Truckers Helper Article Index

This article is a reprint of my column in Truckers Connection and ran originally in the June 06 issue. The column is aimed at Owner Operators and if you haven’t see it before pick up a free copy of Truckers Connection at any truck stop and check it out.

Owning The Wheel
By
John Ewing

We’ve talked before about Fuel Surcharges, but as fuel costs again spiral upward this continues to be a hot topic and one worth another visit. Many of you still do not understand fuel surcharges and if you’re not currently getting a fuel surcharge your days as a truck owner are probably limited. With the cost of fuel so unstable it is nearly impossible to calculate your costs of operation so you can project what you need to charge to keep your truck rolling and make a decent living. Whether you are a leased operator or an independent you are going to have to get a fuel surcharge in order to stay profitable.

If you know what your bottom line is, then there is a simple way to calculate what your fuel surcharge needs to be. If you don’t know what your bottom line is, get your Profit & Loss statement for last year and visit http://www.truckershelper.com/operationscost.php Just enter your costs from last year and the form will calculate your bottom line for you. Once you have your bottom line you’ll be able to calculate your base rate. This is the amount you must charge per mile in order to pay all your expenses and make a reasonable profit.

We’ll assume at this point that you know what you’re bottom line is and that you know what your base rate is. It seems that many companies are using $1.15 as a base rate for fuel costs so the first step will be to compare your base rate for fuel expenses to this number. Take your total fuel costs for last year (or the year you used to create your base rate) and divide it by the total number of gallons you purchased. That will give you your base rate for the cost of fuel. If that cost is near the $1.15 mark use it, if it’s considerably higher then you may want to examine your base rate. Remember that shippers are watching what others are charging as a surcharge and if yours is considerably higher than the national average, even if your overall costs are competitive shippers may complain or refuse to pay the surcharge. If your base cost/gallon is more than the $1.15 then use your base rate for the next calculation.

Next, you need to know what the average cost for fuel is. You can find this on the Department of Energy’s website at http://tonto.eia.doe.gov/oog/info/wohdp/diesel.asp This site will give you the average cost of fuel in the USA broken down by area. You will use the numbers for the area you run in primarily for each shipper. If you run cross country, use the national average. For example if you have a customer in New England where the average cost of fuel is currently $2.769 and another in the Lower Atlantic where the average cost of fuel is $2.629, and you run primarily local loads for these customers use the rate for each customers area to calculate their fuel surcharge. If you run the east coast for each shipper, then use the overall East Coast number for both customers.

In calculating your base rate you will also need to calculate your MPG and again will want to take into consideration what the averages are, though you may or may not want to use those averages. Just like $1.15 is the average for the base rate, 5mpg is the average used by many carriers to calculate the surcharge. You may be able to give yourself more of a competitive edge by using your actual MPG to calculate your surcharge. To do the calculation take the average cost of fuel from the DOE web site and subtract your base cost/gallon from it. Now take the answer and divide it by your overall MPG figure and if the answer is not an even number round it up to the next whole number. Here’s an example:
Weekly Average Cost of Fuel = $2.629
Your Base Fuel Cost = $1.20
Your Overall MPG = 6.5
Your surcharge would be: (2.629-1.20)/6.5 which equals .129 so your fuel surcharge would be $0.13 (13 cents) per mile. Regardless of how you’re doing your billing your fuel surcharge needs to be calculated per mile to start with. You can then use this base to calculate the surcharge based on weight or as a flat rate if you want to bill it that way instead.

In today’s marketplace there are still owner/operators on their way to bankruptcy who will haul freight at a loss, but if you’re going to succeed you must remain profitable. Whether you run under your own authority or are leased to a company you need to be getting a fuel surcharge. Use the methods and formula above to figure out how much you should be getting.

If you have one or more regular shippers who you haul for on a regular basis, or if you are leased on to a small company, be sure to point out that while they may find someone to haul for them for less today, over the long haul no one can continue to provide them with reliable service without remaining profitable and no one can remain profitable without a fuel surcharge which adjusts the rates charged to the every changing costs of fuel.

Before launching into a brief How To in installing a microwave and inverter in your truck I need to state, the information in this article is based on my own personal experience and does not purport to be an authoritative manual on how to install these items. This task is not one that should be undertaken by the mechanically challenged. An inverter if improperly installed could start a fire in your truck, give you an electrical shock and possibly seriously injure or kill you. The safest course of action is to have your dealer, or other qualified individual install an inverter and outlets for you. If you have any doubt as to your own understanding of electricity or proper wiring techniques have this work done for you by a qualified professional. If you choose to undertake this task on your own you do so at your own risk.That out of the way let�s get to the business at hand. I have installed and used an inverter and microwave in all of my trucks and found it to be a really money saver. When my wife and I ran team we found that frozen dinners would last about 3 days in our cooler and so we�d stop every 3^rd day, usually at a WalMart Supercenter, to stock the cooler. Having our meals in the truck meant not only a cost savings, but quality food without the need to stop the truck. Fewer stops mean more miles � so you not only save a little, you also make a little more.

The first thing you�ll need is to decide on an inverter. I used the inverters that the Flying J carries with good luck. The one they are currently carrying comes with cables and is ready to install. You can check it out here > FlyingJ Store

I installed the inverter in the side compartment and then ran an outlet into the sleeper. If you are driving a company truck you�ll need to find out if you can drill a couple of holes in the floor of the side compartment to install the inverter.

Here�s what you�ll need to finish the installation:

An inverter (1500 would be a minimum to power a microwave)

Cables � check the manufactures recommendations for wire size. One of the main problems with inverters is power loss between the batteries and the inverter. So be sure to use the right size wire for the distance you have to travel. This is one of the reasons for using the side compartment, it was near the batteries.

Rubber Grommets � the size of the grommets will depend on the size wire you�re using but it�s CRITICAL that you protect the wire from chaffing. So be sure to use adequate grommets to protect the wire where you bring it into the side compartment.

100 Amp Fuse � this is also a CRITICAL component. You need the fuse to protect your wiring and for fire protection.

Tools � drill, bits of the right size, wrenches and assorted hand tools.

The first step is to run the wiring. Place your inverter where you plan to mount it and determine where the wires are going to enter the side compartment.Be sure to leave a little slack in the wires so you have room to move things around and connect the wires to the inverter. Now drill the holes using the correct size drill bit for the grommets. Install the grommets and fee the wire through them. Attach the wire to the inverter and secure the inverter. If the inverter doesn�t come with any type of mounting hardware you can obtain some strapping at your local hardware store and use that to hold the inverter in place. Be sure to protect the wiring and connectors so other items in the side compartment cannot come into contact with them. Finish up this step by caulking around the grommet and where the wire passes through it to give you a good seal and keep moisture out of the side compartment.

Now connect the wires to the batteries. Use the 100amp fuse between the battery and the positive cable. Once the connections are made turn the inverter on and be sure it is functioning correctly.

I�ve run the power from the inverter to the inside of the sleeper a couple different ways. The easiest way is to use a power strip. Drill a hole large enough for the plug to go through between the side compartment and the sleeper. Pass the plug though this hole and then place a rubber grommet around the wire to protect it from chaffing. You can mount the power strip with Velcro, 2 sided tape, or with a couple of screws. Where you position it will depend on the layout of your sleeper and where the Microwave is going to live.

For your microwave you�ll want to get a 1000 watt microwave. Be sure to get one with a rotating tray as these will give you much better results. Now just mount the microwave somewhere safe and plug it in. You can also use your inverter to power a coffer pot, computer or other A/C appliances. Just be sure to keep an eye on how many watts you�re using at a given time. ALSO keep the truck running when you�re placing a lot of demand on the system. Most trucks have a high output alternator in them that will be able to keep up with your demand for this small system. This will insure that you�re inverter doesn�t shut down half way through a meal because the batteries are getting low.

So what’s it take to be an Owner/Operator anyway?

“I’m a good driver and willing to work hard so I’m going to get my own truck and I’ll make more money than I do driving for a company!” Does this sound familiar? The answer is that is takes a great deal more than just being willing to work hard. A lot of good men have worked very hard at making a go of it as owner/operators and have still failed. In talking with some of these men, certain common factors emerge. The most common reason for failure turns out to be a lack of planning. You’ll quite often hear an ex-owner/operator complain that they were �ripped off� by a broker, plagued by truck breakdowns, or struck by some other item which, in their mind, was totally out of their control. However, few of these items were truly �beyond their control� - they were just unforeseen and not planned for. Before you take the plunge and get a truck of your own, you need to be aware of the possible problems you may encounter and make a plan for dealing with them. You also need to have a backup plan to carry you through in the event of a problem. Remember, you’re not just changing the truck you drive - you’re starting a business, and you’re now the manager of that business and will be faced with the many challenges of running a business.

Every year in this country there are literally thousands of new businesses started, and at the end of the year there are only a handful of them left. The key to starting a successful trucking business is the same as it is for any business, so let’s look at a few of the reasons that cause thousands to fail and only a handful to survive and become successful.

The first and most obvious answer is planning - being prepared for the worst. If you start out prepared to handle possible emergencies you’ll have a much better chance of succeeding. Many of the people who fail thought they had planned for these emergencies, but they didn’t look closely enough at what could possibly go wrong and found that they were unprepared for an event that should have been just a minor setback. For a trucker here’s a few of the possibilities -

1. Broker/Company you’re pulling for goes bankrupt owing you two months pay.
2. Truck has a number of small breakdowns - not serious but a day or two each � and you’re under a load. According to your lease, it is your responsibility to get the load delivered, so you have to job it out. Not only do you have a repair bill, but it winds up costing you more to have someone else deliver the load than you made on the job.
3. You’re on the loading dock when you slip and fall, breaking your hip and dislocating your shoulder. The doctor says it will be at least six months before you can get back on the road.

These are just a few of the possible emergencies that could arise and they all represent problems that could and should have been planned for. How do you foresee and plan for such events? Next week we’ll take a look at how to plan for and be prepared for whatever may come.

Last week we talked about the need for planning for your new business and being prepared for the possibilities that you might face in running a business for yourself. This week we’re going to offer some specific steps to take in being prepared for any eventuality. We had mentioned 3 specific items that could go wrong. Here are some steps to take to be certain your prepared should any of these disasters strike you:

1. Broker/Company you’re pulling for goes bankrupt owing you two month’s pay.First, you should never allow anyone to become seriously behind in paying you regardless of what the “story” is. If you’re running for a single broker or company, you’ve put all of your eggs in their basket. If they drop the basket your eggs are going to get broken. The first time your check is late or bounces, start looking around. The second time it happens, make a move.Second, check out the broker or company thoroughly before you sign on the dotted line. Don’t take Joe’s word for it that they’re a good company. Talk to at least five or ten other people. Check them out online - post notices of inquiry about them on the trucking bulletin boards. Check with OOIDA and find out if they’ve had any complaints or if they have any information on the company. Find out everything you can before you put your trust in them.

   READ YOUR LEASE! Don’t put yourself in this position to start with. Read your lease or agreement with the broker or company carefully. If you don’t understand something make them explain it or get a lawyer to review it for you and explain it to you. Be sure you understand what you’re signing BEFORE you sign. If you find yourself in the recruiters office with him standing there pen in hand, ask to take the agreement home to review it before you sign. If he refuses there’s probably a good reason why he doesn’t want you to read it carefully, so look for another company to sign on with. Any reputable broker or company will not only be happy to let you examine their agreement, they’ll want to be sure you understand it before you sign it.

   Finally, and this applies to all our possible scenarios, have a reserve before you start your business. You should have enough in reserve, after making the down payment on your truck, to last you at least three months - preferably six. Failure to have a reserve is probably the single most prevalent cause of owner/operators losing their truck and going bankrupt.

2. Truck has a number of small breakdowns - not serious but a day or two each � and you’re under a load. According to your lease, it is your responsibility to get the load delivered, so you have to job it out. Not only do you have a repair bill, but it winds up costing you more to have someone else deliver the load than you made on the job.First, KNOW YOUR TRUCK! Failure to know enough about the mechanical workings of your truck puts you at the mercy of towing companies and mechanics who may try to rip you off. The owner who knows how to jury rig and get it running also knows how to maintain his truck and keep it from breaking down. He’s also in a position to know when he can safely jury rig something long enough to get the truck to a shop or make his delivery before more professional repairs are made.Secondly, research the truck before you buy and get a warranty from the dealer you’re buying the truck from. Don’t just take the dealer’s word that the truck has been well maintained, ask to see records. Find out what warranty is available, does it cover you when you’re away from your home base, etc.
3. You’re on the loading dock when you slip and fall, breaking your hip and dislocating your shoulder. The doctor says it’ll be at least 6 months before you can get back on the road.There is no way to know when a medical disaster could strike, and we all tend to operate under the assumption that it won’t happen to us, but failing to prepare, just in case, is another major cause of businesses failing. A single truck owner/operator is a 1 person business, if that person becomes ill or has an accident there is no longer a business. There are a number of things you can do to be prepared for such a disaster.First, HAVE A RESERVE! If you have a reserve to fall back on you will be able to weather this storm and get back on your feet, if you don’t, you’re looking at losing your truck at the very least and possibly losing a lot more.

   Secondly, have disability insurance for as much as you can afford. If a full blown disability policy is out of your reach, at least get policies to cover your major payments. These are usually available for high price items such as your car, house and truck through the finance companies that carry the loans and are usually quite affordable. If you’ve got insurance on these major payments your reserve will last you a lot longer and you’ll probably be able to survive an accident or illness that lays you up for several months.

   Finally, BE CAREFUL! Remember you’re no longer foot loose and fancy free: You’re a business owner now. With these new responsibilities comes the need to behave like a business man. As a driver, if you let the dock foreman get your goat and you slip and fall as you stomp back to your truck, the company’s insurance will cover you, they’ll provide another driver to get their truck moved, and they’ll probably even have disability coverage to get you through until you can go back to work. But as an owner/operator you have no one to fall back on. You not only have to deal with your injury, but you have to get your truck home or find the tow yard it’s been hauled to and reclaim it. With this new responsibility comes the necessity to behave as a business owner - to not let people make you careless or allow others to influence your judgment.

Next week we’ll take a look at some of the other steps you can take to assure your success as an Owner/Operator and take a look at the family commitment that’s necessary to help you succeed when you strike out on your own.

John Ewing, has written many articles for various trucking publications and is currently a field writer for Truckers Connection where his column Owning The Wheel is a monthly feature and he occasionally publishes a feature article. His articles on trucking, managing your money on the road, business management software, and other helpful issues that could benefit the entire trucking industry from drivers and owner/operators to fleets with hundreds of trucks.

These articles are copyrighted by John Ewing and by the original publisher. There are reprinted here with permission from the original publisher who is acknowledged in each article. These articles may not be copied or reproduced in any form without specific written permission from the author and original publisher of the article

While much of the trucking industry has made the transition to computers, a large number of owner/operators and small fleet owners still have not taken the plunge. Operating out of a paper bag they either take all of their receipts to an accountant or bookkeeping service, or the wife is still logging the receipts into a journal. While this method of operation handles the bare necessities of keeping tax records, it leaves large gaps in the information that is necessary to survive and be successful in today’s competitive trucking industry. This is a penny business and if you don’t track those pennies carefully you will not be able to remain competitive.

We have all heard the stories on the CB: “Yea, I used to own my own truck, but I just couldn’t make as much money as driving for a company.” The question is why couldn’t this driver make it? While there are as many answers to this question as their are owners who fail, they all have one thing in common - they failed to have the information at hand that they needed to run a successful business. This information comes in part from experience and in part from an evaluation of past and present performance. A computer cannot help you with the necessary experience but it excels at providing you with information about past and present performance. Let’s take a look at an example: Joe picks up a load in New York for Los Angeles. What is the most profitable way for Joe to run? If you ask this question to 10 truckers, you will probably get at least 8 different answers, but it is highly unlikely that any of those answers will be based on an evaluation of all the different factors that go into making up the right answer. Speed and ease of driving are generally major considerations that will figure prominently in drivers answers, but in figuring the profitability of a route you also need to take into account cost of fuel along the proposed route, fuel taxes in various states and similar data. This information is in your records from past runs across the country, when you tried different routes, but without a computer to crunch the numbers for you, it remains hidden in the recesses of your accounting journal.

This is just one example of the information that you need to remain competitive in today’s market. Other information hiding there in your records includes the amount a run needs to pay to be profitable, the real cost of maintenance by the mile and a variety of other cost factors that are vital to the planning and operation of a successful business. By knowing exactly what it cost you to run from one point to another you will know when it pays to take a cut-rate load to get out of Dodge and when you need to wait another day or two for a more profitable load. You can analyze what loads to accept and turn down so that you are better positioned to get a profitable load back to the house. These are all factors that lead to the success or failure of an owner/operator.

With a computer at hand you can also reduce your operating costs in the areas of accounting and tax preparation. Many operators are still taking in a bag of receipts and paying a bookkeeper or accountant to add up their receipts for them. By entering this information yourself, or having the wife do it while you are out on the road, you gain the benefit of having the data available for future planning and you save yourself the expense of paying someone else to do it. With the wife doing the books, you can also put her on the payroll and gain further tax advantages. An accountant may still be required to help you at tax time, but with good software and your own computer you can provide him with good information thereby minimizing his time and his fee for preparing your return.

Accounting, though, is just one of the many uses to which a modern trucker can put a computer. Armed with a desktop at home and a laptop in his truck he can communicate with home, check on routing, check the latest weather and get road conditions for almost any major road in the country. Trucking related web sites abound and they are filled with information and services for truckers. With a major online service you can log on from a truck stop in any major city and spend an evening on the net for the cost of a local phone call. Whether you’re looking for a hard to find part for your classic Pete, or just a friendly conversation the internet can connect you with the world.

Company drivers can also benefit from a computer. Tracking expenses, checking logs and putting the computer to work figuring routes are just a few of the uses a company driver could find for a computer. Yet computers are still missing from the majority of trucks out there on the road and one wonders why many drivers and owners still hesitate to join the 90’s. A part of this hesitation is no doubt fostered by fear of something new. Computers are somewhat intimidating and many of the old timers remember looking into computers back in the days when you needed to be a programmer to work on a computer. But that has changed over the years. Today’s computers, and software in general, have improved to the point that almost anyone can master using a computer with a few hours of effort. There are, of course, still a number of things to learn and it is doubtful that you will bring your new computer home and begin computing that evening, but with a couple of evenings at the computer, and a little help from a friend, or the children who are exposed to computers daily in school, you should be able to start getting some meaningful use out of your computer in a week or two.

Another factor holding truckers back is the cost. But here also I think many will be surprised at the actual cost of getting started. You can buy a good basic computer system for under $1000. You can of course spend a great deal more than this, but for starters I would recommend a simple home multimedia system. A laptop will run about twice this amount, but it will offer the advantage of being able to go on the road with you. I do not recommend trying to put a desk top unit in your truck. They just aren’t made to take the vibration and abuses of the road. Even a laptop needs to be stowed in a padded case and isolated from the vibration of the truck as much as possible.

In an industry that continues to squeeze prices down you need to make every penny count. You need all the help you can get in finding profitable runs, tracking expenses and keeping an eye on where your pennies are going. The computer can assist you with this task and make it easier for you to remain profitable. As computers take over more and more of the industry you are going to need to be able to operate a computer just to stay in business. Electronic logs, electronic data transfer (loads, billing and payment all handled by computer) are around the corner and if you don’t learn to operate within this system you will be out of business. Computers have come of age and now may be your last chance to ride in on this new wave of technology. The future of the owner/operator and small fleet owner looks bright ahead if he can adapt to the new ways and prepare himself to remain competitive.