From behind the wheel: So you wanna be an owner/operator?
June 1, 2007
When I decided to become a long-haul driver, my three-year plan was simple: Year one, work as a company driver to gain experience; year two, buy a truck and work as an owner/operator at the same compa...
When I decided to become a long-haul driver, my three-year plan was simple: Year one, work as a company driver to gain experience; year two, buy a truck and work as an owner/operator at the same company; and year three, get my own authority, buy a trailer, and go 100% independent.
I started trucking in August, 2005 but 18 months later I was still a company driver. All the negative talk I heard from other company drivers plus personal “interviews” with struggling owner/operators persuaded me that buying a truck was a bad idea.
I remember meeting a proud leather-clad O/O in Calgary, Alta. I told him I wanted to buy a truck, and he said “How many days do you want to stay on the road?” When I answered, “Ten to 14 days at a time,” he said, “You’re not going to make it.” I asked the guy how many days he himself stayed out and he said “One month.” I was shocked.
As a company driver I drove less, my truck was a 2006 Freightliner Columbia with 100,000 km on it and I was paid 37 to 40 cents a mile every two weeks like clockwork – with no headaches about truck payments, repairs, taxes, insurance – you name it. I don’t understand why some owner/operators want to work harder than company drivers only to make the same amount of money! To me the only reason to own the tools of my trade (the truck) is to work less but make more money.
So, I decided to look at the matter of “to be or not to be” without emotions – through numbers.
I started frequenting message boards at trucking Web sites where I learned about suggested monthly truck payments, how much to set aside for future repairs and maintenance, what truck is best on fuel, what an “axle ratio” is, and so on.
I bought audio books for owner/operators and tracked my personal expenses with Quicken.
I kept tabs on expenses I incurred as a company driver with special attention to fuel costs.
One day, I picked up a copy of the owner/operator information package in our recruiting department.
It turned out my employer still paid $1 per mile plus a fuel surcharge (20 cents per mile at the time).
There was an extra three cents per mile for runs to the Northeastern US, and the usual small payments for crossing the border, live loading/unloading, etc. The good part about the package was the carrier covered most expenses: plates, insurance, tolls, scales, satellite, etc.
The only other expense the new O/O would be burdened with was a $3,000 holdback fund which translated into $150 deductions every two weeks (until the $3,000 was accumulated).
Assuming I did 9,000 miles in my own three-year old truck, with fuel consumption 6.5 mpg at $3/gal; here’s how I evaluated the pay plan of this carrier: $1.20 per mile average pay minus 46 cents for fuel minus 17 cents for truck payment minus three cents for the holdback fee minus five cents for repairs and maintenance = 49 cents per mile.
The idea is to arrive at a number higher than 40 cents per mile and this particular package paid only nine cents more than what I could make in a company truck. Plus 49 cents per mile is a rough estimate – there’ll always be unforeseen expenses, such as fuel price increases or flat tires.
I also realized how hard it would be to stay afloat if I buy a new truck: If I substitute 17 cents in the above example with 24 ($2,200 monthly payment for a brand new average truck divided by 9,000 miles a month) and use three cents for the repair fund instead of five (it’s a new truck after all), the result is 44 cents per mile, only four cents more than what a company driver gets.
After 18 months on the job I was getting restless anyway, so I started looking elsewhere. I found a small carrier in a nearby city that had been in the trucking business since the 20s.
They paid more in cents per mile for the same dry van work and I also had an option of buying a flatbed trailer later on and switching to their flatbed division. Flatbed work paid percentage (82% of the gross) and I had read on message boards that percentage pay was almost always preferable to mileage pay.
Another advantage of leasing with this company was they had fuel prices capped at 47 cents per litre, provided I showed a reasonable mpg.
I played with the numbers listed in their owner/operator information package.
I showed a potential gross profit of 76 cents per mile – before the truck payment and maintenance deductions.
So, if the truck costs 15 cents per mile, and I set aside five cents per mile for repairs, I should see 56 cents per mile in my pocket. Not bad.
The lady in recruiting showed me pay statements of two anonymous owner/operators and I saw my estimate was pretty close. I had found my new carrier!
I did all the paperwork in order to get hired and the recruiters told me when to show up for a 2.5-day orientation. All I needed now was a reliable used truck.
– Read about Sergei’s truck buying experience in next month’s issue of Truck News.