Facts About Trucking Rates
Why $3 A Mile Should Be A Standard For Truckers
So you want to get a CDL, and ride the road with the, “Billy Big Riggers”,..eh? Well, that’s just great, but, before starting that journey, consider this first. Here are some facts those big trucking companies, (The Big Boys), are not ever going to tell. And furthermore, there’s alot of Experienced Over-The-Road Truckers, that’s not even aware of these things. I’ve written this letter to explain the reason why. lalamove review
First of all let me start with a, “Phase One”, perspective, that I have named, “Joe Blow”. The person who has become frustrated with that terrible, “Dead-End Street,..Can’t Get Ahead”, job. Like so many Americans he’s thinking about getting a CDL, to overcome his limited boundaries. And why not?,.He always hear about how there’s a great demand for the CDL driver..right? In fact,.. there is a huge demand for truck drivers, especially now, with all the big
boom industries doing all of their buying, selling, and trading on a worldwide scale. Today, there’s literally more freight available than there are trucks on the road. Which includes, importing and exporting goods, not only here in the United states, but also, in Canada and Mexico as well.
Okay, so what does all of that mumbo-jumbo have to do with Joe? Well, .. Joe starts to look for a way to get his new CDL. Some CDL schools and independent training courses, can become a little expensive for a person that lives on a small budget. So, as Joe explores his options, he begins to notice the, “Wanted Ads”. Almost all trucking companies require at least a minimum of 2-3 years of experience. So, Joe now has to figure out not only how to get a CDL,
but also, who will hire him with less than, 1 year of experience. Yes, there is a solution,..and Joe finds it. Joe finds a brochure about a trucking company. It provides information of how he can make $40K-$60K per year, get the CDL training he needs, a job,as well as supplying him with his very own truck with all the bells and whistles to go along, at no cost to him. Now, Joe’s wheels start to turn, as he begin considering this option. It’s perfect, it’s the break that
he’s been looking for. So Joe makes the, “1-800”, phone-call, talks with a recruiter and sets up his training, to begin in a few days. Everything is legitimately legal, and is at the, so-far so-good stage.
At “Phase Two”, we find Joe Blow, attending Orientation at one of the, “Big Boys”, training facilities. This is where you get pre-employment tested, and trained for your new carreer. So now they explain to Joe, along with about 50 other people in the class, all the technicalities involving their newly chosen carreers, and what will be expected of them. Still,not too bad of a deal, it seems fair enough. At this, “Phase-Two” point, some companies may cover your living costs, while you’re training, and others will not. That is left to the companies own descretion to provide or
not. Its very likely, that Joe will be looking at 4 weeks of training, without any pay. The reason being, is that he still hasn’t taken and passed the, “Dot Cdl Exam”, at the DMV station yet. Now, own the other hand, some companies only require you to ride for a few weeks with an experienced driver that, trains you while driving over the road. And even moreso, most companies require that you do both. Classroom and exam first, then over-the-road training for approximately 7 weeks, Which would actually provide an extremely good training experience for Joe.
Now comes, “Phase Three”, as Joe has finally completed the training, and is now ready for the road and all that top-dollar pay. Only one last and final decision to make, Joe. “..Would you like to be, a Company Driver, or..a Lease Operator?” Now, this is the tricky part for Joe, who has just spent almost 2 entire months riding as a team-driver, living on very little pay, and is just ready to start making a decent wage in his own truck. By this time the average person really would prefer having their own new, and clean truck, rather than an old torn down clunker that’s been through, the “Torment of Hell”, and is back again. Besides, they just explained to Joe that if he goes with a, “Leased Option to Buy”, program, that he can double that massive stack of money. Now, being hungry for a meaningful wage standard, Joe decides to lease his new truck. But unbeknown to Joe, he has just shot himself in the foot, and has made an very bad decision. Which will probably lead him right back to square root 1, to the same financial situation that led him to the trucking industry in the first place. What Joe Blow begins to see once out on his own, is that his gross check at the end of the week is about twice the amount that he was previously working for, and sometimes even more. But he is also noticing that he is bringing home about the same and sometimes less, due to the overhead expenses. He begins to wonder how it can be so. He thinks to himself, “How can it be, that I make more and bring home less, when all I do is drive the truck. I don’t go out and party or blow the money foolishly.”
For Joe, it will never make sense until he realizes, exactly what has actually happened. “Big Boys”, have just talked him into transporting the freight, at his own expense, as well as purchasing a new truck. It was an all Win-Win situation for the , “Big Boys”.
Fact: Joe didn’t know that 90% of recruiters have little or no experience about driving a Big Rig. Because simply put, a recruiter’s job is to, recruit and sale, period. To get as many people as possible, signed-up and enrolled in training, or signed-on as, “New Hirees”, whether experienced or not. To the recruiter, Joe is just another number in the system. Regardless, of how much that brochure talked about how a company valued their drivers. That is just a sales pitch, in a nutshell. That is what companies say to try to get people the decide to use their service instead of the competition’s services. What companies care about, is that freight thats being pulled down the road.
Fact: After obtaining the CDL from the DMV, Joe would normally be out from under the recruiter, and then turned over to a Broker,or Dispatcher, or put on some sort of department roster. In other words put in the stack among other drivers. From this point on, this would normal be his contact for a load.
Fact:Doubling the money theory comes by representatives encouraging Joe to take on a co-driver,
most of the time a trainee. Why? Because he’s new and ignorant to trucking, and will accept dirt cheap pay to get the experience needed to operate an 80,000 lb vehicle while under all situations and conditions.
Fact: The “Big Boys” profit this way, by 1) Letting Joe pay the co-driver a small sum, while Joe gets paid for all the miles that he drives, plus all the miles the co-driver drives. “Example: (Joe drives 100 miles, then his 2nd seat drives 100 miles, which comes to a total of 200 miles. (100 + 100 = 200 miles) The company would pay Joe for the total 200 miles, then Joe would pay his 2nd seat for approximately 20 miles.)” So, then a company has 2 drivers in one truck traveling double the distance in a day, versus a single driver. Which also, allows them to move freight at double time for the price of one driver. It’s a shrewd method to get alot for the least at the expense of 2 drivers.
Fact:Many companies nowadays are moving toward the “Team” movement. The reason is simple, “If the owner-operators will accept wages that cheap, why change it.” It means bigger profits for the Trucking Companies and Lesser profit for the Owner-operator. “What they don’t know, won’t hurt’em”, Theory. But it does hurt in the end.
Fact: Many Truckers claim that Freight Rates are being driven down. Freight rates are higher than ever before. But what is happening, is that Owner-operators are waiting for competitor trucking companies, to pay them more for a load, while finding a load for an Owner-operator. “If you want to be paid what its worth, then you have to find the load yourself.” Stop agreeing to haul loads for cheapo rates. There are more Truckers than there are brokers, that can actually drive the truck.
Fact: Big companies use, “Load Brokers”, to setup the freight load and unload points. Part of your money goes to the Broker as payment for finding your load. But you still have every right to find own load, and negotiate your own price for hauling the freight, without using a Broker.
Fact: The “Big Boys”, will always prefer to have an Owner-operator hauling their load, because it almost an 70% to 80% profit for their company. And all the cost falls on the trucker.
Let’s pretend that Joe Blow is starting a really big Freight company. Let say he has 1000 Trucks, and 1000
Trailers to accomodate the freight to be hauled.
1 Question: How expensive is it to haul 1 load of freight 2500 miles?
2 Question: How much fuel will it take, and whats the cost?
3 Question: How much will money will I need to get back home?
4 Question: Will I any permits or other legal documents to transport the load?
5 Question: What’s the cost of fuel per gallon?
6 Question: How many mile can Joe travel on 1 tank of fuel?
7 Question: Will I need lumpers to load or unload?
8 Question: What is the average current rate for a load like this?
9 Question: How much will I need for food, parking, other miscellaneous needs?
10 Question: How long will the trip take?
11 Question: When is the load due?
12 Question: Is it a “Hot” load?
13 Question: How much will it cost per mile to deliver the load.?
These are Joe’s questions, because all of these factors will need to be cover for only one load. Remember, He is going to be starting out with 1000 trucks, and will need to cover every truck’s expense. Joe start’s to ad it up to get a rough idea of how much money this 1 load will take.
1) Joe knows that 2500 miles divided by 60 mph = 41.6 hrs. (3 days 5 hrs.) Now, by experience Joe knows that it may take 4 days in actuality to deliver this load.
2) Joe knows that his trucks are rated an average 6.0 mpg. and have 200 gal Fuel Tanks.
3) Joe knows he will need to make 4 fuel stops during this load, which are:
- a) Fuel Stop #1 Fill Tank ( 200 Gal. x $4.00 per gal = $800.00 )
DAY 1 – Joe drives a total of 625 miles
- b) Fuel Stop #2 Half-Tank (100 gal. x $4.00 per gal. = $400.00 )
DAY 2 – Joe has driven now for a total of 1250 miles
- c) Fuel Stop #3 Half-Tank (100 gal. x $4.00 per gal. = $400.00 )
DAY 3 – Joe has driven now for a total of 1875 miles
- d) Fuel Stop #4 Half-Tank (100 gal. x $4.00 per gal. = $400.00 )
Day 4 – Joe has driven now for a total of 2500 miles
If Joe is lucky, and everything goes flawless he may arrive in late of the 3rd day.
But it should not be looked at as a guarantee, if driving solo.
Determining the Cost
Now Joe knows the Fuel bill will be $2000.00 for the Truck alone (Add $150.00 for a refridgerated trailer) This is a One-Way. It will cost the same amount to bring the truck back to the terminal. So Joe is now looking at spending at least $4000.00 for a round-trip expense in Fuel alone. So now, with this average Joe can know how much it will cost him, everytime each truck travels one (1) mile. ($0.67 x 6.0 mpg = $4.00 gal) It will cost Joe $0.67, per mile in Fuel, each time a driver goes 1 single mile. Joe knows that now if it will cost him $2000.00 to have one of his trucks haul one load for 2500 miles, then it will cost him $2,000,000 to cover the fuel bill for his trucks.
Okay, so now at a $2,000,000 fuel bill plus the maintenance, need I remind Joe, that we haven’t dicussed how payroll rates yet. For the drivers will need to be paid as well. So how will Joe Blow pay this very large fuel bill of $2,000,00.00, then pay his company drivers $0.35 per mile, keep up all the maintenance and permits, licensing and insurance on all of this stuff? “Elementary Dear Watson”. Here’s how
The Master Plan
Instead of Joe Personally owning all of these trucks:
1) Let’s simply lease the trucks
2)Then Lease-out to CDL Drivers, and deduct the payment from their payroll
3)Fair is fair, since the Lease and Owner-operators are paying for ownership of the truck,
4)then maintenance, fuel and other truck expenses rest on the Owner’s shoulders.
5)Which leaves Joe Blow with the task of simply locating the freight (Brokering the Load)
6) Now, you have a fully equipped fleet, with the least amount of overhead, being that’s the Lease and Owner-operator’s problem to pay for the fuel and Truck cost of repair.
7) This way we actually own the truck, and the truck driver pays for the truck and fuel.
8) Now instead of Joe spending that $4000.00 round trip, he throws a few incentives to the naive trucker, and let them pay it.
9)Now Joe sell these 2500 mile loads for roughly $6K, $7K, $8k, then pays a driver around $0.80 to $1.20 per mile to deliver it.
So, Whats Joe’s Cut?
So what does Joe Blow Profit out of this new setup? A load going 2500 miles, and Joe is charging $7,500.00 to deliver it. $3,000.00 goes to the trucker, and $4,500.00 to Joe Blow. So instead of Joe spending $4K, he gets to profit $4.5k for the load. And that $3,000 that Joe paid to the Lease driver? Well being that Joe company leases their trucks out to their drivers, means that each week, each and every one of Joe’s drivers will make a small settlement deducted payment to Joe of about $300 to $600 a week for the lease purchase plan agreement they signed after their training and sign-on. This is the reason why it appears that prices are becoming cheaper when they are actually rising due to the increase in fuel cost at the pump. Because Big Boys like Joe Blow can say to their employees we pay $1.20 per mile. Truckers were making that in the 70’s. The sad part about it is this. Alot of Owner-operator are out there falling for these gimmicked up snake-pits and signing on with the Joe’s that doing them in.
To finally wrap the entire letter up in a nice little bundle. Most importantly, learn this,… your competitor will never pay you more than what they are getting paid, neither your boss pay you more than what they make, else they may end up working for you, instead of you working for them. And no,..I’m not saying, “Don’t work for or with the big boys in the trucking industry”. This letter intended to merely shine light on the subject. For once you understand how the game is played on the playing field. All the big boys have done, is capitalize on a good market strategy, and changed the way they do a few things. But you can plan and use your brain power just as well as they can. You can do the math yourself: If fuel prices are nearing $4.00 per gallon, and you need to go 2500 miles @ 6.0 mpg, leaves you with a ($.67 per mile – $.70 per mile) cost on your truck. Honestly, Leased and Owner-operator should be charging no less than $3.00 per mile on every load. The average freight bill that is brokered on a load as such, normally ranges in the neighborhood of $7,500.00 dollars. All I can say, is that the truckers are doing it to themselves, by accepting anything less than these rates. But its left up to you, you control it. By the time you read this, these rates may be too cheap. The best way to put it is like this, You the truck driver is in demand, brokers are Not. Brokers drive small compact
sports cars, not semi-trucks. You can’t physically get 76,000 lbs. of anything, from one coast to the other coast through that small cable, found on the back of the broker’s computer terminal in his office.
Created From Trade Knowledge
–Facts from the Ranger