If you've been working as a professional semi driver for several years or more, you may be wondering whether it is a more lucrative long-term decision to transition from a company driver to the owner and operator of your very own rig. Even if you determine that driving for yourself is the right decision, one of the biggest "sink or swim" measures of your new employment arrangement will be the semi truck you purchase. Read on to learn more about the factors you'll want to take into consideration when changing your payment structure and when investing in your new (or new to you) semi.
Will going into business for yourself as an owner operator be the right financial decision?
Each transit company sets its own pay rates and structures, so the answer to this question often depends on your local economy and the availability (or shortage) of qualified drivers in your area. However, in most cases, company drivers are paid either a flat weekly wage for a commitment of a certain number of hours or a per-mile wage.
Owner operators can charge their own per-mile rates, which are usually much higher than the per-mile rates earned by company drivers. However, owner operators must accept full financial responsibility for insurance, repairs, and any costs related to delay of (or damage to) a shipment. Owner operators also don't get benefits like paid vacation -- if their rig isn't on the road, it's not earning money. This arrangement often makes being an owner operator a riskier proposition than being a driver. However, with higher risk comes higher potential reward, and many owner operators who take care of their equipment and make wise investments are able to earn a good living.
What should you consider when purchasing a semi truck?
If you're transitioning from company driver to owner operator, you'll need to make a decision about the semi you're currently driving. For those who plan to stay with the same company, paying to lease the rig you've grown accustomed to driving may be an option, as can purchasing a new (or used) semi on your own. The financial benefits or drawbacks of leasing can usually be fairly evident through a few simple calculations -- the lease mileage rate, the per-mileage rate you expect to charge your vendors, and the number of miles you estimate you'll travel in a year. You'll also need to consider whether your leasing company pays for maintenance or whether you're required to pay out of pocket.
If the per-mile rate you charge minus the per-mile lease rate (and the cost of any mechanical expenses) equals less than you currently earn per mile as a company driver, it's likely that purchasing a new or used truck is the better option financially. If your per-mile rate minus the lease rate is still more than you're making as a driver and you won't be responsible for repairs or maintenance, leasing may be an advantageous decision.
Those who have decided to purchase a truck may be debating between the decades of utility guaranteed by a brand new semi truck and the lower cost of a used one. Unlike most passenger vehicles, semi trucks (with their high-powered diesel engines) can often log 500,000 miles or more without requiring major repairs, so purchasing a new semi can allow you to earn many multiples of the purchase price before you'll need an engine or transmission overhaul.
However, to reduce depreciation costs and help your investment dollars stretch further, you may want to consider a low-mileage used truck. A new semi truck will begin to depreciate the moment it's placed into service, so purchasing a semi truck with only a few years (or a few hundred thousand miles) can let the previous owner absorb most of these depreciation losses while providing you with the durability and life expectancy of a lightly-used truck.
You can contact local dealers like Arrow Truck Sales to find the used truck that will meet your needs as you plan for this change in your life.