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"Owner Operator 101" Everything you need to know from A to Z.




Owner Operator 411

a

23 February 2009

5) What the Owner Operator Needs to Know About Equipment







2001 Kenworth T600






Information About How to Become an Owner Operator


5) Equipment





See my other posts:


FAQ for the Owner Operator
Pictures
Anti-Idling Regulations
Definitions and Industry Terms
Blackrock Auxiliary Power Unit (APU)
Interactive Cost per Mile (CPM) Calculator Spreadsheet
Privacy Policy
1) Owner Operator 411 – Welcome
2) Income and Expenses
3) Financing and Credit
4) Operating Authority or Leasing?
6) How To Do Bookkeeping and Other Necessary Paperwork
7) What You Need to Know About Loadboards
8) Companies That Lease Beginning Owner Operators
9) What You Actually Need to Get Started - Licenses, Permits, Insurance, and Taxes
10) Truck Driving Schools


There is one more thing you need to decide before you apply for a loan (assuming you have read my previous posts): what kind of freight do you want to haul?

This will determine what company you can lease to (all companies don't haul all types of freight) and what kind of equipment you will need. If you are buying your own trailer, then you need to know what kind to buy based on what you will be hauling. For example, do you need a refrigerated trailer (reefer) to haul food, a dry van for general freight, a flatbed to haul steel, or a drop deck or goose neck to haul equipment?


Even if you don't buy your own trailer, knowing what you will be hauling will determine how to spec your tractor. If you are going to be hauling heavy loads, you need to spec a tractor with heavy duty suspension and a big motor. If you are going to be hauling mostly light loads, you might be able to get by with a tractor with a smaller engine or lighter suspension. Also, the type and length of trailer might determine the length of the wheelbase of your tractor. What you are planning to haul will definitely decide how much your tractor can weigh.

Deciding what you will be hauling will also tell you what other equipment you need to buy. If you are going to pull a drop deck or goose neck, you will need chains, tarps and binders. If you are planning on pulling a flat bed, you will need all of those things plus a side kit. If you pull a dry van, you most likely will need load jacks.

When you are deciding what you are going to haul, don't forget to think about the physical side of what you choose. If you are going to be pulling a flatbed, you will have to be outside in all types of weather chaining and tarping your load. If you want to pull a reefer, you may be required to unload it, which means you will be working in very low temperatures, regardless of what the outside temperature is.

When you spec your tractor, there are several factors you need to need to consider. Will you be making long or short hauls? If you make long hauls, you will probably want to spec a sleeper. You don't want to spend all of your money on motels, and besides, there are a lot of times when you have to spend a night on the road and can't get to a motel.

What kind of engine do you want and how much horsepower do you want? The three major engines are Cummins, Caterpillar, and Detroit.

You need to decide what size tires you want, and what kind of a transmission and how many gears. Today, you can get a semi with an automatic transmission! Definitely a far cry from the old days when many trucks had two sticks (two gearshifts).

Modern trucks have power steering, ABS brakes, heat and air conditioning. They have big comfortable seats and privacy curtains. The beds are large and comfortable and some have a couch, and some have two beds. Most have closets and storage space. You have to decide what you need, then decide how much of what you want you can afford.

Other equipment you will need is a CB radio, gloves, coveralls, fuses, flares, a fire extinguisher (mandatory), tools, oil, fuel, and water filters. You should also carry oil, grease, and anti-freeze.

Optional equipment you may want is a cell phone, a satellite radio, and a TV. If you are planning on being gone from home a lot, you might want to consider buying an inverter. Then you can buy a coffee pot, a toaster and a microwave, and save yourself a lot of money on meals. 

A note about meals: When you file your taxes, the IRS lets people who are in the transportation industry and those who are regulated by hours-of-service rules (see "Income and Expenses") deduct meals differently and at different rates than everyone else. See an accountant or tax preparer for details. To simplify a very complicated rule, basically you can flat-rate your meals for every day you are on the road long enough that you are required to take a sleep break, even if you don't eat a thing, or spend a dime. Of course with the IRS, there are 40,000 ifs, ands, ors, and buts, so be sure to check it out with a tax professional or preparer.

An auxiliary power unit (APU) is becoming a must have. These range from about $6,000.00 to $10,000.00. What is an APU and what does it do? Basically, it is a generator. It is used when you are not driving to eliminate idling. Why is idling necessary? If you have to sleep in the truck in the winter or summer, you will probably run your truck so you can have heat or air conditioning. It is hard to sleep when it 25 degrees or 118 degrees in the sleeper.

With an APU, you can heat or cool your cab without running you truck. This is very important, as an APU can reduce your fuel consumption by about 75 %. Yes, I said 75%. Instead of using a gallon of diesel an hour idling, you use a quart with an APU. Not only is this important for your bottom line, but more and more cities and states are making anti-idling laws with fines ranging from $50.00 to $25,000.00 and/or up to 1 year in prison, for idling your truck.

Sometimes the idle time allowed is as few as three minutes. These anti-idling laws were written to reduce noise and air pollution. 

Click here to go to an: Anti-idling Regulations Chart
To view this chart you need Adobe Acrobat Reader

The cost and age of your equipment can affect the costs of your license plates and insurance.

As you can see, it is very important to decide on your equipment before you make a commitment. Once you have bought that $40,000.00 used truck, it is very hard to change to another truck if you find you don't like what you bought.

Although you will never know exactly what it is like until you actually do it, you need to ask questions of other drivers about their equipment, and what they like and don't like about it. If at all possible, go out on a load with someone. Volunteer to help them load/unload to get a feel of what it is like. The more you know before you buy, the better off you will be.

What make of a truck should you buy? That is up to you. Just a some people wouldn't own anything but a Chevy, some people won't own anything but a Volvo.

Any make of truck, if spec'd correctly, will do the job, it is a matter of personal preference and how much you can afford to pay.

The most popular trucks are Peterbilt, Kenworth, and Volvo. Other popular truck makes are: Freightliner, International, Ford, Mack, Sterling, and Western Star.

Anything with a Gross Vehicle Weight Rating above 33,000 lbs. is a "Class 8" truck.

Good places to look for a truck (new or used) are "The Truck Paper" and "Truck Trader". If you have cash and are very familiar with trucks, good deals can sometimes be found on eBay.



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I am sorry I have to do this, but due to spam "comments"  I feel I need to moderate comments from now on.
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12 comments:

Anonymous said...

I am thinking of becoming an owner operator for Dart. Any advice? sexy_mr_man28@yahoo.com

Road King said...

sexy_mr_man28,

I can't give you any specific advice about Dart. First though, you will not be an owner operator FOR Dart. You will be an owner operator for YOURSELF, leased to Dart. There is a big difference. If you don't understand what that is, then go back and read every page of this blog again. If you still don't understand, then ask, but it means you are not ready to take that step. Whether you are ready or not, now is not the time to start your own business. There just isn't that much freight, and companies are laying off drivers right and left. If you need to work, get a job driving, don't buy a truck.

I have yet to write about all the disadvantages of being an owner operator, or just being self-employed, but some are: most new businesses fail within the first year; you have a lot of paperwork; you will not have medical insurance, disability insurance, or worker's compensation; taxes; being gone from home; and not making any money. Since you probably will do what you want, and not listen to me, I will say, "Good Luck."

Thank you for your question.

Road King said...

I received the following message from sexy_mr_man28, but he signed his first name. As I stated in my Privacy Policy,

"I guard my online privacy religiously, and I will do the same for you to the best of my ability."

"I meant that!

Here is what sexy_mr_man28 said,

"Actually, since you really seem to know what you are talking about, and obviously you have enough experience at it, I am going to take your advice. I know I am not ready. Thank you for your responce, advice, and honesty."

I replied:

I know I sound pessimistic, but stay with me and read this.

It is true that someone will buy a truck today, go in debt, and end up with a successful business, or become a millionaire. It happened in the 1930's depression, and it will happen today. So why do I keep saying don't start your own business? Because that success won't happen to everyone and probably won't happen to you.

Now, I know what your next question is going to be. If things are so bad, why are these companies hiring or leasing on trucks?

They are hiring drivers, not because they are expanding, but to replace those who quit. Why did they quit? They 1) didn't like driving, 2) didn't like being on the road for the length of time it takes to take home a decent paycheck, or 3) they weren't making enough money. So they quit, and ABC company needs to replace them.

Why would they lease on a truck (an owner operator)?

The company I have my truck leased to is laying off their company drivers, but they are not getting rid of any owner operators, yet.

If they lease (rent) YOUR truck, they save all the expenses connected with operating a truck while getting the benefit of getting their freight hauled. They don't care if you go bankrupt in 6 months and lose your truck, they will just lease on another one. Believe me, there are plenty.

Companies usually have more trucks than freight on purpose. That is good for them. That way they can be sure they will always have a truck and can cover their freight, but it is not good for owner operator.

So, sexy_mr_man28, I can't say I am happy with your decision, but I do think it is the correct one.

Whatever you end up doing, I say again, "Good Luck."

Marcelo of Miami said...

Hello , I've read your blogs a couple of times and it caught my attention. It's a huge piece of information for a guy like me,I would like to become an owner operator. I have 1 year otr experience and to many questions. First of all let me tell you my plan, I have a propertie that is on sale and I'm going to get between 80 & 70,000 thousand dollars. I saw in truck paper a Peterbilt 2005 ,cat hp 475,13 spd ,3.55 ratio for $35.000 and reefer 53" for $15.000, what do you think? Also I plan to run on 48 states. I check different load board and saw many loads that are true? Give me your opinon about factoring, which one is the best? Thank you for your blog and I will be waiting for your awnser. resuche@msn.com

Road King said...

Marcelo of Miami,

Since you will have the money to purchase a truck and trailer outright, and still have some cash left over ($20,000 to $30,000) for startup costs, emergencies, and to live on, you may be able to succeed.

$30,000 seems a little high for that particular truck (due to its small engine), especially if it does not come with any kind of a warranty.

Check my post on load boards at http://owneroperator411.blogspot.com/2009/03/what-you-need-to-know-about-loadboards.html

For those reading this who don't know what factoring is:

Freight factoring is a way for truckers to be paid immediately for the work they have done, whether or not the shipper they are working for pays on time. A freight bill factoring company purchases trucking industry invoices at a discount and then funds the carriers for the receivables purchased. That means that if the company does not pay for a long time (such as a month), you will still get paid for the load immediately. Of course, the factoring company will charge for this service.

I really don't know anything else about factoring. If you are planning on obtaining your own authority, you may want to consider it, but I believe if you deal with honest, reliable, well-established companies, you probably shouldn't have to pay someone to collect your money for you.

If you lease your truck to a company, according to the Federal Motor Carriers Safety Administration (FMCSA)/Department of Transportation (DOT) found at http://www.fmcsa.dot.gov/rules-regulations/administration/fmcsr/fmcsrruletext.aspx?chunkKey=090163348008ef8e which states:

"f) Payment period— The lease shall specify that payment to the lessor shall be made within 15 days after submission of the necessary delivery documents and other paperwork concerning a trip in the service of the authorized carrier. The paperwork required before the lessor can receive payment is limited to log books required by the Department of Transportation and those documents necessary for the authorized carrier to secure payment from the shipper."

A law or regulation is only as good as the company or people you are dealing with. If you lease your truck to a reputable company, then you should not have any trouble and you should not need a factoring company at all.

Hope this helps.

Anonymous said...

Bookmarked! Thank you for this awesome resource.

Road King said...

Anonymous.

You are most welcome. Thank you for the bookmark.

Anonymous said...

I enjoy you because of all of your effort on this site. Its been an motivation for me. I've passed this onto a friend of mine.

Road King said...

Anonymous,

Thank you for writing, and for your comment. I do put a lot of effort into this site, trying to be as helpful as I can. I am glad you found some motivation. I hope your friend also finds it beneficial.

Anonymous said...

I need to stay local but also want to be an owner/op. I live around all the rails in northern illinois and maybe make a decent living onwing a tractor and pulling containers. Im somewhat familiar with pulling rails having done it in the past and have a knowledge of the yards themselves...what do you think of this? Im a single guy who basically has no tie downs such as kids or a wife..I have a car payment and afew credit cards and thats about it. otherwise im open...just have to stay local...

Road King said...

Anonymous,

It's possible.

I would check with some local companies and see if anyone is looking for trucks, what rates they pay, and if they would allow to stay local. You weren't thinking of getting your own authority were you?

With your background and limited responsibilities, if you have enough cash for at least two months operating capital, and 2 to 8 months living expenses, then you should be able to make it.

Find some good equipment, and don't go too much in debt for it. I would suggest you try to pay off your credit cards first. Two reasons: first, this will help your credit when buying a truck; and second, you will have less to worry about after you start making truck payments.

Good Luck.

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