Nicky Hammerlane here, in one of my favorite towns, Albuquerque, New Mexico; sitting at the truck stop near the I-40 and I-25 interchange. Lots of restaurants within walking distance, so I decide to take a jaunt over to a restaurant that’s famous for its cheesecake. Now I know what you’re thinking - “He does the pie thing, what’s this?” Well, it’s another of my weaknesses – cheesecake; any kind of cheesecake and Dee’s Cheesecake Factory in Albuquerque has some of the best in the country. In fact, if it’s raining or snowing, I’ll take a cab there to get my cheesecake fix. On this particular day it was clear and near sunset so I opted to walk the mile or so to Dee’s, figuring I’d work off the calories before I consumed them.
Well, I hadn’t got but about 4 blocks when this red ‘dually’ pickup made a U-turn about a block in front of me and then a beeline back to where I was walking east on Menaul Boulevard. The truck stopped in a store’s driveway and the right window rolled down. “You Nicky Hammerlane?” called the driver.
“That’s me,” I answered.
“Man, I thought I missed you. You’re a hard hombre to catch,” he nodded. “I asked the pretty blonde clerk at the fuel register to call me if she saw you come in. When she called I got there as quick as I could, but you’d just walked out the front door. I jumped back in my truck, and luckily even in Albuquerque spotting that black Stetson isn’t difficult.”
“Didn’t know I was a wanted man,” I grinned. “What can I do for you?”
“I’m Juan Griego, owner of a small trucking company here, and I need some help. Where’re you headed? Can I give you a lift?”
“Up to the Cheesecake Factory,” I answered. My stomach growled, seconding the motion.
“You going for dessert or to eat?” Juan asked.
“Both,” I said, leaning into the pickup window so Juan could hear me over the traffic.
“How about I treat you to a real New Mexico meal? There’s a small restaurant on the other side of the Interstate called Padilla’s Mexican Kitchen; best chile relleños in New Mexico. And if you still need that cheesecake, we can grab a piece on the way back.”
Another confession. My third weakness is a plate of New Mexico green chile relleños. “You’ve got a deal, Juan!” I jumped into the right seat of his truck and we were headed to cuisine heaven.
We arrived at the small storefront restaurant located in a miniscule strip mall. It was a popular place; we stood in line for about 30 minutes before being seated. Once our chile relleños were ordered, we tucked into the homemade salsa and chips. One thing about trucking, if you get away from the truckstops, you can find some amazing food.
As we alternately crunched and doused the small fires behind our teeth with sips of iced tea, I asked Juan to describe what was going on with his trucking company.
“Well,” he began, “we’ve been doing OK, not great, but holding our own. We’ve got 9 trucks and drivers, all company employees, and then I drive a truck from time to time to fill in when someone needs some time off. Got a pretty good run out of Albuquerque to the West Coast/LA area with a decent return, or at least I thought I did.”
“What do you mean, you thought you did?” I inquired.
“Outbound’s paying really well, around $3.50 per mile. The return comes back to Las Cruces, 226 miles south of here, which pays right at $1.90 per mile for a net of $2.42 per mile or about $5,400 for the round for 2,226 miles. I should be making money, but I’m barely breaking even,” Juan explained.
“What’s the time span your trucks are doing this turn in?” I asked.
Juan responded, “Well, let’s see, each truck leaves on a different day from here. Takes two days to LA, delivers the morning of the third day, then sits for three days out in Ontario and then picks up the load from the port in Long Beach or San Pedro. The customer in Las Cruces wants it three days later. So let’s see, that’s two days out; delivers on the third day, so that’s three days, sits for three more, that’s six, and takes three days to deliver to Las Cruces, that’s nine. A half day to get back to Albuquerque, and then he loads the next morning going back to California. It’s ten days for a round.”
“That’s your problem,” I observed.
“What is?” he asked.
“Ten days for the round and too much time sitting and not producing revenue,” I answered.
“But we’re averaging nearly $2.50 per mile for the round,” Juan insisted.
“While that’s true,” I began, “you’re also taking 5 to 6 more days than the minimum legal driving time would allow.”
“I don’t understand. If I’m making $2.50 a running mile, I should be making money, right?”
“Not quite,” I said, finishing my half of the pile of tortilla chips. “There’s a little number called ‘fixed cost per day,’ that’ll negate the theory of running a truck on a per-mile revenue figure.”
“Wait a minute. I’ve been taught my whole life if you can get over $2 per mile you’ll succeed in trucking.”
“Lots of folks figure that too, Juan,” I continued, “Now, while I don’t know your actual fixed cost per day per truck, let me show you something.” I grabbed a paper napkin and handed Juan a pen, then tapped the calculator app on my phone. “Write these figures down for me.”
I sorted through my memory until I recalled a similar case a couple of years ago. “We’ll use one of your trucks with a fixed cost of, say, $300 per day which includes office salaries, and assume the driver’s paid by the mile. Based on each day your truck sits, add $300 of fixed costs that must be recouped in revenue when it’s loaded. You’re currently averaging 2,226 miles, and your fixed cost for those 2,226 miles over 10 days is $3,000, or around $1.35 cost per mile. If you did those same miles based on a 600-mile day, it’d take your driver right at 4 days. This would equal only $1,200 in a fixed cost, or about 54 cents per mile. That’s around 81 cents less in your fixed cost per mile, or $1,800 per run difference in total fixed costs. That’s huge, especially when you have six out of ten days on each round without any revenue.”
“That’s a lot to absorb,” commented Juan, “but it makes sense.”
“Simply put,” I responded, “the fewer miles over a period, the higher your cost per mile. The more miles over the same time, the lower your cost per mile.”
Just then our orders arrived, and we devoted our attention to savoring some of the best chile relleños I’d ever tasted.
After about five minutes of absolute silence, Juan asked, “So how do I solve this problem?”
“First step,” I began, “is to calculate the fixed cost per day of each truck and trailer you operate. And each one will be different, based on age, payment, and insurance costs. You’ll also need to divide your office costs equally between all nine trucks. Be sure you include all the salaries of anyone you have in the office and including yourself in that office fixed cost.”
“That’ll take me a few days. I’ll need to get together with my sister; she’s my accountant, and get those figures together. What comes after that?”
“Then we need to look at completing your freight lanes for each truck,” I answered, laying down my fork reluctantly. There wasn’t a crumb left on my plate. “I think you’re missing a leg, which could produce some revenue over those three days your trucks sit in Ontario waiting for the Las Cruces load.“
“Uh – wait a minute.” Juan cleared his throat. “You said ‘we.’ I’m not sure we can afford you, Nicky. I mean, I’m struggling now to keep my drivers paid. I haven’t seen a paycheck in 3 months.”
“Don’t worry about it. My fee is based on results. You don’t pay a dime unless we’re successful.”
“Wow, that’s pretty awesome, but you still haven’t told me your fee,” he said.
“Ever hear of Cuidando Los Niños charity here in Albuquerque?” I asked.
“You mean CLNKids, the group that takes in homeless kids and their families? They help the parents learn the skills to get jobs and then get the family into a home and school for the kids.” Juan replied.
“That’s the one,” I said.
“And this has to do with your fee how?” Juan asked, puzzled.
“If I’m successful in helping make your carrier profitable, you help some child and his or her family get back on their feet by making a donation to CLNKids.” I tried to signal for the ticket, but found Juan had beaten me to it.
“But what about any payment for you?”
“Juan, I’m a successful trucker who sold my operation to the kids and grandkids. Now I’m doing what I’ve always wanted to do—run the road and help others. And each time I help a trucker, who in turn donates to a worthy cause like CLNKids, my efforts have helped two families instead of just one.“
Juan nodded. “A new twist on the knights of the road. Awesome.”
“Here’s my card with my cell number on it. If you or your sister have any questions, call me. I should be back through here in about a week and we’ll solve this missing leg dilemma. And thanks for bringing me here to Padilla’s – those were the best chile relleños I’ve ever had.”
With that we finished our iced tea while discussing the correct answer to New Mexico’s official State Question: Red or green? That’s red or green chile, to those unfamiliar with Southwestern cuisine.
Join Nicky for the next installment of The Case of the Missing Leg in our next blog. How will he help Juan Greigo find the loads and revenue to complete the missing section of his freight lane? And what about that cheesecake?