Should A Rookie Driver Become A Lease Operator?

Earlier I suggested you wait for a while before getting your own truck. That does not mean I think it's a good idea. That decision is 100% your own choice. I have a friend that was in the same Swift Academy class as I was. He worked for other companies for the last two years and this summer (2017) bought his own truck. (I don't know if he uses his own Authority.) He's happy as a clam and I believe he is making the money he was looking for. Grain of salt: a new truck will roll those miles trouble free, but my buddy will be buying tires, oil changes, and maybe brake shoes in the future.

But I want to add in what Turtle is talking about. Hauling a load is revenue miles. Most miles where you are going somewhere to get a load, or moving bobtail are on you - you pay the fuel. Company drivers get paid for moving to wherever they are dispatched - across town or across the state. Another reason to sit (unpaid) waiting for a revenue load.

Good point

In addition to what the others have stated, I'll just add this for more perspective:

My cdl class at Prime started with 23 students. Of those, only 7 of us completed training. Of those, 3 chose the lease program, the rest of us went company.

ONLY US 4 COMPANY DRIVERS ARE LEFT!

All 3 lease ops were miserable their first year. They constantly haggled over low-paying loads, or spent days sitting idle because they didn't want to accept loads to bad freight areas. The constant struggle to make enough money to pay that lease payment left their entire rookie year experience a miserable one. They are all quitting now that their year contract is up.

As a company driver, I out-earned them all.

Us four company drivers remain happy, and plan to stay on with Prime.

Let that sink in...

I'll share one experience I had Gregory since it involved a certain company you mentioned when I was leasing.

That company had a contract with a certain customer where they hauled into and out of this customer. Was all drop/hook. Back then the company had 2 fleets paid percentage. They have since done away with the percentage pay program. Anyway I hauled a load into the customer. Easy enough. I had no preplan for my next load. I got to the gate and checked in. The security folks were very friendly and talkative. They asked me which load I was hauling out??? I told them I wasn't assigned one. They showed me the bills for 5 outbound loads and told me those were all over 24 hrs late being picked up. I had already spoken with dispatch about 5 hrs earlier asking what I was doing next. Security told me they had no empty trailers for me. They even showed me on their computer the loads and status. Like I said they were very talkative.

I contacted dispatch and was told I needed to grab an empty and head 230 miles to pickup a load that I already paid very poorly. I questioned them about the late loads and they immediately told me I was not eligible for those and wanted to know how I knew so much information. I told them there were no empty trailers at the location and it made no difference how I knew the information. As I was there a company truck bob tailed in to pickup 1 of the late loads. Needless to say I wasn't very happy. I did appreciate the dispatcher not lying to me though, which they could have done.

Moral to the story is lease op's are going to get loads that are less profitable to the company. That's not a conspiracy that's just business. And no I never threw the security guards under the bus. They did teach me a very valuable lesson that day and for that I will always be thankful.

I have a question: If you were a defendent in a murder trial and could be facing the death penalty....would you want a first year law stusent as a lawyer? If you had cancer would you want a pre med student attending you?

same thing as leasing or owning as a rookie. lacking skills, knowledge, and experience can greatly affect your life.

3 posts above this: "I leased a truck with Swift"

and in that post he said he regretted it and was not making money. Basically what happens to anyone. Especially for a rookie, short answer: no

Very understandable and makes a lot of sense. Thanks

I'll share one experience I had Gregory since it involved a certain company you mentioned when I was leasing.

That company had a contract with a certain customer where they hauled into and out of this customer. Was all drop/hook. Back then the company had 2 fleets paid percentage. They have since done away with the percentage pay program. Anyway I hauled a load into the customer. Easy enough. I had no preplan for my next load. I got to the gate and checked in. The security folks were very friendly and talkative. They asked me which load I was hauling out??? I told them I wasn't assigned one. They showed me the bills for 5 outbound loads and told me those were all over 24 hrs late being picked up. I had already spoken with dispatch about 5 hrs earlier asking what I was doing next. Security told me they had no empty trailers for me. They even showed me on their computer the loads and status. Like I said they were very talkative.

I contacted dispatch and was told I needed to grab an empty and head 230 miles to pickup a load that I already paid very poorly. I questioned them about the late loads and they immediately told me I was not eligible for those and wanted to know how I knew so much information. I told them there were no empty trailers at the location and it made no difference how I knew the information. As I was there a company truck bob tailed in to pickup 1 of the late loads. Needless to say I wasn't very happy. I did appreciate the dispatcher not lying to me though, which they could have done.

Moral to the story is lease op's are going to get loads that are less profitable to the company. That's not a conspiracy that's just business. And no I never threw the security guards under the bus. They did teach me a very valuable lesson that day and for that I will always be thankful.

I may have missed it, but how mechanically inclined are you ? I have been around cars for over 50 years. I have had in that time some Diesel engine experiences. I got my CDL about 6 months ago and I can assure you I knew very little about tractors when I started. I might have doubled my knowledge of them in those 6 months. That means my 12.5 % is now in the 25 % area. One major mechanical mistake or issue can easily set you back 25K. I would offer you drive on "scholarship" as a company driver for 5 years and then make an intelligent decision about owning or leasing at truck. P.S. I too owned a business with multiple employees for over 20 years and it was automotive related and if I was 30 years younger .... I'd still wait 5 years myself before I tackled this beast known as trucking on my own.

It's conversations like this combined with opposing conversations with driver's and dispatchers that make my head spin.

Every point made here makes perfect sense about why a rookie shouldn't go lease. But this site of the only place I hear these argument against leasing.

When I talk to driver's who are leasing I get responses saying leasing is the only way to go, and why waste time as a company driver. Driver's who have completed 4...5...6...or 7 leases saying they think driver's should go lease asap.

I asked a company fleet manager how many trucks Prime has out there and how many company driver's. He estimated about 6500 trucks in all with about 1000 company driver's. So that's roughly 5000+ trucks that are either owner operator or lease operator. Damn near all of the ones ones ive talked to seem more than happy.

I asked about concerns that company trucks get the profitable loads to save the company money. They laughed at the question explaining that fleet managers are either company only or lease only, no mixed fleets. Also the managers are paid on a incentive based system. The better their fleet does the more money they make. Basically unless you cuss out and simply **** your manager off to the point where they'd rather lose money denying you loads (which they claim won't happen because the dispatcher could lost their job), they will do whatever they can to keep your revenue high. It's the driver's that refuse loads and refuse to go certain areas that shoot themselves in the bank account. Someone mentioned the 3 or 4 new lease driver's who all argued about low paying loads or sat for days refusing loads because of the area the load took them to. That was the exact behavior that it was explained to me puts driver's in the hole. If your not making money neither is the dispatcher. They want to generate revenue and will have a plan to keep the revenue flowing. If you keep turning down loads you are not generating revenue, and that lease payment isn't going to pay itself. Your current load may not pay well but it could set you up for a better paying next load. Conversely this load could pay decent but you take lower paying next load as they try to get you out of that area. Would you rather sit an extra day in a low freight area and still be in that low freight area tomorrow, or take a load that barely pays your fuel cost, but puts you in a higher freight area tomorrow?

My trainer is very young and only been driving for a little over a year. He started as company driver and did ok. Then he switched to lease after a few months and he started immediately making better money. Then he started training and started making better money than he ever imagined. Yes he has some bad weeks, but far more good than bad. He also stays in constant contact with fleet manager. If he is questionable about the load, he calls his manager to discuss and understand what the managers plan for this load and the next are. Never has he turned a load down after talking with the fleet manager.

I don't want any of the above to be misunderstood as me arguing with anyone for or against lease or company. I also am new and am just sorting through the mass of information I collect from so many sources... All of the above is me regurgitating information collected from others in my own effort to better my own understanding.

I do look forward to constructive responses.

PlanB I totally get where you're coming from. I'll summarize a few points here quickly if I can:

1) The average profit margin in the trucking industry is 3%. What that means is that after paying the driver about 3% of the company's revenues will actually be profits. If a truck gets paid $1,000 to haul a load then after paying the driver and all expenses the company, if managed well, can expect to make a profit of about $30. If you owned a truck that $30 is about what you can expect to make above and beyond what a company driver would make for that run. So if a company driver made $280 for that run, an owner operator might make $310.

There is no way around that 3% profit margin. Unfortunately that's the average potential you stand to gain owning or leasing a truck - an extra 3% of a truck's revenes. What's the downside? Bankruptcy. You can lose everything. Should you risk everything for the hope of making an extra 3% of revenues? You decide.

2) Ask yourself why companies lease trucks to drivers in the first place. Think about this - lease drivers are hauling the same freight that company drivers are hauling and they're doing it in the same trucks burning the same fuel. If lease drivers are making more money off the company than company drivers are then that means the company is losing money by leasing trucks to drivers instead of hiring company drivers. Why would a company set up a lease program, draw up the contracts, control all the freight, control all of the cash flow, and then lose money in the end? Why would they do that to themselves?

They wouldn't. Trucking companies set up lease contracts so they can take their cut of the profits off the top risk free. The company books the freight, they take their cut, and then they pass the remaining revenues onto the lease drivers. The company doesn't have to manage all of the risks, expenses, and headaches of ownership. They basically become freight brokers.

Not only that, but they're selling everything to the lease drivers. They sell them insurance, tags, fuel, repairs, and of course the freight. The company becomes the middleman that gets the freight and services at a certain price and then resells all of the freight and services to the lease trucks after taking their cut of the profits.

Now with an industry average of 3% profit margins, how much additional profit do you think is left over for lease drivers after the company takes their cut?

3) In the end there's only one number that matters - net profits after all expenses. There's only one place you'll ever find that number, the true amount of money that a lease driver or owner operator is making, and that's on their tax returns. It's listed as "Net income after deductions" and I guarantee you that no one will ever show you that number. I've been running this website for over 11 years. We've had over 14,000,000 visits in those 11 years. Before that I was a driver for 15 years. In basically 25 years in this industry I have never had one single lease driver or owner operator show me that number on their returns. Not one, ever.

If they're making so much money wouldn't they want to prove it to people? Wouldn't they love to show off that number? I mean, they sure talk about it all the time. But in the end I guarantee you that if you insist on seeing that number you'll immediately make enemies. I lost count years ago of how many lease drivers and owner operators have given me the finger and stormed out of here never to return when I insisted upon seeing that number for myself.

4) Speak with accountants. Pretty much every accountant out there has clients in the trucking industry. Ask them what they think about you buying or leasing a truck. Ask them if their clients have swimming pools full of cash like they claim they do.

5) Trucking is a commodity service where only the lowest price matters. Commodity businesses never have much in the way of profits to speak of.

Listen, in the end don't let us convince you. Don't let anyone convince you. Do the research. Speak with accountants that handle trucking companies. Speak with owner operators and lease drivers. Read books on the subject. Make sure you study what a commodity business is all about. Do your research and decide for yourself.

PlanB wrote:

Every point made here makes perfect sense about why a rookie shouldn't go lease. But this site of the only place I hear these argument against leasing.

Two things:

- Yes, every point does make perfect sense.

- Yes, this is the only site that offers the truth about leasing and owning.

If you take a closer look at the drivers you mentioned, chances are they have not been "at it" long enough to truly understand the fixed and variable costs involved running their truck.

Of course the money will look better,...for a while. Considering everything that a lease operator must pay for out of that income, it becomes less and less attractive. Big truck payment every week no matter the mileage. Wear parts like tires and brakes are now the responsibility of the Lease Operator. Trucks break. It's inevitable. When that occurs you'll have both downtime and the cost of a non-warranty repair. Negative cash flow.

There are experienced lease operators on this forum; without any exception they will all tell you the same basic thing:

A lot more work and responsibility for a little bit more money.

They will also tell you to get at least a year or more of experience before making the commitment.

That said, here is a long to another article discussing the reality of leasing:

When is the Right Time to become an Owner Operator