O/O revenue and drivers pay

[davekc]

This is kind of a follow up to RichM's post. It seems alot of companies and owners are struggling to find team drivers ect. The large truck load carriers are offering .32 to .50 cents a mile plus benefits and still can't find enough drivers.
As I look at the current classifieds, there are only a handful of people willing to team. Many years ago there were so many and now so very few.
So my question is, for the owners, how much do they feel they need to put out there in order to attract decent drivers.
And secondly, for drivers, what kind of revenue is expected in order for survival or to keep you in the profession.
I have my own thoughts relating to this but this seems to be a topic that is coming up more frequently.
Any input would be helpful as alot of owners are struggling to find drivers. 150 ads under teams wanted indicates that.
Davekc

 

[NoProblem]

And secondly, for drivers, what kind of revenue is expected in order for survival or to keep you in the profession.

As a driver, not an O/O (yet), there are a few additional points worthy of discussion on this topic. Money is, in my opinion, primary concern.

First, of course, is my pay. In my limited expediting experience, seems like O/O's in expediting usually do not offer any type of health benefits - only a flat per mile rate based on percentage of the load.

So while .50 per mile sounds like a fair pay rate, in my opinion, thats not really so when its easy to make .46+ per mile WITH some benefits with many truck load owner op's and companies.

Additionaly, its pretty easy to get a consistant 3000 miles per week in truck load as a solo driver, 5000+ consistantly for teams - and teams can usually get an additional .10 or more per mile.

Second point is the actual truck. The more options, the better. Some options like electric widows and electric/heated mirrors can go along way. A quiet and strong enough engine with sufficient power does too. I like to know the outside temperature, MPGs, a trip odometer, fridge and perhaps a few other creature features too.

Now I am not saying that the truck needs to be the cadilac of trucks, but, when you order the truck, already spend the extra ten grand and then tell the potential driver a nice list of options - hell, you aren't driving it anyway and if you want the driver to live in the thing, then a nicely equipped truck can help entice them to do just that.

In short, the truck should be just as comfortable as it can be to keep the driver from wanting to go home every time you turn around.

I sincerely feel that if an O/O wants to retain good drivers, the two above items are worty of consideration.

Please don't mistake my reply as representing all other expeditors or that I am some stuck up greedy s.o.b. driving for a tyrant because neither could be farther from the truth.

A good driver, one who looks out for the O/O's interest as well as his own, would be worth, IMHO, damn near whatever he wants.


Question: How much money do O/O's need to make for themselves when they are not doing the actual driving anyway? I completely understand they pay all the bills and all the maintenance, but I don't agree when they try to make too much off of each truck at the driver's expense. Again, I am most likely stuck in "truck load mentality" here, but in truck load, a few highly succesful fleet owners I know have 20+ trucks, make a little - not a lot - off of each one, and THAT equalls big bucks for both the owner and the driver.....whats wrong with that?

 

[Glen Rice]

When business is good everyone is a winner. Have a friend that is driving team for a couple. This month the owner will make close to 7000.00 and the drivers will make 12000.00 minus fuel. Not a bad return for either one! Unfortunately the truck set for a month or two with no income. We all know how that goes, there should be no resentment for either. Everyone deserves to make a reasonable income. Maybe next month will half of those numbers. I tried being a fleet owner in the late 80's and it was a struggle to break even. In the end I worked for the worst boss I've ever had "myself". No buddy to complain to! It seems we always work harder for ourselves than anyone else. If you are fortunate to get a dependable decent person to operate your equipment...treat them well. Good luck with your growth.

 

[davekc]

No Problem
That is the type of information that would be helpful to alot of the owners ect. As mentioned in another post, I think the industry will have to make some changes as well as the owners. I think the typical 60/40 split is going to be a thing of the past. What would be a decent wage for a single or team in order for them to continue in expediting. Say for example, a person or team with one year of experience.
Davekc

 

[Tennesseahawk]

Very easy to say that O/Os should give drivers health benefits. Truth of the matter is, the drivers don't work for the O/Os... they are their own small business. Health benefits are for employees, unless you get medicare or pay for your own.

Want more money? Do more work. When I put my driver in his own truck, he'll make 35% with a bonus percentage for every mile over 2000 miles. Incentive goes both ways. Show me you'll work the truck AND take care of it, and I'll do my best to finance good stuff for you to drive. One can go thru quite a few drivers before a good one is found. In that time, the truck ends up a total disaster! You start out driving the Escort, then you move up to the Lincoln.

As a driver, I drove when they had loads, cleaned my truck when they didn't and went home when I was close. As an owner operator, I do the same thing. I told my co-driver that when he's running single soon he is going to be controlling the truck/business. As long as he's making his runs on time, getting alot of miles, and taking care of my truck, he can run it as his business. Eventually, he wants to get his own truck. I told him to act as a businessman now, and that will tell him what kind of O/O he'll become.

 

[NoProblem]

I think the wage itself depends on whatever agreement can be reached, and determined to be fair between driver and owner.

I agree that 60/40 has all the markings of becoming a thing of the past, but I hesitate to state actual figures for the simple reason that everyone's idea of "fair" varies - as does the level of expertise for one year, two years, 10 years etc. experience. But speaking only for me, one year should bring in 40% for solo and 45% for teams if they are not lazy. Beyond one year should max out in the 55% and 60% neighborhood - thats only my opinion which is extra easy to give since I am a driver - not an O/O. Again, how ever much the O/O wants to make for himself will determine the ceiling he sets.

The thing is, some drivers with one year experience might produce more income simply because they might be more eager and are willing to stay out 6 months at a time to generate as much income as they can, making $$$ for himself as well as the O/O - while someone with much more experience, already set in their ways, might only want to run during daylight hours and be home every weekend - not the best example but I think you get my drift.

Then too, if the O/O is too generous with the wrong driver(s), he might find the driver is only willing to roll, say, 1000 miles a week or at his own convenience.

If someone with one year has a clean MVR, unless they have a bad reputation for tardiness or laziness, I personally would try to keep them as long as I could and not let 5 or 10% stand in the way - unless getting good drivers is easy and retention is not a priority.

 

[NoProblem]

Tennesseahawk,

Very easy to say that O/Os should give drivers health benefits. Truth of the matter is, the drivers don't work for the O/Os... they are their own small business. Health benefits are for employees, unless you get medicare or pay for your own.

I am not saying that O/Os should give benefits - I am saying that benefits are expensive as well as necessary and since O/Os in expediting do not seem to offer them, they should be willing to pay a higher rate if they wish to entice and retain drivers so the driver can afford health insurance.

Want more money? Do more work. When I put my driver in his own truck, he'll make 35% with a bonus percentage for every mile over 2000 miles. Incentive goes both ways. Show me you'll work the truck AND take care of it, and I'll do my best to finance good stuff for you to drive. One can go thru quite a few drivers before a good one is found. In that time, the truck ends up a total disaster! You start out driving the Escort, then you move up to the Lincoln.

A nice bonus is a great incentive and I was *only* speaking about a "good" driver, as I said: A good driver, one who looks out for the O/O's interest as well as his own so, obviously I totally agree that incentives as well as rates go both ways.

Speaking for myself - I will run the wheels off that truck, be available 99% of the time, be on time 100% of the time and take better care of that truck than I would my own - for all that, I ask to be compensated with a fair rate that we both agree on. If we can't agree, I know where the door is, no hard feelings here, after all, its just business.

I sincerely am not totally aware of how hard it really is to find a good driver since I have never had to worry about that - yet. I know how I drive and how some of my friends drive - so as far as I know, personally, good drivers are pretty easy to find. But from what I hear, good drivers are hard to find which is why the rates might need to go up as well as other incentives to attract and retain good drivers.

 

[Dreamer]

But speaking only for me, one year
>should bring in 40% for solo and 45% for teams if they are
>not lazy. Beyond one year should max out in the 55% and 60%
>neighborhood - thats only my opinion which is extra easy to
>give since I am a driver - not an O/O. Again, how ever much
>the O/O wants to make for himself will determine the ceiling
>he sets.
>



Hmmm... you mean 40% and still pay fuel out of that? That's gettin kind of thin there...... usually that 60% means they pay fuel... pay fuel out of 40%, and a driver wouldn't have a lot left.... not at today's fuel prices.



Dreamer

 

[NoProblem]

I mean 40% of the total gross, owner pays for the fuel and max out in the 55% neighborhood with the owner still paying for the fuel. Like I said, I am no O/O, but what is a "good" driver worth? How much does the owner need to make off a "good" driver?

Again, I really do not know what each O/O wants to make, but IMHO, an O/O who is pocketing the same $$ that the driver is pocketing has plenty of room to negotiate a higher rate - then again, I am used to overhead being 10 - 15%, not 30 - 35%.

Again, I am only going on the premise that the O/O wants to attract and retain "good" drivers.

IMHO, if driver turnover is high and all the O/O will pay is 35%, maybe he needs to consider that one of the reasons is because he needs to dig a little deeper and get to the folding money for his "good" driver.

I was making 48% with health insurance from my O/O when I drove a semi, I new two guys making over 50%.

IMHO, 60/40 is a good reference point, but its no law.

 

[Djcoak]

So you want the owner to pay the truck payment, insurnace, maintenance, fuel, repairs, and the various other things and still ppay you 40% of what he makes? I think you're dreaming. I paid my OTR driver 25% of the trucks gross and still didn't make it. Sorry I think thats a fantasy figure. You want more pay then buy a truck and drive for yourself. Sorry to sound like a prick.

 

[Tom Robertson]

This thread started off with "No Problem" giving his insights both on pay and truck amenities. Excellent response!

It is my opinion that many teams and single drivers have not viewed this industry in realistic terms. You guys get so hung up on percentages that cannot be confirmed that you defeat your own purpose...INCOME!
I've read the entire thread and each of you have your own view of what is fair pay based on a % of truck earnings.
I know from my own experience with one of the major expediting companies that I had no way of knowing what the company really got for the load. This company told us at orientation that we could "request" their invoice for any run our trucks made. I did on three seperate occasions (with numerous additional request) and got nothing but a line of bull. They never provided the invoice. So my questions is...
WHY ARE OWNERS AND CARRIERS STILL USING THIS OUTDATED METHOD OF DETERMINING PAY?
Here is the answer...
It is my opinion that team drivers are few and far between and that this entire industry has been duped into the "what is my percentage" mentality put forth by carriers who play the numbers game. If you have 200 or more trucks, and you care not whether the individuals who own the trucks can make their payments, then you can stick to the "business model figures" and possibly and probably tell the O/O and or owner that the gross revenue is actually less that what you are receiving.


As a carrier and owner of trucks we pay a direct rate per mile, regardless of what we receive for the load. There are times that our drivers receive 80 to 90% of the pay (when trucks are in an area with little freight and or competition for the freight is great) and other times that they may receive 40%. While I can understand that a good business model requires maintaining certain percentages of revenue as "actual costs", experience states that these figures do not have to be written in stone for EACH load. The "business model figures" should be achieved on an overall basis, not a per run basis.

I do not let my trucks sit, even if it means accepting only 10 to 20% of the revenue. It can and will be made up at a later time.

In my opinion, if the drivers pay is constant and he is making a consistant ball park figure each week, he has a greater ability to meet expenses, and budget his income. It should not matter to the driver if he is making 90% or 40%! What should matter is that he is getting good mileage each week and that he is being paid fairly for his efforts.

POINT TWO
Our trucks are equipped like I would want them if I were driving them. Electric, heated mirrors, electric windows, stand from the drivers seat sleepers with ref/ tv / microwave double bunks or single bunk with cabnetry, air ride box and cab, and many other features...

It is my opinion after quite a bit of classified advertising on this site that the number of teams in this industry must be under 10%... and that of those 10% very few if any can get beyond the "what percentage do you pay?" question. I will place our average drivers earnings against any in the industry, and wager that they earn more than 90% of the drivers for any company or owner.


This is my opinion. I only have my own experiences to draw on. I am not stating that all carriers operate in this manner, but do believe that many use this model as a certainty of unfair and greedy profit.

Af few years ago, I was hopeful that by placing my trucks with one of the major carriers in this industry, that my 7 days a week 18 hour workdays would end. After several months of losses and also loosing 2 drivers for lack of income, I decided to go back to work and successfully obtianed my own contracts.

We have been very successful using my "business model". My drivers, who have driven for every major company in the industry are earning more with us, are known by name, treated with respect and driving the latest and best equipment on the road.

Teams...it appears that they simply make up a very small percentage of the drivers in this industry. Why> I have no idea!

 

[hdl]

davekc wrote:

It seems alot
>of companies and owners are struggling to find team drivers
>ect. The large truck load carriers are offering .32 to .50
>cents a mile plus benefits and still can't find enough
>drivers.

For me the issue isn't money or even how the truck is equiped. It's more about the unlikeliness of finding a compatible co-driver for the otr environment. I tryed teaming after attending the C.R. England school. My original intention was to go solo, but having met an individual at school that lived near me I thought I would give it a try. Both being rookies I figured that the two heads better than one might work out. That lasted about 3 weeks. (fortunately I kept the Volvo )

The only way I would team is if it were a dedicated run with weekly home time. IMO teaming and staying out for 3, 4, or more weeks is just too much.

 

[davekc]

Some very good responses. As Tom mentioned alot of figures or expectations swirl around percentages. What kind of dollars are needed to retain or attract good drivers or teams. Do folks think $1000 a week $2,000 a week ect. Whether it is percentage or flat milage rates. Since no real benefits can be offered because of independent contractor status, what actual dollar numbers are needed.
I think part of the problem is owners are afraid to throw real numbers out there, thus compounding the problem. I found that I had more personal success when I threw guaranteed money out with obtainable bonuses. In addition, mine were (except for three) actual employees. As a former owner, it is a tough balance as we had 15 trucks at one time and have scaled that back because the investment dollars work better in other investments. I see alot of owners really starting to struggle so that is why I threw this post out there.
Davekc

 

[NoProblem]

So you want the owner to pay the truck payment, insurnace, maintenance, fuel, repairs, and the various other things and still ppay you 40% of what he makes? I think you're dreaming. I paid my OTR driver 25% of the trucks gross and still didn't make it. Sorry I think thats a fantasy figure. You want more pay then buy a truck and drive for yourself. Sorry to sound like a prick.


Djcoak,

Well, let me ask you: Do you want the driver to beat himself up making both of you the same paycheck? That sure is lucrative for the O/O, but, under most circumstances, even the O/O will be unable to afford health insurance based on that situation, so how could the driver, who is actaully generating the income ever expect to afford it?

This thread is not about "You want more pay then buy a truck and drive for yourself." It is about attracting and retaining "good" drivers.

So far, I have given my personal honest, driver, non-owner op opinion based only on my limited knowledge and not ever having owned any truck yet.

I will ask you - how much money do you need after truck payment, insurance, maintenance, fuel, repairs, and the various other things including paying the driver?

I am only guessing but - on average, I think that the actual cost to actually operate the truck is somehwere in the .30 to .35 per mile neighborhood - give or take, depending on truck payment and not including repairs. Any O/Os that are willing to publish an actual figure are urged to chime in here and set me straight. I assume that O/Os SHOULD know an accurate estimate for this figure.

If you could not afford to pay 25% to your drivers, then, it seems obvious YOU were not making enough from the company you signed on with and should have moved on. Either that or your drivers sucked.

Once again, I will challenge every O/O to answer honestly - how much do you need to make off the truck before it is no longer worth it to you to pay the "good" driver anymore? Answer with an honest etimated figure. Do you need $500 per week, .40 per mile, 75% of the gross?

If you WANT more, thats another thing entirely and thats not what I am asking. I'm asking "what do you gotta have, whats all the b.s. worth?" - put a figure on it.

 

[NoProblem]

Tom Robertson, wow! Excellent post!

 

[Tennesseahawk]

I could almost see that if fuel were .85/gal again. But again, who's working for whom? Paying over 50% is rediculous IMO. Like I said, bonuses should apply if a certain quota is met. But by all means, paying someone as you would a partner isn't the answer. 35% is the going rate because of supply and demand. Turn-around is high because both O/Os and drivers are getting greedier. Let's face it... the days of the 48" sleeper are history. Now drivers want microwaves, fridges, tvs, vcrs, Sirius or XM, all wrapped up in a corvette style truck. O/Os on the other hand want more miles, more weekends on the road, good business sense, and to micromanage the trucks. Meanwhile, instead of taking care of the truck's maintainence, the driver spends his off time on his videos or that stupid horse race game at truckstops. The O/O could spend his settlement on the real ponies and not have enough to pay the driver. That's your reason for a large turn-around... bad people all the way around have flooded the market... companies included. When the grass is turning a little brown, try watering it instead of finding greener pastures all the time.

 

[NoProblem]

davekc, another excellent post!

I am trying to get back to the $1300 neighborhood per week gross paycheck that I grew accustomed to solo in a semi, tack on another $300 to $700 for when I was teaming - not including bonuses.

I am willing to bust my chops to make the money I am looking for - but even at that, in most cases, 35% of gross won't cut it.

Eventually, I WILL get my own truck(s) and will then deal with all the extra problems and compensation associated with that responsibility, but I do know one thing - a "good" driver is worth plenty - and the only thing twice as good as a "good" driver is two "good" drivers.

As for me, my O/O calls me his partner - and he is absolutely 100% correct. If it doesn't work fairly both ways, I do not think it should be expected to last very long.

 

[davekc]

No Problem. That was the kind of information that I was trying to reference to. Alot of the o/o's with that criteria($1300 a wk for a single driver) would be in trouble based on current conditions. Namely, high fuel costs and rates remaining somewhat stagnant. That number would be obtainable on some weeks but could it be done consistantly? Kinda the same with teams, can the current owners pay a consistant say $2,000 per week. Some weeks yes, but for a team, can the owner pay $104,000 a year. Some can but others will sink with those numbers. As Tom eluded, if the carrier runs into problems, so does the owner and anyone that drives for them. The year 2000 was an excellent example for sinking ships. We were lucky as we had bought alot of equipment for pennies on the dollar through that period, thus being able to pay maybe not higher, but a gauranteed wage with benefits ect.
Davekc

 

[NoProblem]

I could almost see that if fuel were .85/gal again. But again, who's working for whom? Paying over 50% is rediculous IMO.

I don't disagree with your post at all. And thats a good point - who is working for whom? Perhpas the better question is - "whom depends on whom?" And again, why is paying over 50% ridiculous? Is it because you CANNOT pay that or you WILL NOT pay that to attract and/or to retain a "good" driver?

How much money do you need to make off that truck? The same amount that the driver makes?

 

[Tennesseahawk]

No Problem, With 50%, I'm talking that I am paying fuel. I see no way that I, as an O/O could make it on that scale. Fuel is 1/4 or more of my money...truck payment is another big chunk. I am an O/O for one reason... the same reason Ford and GM and every other business is in it for... to make money.
I agree I have to be competative to keep good drivers. I agree that rewarding hard work is essential. I agree that a good truck is something that is needed every so many years. But you can't hire a private and pay him a general's salary! Why are percentages so evil all of a sudden? We as O/O are paid either percentages or $/mi. Like I said... bonuses for reaching a plateau (in our case 2000 mi) are in effect, as are for extras such as detention pay, lumper pay, and mistakes based on misinformation, most money would go to the driver (all in the case of driver unload). I agree that pay increases are necessary over time. I would want to keep a great driver on with me as much as I can afford to("at all costs" is a bit extreme). So a veteran with the sense for business and expediting would be worth a mint, but I can't give him the house.