Trucking and transporting goods are always in-demand, so it seems to be a good opportunity for small business investment. But, everyone knows semi-trucks are expensive, and there’s a lot that goes into getting a truck on the road and making money. So, is buying an 18-wheeler a good investment?
Buying an 18-wheeler is a good investment when you have a solid business plan, consider all the factors impacting your expenses and potential profits, and make good decisions while purchasing the truck. Owner-operators make more money than owners, but both can make money with the right approach.
Is Owning an 18-Wheeler Profitable?
You can make a good investment in an 18-wheeler and start earning profits over time. Still, it’s important to understand that you normally won’t start making your money back immediately.
Purchasing a semi-truck requires a pretty large up-front investment. You’ll have to purchase a truck (typically by financing) and insure it.
If you plan to drive the truck yourself, you’ll have to ensure you have all the required licenses and certifications you need. In any case, you’ll have to also complete any required inspections and other tasks necessary for putting your truck on the road.
Then, you’ll have to do enough work to offset the cost of the truck, insurance, gas, and maintenance, plus any other business-related expenses. If you operate the truck yourself, you won’t have to pay a driver, which means you’ll start making money faster.
Still, plenty of investors make passive income through leasing their truck out to a company or private driver.
On the other hand, if you already run a business that pays another company to haul your products and materials, you could eliminate that expense by doing the work yourself. In that case, it could help boost your profits if the cost of owning the truck is less than that of contracting out your transportation needs.
How Much Can You Make by Owning a Semi-Truck?
Owner-operators typically make $150,000 to $250,000 per year. Actual earnings can vary quite a bit depending on the types of loads you haul, where you live, and how much you want to work.
Let’s take a look at some of the highest paying cities for owner-operators in the U.S. (according to Indeed):
|Location||Average Annual Earnings|
|Las Vegas, NV||$326k|
|Salt Lake City, UT||$298k|
Truck owners who contract or lease their vehicles (also called investors) typically earn significantly less than owner-operators. But, they also don’t have to do any of the actual driving.
Investors usually make between $500 and $2,000 per truck, per week. Still, the actual earnings can vary quite a bit depending on things like mileage, repair and maintenance expenses, seasonal business changes, and types of loads.
Owner-operators and owners earn a rate per mile that varies – typically by the load. The rate per mile could be higher or lower based on which week of the year you’re in, the season, market influences, geographic location, equipment type, and so on.
But, to set a baseline, an average rate per mile is around $2.50. So, the more you drive (or the more your truck drives), the more money you can make.
How Much Does it Cost to Buy an 18-Wheeler?
Buying an 18-wheeler may cost anywhere from $30,000 for a cheap used truck to $200,000 for something brand new. The price tag for your truck will depend on many factors, but the first one is whether you go with a new or used semi.
|Used Truck||$30,000 – $100,000|
|New Truck||$120,000 – $200,000|
|Truck Trailer||$15,000 – $80,000|
Once you purchase the truck, you’ll also have to consider the trailer’s cost. Depending on what you plan to haul, a new trailer may cost anywhere from $15,000 to $80,000. Of course, there are options for used trailers, too.
Before you pull the trigger on your purchase, you should think carefully about the long-term costs of owning the truck. This is especially important if you’re thinking of buying something used.
Always work with a reputable dealer or company when purchasing a semi-truck. Otherwise, you could end up with something that needs a lot of work and money before it gets on the road.
Purchasing a truck that comes with a warranty is very important, especially for new owners and first-time buyers. Good warranty coverage can help keep you from going into the red in the event of an unexpected repair bill.
Even used equipment should have the option for extended warranty coverage if you’re buying from a reputable company.
In any case, you should budget for repairs and maintenance along with your purchase cost and have that money set aside from day one. Remember, your truck won’t be earning when it’s not on the road, but you’ll still be responsible for paying for it either way.
What Factors Impact a Truck Owner’s Earnings?
Earnings may vary depending on many factors, but ultimately it depends on how much the operator runs, the loads they haul, and how much they can reduce their operating expenses.
The type of freight the truck hauls is one factor that impacts earnings. Certain loads make more money than others.
For example, van truckloads (these are the standard trailer types that you most frequently see on the road) make the most revenue and are the most versatile in what they haul.
Tanker trucks (those carrying liquids or gasses) are typically the second highest-earning freight hauls.
Trucks that haul ocean containers in and out of the port (called port drays) typically earn less than the other two types.
So, even though all three trucks haul freight they have different earnings based on the freight type.
Other factors may include:
- Load selection: Using a dispatcher or broker service to select loads means you’ll have to pay a fee for those services (usually 5-25%). Leasing your truck with a carrier eliminates those fees, but you may earn less overall than if you stayed private.
- Rate or payment method: Whether you charge a flat rate per load, percent revenue of the load, or rate per mile, how you calculate your fees will impact the exact amount you end up making.
- Operating expenses: Owning and operating an 18-wheeler can be costly. Reducing expenses will increase your overall profits. Fuel costs, insurance, maintenance and repairs, truck payments, etc., will all come off your bottom line.
- Freight quality: Experienced drivers and owners have a method to select which loads they’ll haul. Depending on the travel, distance, how much the load pays, and where the delivery takes them can all impact how desirable the haul will be. For example, sometimes it might be worth it to get paid a little less to not have to travel as far.
- Mileage: Whether you charge a rate per mile or a flat rate, mileage directly impacts earnings. Either you’ll charge a higher rate for a longer distance or you’ll pay more in fuel for farther travel. Plus, mileage means added wear and tear on your vehicle.
- Driver’s performance: No matter who is behind the wheel, the driver can save or cost you money based on their consistency, timeliness, and effective communication. Time is money in business, and you don’t want a driver that doesn’t operate efficiently.
- Repairs and maintenance: Keeping your truck in good working condition is essential for profitability. Even repairs that seem expensive now can mean less downtime later on. You also have to factor in the time that your truck is in the shop as lost earnings. So, you’ll want to keep up with all routine maintenance to reduce big repairs.
Owner vs. Owner-Operator
Most people who own an 18-wheeler are either owners or owner-operators. Owners are those who own the truck but don’t drive it themselves. Owner-operators are those who own and drive the truck.
Owner-operators typically make more money from the truck than owners alone. That’s because owners have to pay someone else to drive for them.
However, if you don’t have the desire or ability to drive the truck, it can still be a good investment to have someone else haul the loads for you.
The Bottom Line
Owning an 18-wheeler comes with the potential for great earnings if you handle the investment properly. Owner-operators make more money than owners alone, but that doesn’t mean it’s not a good investment for someone who doesn’t want to drive the truck.
Investing in an 18-wheeler starts with doing your research and shopping around for the right truck. It’s critical to only purchase from a reputable dealer, otherwise, you might end up paying far more than the truck is worth if it ends up having problems.
A warranty is key, especially when you’re just starting out. In either case, having a budget set aside for repairs and maintenance is essential for keeping your truck on the road.
A carefully constructed business plan that lays out your projected expenses will help you determine how much money you need to make in order to break even and start to earn profits. Careful planning of your load and freight types, and rates, and managing your costs will help your business earn more money faster.
Remember, owning a truck is a long-term strategy. Over time, you’ll earn equity in your equipment and eventually be able to operate the truck without payments. Or, you can use the equity to buy a newer truck. You may even decide that you could add a second rig to generate more profits.
The possibilities are truly endless with the right business strategy.