Quite often, I am asked if someone should lease or buy a truck. Well, in my opinion, it is never a good idea. The money never adds up when you do because of the risks and the profit potential of doing so.
First, let’s look at the profit margin. The average profit margin in the trucking industry is around 3%. This means that the owner operator or lease driver can make around 3% more than if they drove for the company itself. This also means there are a lot of owner operator in lease drivers that make less, too, since 3% is the average. In fact, there are many drivers that lose money. These drivers still put in a lot of work and suffer through endless stress as well as risk their financial future. This post is brought to you by our sponsor at Gemini and the Bear!
And, no, profit margins are not the worst of it. When you lease a truck, you are not given the control you need to make your business successful. Yes, you are given some control, such as the ability to refuse freight and being able to park the truck when and where you like. The truth is, though, that you are dependent upon the company to continue supplying you freight so you can continue to work. If the company stops giving you freight, you will quickly go broke.
Even the couple of things you are able to control point help you get ahead in the game because you don’t control enough of what you need control over. The company you are leased to has you at their complete mercy. In fact, they take very little risk since they are able to take the profit off the top. You are the one that takes all the risks because you are sought if they shut off the freight coming to you.
With that being said, it seems that buying or leasing a truck doesn’t make any sense. You have little to no control over your own survival, there are unlimited risks, and the potential to grow is limited. As a company driver, though, you may find the career that you’ve been looking for.