that time we were released from FEMA duties and proceeded up to Washington DC, then New Jersey, and eventually arrived at home in California late on September 27th. We had not been home since our Fourth of July home time.

Our Status and Future Plans

Over the past few months we have had numerous job offers including several as a result of being around numerous experienced drivers while working with FEMA. These range from company driver positions with major companies willing to overlook the fact that we’re still under two years, to a pretty high paying job hauling military ammunition. Of these the one we are most likely going to pursue is running owner-op with a friend of ours. We’re looking at 80% of load gross with company dispatch while being trained to self dispatch. In a relatively short period of time (months) we will move to self dispatch at 85% of load gross. At that time we’ll call all our own shots regarding how much we run (team, super-solo, solo) and where we run. In fact we just received our official financing approval to purchase our own truck this past week. Now, I promised early in this thread that I’d report some real results for those husband/wife teams looking to follow in our foot steps. My wife and I will gross $125k for fiscal year 2018 if we maintain pace for the final quarter. With that being said I’ve run the numbers every way imaginable and done so very conservatively with a great deal of padding and still feel we can smoke that as owner/ops. We’ll likely make the official leap by January however there are still a few things which may put that out as far as summer of next year. Stay tuned!