That Nagging Question: Can I Make More Money At Trucking As As Owner Operator?

But to be in a commodity business and have only a few irons in the fire doesn't amount to much in the end.

This is a great analogy! And it reminded me of another analogy:

The trucking industry is like a game of high stakes poker. You have a bunch of fat cats sitting around a table, smoking cigars and drinking Scotch, with stacks of million dollar chips sitting in front of them, all joking and laughing and having a grand old time. They're regulars at this casino, so they are also getting comped drinks, rooms and meals all the time (i.e. "bulk discounts"). These would be the mega carriers.

Then, out of nowhere, here comes this scrawny little pimple-faced kid in torn blue jeans and a Metallica t-shirt. He sits down, places his $50 in chips down in front of him and orders a Pepsi from the waitress. It's his first time at this casino, so he gets nothing comped. This guy represents a start-up owner-operator.

Now he may be able to sit at that table for a few minutes, but does anyone really think he has much of a chance of walking away from there a winner? If he's not knocked out by the big blind (emergency repairs), the other players will force him out by going all in (undercutting his rates). After all, they have the chip stacks to back it up. They can lose hand after hand and still stay ahead. All it takes is one bad hand for him and he's out.

Guys if you truly want Honest Info on the Leasing Side of Trucking start a section for it on Trucking Truth and lets see who all responds...I've been on both sides at Prime and would be willing to join in just not on the Main Board... Newbies don't need the temptations or distractions of the leasing issue...

Ken C.

They [the big players] can lose hand after hand and still stay ahead. All it takes is one bad hand for him and he's out.

That's exactly why you lose so many players in the game during a downturn in any industry. Commodities are also famous for big cycles of booms and busts like we're seeing right now in the oil industry. The big players, even if they get caught with their pants down when a big bust hits, can usually survive ok. Smaller players in the same position don't have the finances behind them to stay alive.

Another problem in a commodity business is that cash flow is normally poor and profit margins are slim which leaves you with very little cash on hand to fund operations. So getting something like a line of credit is often done through collateral of some sort. Larger companies normally own quite a few newer trucks and a good bit of real estate (terminals, drop lots, etc) so they have something to use as collateral. But a small company with a handful of trucks doesn't have nearly the collateral to use for loans and lines of credit.

One fella who happens to be a first year owner operator had mentioned recently that he was making extra payments to get the truck paid off more quickly. I thought that was awful risky for exactly the reason we just discussed. He doesn't have much in the way of collateral or cash behind him. Sure his maintenance account has enough to cover a major breakdown, but does it have enough to cover a "perfect storm" like a major breakdown followed by an extended illness followed by a slowdown in freight? No way.

Cash is king. When you're out of cash you're out of business. Hang on to your cash.

Guys if you truly want Honest Info on the Leasing Side of Trucking start a section for it on Trucking Truth and lets see who all responds...I've been on both sides at Prime and would be willing to join in just not on the Main Board... Newbies don't need the temptations or distractions of the leasing issue...

Ken C.

Ken we'd love to have you join the conversation! I agree of course that newbies shouldn't get into leasing or owning a truck at the start of their career but they're being encouraged to do so at every turn. That's the problem. It's easy to market this as a road paved with gold. It's incredibly difficult to understand the complexities and realities of such a proposition though. We know the newbies are going to get exposed to this opportunity so we want to get the information out there so they can truly understand it.

I look forward to helping in anyway by providing current numbers both good bad and ugly...I'll never recommend Leasing or going Owner Op without a full disclosure of the good bad and truly ugly

Ken C.

I spoke with a lease operator this morning at a rest area near Canby Oregon. I asked him why he leases his truck. He stated the reasons commonly given on this forum: freedom to chose routes, fuel stops, his loads, drive ungoverned and increased home time. As we talked he said these freedom's actually cost him money and he was actually spending less time at home in Oregon because it was getting more difficult to get good paying loads back into southern Oregon where he lives. He said he has a friend who does most of his driving in the Midwest and flies back to Oregon every 6-8 weeks for home time and he's considering doing the same thing because the pay is better in the Midwest. I asked him if he would consider being a company driver again and he said he would if he could find something local, but he wasn't ready to give up his dream of owning his own truck yet. He said he's been driving 7 years, the last 3 leasing. I enjoyed the chat and wished him well as we parted ways.

Gladiator 76, that was fascinating in several ways.

I asked him why he leases his truck....[basic answer - freedoms]....he said these freedom's actually cost him money

We don't touch on this aspect of it enough. Freedoms. This is one of the illusions that people have. Do you really have more freedoms if it costs you money to use them? No. Like you're free to turn down loads, right? But after turning down a few loads you may find that your weekly mileage has dropped a bit. Why? Because the same loads you're turning down are often being turned down by others at the company. Well someone has to haul them. If you start getting too picky they're going to start cutting your miles and tell you, "Sorry, we don't have anything else." So you soon realize you don't have the freedom to pick and choose loads the way you'd like to. You can turn one down once in a while, but you do it too much and they're going to put you "in the penalty box". And remember, there are no guarantees in these leases. The company doesn't guarantee you a certain number of miles or revenues.

What about the freedom to go home anytime you like for as long as you like? You have fixed costs to pay - insurance, truck payments, your accountant, etc. Every minute your wheels aren't turning you're actually losing money. In a business with super tight profit margins how much money can you afford lose sitting at home? Very little. So yeah, you can go home more often and stay home longer but you'll go broke doing it. Not exactly a freedom.

The freedom to fuel where you like. Interesting. Why do you think the company sends you fuel routing? Because that's the cheapest fuel they have available on that route. So as a business owner are you going to purposely choose to spend extra money out of your pocket fueling at a different truck stop? No. Not if you want to stay in business.

The freedom to drive ungoverned? Same problem - speed burns a lot of fuel. So you'll spend less time driving but you'll make less money also. So what did you accomplish? Nothing.

So a freedom to me is really only a freedom if you can use it without consequence. All of the "freedoms" these companies offer you really can't be used if you want to turn a decent profit. The list of freedoms is really a list of ways you can run your business into the ground if you so choose. They don't give company drivers these options for exactly that reason.

he was actually spending less time at home in Oregon because it was getting more difficult to get good paying loads back into southern Oregon where he lives. He said he has a friend who does most of his driving in the Midwest and flies back to Oregon every 6-8 weeks for home time and he's considering doing the same thing because the pay is better in the Midwest.

So he's spending less time at home than he would as a company driver and he's actually considering flying home every so often so his truck can stay in the Midwest? That stinks! What happened to the "freedoms" of going home when you like and turning down loads if you like? Doesn't seem like he's exercising either of those freedoms. He's stuck out on the road for two months at a time and has to spend a ton of money out of his own pocket to fly home because he has to drive around the Midwest. So that means he actually has less freedom to go home, less freedom to drive where he'd like to drive, and spends money to get home instead of getting paid to go home.

Any business owner will have the freedom to make their own decisions. But the freedoms these companies are presenting to you are all going to cost you money. That's not giving you any freedoms. That's giving you the privilege of running your business inefficiently.

Brett,

I agree with you. The more I talked to this driver the more I felt he was trapped in his truck!

Hi Guys, I'm new around here and have wondered about this for quite some time. So here is my question... Why the new truck? What about a well maintained early 2000's truck that costs 1/4 the amount of a new rig? I have heard of guys running these on flat bed runs making it work for them.

Please understand I'm seriously new to this world but it's a question I felt needed to be asked. Why spend 75 to 90 grand on a truck if all your money is going to make the payment on a monthly basis?

Does the industry force you to use new equipment as opposed to using a less than new but fine working rig?

Hi Guys, I'm new around here and have wondered about this for quite some time. So here is my question... Why the new truck? What about a well maintained early 2000's truck that costs 1/4 the amount of a new rig? I have heard of guys running these on flat bed runs making it work for them.

Please understand I'm seriously new to this world but it's a question I felt needed to be asked. Why spend 75 to 90 grand on a truck if all your money is going to make the payment on a monthly basis?

Does the industry force you to use new equipment as opposed to using a less than new but fine working rig?

The main difficulty with running an older truck is maintenance costs. If you are a diesel mechanic and can do your own work, that helps, but you still have downtime and lost revenue when something breaks. Something always breaks eventually, and usually more frequently on an older truck. And if you want to run California, the older trucks probably won't meet their emissions requirements either.

I was talking to an owner op who repowered my load a couple weeks ago. He has a 2010 Pete with a Cummins that he works on himself and was telling me how simple they are to fix. He got less than 100 miles away when his truck stopped firing on all cylinders. I went to meet him and returned the load to the yard while he went home with reduced power to work on his injectors. Not fun for him.

What about "Lease-Operators" vs. "Owner-Operators"?

Buy new, or used?

These are things that some new drivers do NOT consider.

I thinking about it, but if I do, I would buy used $40,000 to $60,000 ($1,000/month guesstimate) vs. leasing (NEW) from a trucking company for $1,000/week.

Dave