May 4, 20184 Comments

Steps to Become a Truck Owner Operator

The origin of being your boss

Many company drivers dream to become an owner-operator who has their truck and drive for themselves. After all, America is the land of opportunity, and good trucking service is always in demand, so there is money to be made by working for oneself. Most of the drivers that fail in owning a truck do that because they are not prepared for all that will come towards them. We have seen excellent drivers losing their savings and owing money because they were surprised by some of the expenses that come with buying and operating a truck. Future owner-operators must think about their cost of the commercial truck, type of trailer, revenue per mile, truck insurance, etc. The list is long.

We hope that this article will help, the future owner operator. Better to read it now, than to pay the high price of learning it down the road.

Brand New Freightliner Cascadia Owner Operator Specs Bobtail Truck

First things first - Cost of commercial truck

You need a horse. There are two ways — you can buy or lease.

Buying a truck is easy

Walk in the first truck dealer you see, and the salesman will do everything possible to sell you one and help you finance it if you have any credit history. You should consider how much the monthly payment will be for that truck. A long time ago a friend of mine told me that a truck without a monthly fee does not exist. If you buy a brand-new truck you will have the apparent loan payment, then immediately after you pay it off, there will be a new payment in the form of higher maintenance expenses.

The cost of a commercial truck, in that case, would be the price + the accumulated interest. From a tax perspective,  the owner-operator can write off the insurance as an expense along with the depreciation of the truck.

Leasing a truck

As a future owner-operator, you can rent a vehicle from Penske/Ryder, as well as most of the big dealers like Freightliner, Volvo, Peterbilt/Kenworth, and International, or even most of the truck financing companies. The first two companies would charge a certain amount per month + charge per mile. They will cover most of the maintenance. However, they will not cover damages due to driver’s fault, which includes anything from a flat tire due to nail, cracked windshield or even if someone breaks your mirror at the truck stop and runs away, etc.

The other type of lease is called “Lease to buy” by lenders. It works similarly to a loan, but the truck is owned by the bank until you “pay it off.” Essentially, you are paying rent (lease payment) to the bank, which in the end transfers/sells it to you for $1. The sales pitch for such loans is that you can write off the payments as an expense and pay fewer taxes. If that is the only reason to choose it — don’t. It is true that a lease payment of $2000 a month can be written off at the end of the year and a loan payment of $2000 cannot in the same way. However, when you have a lease payment the maximum that you can write off is $24000, compared to the loan type, where you can write off depreciation and interest.

Owner Operator Financing

Next time when you have to talk with a loan officer for financing a trailer, for example, they will look at your financials or tax returns. It is much better to have depreciation expense than lease expense if you want to get a better loan rate.

A few things that the financing agency will ask you are — how much experience you have as a truck driver, how much (if any) experience you have as an owner-operator and for which company you will be driving for. The first question is so they determine whether you can drive a truck. The second is to determine if you can operate a business, and the third one is for them to know that you will be doing actual work with the truck.

      After all the paperwork is done, and you are ready to drive off the parking lot, you must show the dealer and the lender proof of insurance.

Owner Operator Insurance

Big rig truck insurance is very different than car insurance. Future owner-operators must know what they are paying for. Check this article for more detailed information.

 Registration 

To haul any load on public highways, you need to have a truck registration. This is the next costly part of owning a truck. The plate can be a state registration or IRP (International Registration Plan). The first would permit you to drive only in the state where the truck is registered. It is usually more expensive than the other, but you don’t need to pay IFTA (International Fuel Tax Agreement). The second permits you to haul freight in North America (hence International Registration Plan) except for the Mexican and Canadian provinces that don’t border with the US.

Permits

We have seen drivers that take money from IFTA, but for the most part, it is around $100–200 per quarter. State permits depend on how much you drive through OR, KY, NM, and NY. Oregon charges you $0.1638 per mile driven in the state. You can offset the extra charge by fueling there since fuel is cheap. NM, NY, and KY charge around $0.05 per mile driven in the state. Other states don’t have such charges, but they do have toll roads, so one way or another you pay. You can read about all the permits in your truck folder here.

ELD Device

After December 18th, 2017, the trucking industry changed. Owner-operators should know how to choose their elog device or go with the trucking company they decide to work for. The

Pick up the right freight segment

The horse is here, but where is the carriage? There are four main freight types and everything else we will put in the group Other Freight.

Dry Freight

This is the most common freight out there and the easiest to haul. Most of the TL carriers include this type of service in their business model. Dry Vans are the cheapest trailer to buy, maintain and load. Most of the time you spend on the road. Almost all companies that pay per mile pull exclusively dry vans. However, dry van loads do not pay as the others.

Refrigerated or temperature controlled

For this type of freight, you need a reefer trailer. It costs twice as much as a dry van trailer, and you need to maintain the reefer unit. It is like having another car attached to the trailer all the time. Oil changes, belts, AC compressor, etc., are things that you need to be aware of and concerned about. Majority of the loads are foods, which means extended pickups, deliveries and special appointment hours. Reefer is easy to load like a dry van, but you must sleep with the unit on most nights. Some drivers are ok with it; others hate it. You make more money with the reefer loads, but you also have more expenses.

Flatbed Freight

Crane or forklift load that type of freight from the top or the side of the trailer. The most commonly used trailers are Flatbeds (obviously), Step Decks and Conestoga. Flatbeds cost almost as dry vans, where step decks and Conestoga are around 10k more expensive. However, as an owner operator, you must buy more supporting equipment — chains, straps, tarps, to name a few. You must also use the equipment, to brace and strap the load. Chains are heavy, and you should move them around when you are securing steel coils. Tarping is not fun for many drivers as well. However, you are getting paid better for the loads.

Hazmat Freight

Тhe previous three load types can be Hazmat as well. That means that they need to follow the Hazardous Material Transportation Regulations. Most of the time this type of freight is loaded in dry van and reefers, but occasionally you will see a flatbed with such cargo. It pays more than other cargo for the given lane, but you must be more careful.

Other Freight

These include tankers, auto carriers, livestock trailers, dump trailer, etc. People usually do not come from driving school and get immediately with Livestock or Tanker truck. They come with their specifications. Livestock is not easy, nor is it easier oversize load or a car hauling trailer.

Choose the right trucking company for yourself

Everyone says that they one of the best owner operator companies. This is the hard part. How do you decide which trucking companies are good and which one is bad?!
Trucking companies pay their owner operators in a couple of different ways:

Revenue per mile

Most of the big trucking companies pay per mile to owner-operators. They usually have a base rate per mile + fuel surcharge(fsc), and you don’t have to have a trailer in general. Signing with such company relieves you from the burden of thinking about other charges that you will have — liability insurance, trailer rent, permits, trailer maintenance, etc. The fuel surcharge changes with the average price of fuel in the US, so it is the same for everyone. However, the base rate changes with the different companies. Some will pay you one rate for loaded miles and another (lower and often without fsc) for empty miles. The other will pay a seemingly higher price for all miles, but you must pay for IFTA, KY permit, NM permit, etc. And in general, these companies will have stricter rules for you to obey.

Revenue per percentage of the freight

This type of trucking companies pays the owner-operator percentage of the cargo that they book for the truck. Usually, the FCS is part of the gross rate. Smaller companies pay 86–90% of the freight revenue, where large fleets pay you around 70%.

Companies with pay range 86–90%

These carriers will not cover expenses such as permits, insurance, trailer, etc. in the percentage they charge. However, you have the most freedom of being an owner operator with them. Some drivers misinterpreted that freedom with changing their company once a month. Not a good idea! When companies do a background check (as required by DOT), they see that and will not take you seriously because they will know that you will work only for a limited time. There are shady companies out there (Chicago has a bad reputation), but if an owner-operator must change three carriers in 6 months think about the way you choose them or the way you work.

Deductions

The Owner-Operator usually pay $700–1000 for “cargo” insurance, which is liability and cargo policy in one. On top of that, he will have the option to choose to pay an additional 5% from the truck revenue or $500–800 a month for trailer rent, insurance, and brake/tires wear. The new owner-operator can purchase its trailer, which will save him money every month. An additional charge would be for IFTA and state permits.

These charges should be in the back of your mind when you pick a load, but should not be your primary criteria.

May 4, 20181 Comment

Trucking trip to Alaska and back in January Part 2

logiflex highway snow road january alaska trucking

Alaska Trucking

We’ve told the story from our perspective, about how we sent a truck to Alaska in January. But the better story comes from the field and our driver Marc. Here are four takeaways he took from his experience:

Wildlife

Be careful of the wildlife. Not just for the moose crossing the road, or the random bison grazing on the shoulder paying you and your truck no mind whatsoever. There’s more. There are eagles, lynxes, bears, and ravens. The moose generally tend to move out of the roadway. Animals want nothing to do with you unless they feel threatened, which they won’t allow themselves to be put in a position to be. The bison get mildly irritated by your air horn. Lynxes are blind to human existence, but also really want nothing to do with you. And then there are bears. They’re a lot like lynxes. They want to get away from you and be left alone. Leave them alone; they leave you alone. I think bison are the biggest threat. They are everywhere and usually in big herds. They pay no attention to their surroundings, and they are just oblivious to human existence, so be careful while driving near them. Always proceed with caution when there’s wildlife near/on the roads.

Cellular connections

There’s not much 4G going on up in the Yukon, but if you come across electricity, you’ll probably come across a usable cell signal. Internet signal will be dodgy at best, but a phone signal isn’t impossible. Make sure that your cellular provider can grant you international roaming and be aware of your charges. I have Sprint and while my data was free, (yee freaking haw seeing as how my data sucked) my voice calls were $0.20 a minute. You should map out your route with your GPS AND Google maps (or whatever computer-based mapping system you like) ahead of time and take screenshots. You won’t have a chance to look at it again once you are out of range. Keep in mind; there is more out there on the Alaskan Highway than a truck stop guide, or app is going to tell you. I’d say that there’s a safe haven every 50–100 miles. That’s just a guess, but that’s better than what you’d find in a guidebook.

Funds

The Canadian currency has generally been worth far less than US currency for as long as I can remember. (Born and raised within 30 miles of the Canadian border.) When we were preparing for this trip, the exchange rate was $1US = $1.36CAN. That’s a pretty substantial exchange rate. Plus, most items in Canada are more expensive than they are in the States. Figure out how much you need on a daily basis and work out a budget for the entire trip through Canada. Also, it’s a good idea to exchange some funds at the Duty-Free at the border crossing. Most banks near the border, on either side, will do the same and give you the most current rate of exchange. The Duty-Free is just a bit easier.

Distractions

If you’ve driven most of the lower 48, you’ve seen some pretty amazing things. The scenery is almost unexplainable. There’s a newly added variable when driving up the Alaskan Highway, and it’s called “isolation.” If you think Iowa is “isolated,” guess what, you’re wrong, if you think west Texas is desolate, guess what, you’re wrong, and if you think the drive on I-10, from California to El Paso is boring, guess what, yeah, you got the idea. You cannot fully grasp the concept of what it means to be so thoroughly and utterly alone and on your own, until you’ve driven the Alaskan Highway. It’s not in the middle of nowhere; it IS nowhere. YOU are nowhere.

Regardless of all that, AK trucking might be the most beautiful experience you ever come across in your life.

May 4, 20182 Comments

Are truckers paid enough?

Our take on the problem

The average full-time work week for an adult in the United States is 34.4 hours. Seems like quite the workload, but we are a nation of hard workers, and we take pride in that.

Now imagine having a worker that really pushed the line and worked twice as hard. Every week. Every month. Year after year. A 70 hour work week is something else! Imagine the productivity if one could find such workers!

Now imagine having an entire team of these workers as part of your operation. Wouldn’t you want to reward them for their dedication?

We do! At Logiflex, we don’t have to imagine these hard workers. We call them our team of expert drivers and they are the secret behind our track record of excellence!

Yellow Truck Happy Driver paid per hour tracktor trailer old logiflex logo

We don’t settle for mediocrity and neither should our drivers. Therefore we are introducing a compensation package that is virtually unmatched in our industry. In addition to offering medical, vision, dental and life insurance benefits, we are now adding a 401k retirement plan and two separate payment options.

Drivers paid per hour

Is that the answer? This is what we think. Starting today our top runners will earn 60 cents per mile along with all the benefits and job security offered by W-2 employment. Furthermore,  we are also rolling out a different payment option for those who’ve had enough of the same old game of getting paid by the mile. Hence, we will pay those employees hourly. After all, ELDs afford you 14 on duty hours per day. And doesn’t on-duty time equal time on the job? It’s high time drivers get compensation for pre and post trip inspections, for downtime at shippers and receivers, fueling, and of course for driving. And because driving is at the heart of it all, we will pay overtime when you log more than eight driving hours on any given day.

Our drivers certainly deserve it, and as a matter of fact, every driver deserves it.
Don’t settle for less, give us a call and come share in our success!

© 2018 Logiflex Inc

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Steps to Become a Truck Owner Operator

The origin of being your boss Many company drivers dream to become an owner-operator who has their truck and drive for themselves. After all,...

→ Read More

Trucking trip to Alaska and back in January Part 2

Alaska Trucking We’ve told the story from our perspective, about how we sent a truck to Alaska in January. But the better story comes...

→ Read More

Are truckers paid enough?

Our take on the problem The average full-time work week for an adult in the United States is 34.4 hours. Seems like quite the...

→ Read More