Trucking Action Plan aims to resolve the immediate driver shortage but some critics say that the plan is not addressing the most critical issue - retention.
Trucking Action Plan aims to resolve the immediate driver shortage but some critics say that the plan is not addressing the most critical issue - retention.
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.
You need a horse. There are two ways — you can buy or lease.
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.
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 the 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.
Next time when you have to talk with a loan officer about financing a trailer, for example, they will look at your financials or tax returns. It is much better to have a depreciation expense than a 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.
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.
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.
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.
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 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.
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.
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 compressors, etc., are things that you need to be aware of and concerned about. The 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.
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.
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.
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.
Everyone says that they are 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:
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.
This type of trucking company 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 80–90% of the freight revenue, where large fleets pay you around 70%.
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.
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.
Buy vs Lease Truck is one important decision future owner-operators must take. Both options offer benefits as well as drawbacks. There are many different situations that apply to different people. Always keep in mind that a truck is a tool for work first, and a vehicle second. Potential business owners should consider the job at hand to make the best choice.
If you are starting your trucking career, leasing a truck makes sense or you if lack good credit. It does not require a significant down payment, and the monthly or weekly amount is generally smaller than that of a loan. The driver will own the truck, as the lease agreement ends. There is a type of lease where a downpayment is required. Monthly payments are generally low because the balloon payment at the end of the contract matches the value of the truck at the time. For example a 10 percent down payment on a $130,000 vehicle with $2000 per month for 60 months and a balloon payment of $24,000 at the end. This is a sweet deal for a new truck if you plan to keep and use it for longer than five years.
The most common lease is directly through a trucking company. Weekly payments will be deducted from the driver's check. A required down payment of around $5000 will be needed. It shows good money management skills and establishes good faith. It also allows for lower weekly payments.
Drivers are responsible for the maintenance of the trucks unless the lease is from Ryder or Penske. These two companies charge between $0.12 and $0.20 per mile for regular maintenance. This, however, does not include accidents and or incidentals. If you hit a deer or a rock cracks the windshield, repairs come out of your pocket.
When a future owner-operator purchases a truck and finances it, the bank takes the title as collateral for the loan. The driver owns the vehicle, and like in the lease (unless the lease is from Ryder or Penske) all responsibility for the ownership falls on him.
Financing a loan is a cheaper option. Also since the driver is the owner, he can build some equity in the truck. If the market is strong, an owner-operator can make extra principal payments towards the loan, thus paying it off early and saving on interest.
Drivers need a credit score of over 630-650. That puts those with less than perfect credit at a disadvantage. The higher your credit score, the better the interest rate on the loan will be.
Many banks require down payments when credit history is an issue. Ten percent is standard, but some will only ask for five. Almost any lender will agree to finance a truck driver with 20 percent cash in pocket. Putting down a substantial down payment secures lower monthly payments that won't put a toll on the driver when the market is slow.
A major factor in improving the odds of financing a truck is the previous owner-operator experience. Many banks will deny even 20 percent down payments if the future truck owner cannot provide past truck payment history. That is probably the main reason why many drivers start off with a lease. Experienced truck drivers are not necessarily experienced business owners, and banks know that. Previous owner-operator experience shows knowledge of how to manage a business and offers banks more security.
To Those Who Keep The Supply Chain Going Strong,
From all of us at Logiflex, we hope that you are staying safe and healthy amidst the COVID-19 pandemic. No matter where you live or where you travel to, the pandemic carries a heavyweight that we all feel. We would like to thank truck drivers and all those who are working tirelessly to keep the supply chain going strong and providing essentials to countless people. We know this time is challenging, which is why we put together some tips that can help you manage your mental health even on the front lines of delivery.
You should limit the amount of time you spend watching, reading, or listening to the news. While it is essential to stay informed, too much exposure can cause more feelings of panic and fear. Even during this pandemic, when things change on a day-to-day basis, you must limit yourself. Try only watching news reports in the morning for 15 minutes or listen to updates during your lunch break. As for the information you are taking in, use reliable sources to obtain information. The Center for Disease Control (CDC), World Health Organization (WHO), or any local government news outlet are the best options for getting the most accurate and up-to-date information.
It is normal to feel emotional distress in the middle of all that is happening. There are high levels of uncertainty, and news changes daily. Emotions such as stress and anxiety can present themselves in some ways – even fatigue. It is essential that as a truck driver, you recognize your triggers for distress and take time for your mental health even while on the road.
Common signs of high-stress levels, panic, and anxiety are fatigue, muscle tension, and difficulty resting. These physical symptoms can be paired with cognitive issues such as confusion and decreased concentration. It is crucial that truck drivers are well-rested and focused while they drive. Take the time to ensure that the sleep you get is quality sleep and that you are getting enough, if not more, rest than you usually would. Sleep will help your mind stay sharp and out of panic mode and will help keep your immune system healthy.
As a truck driver, you visit many public places and are suspectable to germs. Initiate healthy and preventive measures like the proper hand-washing technique, sneezing, and coughing etiquette, and if you have any pre-existing medical conditions, talk with your doctor about how you can best take care of yourself.
Logiflex provides our drivers with HealthiestYou, an app that allows you to instantly connect with a doctor by phone or video 24/7 – all with a $0 copay. During the COVID-19 pandemic, this is a great resource that allows you to receive the medical care you need while on the road or even when you are at home. You can talk with therapists on the weekends by phone and video, which is another significant step for taking care of your mental health right now. HealthiestYou also allows you access to the lowest-cost prescriptions at pharmacies nearest to you. If you do not already have an account set up, you can start here.
You must allow yourself mental breaks to do the things that make you happy. Even if it is just a walk around the truck stop, getting exercise can help you fight off the sense of fatigue that comes with stress. Phone a loved one, get out in nature and enjoy fresh air, or watch your favorite TV show. Whatever it is you enjoy doing, making these things a priority will make your mental health a priority as well.
It is an uncertain and stressful time for everyone, but we must take care of our mental health to cope with the uncertainty. For more information on ways to manage anxiety and stress during the COVID-19 pandemic, check out the CDC’s article on dealing with the pandemic, or read these science-based tips to handle Coronavirus anxiety. Logiflex would like to thank again everyone who has dedicated themselves to delivering essentials and keeping the supply chain running strong amidst the chaos.
I was recently reminded of Operation Safe Driver week and wanted to share what I read. The Commercial Vehicle Safety Alliance’s annual Operation Safe Driver Week is a few days away! July 14-20th are the dates to be exact. This year safe driver week will have a focus on speeding. Law enforcement officers will be looking for speeders during the week but also endorsing, promoting and supporting the message: “Late won’t kill you, speeding will.”
In addition to speeding, law enforcement will be looking for other dangerous driving behaviors. These include distracted driving, texting, failure to use a seatbelt, following too closely, improper lane change, reckless or aggressive driving, failure to obey traffic control devices, evidence of drunk or drugged driving and more.
Nearly 11,000 citations were issued to truck and bus drivers last year. Law enforcement pulled over or inspected more than 42,000 commercial vehicle drivers during 2018’s Operation Safe Driver Week. They issued 10,709 citations and 29,908 warnings for unsafe driving. The top five citations issued were for violations of state and local laws (6,008 citations), speeding (1,908), failing to use a seat belt (1,169), failure to obey a traffic control device (754) and using a handheld phone (262).
To word everything more simple here is what you should do:
As we all know, technology is advancing rapidly. A self-driving truck made by Embark was recently spotted on the I-10 with the Amazon logo. Is Amazon making driverless trucks? To simply answer the question, no they are not making self-driving trucks. However, they are using self-driving trucks made by Embark. Although neither company would comment on it CNBC discussed the event in Amazon is hauling Cargo in self-driving trucks developed by Embark. For those of you who are not aware Embark is a freight company hauling autonomously from Texas to California.
“This is the first time someone has demonstrated this end-to-end," Embark CEO Alex Rodrigues says.
"Embark moves freight for a number of major companies on the I-10, however, we cannot discuss any company specifically as our relationships are confidential." Embark CEO Alex Rodrigues says.
In October 2018, the National Highway Transportation Safety Administration issued its updated AV3.0 policy, which has helped autonomous vehicle firms such as Embark figure out how to test their technology before driving on public roads and which rules they need to comply with to stay there.
A driver shortage currently plagues the trucking industry. A lack of available drivers and trucks poses a challenge to e-commerce companies. Including Amazon, whose customers expect deliveries in a relatively short time.
Expect to see more autonomous trucks in circulation in the U.S. soon.
© 2018 Logiflex Inc
Trucking Action Plan aims to resolve the immediate driver shortage but some critics say that the plan is not addressing the most critical issue...
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,...
Buy vs Lease Truck is one important decision future owner-operators must take. Both options offer benefits as well as drawbacks. There are many different...
To Those Who Keep The Supply Chain Going Strong, From all of us at Logiflex, we hope that you are staying safe...
Operation Safe Driver Week I was recently reminded of Operation Safe Driver week and wanted to share what I read. The Commercial Vehicle Safety...
As we all know, technology is advancing rapidly. A self-driving truck made by Embark was recently spotted on the I-10 with the Amazon logo. Is...