You're right, Master Lease would have been a horrible deal.
I've read several post mentioning DD but I've seen no evidence of it when it comes to EGOC. IMO, regurgitating the exaggerated PRs and fiction from bag holders isn’t evidence of DD. To understand this company and it's business model, you need to understand a few basic things about it's target market, over-the-road trucking aka OTR. Stop reading now if you're a flipper because this gets pretty boring.
Trucking is a cutthroat business and highly competitive. Gone are the days that any 'Bubba' could buy a cheap truck, fuel it with cheap fuel, make great money and maybe grow his company into a mega-carrier ala Schneider National, JB Hunt, Swift Transportation. Deregulation in the late '70s introduced competition and killed the old game plan.
Today, trucking measures profit in pennies per mile, is fiercely competitive, and the mega-carriers are absolutely crushing the little guy. It's about economies of scale and the big fish gobble up the little fish. Bankruptcies are off the charts and the odds against even the better small operators making it more than a year or two are 3 to 1 (at best). Only 84% of lease operators complete the lease and "fleece purchase" has been a trucking joke for years.
The intense competition means that carriers have little ability to hike freight rates for fear that they will be undercut. To fatten the bottom line, the more profitable companies are increasingly dependent on owner operators and lease operators. Some go so far as to con gullible new drivers fresh out of training into leasing a truck from the company. They'll offer a lease truck to the driver or the option of waiting weeks for a seat in a company truck to become available. That kills two birds; i.e., it gets rid of a truck and provides a source of really cheap labor.
Think about it: companies can purchase, finance , maintain, insure, fuel and operate a truck for a fraction of what it costs the little guy. They have the customer base, experience, business sense, and more resources at their fingertips than the small operator will ever have. So, if they didn’t' profit from it why would they share such a sweet deal with the operators?
The answer is simple; they wouldn't. The little guy foots the bill for all expenses and gains nothing in the way of benefits. The company pays nothing and has no payroll tax liability since the operator is an “independent contractor.” They can cut back on maintenance facilities, personnel and other overhead. Essentially, what the company does is make a few phone calls, pay the truck owner maybe 65% of the freight rate and pockets the rest. Do some real DD on Landstar, a so-called “non-asset based company,” and you'll see just how profitable the business model is. They've thrived while other carriers have experienced really tough times.
Why would drivers play the losing game? Not all do. The smart ones will try to get on with a union outfit, enjoy great pay, bennies, nice retirement and such while driving a slow (governed at about 60) homely, simple truck. The slightly less fortunate will drive for a generic non-union company but maybe operate a slightly faster, prettier truck and maybe make “okay” money. The newer/prettier/faster trucks are a recruiting tool in an industry where annual turnover rates are north of 100%. Yes, you read that right.
Unfortunately, most drivers are guys and driving a big, fast, shiny rig are a form of di*k waving. They want 'prestige', their name on the door of the very own rig and dream of the day that they'll own a new Pete or a W900 that will blow by everything on the road. Until that day arrives, they'll lease an overpriced cheapie (like Master Lease pushes) temporarily and hopefully save enough for that “large car.” To make matters worse, most have little business savvy or financial discipline. The settlement checks sometimes seem huge (at first) but they set little aside for rainy days. Few understand the difference between gross, settlement and net income.
Never mind that they want the fastest, least fuel efficient trucks on the planet and will drive it accordingly. Never mind that they'll have zero retirement and make less in real dollars than the guys in the simpler trucks working for a company. They have the 'prestige' and 'satisfaction' of being the Last American Cowboy and bullying your wimpy a$$ Toyota out of the hammer lane.
The problem is, their net profit is minimal, they have lousy credit, they are under-capitalized and living from truck payment to truck payment. The ones nearest the verge of failing are the driver's foolish enough to buy or lease a worn out, high mileage truck with, poor credit and little or nothing down. One major repair or a week or two off for illness/injury means they'll meet repo man and their truck will end up on the hook.
Stupid? Yeah, but that's the crowd that outfits like Master Lease, E1 Leasing and the other cheapie outfits cater to. If you think it's a winning business model, please buy and join the other dreamers in the trucks. If not, trade it.
Personally, I think this is a scam attempt. The big gainer seems to be Hoebel at Master Lease. I believe he's near retirement age, ready to dump his little company on you and leave with full pockets. He has tried twice to no avail already. Will there be a third try?
Flame away. =^)
