Having a track record of over 30 years in the transportation industry in one form or another; starting out as a leased owner operator for Mayflower in 1975, up to currently owning an expedited delivery service down here operating within the state of Florida for over the past decade, I have a general feel of how the industry works in general. I've lost count of how many miles (hundreds of thousands or even up in the million or so range) that I have accumulated personally operating various size motor vehicles from light trucks and cargo vans up to 80K pound full load tractor trailers. Every single mile being accident free in over 30 years of driving within the United States and overseas in Europe for the U.S. government (autobahn). Just about seen it all, and almost done it all.
Ever see a guy pushing a WHEELBARROW across 3 lanes of interstate traffic at DUSK for all he's worth? I did, Jacksonville, I-95. 7pm. Ever pass a pickup in the rain , just to have him spin out and slide sideways down the road just 2 to 3 feet from your front bumper until his wheels caught and threw him into the grassy median? We've all seen the wrecks with the yellow plastic tarp over bodies, air extraction of half living human bodies, the road rage nuts, the police each delivering their own brand of "road-Side Justice", especially in these little towns with no traffic lights.
Even saw one truck wreck over in Germany where the only thing left from a tractor was the engine/transmission combination down in the ditch. Never did figure out what happened to the rest of the cab, and body inside - just saw that motor and tranny down in a ditch.
For all of you guys new to the trucking industry, keep these written words etched in your memory: "TIME IS MONEY", as quoted by Benjamin Franklin.
This entire industry, including expediting, is evolved around using your time up for free, without compensation. YOu will put in 60-70 hours weeks and be compensated for your driving mileage on a pocket change basis. If we were all lucky to be paid on an hourly basis such as those local LTL guys (some up to $22/hour with OVERTIME); we'd all retire early - assuming survival of the road and not becoming another statistic.
I read a post from someone who was very excited about driving from TEXAS to OHIO (I think) for orientation, and then driving back to Texas? I hope that your time and mileage is being compensated for at a decent rate - otherwise in essance what you are doing is driving up there and back out of your own pocket expense. With the cost of diesel, adding to the man/woman hours of driving time that you believe you are worth - you have basically donated your time(money), and cash for diesel just to go to orientation. Sure they will pay you a nominal sum to while ATTENDING that orientation, but you have to think from a full view perspective of being a business owner. Can you actually drive all those miles and spend all that time driving for what boils down for FREE? How will you recoup those losses?
The other point is business operational expenses; there are both FIXED and DYNAMIC. Fixed costs are the ones which remain the same day after day whether you drive the truck or make any type of money. Those include Truck payments and insurance payments, tag, registration, etc. divide all those fixed costs by 365, and you have a base mimimum which you are required to make PER DAY just to break even without driving a single mile. When you layover, or wait for a load, some of you people have stated for up to a week - then your carrier is basically playing with your money by using up your time.
Your bank and insurance company isn't going to stop demanding payment on the days you're not hauling loads are they? Therefore, for every day you are not driving and generating revenue has to be made up at a later time; by adding that cost to the next load. You sit for a few days waiting for a load and wait? Free? Not a chance. Banks and insurance companies already noted don't care; but can you live without eating or drinking for those days; another added cost liability of lowering your overall net income.
Then you have the dynamic flexible expenses such as amount of mileage, fuel expenses used to deliver loads, depreciating value of the vehicle, breakdowns, tolls, repairs, maintenenace,tires, etc; which all fluctuate up and down each day and month all dependent upon the amount of miles you drive. These are the only expenses your carriers WANT you to know about. They are quite happy for you to sit out in Nowhere USA for days, and think it's just peachy, as it's not costing them a penny; but it sure is FOR YOU.
As most of you have noted in this expedited delivery business- the best type of operation to generate a maximum return on your investment (ROI) is a TEAM; where the truck basically never stops except for pickup, delivery, and shop maintenance and repairs. In this business model your pennies per mile compensation is at its maximum, but you are burning yourself out and driving the truck into the ground - but why should the carrier worry about that, it's YOUR asset (or I should say $100,000 liability to the bank). You run hard, don't know what the meaning of HOME or VACATION or OVERTIME means; it's not in the vocabulary, and try to trade in that truck before it flat self destructs from wear and tear.
Some people are quite happy and content with that; and I say go for it.
For me personally, I do not like the idea of playing around with my business asets, and especially my TIME as if it were to be given away for free. Nobody works for free in this country, that is not how you pay bills, the daily fixed business expenses, and put shoes on the kids. Your time is money; and the more of your time you give away without being compensated for, the quicker the road to the poor house you will go.
Scenario: pickup a load to deliver to Wichita, Kansas. Done and delivered. Dispatcher says "hold tight and wait". Right there your time is being used for free, and the clock is still ticking on those fixed expenses. The longer you wait without compensation, the higher paying the next load will have to be in order to compensate for the lost amount of potential generated revenue. The problem with that, and for the trucking industry in general for the past 30 years, is that the next load is NEVER a higher paying one to allow you to recoup for the lost time ($$) and fixed expenses and still pay decent for the next one. Some things never change,much, freight rates in trucking are a prime example.
Next item on the agenda: do not allow yourself to get tricked in to a percentage load statement quote. Example: "we pay 65% of the gross" Gross of what??? How do you know and how can you determine what the actual GROSS freight rate is? Ask for the actual copy of the freight Bill of Lading and Invoice to the customer? Good luck on your next job. In your contract, always, always, always, have it stipulated in WRITING, signed by a designated person who has the AUTHORITY (not the janitor) who has the power of attorney to act on the carrier's behalf to enter into contractual agreements, and get every possible situation that you can think of down in writing; add in addendums if necessary - those contracts ARE NOT written in stone as much as those carriers would like for you to believe. They are, of course, drawn up by their laywers, and heavingly worded in their favor. What else is new?
Wait time? How much per hour, how much permitted "free time" Remember my time is not free. The key here is to get loaded and unloaded ASAP in a team operation and get to the next low paying load.
Loading and Unloading? You or the unskilled dock warehouse people? You get paid for manhandling freight after driving 10 hours? Do you want to? I have my own opinion on this; a motor vehicle operator safely operates the motor vehicle on the streets and highways, and is responsible for SECUREMENT of the load while in transit. That does not include loading the freight, and does not include unloading the freight. That does not include doing mechanic work, unless you want to save money and do it yourself. The law is specific on this; the driver must do a pre-trip and post trip inspection of the vehicle, inspect it every 150 miles while in transit, including load containment; period. I used to deliver HHG for Mayflower 30 years ago. It was not uncommon to load the truck, drive the truck, and unload the truck, and make my "generous 65% commission" of the load. 65% of WHAT amount???? And 30 years later, with the new trucks topping over the $100,000 mark, the base commission percentage is STILL THE SAME????? Think freight rates have gone up a lot to compensate the cost of living? Guess again. That is why a lot of HUGE LARGE carriers have gone bankrupt. Freight rates and competition, and expenses which have gone through the roof.
Bottom line:
If you do not think like a businessman, and only think like a driver being told and led around by the nose, you will soon become another statistic. MAKE THAT TRUCK WORK FOR YOU, NOT YOU FOR THE TRUCK. Don't fall into the trap of becoming a contractor owner operator with a lease/puchase program with truck payments of $2000 a MONTH!! Not with the average cost of freight rate being noted at 80-90 cents per miles plus fuel surcharge (excuse me while I do my poddle flips)and other incentives to bring the grand total up to $1.20 or $1.40 a mile.
You will go broke. Rock bottom figure for an old used truck with low payments and cheap diesel, and praying every day that the thing won't blow up is $1.50/mile, and that's WITHOUT that extensive "free" waiting time I as talking about previously. For a new model truck, you should be asking for $2.00 to $2.25 per mile, with a paragraph in that contract stating that wait or detention time is payable immediately after 1 hour (at most) at $15.00/hour. Otherwise, you will go broke.
I read the article in the truck mag about an O.O. who ran his new truck hard and nonstop (violation of the HOS regs) in order to try to make his $2000/month truck payments. He ran hard alright, right up to the point where he fell asleep at the wheel and wrecked and I believe caused a fatality. Don't fall into that trap. The article stated that this guy didn't eat or sleep good,take showers and didn't see the front door of his house in months. His life was focused on bending the 10 straight hours off duty time in order to deliver cheap freight in his shiny new hundred thousand dollar truck; which the BANK actually owned; not him. He ruined his life by the wreck, the court costs, the criminal neglectance action against him, loss of CDL, penalty and fines assessed against him, and I wasn't sure if he was sentenced to JAIL or not. All this - just to deliver cheap freight in an overly expensive truck; worked like a pack mule until he just dropped from fatigue.
Is that what you want to get into trucking for? Or do you want to enter it from a small business owner aspect and MAKE MONEY by operating wisely? That wisdom comes from experience and time and relationships built with warehouse , dispatchers and terminal people.
Nothing more sickening that the sound of a dead motor right in the middle of delivering a load. As an O.O., I hope you have a big fat credit card or large bank account, because calling 1-800-HelpME isn't going to work. Those are your bills heading your way. Worst yet - your carrier might even be so kind as to dispatch another contractor over to where you are to "TAKE" you load and deliver it, and keep all the money for himself - leaving you with a negative on that load.
Worse has happened.
Want you own operating authority to act as a contract carrier so you can negotiate with shippers and brokers for freight? GOOOOOD LUCK. Hope you have the experience behind you because there are enough
schemes and scams going on out there that could fill a book. The basic premise of the entire problem relies upon the fact that just about 99% of the loads are delivered on CREDIT. Only the smart guys like UPS anf FEDEX make their shipping customers pay either UP FRONT in full, or request a line of established credit, which is only approved after extensive research into their business history (called a DUNS Dun and Bradstreet) report. Building your trucking business model upon delivery and trust for payment after the fact is R-I-S-K-Y.
Ask for some of your money up front, and some of these guys will look at you crossed eyed, or have the nerve to charge a percentage of the amount "LOANED" to you...your own money.
Brokers and Lumpers...what would this industry be without them.
That's a whole can of worms in itself. Pallet exchange scams, unloading "fees" which for the most part are cash-only and no receipt with SOCIAL SECURITY NUMBERS with NAMES written down on them, so the IRS will refuse your tax deduction, to pay up if you want to be unloaded by our crew now, or wait over there in the corner of the (for a few days) until we find dock space....
Brokers - I'll leave that one for you to find out for yourself. Just keep reading the forums and board postings. Note: be very careful as to who to trust with your money.
Final notes:
Always, always, always, place Shipper, Load and COunt (SLC) on your Bill of Lading if you weren't duped into loading the freight yourself.
Shortages have been known to occur in this industry, once or twice before..., and it will come out of YOUR pocket as a cargo claim.
Check the weight of the load on a scale before finding out the bad news at a weigh station down the road - where their mantra is "cash only, or money order for the EXACT amount of the fine". Shippers have been known to make a few "errors" on actual load weights before, usually as a means of getting a lower rate of a few bucks. The guys who load your truck with forklifts or pallets jacks are the ones who are setting your axle load weights as well; so best to supervise the operation, not do it, but WATCH. It's your truck, and your cargo responsibility. If they want to seal the load, then demand to get in there first to secure it as best you can, before they lock and tag the doors. Any load shifting is your baby, and your cargo claim.
That about covers Owner Operator - 101. Might think of a few other items later. A good place to find more information about operating your own business, acting under your own authority, or leasing to a carrier is the OOIDA site. I am a member, but they do not pay me to endorse them. It is only a reference in their direction. They have an entire business office devoted to the success of the indepedent owner operator. Dues is about $45 a year; and tax deductible.
Ever see a guy pushing a WHEELBARROW across 3 lanes of interstate traffic at DUSK for all he's worth? I did, Jacksonville, I-95. 7pm. Ever pass a pickup in the rain , just to have him spin out and slide sideways down the road just 2 to 3 feet from your front bumper until his wheels caught and threw him into the grassy median? We've all seen the wrecks with the yellow plastic tarp over bodies, air extraction of half living human bodies, the road rage nuts, the police each delivering their own brand of "road-Side Justice", especially in these little towns with no traffic lights.
Even saw one truck wreck over in Germany where the only thing left from a tractor was the engine/transmission combination down in the ditch. Never did figure out what happened to the rest of the cab, and body inside - just saw that motor and tranny down in a ditch.
For all of you guys new to the trucking industry, keep these written words etched in your memory: "TIME IS MONEY", as quoted by Benjamin Franklin.
This entire industry, including expediting, is evolved around using your time up for free, without compensation. YOu will put in 60-70 hours weeks and be compensated for your driving mileage on a pocket change basis. If we were all lucky to be paid on an hourly basis such as those local LTL guys (some up to $22/hour with OVERTIME); we'd all retire early - assuming survival of the road and not becoming another statistic.
I read a post from someone who was very excited about driving from TEXAS to OHIO (I think) for orientation, and then driving back to Texas? I hope that your time and mileage is being compensated for at a decent rate - otherwise in essance what you are doing is driving up there and back out of your own pocket expense. With the cost of diesel, adding to the man/woman hours of driving time that you believe you are worth - you have basically donated your time(money), and cash for diesel just to go to orientation. Sure they will pay you a nominal sum to while ATTENDING that orientation, but you have to think from a full view perspective of being a business owner. Can you actually drive all those miles and spend all that time driving for what boils down for FREE? How will you recoup those losses?
The other point is business operational expenses; there are both FIXED and DYNAMIC. Fixed costs are the ones which remain the same day after day whether you drive the truck or make any type of money. Those include Truck payments and insurance payments, tag, registration, etc. divide all those fixed costs by 365, and you have a base mimimum which you are required to make PER DAY just to break even without driving a single mile. When you layover, or wait for a load, some of you people have stated for up to a week - then your carrier is basically playing with your money by using up your time.
Your bank and insurance company isn't going to stop demanding payment on the days you're not hauling loads are they? Therefore, for every day you are not driving and generating revenue has to be made up at a later time; by adding that cost to the next load. You sit for a few days waiting for a load and wait? Free? Not a chance. Banks and insurance companies already noted don't care; but can you live without eating or drinking for those days; another added cost liability of lowering your overall net income.
Then you have the dynamic flexible expenses such as amount of mileage, fuel expenses used to deliver loads, depreciating value of the vehicle, breakdowns, tolls, repairs, maintenenace,tires, etc; which all fluctuate up and down each day and month all dependent upon the amount of miles you drive. These are the only expenses your carriers WANT you to know about. They are quite happy for you to sit out in Nowhere USA for days, and think it's just peachy, as it's not costing them a penny; but it sure is FOR YOU.
As most of you have noted in this expedited delivery business- the best type of operation to generate a maximum return on your investment (ROI) is a TEAM; where the truck basically never stops except for pickup, delivery, and shop maintenance and repairs. In this business model your pennies per mile compensation is at its maximum, but you are burning yourself out and driving the truck into the ground - but why should the carrier worry about that, it's YOUR asset (or I should say $100,000 liability to the bank). You run hard, don't know what the meaning of HOME or VACATION or OVERTIME means; it's not in the vocabulary, and try to trade in that truck before it flat self destructs from wear and tear.
Some people are quite happy and content with that; and I say go for it.
For me personally, I do not like the idea of playing around with my business asets, and especially my TIME as if it were to be given away for free. Nobody works for free in this country, that is not how you pay bills, the daily fixed business expenses, and put shoes on the kids. Your time is money; and the more of your time you give away without being compensated for, the quicker the road to the poor house you will go.
Scenario: pickup a load to deliver to Wichita, Kansas. Done and delivered. Dispatcher says "hold tight and wait". Right there your time is being used for free, and the clock is still ticking on those fixed expenses. The longer you wait without compensation, the higher paying the next load will have to be in order to compensate for the lost amount of potential generated revenue. The problem with that, and for the trucking industry in general for the past 30 years, is that the next load is NEVER a higher paying one to allow you to recoup for the lost time ($$) and fixed expenses and still pay decent for the next one. Some things never change,much, freight rates in trucking are a prime example.
Next item on the agenda: do not allow yourself to get tricked in to a percentage load statement quote. Example: "we pay 65% of the gross" Gross of what??? How do you know and how can you determine what the actual GROSS freight rate is? Ask for the actual copy of the freight Bill of Lading and Invoice to the customer? Good luck on your next job. In your contract, always, always, always, have it stipulated in WRITING, signed by a designated person who has the AUTHORITY (not the janitor) who has the power of attorney to act on the carrier's behalf to enter into contractual agreements, and get every possible situation that you can think of down in writing; add in addendums if necessary - those contracts ARE NOT written in stone as much as those carriers would like for you to believe. They are, of course, drawn up by their laywers, and heavingly worded in their favor. What else is new?
Wait time? How much per hour, how much permitted "free time" Remember my time is not free. The key here is to get loaded and unloaded ASAP in a team operation and get to the next low paying load.
Loading and Unloading? You or the unskilled dock warehouse people? You get paid for manhandling freight after driving 10 hours? Do you want to? I have my own opinion on this; a motor vehicle operator safely operates the motor vehicle on the streets and highways, and is responsible for SECUREMENT of the load while in transit. That does not include loading the freight, and does not include unloading the freight. That does not include doing mechanic work, unless you want to save money and do it yourself. The law is specific on this; the driver must do a pre-trip and post trip inspection of the vehicle, inspect it every 150 miles while in transit, including load containment; period. I used to deliver HHG for Mayflower 30 years ago. It was not uncommon to load the truck, drive the truck, and unload the truck, and make my "generous 65% commission" of the load. 65% of WHAT amount???? And 30 years later, with the new trucks topping over the $100,000 mark, the base commission percentage is STILL THE SAME????? Think freight rates have gone up a lot to compensate the cost of living? Guess again. That is why a lot of HUGE LARGE carriers have gone bankrupt. Freight rates and competition, and expenses which have gone through the roof.
Bottom line:
If you do not think like a businessman, and only think like a driver being told and led around by the nose, you will soon become another statistic. MAKE THAT TRUCK WORK FOR YOU, NOT YOU FOR THE TRUCK. Don't fall into the trap of becoming a contractor owner operator with a lease/puchase program with truck payments of $2000 a MONTH!! Not with the average cost of freight rate being noted at 80-90 cents per miles plus fuel surcharge (excuse me while I do my poddle flips)and other incentives to bring the grand total up to $1.20 or $1.40 a mile.
You will go broke. Rock bottom figure for an old used truck with low payments and cheap diesel, and praying every day that the thing won't blow up is $1.50/mile, and that's WITHOUT that extensive "free" waiting time I as talking about previously. For a new model truck, you should be asking for $2.00 to $2.25 per mile, with a paragraph in that contract stating that wait or detention time is payable immediately after 1 hour (at most) at $15.00/hour. Otherwise, you will go broke.
I read the article in the truck mag about an O.O. who ran his new truck hard and nonstop (violation of the HOS regs) in order to try to make his $2000/month truck payments. He ran hard alright, right up to the point where he fell asleep at the wheel and wrecked and I believe caused a fatality. Don't fall into that trap. The article stated that this guy didn't eat or sleep good,take showers and didn't see the front door of his house in months. His life was focused on bending the 10 straight hours off duty time in order to deliver cheap freight in his shiny new hundred thousand dollar truck; which the BANK actually owned; not him. He ruined his life by the wreck, the court costs, the criminal neglectance action against him, loss of CDL, penalty and fines assessed against him, and I wasn't sure if he was sentenced to JAIL or not. All this - just to deliver cheap freight in an overly expensive truck; worked like a pack mule until he just dropped from fatigue.
Is that what you want to get into trucking for? Or do you want to enter it from a small business owner aspect and MAKE MONEY by operating wisely? That wisdom comes from experience and time and relationships built with warehouse , dispatchers and terminal people.
Nothing more sickening that the sound of a dead motor right in the middle of delivering a load. As an O.O., I hope you have a big fat credit card or large bank account, because calling 1-800-HelpME isn't going to work. Those are your bills heading your way. Worst yet - your carrier might even be so kind as to dispatch another contractor over to where you are to "TAKE" you load and deliver it, and keep all the money for himself - leaving you with a negative on that load.
Worse has happened.
Want you own operating authority to act as a contract carrier so you can negotiate with shippers and brokers for freight? GOOOOOD LUCK. Hope you have the experience behind you because there are enough
schemes and scams going on out there that could fill a book. The basic premise of the entire problem relies upon the fact that just about 99% of the loads are delivered on CREDIT. Only the smart guys like UPS anf FEDEX make their shipping customers pay either UP FRONT in full, or request a line of established credit, which is only approved after extensive research into their business history (called a DUNS Dun and Bradstreet) report. Building your trucking business model upon delivery and trust for payment after the fact is R-I-S-K-Y.
Ask for some of your money up front, and some of these guys will look at you crossed eyed, or have the nerve to charge a percentage of the amount "LOANED" to you...your own money.
Brokers and Lumpers...what would this industry be without them.
That's a whole can of worms in itself. Pallet exchange scams, unloading "fees" which for the most part are cash-only and no receipt with SOCIAL SECURITY NUMBERS with NAMES written down on them, so the IRS will refuse your tax deduction, to pay up if you want to be unloaded by our crew now, or wait over there in the corner of the (for a few days) until we find dock space....
Brokers - I'll leave that one for you to find out for yourself. Just keep reading the forums and board postings. Note: be very careful as to who to trust with your money.
Final notes:
Always, always, always, place Shipper, Load and COunt (SLC) on your Bill of Lading if you weren't duped into loading the freight yourself.
Shortages have been known to occur in this industry, once or twice before..., and it will come out of YOUR pocket as a cargo claim.
Check the weight of the load on a scale before finding out the bad news at a weigh station down the road - where their mantra is "cash only, or money order for the EXACT amount of the fine". Shippers have been known to make a few "errors" on actual load weights before, usually as a means of getting a lower rate of a few bucks. The guys who load your truck with forklifts or pallets jacks are the ones who are setting your axle load weights as well; so best to supervise the operation, not do it, but WATCH. It's your truck, and your cargo responsibility. If they want to seal the load, then demand to get in there first to secure it as best you can, before they lock and tag the doors. Any load shifting is your baby, and your cargo claim.
That about covers Owner Operator - 101. Might think of a few other items later. A good place to find more information about operating your own business, acting under your own authority, or leasing to a carrier is the OOIDA site. I am a member, but they do not pay me to endorse them. It is only a reference in their direction. They have an entire business office devoted to the success of the indepedent owner operator. Dues is about $45 a year; and tax deductible.
