Clearing the hump

By scrutinizing his P&L statements, slowing down to save fuel and cutting other costs, David Beamer is turning his once-stagnant business into a success.

Until this year, David Beamer did not scrutinize his profit and loss statement. He did not know his per-mile costs or net income. His highway speed usually averaged 66 mph.

“I probably thought that I was getting almost 40 cents per mile, but I just wasn’t paying attention,” says Beamer, a 46-year-old Oklahoma City resident leased to Schneider National. He was making half that rate last year, and in January his net income plunged further, to 13 cents per mile. Granted, freight was slow and he was sick with flu that month, but Beamer says he was ready to make serious changes.

What a difference five months can make. Thanks to a constant effort to cut costs, including religiously tracking expenses and slowing top speeds, Beamer turned things around by mid-year. “Now that I know I’m getting 40 cents a mile, it’ll be easier to stay on track,” he says. And the income could increase further, says David Wolff, Beamer’s consultant at financial services provider ATBS of Denver.

Beamer, who exited the business for 17 years to help raise his two children, has been back in the cab since 2004. During his hiatus he drove a taxi and worked as a prison guard.

He had to re-start as a company driver because carriers considered him inexperienced.

In 2005, Beamer purchased an ’06 Peterbilt 387 through Schneider’s lease program for $108,000 at 10.25 percent, giving him a $2,200 monthly payment. He began hauling general freight as an owner-operator and took the option through Schneider Finance to sign up for ATBS services.

In January 2006, Beamer bought a Thermo King auxiliary power unit through Schneider Finance. “I already feel like I’ve made my money back in the 15 months I’ve had it,” he says. The APU’s fuel savings, however, weren’t enough to compensate for fuel wasted in other ways.

Beamer was telling Wolff that he wasn’t idling and was watching his speed. “But in fact, he wasn’t watching it the way we wanted him to,” Wolff says. Furthermore, Beamer wasn’t getting the miles he wanted, and he considered other carriers several times. Beamer was “the traditional non-believer that didn’t think he could control his own future,” Wolff says.

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After Wolff highlighted Schneider’s carrier benefits, such as discounts on tires and fuel, Beamer decided changing carriers could be more expensive than he realized. “That was when we started doing some serious reviews of his profit and loss statement,” Wolff recalls. “He started seeing what his numbers really were.”

Things got worse. Freight plunged this January, and Beamer’s miles with it. He finally started taking a close look at the profit and loss statements he only had glanced at before.

“That’s when I had an epiphany: I don’t want to do this for free,” he says. “I realized I was not trucking as smart as I could be.”

Adds Wolff, “Volume can make up for poor performance to a certain extent, and what this economy has taught us is that that line is very narrow. My goal is for a driver to drive as few miles as he can while making as much money as he can. To do that, it is not dependent on how much he is getting paid, but it’s more dependent on how he is controlling his costs. Two guys can run 10,000 miles and have a different bottom line.”

Beamer has proven that point with his dramatic turnaround in 2007. “That’s a result of everything he does to control his business,” Wolff says. “Nothing was done for him.”

Karen Gagnon, a contract sales representative for Schneider who sold Beamer his truck, has witnessed the same thing. “He had a mind-set change, and he started thinking like a businessman,” she says. “It’s really been a pleasure to watch him grow.”

Toward a better bottom line
Here are the steps David Beamer has taken to reduce costs and work smarter with his carrier.

HOLD DOWN DAILY SPENDING. David Wolff, Beamer’s ATBS consultant, encourages his clients to keep personal expenses to no more than $100 per week, or $20 per workday. The U.S. Internal Revenue Service allows truckers a per diem deduction of $52 for every day they’re away from home overnight, of which they get to deduct 75 percent or $39. If a driver logs more than 300 days, that totals at least $11,700. If he actually spends only $20 per day, or $6,000, he still gets a bonus $5,700 in deductions. “If you don’t spend it, you keep it,” Wolff says.

PREPARE YOUR OWN MEALS. The easiest area in which to make big cuts in daily spending is food. Beamer stocks up on supplies at Wal-Mart and eats in his cab rather than in truck stops – though for him, it’s not just a matter of saving money. “There are no more mom-and-pops any more,” he says. “You can almost quote the menu when you stop from one place to another, that’s how generic the food has become.”

SLOW DOWN. Once Beamer cut his average highway speed from 66 mph to 60 mph, his fuel economy went from 6 to 7.4 gallons per mile. “We’re looking at $9,000 to $10,000 extra in my pocket at the end of the year, and I’m running the same amount of miles,” Beamer says. “I am not worried at all about having to pass everybody; I am on the right, and everybody passes me. I get a better night’s sleep when I’m less stressed.” Safety is up a notch, too, because he has more cushion between his truck and other vehicles.

REVIEW INSURANCE COSTS. Wolff suggests re-evaluating physical damage insurance every six months to see whether the coverage and premium can be lowered. This especially is true on newer trucks because they depreciate faster.

RESIST CASH ADVANCES. Beamer has all but quit taking cash advances. The driver who relies on those “is mismanaging his money so he’s always behind, chasing his tail,” Wolff says. “He takes an advance this week and pays it back the next week, and then he gets into a thing he can’t get out of.”

IMPROVE YOUR PARTNERSHIP. After Beamer considered leaving Schneider for another carrier, Wolff helped Beamer to better his relationship with the company. This includes being adamant – but polite – about getting more miles from the dispatcher. Beamer “is Schneider’s business partner and they need to treat him as such. Schneider is Beamer’s client and his job is to provide them with good customer service,” Wolff says.

CHOOSE ROUTES WISELY. Beamer used to take mostly long hauls, not considering short hauls. Now he evaluates shorter hauls, which can offer owner-operators premium pay. “If they could put together three short runs, often they will make more money than they could for a 1,000-mile long run,” Wolff says.

How good can it get?
David Beamer’s not done fine-tuning his operation. He’s also considering:

  • Improving his customer service skills.
  • Installing an oil bypass filter to get extended drains.
  • Using super-single tires to improve fuel economy and cut tire costs.
  • Joining Schnei-der’s new Load System program, in which owner-operators work for percentage pay, not mileage pay, by dispatching themselves as if they were independents via the company’s online network.
  • Increasing his fuel mileage so that fuel costs represent no more than 34 percent of his gross income. In Beamer’s case this would be approximately 6.5 mpg for paid miles. For all miles, both paid and unpaid, he will be averaging between 7.2 and 7.5 mpg.