Western Express Lease Purchase....thoughts???

The main point I always try to make to anyone considering buying or leasing a truck is the risk/reward ratio.

The trucking industry has an average profit margin of about 3%. Essentially that means that a lease driver or owner operator who is doing well will make about 3% more than a company driver. Unfortunately, by the definition of average that also means that a ton of lease drivers and owner operators are either making the same as a company driver, or less. Many are even losing money. And yet they're putting in way more work, suffering through endless amounts of stress, and risking their financial future for many years to come.

For what? The opportunity to potentially make 3% more than a company driver?

Quick numbers for perspective:

Average experienced driver salary: $48,000 per year
3% of $48,000 is $1,440 per year
Divide the extra $1,440 per year into weekly numbers for perspective: roughly $30/week

You're going to dedicate the time, energy, and money it takes to own and run a highly competitive, capital-intensive business with razor thin profit margins while risking everything financially just to make an extra $30 per week?

On top of that, you don't have the most important thing you need to successfully run a business - control. Sure, you can park the truck wherever and whenever you like. You can also refuse freight. But the reality is simple - you need the company that is supplying your freight to keep your wheels turning. If they stop feeding you enough freight you're going to go broke in short order. So try aggravating the people at the company you're leased on with and see how long your business stays afloat. The things you do have control of won't help you get ahead and the things you need control of to ensure your success will not be under your control. You're totally at the mercy of the company you're leased to. They're taking no risk - it's all profit off the top for them. You're taking all the risk. They "shut off the freight switch" and you're sunk.

I don't see how anyone can make an ounce of sense out of buying or leasing a truck. The economics of the industry are awful, the potential is extremely limited, the risk is unlimited, and you lack control over the things you count on for survival. I don't think you need an MBA from Harvard to figure out it's a terrible business to own and operate.

John R, thanks for straightening out the numbers for us, because I just couldn't believe any body would fall for those first numbers given out earlier in this thread, but I've still go to agree with Brett's argument on this one. I am a company driver for Western in their flat-bed division, and I am bringing home very close to what you said your friend is, and I don't have any of the concerns or cares that he does. I've been a business owner for most of my life, and I can never seem to pencil out how the lease/operators come out ahead of a good solid company driver - these trucking companies have this option for a reason, and it's not out of a benevolent heart that they are leasing these trucks out.

these trucking companies have this option for a reason, and it's not out of a benevolent heart that they are leasing these trucks out.

That's exactly right.

For-profit businesses exist for one reason - to make a profit. They're not out there to do other businesses a favor. So the idea that they're trying to help you get into the trucking business so you can make a nice profit doing exactly what they're already doing should throw up a big, red flag. It doesn't make sense. If there was so much money in owning trucks and hauling freight then why would they encourage you to do it? Why wouldn't they keep that for themselves?

That being said, the idea that they might be trying to pawn off the riskiest and least profitable aspect of their business on someone else while keeping the most profitable and safer aspects of the business for themselves makes much more sense. They would really rather not own trucks and haul freight. They'd rather let you own the truck and haul the freight so they can provide profitable support and services to you like freight brokering, parts & repair, reselling insurance, leasing you a truck, and business management.

Basically, the leasing driver is carrying all the financial risk for the trucking company by making the payments for them, for as long as they can "hang on," right? And if the lessor/driver wants to back out of the deal, the trucking company hasn't lost out because they just get their truck back and go find a new driver, correct?

-mountain girl

As the originator of this discussion I thought I would update all on my endeavor here at western.....it has been fantastic. For the first time in my 20+ years of driving, a company had actually lived up to the hype they put out there. When I first spoke to my recruiter (Eric) I took it all with a grain of salt.....seemed to good to be true. I, literally, have found no difference in what was told to me before orientation and now being with them since June. Nothing hidden. No "I forgot to tell you about that". No bulls@$t!! How refreshing. I'm averaging 1.75/mile. Im averaging 2000 miles a week and I'm home every weekend. After all expenses (750/week covers lease payment, insurances, taxes, maintenance escrow, etc) and fuel I'm averaging .72/mile. That's right.....I'm AVERAGING a little over 1400.00 a week AND I'm home on the weekend (usually get home fri nite/sat morn and leave sun nite/mon morn). Granted, the truck I'm buying had 380000 miles on it but I'll have it paid off in 2.5 years and with the mileage I'm running that gives me a paid off truck with around 650000 miles. No balloon payment and NO interest. I've looked at dozens of companies lease programs and not seen one with both of those. The only downside is that if u like to TALK to your DM it's difficult to say the least. Everything is Q/C. Small price to pay.

Hey Jon, I'm thrilled to hear that it is going good for you. Since we are not big proponents of leasing some people get the twisted idea that we hate owner operators or some such foolishness as that. Actually we want all truck drivers to succeed, and we especially like to help new drivers with the critical information they need to make a good start in the business. Typically, jumping right into a lease as a newbie is a recipe for disaster, so we steer people against it. I realize that you are not a green horn, and respect your decision. For me, it doesn't provide near a large enough reward for my efforts with the amount of risk and liability that I would be exposed to. After thirty years of being self employed and having some really great years and some awful years, I learned all about things that are realities of business - things like reversal to means, and how industry averages are just that - because there are winners and losers, and sometimes you can be both at different times depending on many things that may very well be beyond your control.

I recently spoke with another lease operator at Western and he almost said exactly what you just said. Here's the catch, if you will. He had only been doing it for three months. You are new to the program also, and I sincerely hope it continues to work well for you. If you can maintain your performance at or above average and control your costs then you may very well be successful at this. There are just so many things beyond your control. Imagine what might happen to the price of diesel should things completely unravel over in the middle east. That's only one example of the many things beyond our control, but I don't want to sound like I'm scared the sky is falling. I've been a huge risk taker all my life, so I know about the challenges of business, I've got to hand it to you for being a go-getter and getting out there and chasing your dream. I'm glad it's working out, but I fear that it's not always going to be as easy as it seems right now. Hang in there and do everything you can to put a little something back - I've owned six big trucks and I promise you there's going to come a day when you will need to tap those reserves.

After thirty years of being self employed and having some really great years and some awful years, I learned all about things that are realities of business - things like reversal to means, and how industry averages are just that - because there are winners and losers, and sometimes you can be both at different times depending on many things that may very well be beyond your control.

I couldn't have said it any better.

things like reversal to means, and how industry averages are just that

That is what you will not be able to get away from. Let's think about this......

The industry has a 3% profit margin. That means after paying their drivers a company can expect 3% of their revenues to be profit - on average. The average experienced driver makes about $45k turning 2800 miles per week.

So far you're bringing home $1400/week, $75,000 per year, on 2000 miles a week.

Now if that was something that was going to be profitable, would there be any company drivers in America? Nope. Not one. We'd all be leasing or buying trucks.

Now let me ask you another question.....when was the last time you spoke with a lease driver that was unhappy with his decision in the first two or three months? My answer? Zero. Everyone is well taken care of those first few months. That's how they get you hooked. You drive around in your own rig bragging to everyone how well you're doing and you get a taste of those big paychecks. Now you're hooked and now they know you'll do just about anything to keep making those payments. Because hey - if things can go great for a while you can make them great again, right? Of course! So why can't you always turn 2000 miles a week, go home every weekend, and make $75 a year right? Seems easy so far!

The very highest priority you should have on your list right now is to figure out why you'll be bankrupt within about six to nine months if you keep doing what you're doing now. If you don't know off the top of your head then you better figure it out quick because reality is going to teach you if you don't figure it out first.

One of the golden rules of life should be throwing red flags - if it seems to good to be true it probably is. Two thousand miles per week, home every weekend, and turning a consistent profit over the long run? Absolutely not going to happen. Accept that right now and figure out a new game plan while you still have money in the bank.

And I agree with Old School - we want to see every driver succeed - not just certain drivers under certain circumstances - everyone. So I'd love to see you do well. That's why I'm telling you that 2000 miles per week and home on weekends isn't going to work for long. You're going to go broke. You've been around this industry way too long to fall for that level of wishful thinking. I wouldn't let a company driver think he or she is going to be around long if they're going to settle for 2,000 miles per week. It's nearly impossible to turn a profit at all with under 2,500 miles per week unless you're hauling Uranium for the Feds.

It's nearly impossible to turn a profit at all with under 2,500 miles per week unless you're hauling Uranium for the Feds.

That's even a thing? Does someone follow you into the stall to watch you take a crap when you have loads like that?

That's even a thing? Does someone follow you into the stall to watch you take a crap when you have loads like that?

Yeah, guys like us don't get those loads or those type of jobs. Those are special jobs the Feds handle.

I wanted to get some of the above misconceptions out of the blog and shed some light as to the "real" information surrounding Western Express's Lease program. The program is designed to turn a driver into an Owner without the financial risk of purchasing a truck independently on their own credit or down payment. This world has a lot of uncertainties, so when a company is willing to shoulder the burden of your financial risk without a credit check and a down payment then maybe the intent isn't a bad one. Take that coupled with the overall cost of ownership and purchase price and another level of legitimacy is added into the mix. Most lease purchase program's in America today are actually just "lease - lease" programs where you lease a truck for 3 - 4 years then pay a $45 - $60,000 balloon payment at the end, OR, they have reasonable payments with unreasonable terms, like $425.00 per week for 260 weeks. At Western Express, this is the first Lease to Own program of its kind in many years, that is actually pricing trucks below retail and actually empowering the LP driver to success. In 2 to 3 years one of these trucks will be parked in your driveway, and will be yours free and clear. So if you have the dream of truck ownership and don't want to sign on your own credit, a program like this is exactly what you are looking for. If you are happier not owning your own truck and the extra responsibility, then ownership through lease purchase or a straight purchase wouldn't be for you anyway.

Western Express has both Van and Flatbed contractors and both have ample opportunity to make great money while fulfilling their dreams of ownership. The average pay is like a previous blogger quoted in the $1.45 - $1.85 range per mile and Western also pays FULL rate on empty miles as well, which is a real game changer in this industry. The example above stated that 2500 miles would not be profitable, but a 2500 mile week actually can be very profitable with certain elements in place. 2500 miles would equate to approximately $3650.00 in revenue, and would require approximately 400 gallons in fuel at $3.58 per gallon average this week. So you business calculation would be: Your business: $3650.00 Your Fuel Cost: $1432.00 (based on 6.25 mpg) Your Truck Pkg: $700.00 (est) Take home pay: $1518.00

Out of the $1518.00 take home you would still have taxes to pay as a regular company driver would, but your average take home cent per mile would be approximately 60 cents for all miles to the house, plus the purchase of your own equipment. So at the end of 2 - 3 years you would own a tractor with approximately 500 - 650,000 miles, earned a very good income potential of $80,000 or more per year, and gained your independence in the process. All of which based on the weekly mileage of 2500 miles per week.

Since the Western Express Lease Purchase program began in March of 2014, the world of lease purchase has changed slightly by offering a plan not often seen since the early 1980's. The architects' plan for this program was to take available trucks and find individuals that were done with the company side of life and wanted more. The "how much" more would be entirely in the hands of the contractor that leased the truck, not the company and not the limitations of the common "lease to lease" programs so many of us have become accustomed to in this industry. They wanted to find a source of common ground that would allow an average person to do extraordinary things with the right tools in his/her hands, and a business partner that believed in his/her abilities to go farther. There is nothing worse than an extraordinary amount of talent wasted because the right opportunity never came along. One of my favorite quotes is:

"Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent."

I live by these words every day of my life because I do believe that if a person is given the right opportunity and finds something that he / she truly enjoys in life, there is nothing that can stop him or her from great success. Persistence is the key to all great achievers, and Western's lease program isn't the answer to everyone's success, it is merely the fertilizer that will allow many to achieve it.

David