Tarmac Owner operator

[marcustandy]

A friend of mine who I used to be in the army with now has a tipper on contract to Hanson’s.

He ain’t clearing £4k a month but he’s doing well; in his first year his clear profit was a bit under £40k. He does start early (by choice) but has never done a night out and definately didn’t put a big deposit down on his truck!

He keeps wanting to put another tipper on the road but the limiting factor is finding a 100% reliable driver who doesn’t throw ‘sickies’ etc. It wouldn’t take many ‘sickies’ to turn that £40k into a loss.

By the way, he knew now’t about the tpt industry, did his HGV1 as resettlement and only did a few months as an agency driver before some bloke on the golf course talked him into it!! He’s doing alright though.

[lard]

Owner-Driver1980:
I have never heard of anyone from tarmac, hanson, tilcon, readymix, ever say you need £30,000 before you could think about owning your own truck.

Matt

Yes you have, I said so

I’d say £30,000 is at the low end. £40-45,000 would be better.

Owner-Driver1980:
if you sign a contract with tarmac hanson or any other above firm you can usually get a brand new truck with little or no deposit to put down.

Matt

Yes, and you will also get a stupendous amount of finance

Around £1500 per month for five years for a £75,000 motor with a £5,000 deposit. Splendid recipe for misery in years 3,4 & 5 when the warranty has run out and those big repair bills start to roll in.

Put down £30,000 and you’ve paid for your truck in three years at £1500 pm and be able to sell it whilst its worth something. You then get ALL the proceeds of sale to put down against your next truck rather than using it to pay off outstanding debt if you’d taken it over 5 years and got rid after three (which would incur a nice early settlement penalty from the finance house).

You also miss out on paying thousands of pounds in repair bills as you spend most of your time in a truck covered by the manufacturers 2 year R + M deal…which means more profit which is the bit I go to work for.

Put down £45,000, pay for the truck in two years at £1375pm, get rid of it and have no repair bills at all as the R + M will catch the lot…less interest as you are borrowing over a shorter period too which reduces the finance by £125 pm.

Buy the thing for cash and pay no interest at all saving you a fortune. Just put away £1200 per month into a savings account out of your earnings.

So lets put all this in another form…

New truck costing £75,000, interest at 5%pa flat

1. Deposit £5000, period five years, interest on 70,000 £3500pa
2. Deposit £30,000 period three years interest on 45,000 £2250pa
3. Deposit £45,000 period two years interest on £30,000 £1500pa

So, option 1gives you an interest bill over five years of £17,500 with the bonus of three years of garage expenses on an aging motor.

Option 2 after five years sees you two years into your second motor (so you’ve only had one year out of warranty to stand maintenance on your first motor) and you’ve forked out £11,250 in interest.

Option 3 after five years sees you one year into your third motor having had no garage bills and interest payments totalling £7,500.

To make it fair, lets assume that the piggy bank has been raided for the deposits so you owe yourself the lost interest back. Lets say 3%pa flat from a building society. (too late to do compound interest!)

£5000 deposit would loose you £750 interest over 5 yrs
so total interest bill for option 1 is £17,500 + £750 = £18,250

£30,000 deposit would loose you £4500 interest over 5yrs
so total interest bill for option 2 is £11,250 + £4,500 = £15,750

£45,000 deposit would loose you £6750 interest over 5 yrs
so total interest bill for option 3 is £7,500 + £6,750 = £14,250

Maintenance cost, lets say it costs an average £5,000 pa (which is moderate but illustrates my point) and each new truck comes with the first two years free R + M. Over the five years, the costs would be as follows:

Option 1 3 x £5,000 = £15,000
Option 2 1 x £5,000 = £5,000
Option 3 0 x £5,000 = £0.00

Total interest and repair costs for the three options:

Option 1: £18,250 + £15,000 = £33,250
Option 2: £15,750 + £5,000 = £20,750
Option 3: £14,250 + £0.00 = £14,250

Conclusion:
Putting down a big deposit reduces the shafting you get from both the finance company and your friendly local truck dealer. This means you make more money for yourself which is why you are going to all the trouble!

Other points to take note of:

Selling a two or three year old truck will give you back your deposit plus a bit of profit (5-10,000 each time you change) which helps keep pace with the price rises over the years so your finance stays the same each time you change or gives you a bigger deposit each time so reducing the amount you need to borrow.

Selling a five year old for £20,000ish still leaves you with a mountain of finance to climb on its replacement.

Then there is the great tax allowance issue…new trucks give you something to write off against tax, old trucks that behave themselves leave you with a nice big tax bill.

[lard]

Rob K:

Owner-Driver1980:
he brings home around £4,000 profiteach month with his mixer

My best ever month was around £6,500 clear…

Usually do around £40k pa for an average 45 hour week including lots of poa and breaks.

[loggo]

Hey Convoy. Hold back with the purchase of that new car - I think we have a better way to spend your money here - and you’ll have a good boss !

[tvradict]

I’m thinking of going O/D on the Tarmac Scheme, there are 2 Tarmac quarries local to me, but I was in one last week and noticed a lot of independant Subbies in their, not many of the Contracted O/D’s which does put me off a bit.

Surely someone like Tarmac would need to give the Priority to their Contracted Hauliers than to Subbies?!

[lard]

tvradict:
I’m thinking of going O/D on the Tarmac Scheme, there are 2 Tarmac quarries local to me, but I was in one last week and noticed a lot of independant Subbies in their, not many of the Contracted O/D’s which does put me off a bit.

Surely someone like Tarmac would need to give the Priority to their Contracted Hauliers than to Subbies?!

In an ideal world that would be nice but any quarry companies priority is to get material over the weighbridge. Dumping on regular hired wouldn’t help this aim. You need to ask why there aren’t many contract o/ds before jumping in.

[tvradict]

A mate of my Uncle is a Contracted O/D with tarmac, he’s just ordered a brand new Volvo so he cant be doing too badly.

The ones I saw the other day where in there a good few times, depending on when they put the first load out I would estimate they did at least 6 loads and it was all asphalt!

[tramper]

marcustandy:
He ain’t clearing £4k a month but he’s doing well; in his first year his clear profit was a bit under £40k. He does start early (by choice) but has never done a night out and definately didn’t put a big deposit down on his truck!

Let me get this straight, Just under £40,000 profit?! in 1 year on 1 truck
Assuming the trucks working 50 weeks in the year, thats about £800 profit per week!

Surely that can’t be right, if it is I’m in the wrong game! Are you sure?

[loggo]

So, looking at Laird’s figures ( very soundly put ) it might be best to take an interest only mortgage out on the house for 75k and buy with cash. Cheaper than any kind of loan deal and I can’t imagine many of us have the necessary sitting in the bank.
But discipline is needed to put awat a lot of the income to fund the replacement truck in 2/3 years.
As for me I think I’ll pop up the quarry on Monday for a chat !

[paul_b]

Tramper:

marcustandy:
He ain’t clearing £4k a month but he’s doing well; in his first year his clear profit was a bit under £40k. He does start early (by choice) but has never done a night out and definately didn’t put a big deposit down on his truck!

Let me get this straight, Just under £40,000 profit?! in 1 year on 1 truck
Assuming the trucks working 50 weeks in the year, thats about £800 profit per week!

Surely that can’t be right, if it is I’m in the wrong game! Are you sure?

would imagine it would come down to your perspective of “profit”, i personally work on a wage of £500 a week plus all the running costs of the wagon, whats left is what i call profit, i’d assume the above figure of £40,000 is including wages, easily possible with a rigid at good rates but i’d be sceptical if it’s acheavable with a tipper, with high maintainence and very slow periods in the winter! did a bit of tipper work for marshals and the rates weren’t that bad considering the speed of loading and tipping involved but to me, as a job of work, it was absolutely rock bottom but that was simply running sand and aggregates, now if you can get some muckaway jobs and tip the stuff at the right money i.e make £100 per load with a six wheeler then £400 a day is a dodle on very little diesel, the same with mixers, if your selling the concrete to costomers of your own then your getting the haulage on the load plus making a bit on the cony as well, as with all rigid work if you can find enough to be busy all year you can make some seriouse dosh, i personally wouldn’t go anywhere near these “take a truck on finance and work for us” schemes.

[tramper]

Right, so it’s not Profit ! In my book, wages are part of the cost of running the motor, so that brings the profit down to a more realistic rate.

[lard]

Loggo:
So, looking at Laird’s figures ( very soundly put ) it might be best to take an interest only mortgage out on the house for 75k and buy with cash. Cheaper than any kind of loan deal and I can’t imagine many of us have the necessary sitting in the bank.
But discipline is needed to put awat a lot of the income to fund the replacement truck in 2/3 years.
As for me I think I’ll pop up the quarry on Monday for a chat !

Quite so, it would be a cheaper loan as the mortgage company only charge you interest on the outstanding balance whereas a finance agreement charges you interest on the full amount of the loan for the whole term. So in year 5 of a finance agreement, you are paying interest on a sum you have long since paid back - which is why I really hate finance - its such a major shafting!

Couple of points though…

You are putting your house at risk directly (no hiding behind ltd companies etc)

Secondly, you need to make sure you’ve had a word with your mortgage lender and your accountant to make sure that you can get tax relief on the interest payable. You are using the money for business purposes and as such are entitled to the relief but the lender may want to lend at a higher rate as its for business use.

[lard]

Tramper:
Right, so it’s not Profit ! In my book, wages are part of the cost of running the motor, so that brings the profit down to a more realistic rate.

If you are running a limited company, wages are regarded as a cost. As a sole trader (which covers most o/ds), your profit is what is left after all costs and allowances have been deducted from your earnings. As a sole trader, you don’t have a wage, you don’t do p.a.y.e., you just have a monthly standing order for some of your N.I. contributions.

So any profit figure for a sole trader is regarded by the taxman as the taxable income of the proprietor…in other words his wages or annual salary.

Remember that out of this money you need to save for your next motors deposit and make provisions for major repairs that crop up. It also gets further complicated by the amount of Capital Allowance left on your truck. If you buy an expensive lorry over a long period (5 years say) with minimal deposit, then in the last year of two, your finance payments may be far in excess of the tax allowance you could claim.

So, in year 4, your 75,000 motor would be written down to 31,640 and you’d be able to depreciate this by 25% which is 7910. But if your finance payments were 1500pm (300 of which is claimable interest) you’d be paying 1200x12=£14400in capital repayment!

So out of your profit upon which you’ve paid tax and ni, £6490 of it you’d never have as income at all as its gone straight to the finance company!

Another good reason not to borrow lots of money over a long period to pay for lorries!

A decent living can be made being an o/d but I hope by my rantings on here that I’m showing that there is a fair bit more to it than just buying the truck and doing the work:- Its how you buy the truck and when to change it that can really make the difference.

[paul_b]

i don’t consider wages as “profit” although as you rightly say the tax man considers all earnings as profit, i look at it this way, i’m self employed and the trucks my business, i can earn £500 a week with none of the grief working for someone so i jugde the job by what i earn over and above that amount.
to me buying a truck on large finance and at the same time tyeing yourself to a firm and being stuck with their rates while you pay off the truck is madness!

[matt1978]

So after looking at all of the above, would anyone recommend this as a way of entering the owner operator route?
Matt

[paul_b]

i certainly wouldn’t, to me it’s owner driving in name only, the firm such as tarmac have got you by the balls all ways round, you’ve all the grief of the o’license, maintainence etc and yet some weeks you’ll only clear £300
thats nowhere near enough, you need three or four times that amount to cover that unexpected bit of bad luck that “WILL” come your way! as for the firms that run these schemes, they get a brand new truck pulling out of their quarry with their livery on, doing work solely for them at rates they dictate and it’s cost em nothing and they’re taking no risk financially the owners must laugh their heads off everytime another newbie takes one on.
it’s like putting a noose round your neck and handing them the rope.

[loggo]

Or you could go the “no commitment” route and drive for someone who has a few waggons working out of a quarry.
The trouble is that (around here) they only pay 6.25 / 6.50 an hour so you would only get 300 on a good week - probably average 16 - 18k a year if you did all the weekends etc.
It makes 40k look pretty good.

[pursy]

As far as Hanson used to do it and probably still do,you can have franshise truck no deposit just handover the VAT when you claim it back ,so figure on about £13000 to £15000 , they then take money out of your earnings (about £8000)to cover any short falls in earnings so that anything you book to them is covered.you tend to be very busy for the first few months while you earn this reserve fund.
HPwas about 2%above standard market rates however you can hand the keys back and not get a bad credit rating.
Earnings for my 6 wheeler over the past 6 years have been between £50000-£55000 per annum thats doing some of my own loads,backloads etc reckon on £18000-20000 in derv so you could have £30000 left to pay for running costs and provide a wage unless you can cut some corners i think an o/d running a newish 6 wheeler tipper out of these quarries can pull £18000-£22000 in wages

[owner-driver1980]

Yes, out of say £4k profit yes there are other bits to put away of (over heads) i.e break downs that kind of thing which will take some off the £4k profit.

I wasnt having a go before or anything like that so hope none of you got wrong idea?

There is money to be made in haulage but i am saying for that you do need to look into the contracts before you sign anything…or yes it could turn out to be a very costly mistake. If you have no experiance in haulage at all and you want to do long distance as a owner driver then maybe get a transport manager to find you the work someone that knows all the right contacts but you have his wages to pay for…alot of truckers i speak to want to see the shortage of truckers stay because it bumps up the rates for owner drivers and bumps up wages for company employed drivers. But to say there is no money to be made and that the days of owning a truck and making good money is over i think it gives wrong impression of haulage industry.

Yes to a point i do agree spend as much as you can on your new truck to reduce finance but for someone that is just starting in haulage they may not have that kind of money to spend but could build upto that by getting there first truck on finance and giveing just afew grand as deposit.

When it comes to me getting a new truck i dont know which option ill take i have afew grand saved already and ive only been owner driving 2 months or so (which is quite good)
but for my first new truck i think ill end up giving 5 possibly 10grand deposit rest on finance…

To anyone thats wanting to become a owner driver then maybe get some driving experiance first to see if its what you really want to do and if you do decided to become a owner driver then get an older truck at first.
having said that i jumped straight into owner driving but thats only because i have been surrounded by the industry and its something ive always been after doing.

Matt

[marcustandy]

Tramper:
Right, so it’s not Profit ! In my book, wages are part of the cost of running the motor, so that brings the profit down to a more realistic rate.

Sorry i’ve been slow getting back to you - a ‘Yugo’ trip and now moving house (and country) means i’m ‘mid-stress session’!!

Mmmmm, profit and it’s definition of…

He definately cleared £40k, or should I say the truck did. Yes, his ‘wages’ are to come out of that but he has done the ‘Ltd Co tricks’ and pays himself min wage and takes other monies as the director i.e. pays less tax on ‘dividends’. He said from the begining that he wouldn’t do it (OD) if he couldn’t take the same as his wage when he left the army (he was a WO1 = good money).

He also gets a very good pension from the army but doesn’t include any of that money in his figures. He didn’t use any of his lump sum pay-off towards the truck or fuel card deposits etc, just from other savings.

I know that since he has been there (over 20 mths) his location has only set one more truck on. He has told me that most of the other OD’s always complain that it is a struggle to make decent money but they don’t load the night before and have to wait until the quarry opens at 0700hrs to get their first load of the day; he always loads the night before, starts early and is back to the quarry by 0730hrs for his second load of the day. It’s the things like that that make the difference. He wasn’t the hardest working person I knew when we were in the army but he was one of the smartest working people i.e. don’t work harder - work smarter!

That £40k figure is accurate & truthfull. Maybe the ‘wages’ thing puts a different take on it but I know, as I said earlier, if he could find a totally reliable driver, he would set another truck on tomorrow.