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Brian Soule

Apr 17, 2008

This Truck Driver makes 2 Million a Year

You are probably wondering, How is it possible for a single truck driver to make 2 million dollars a year?

I'll answer that question with another question, How is it possible for Exxon Mobile to make 39.5 Billion dollars in a year?

The answer is arbitrage; when something is worth more in one location than somewhere else.

Back to the truck driver, he is an independent contractor that works with BP. His job is to drive around Italy, fueling the underground tanks at BP stations. After fourteen years on the road he decides that his truck is getting old and that it's time to sell the old and lease a new large capacity rig. He finds a buyer, in Egypt that will pay a good price for the tanker. So the trucker takes a week off to escort his truck on a boat to Egypt.

When he arrives in Egypt, the trucker notices that the price of gasoline is a mere .95 cents per gallon. (Global gas prices listed here.) He thinks about how great it would be to buy gas at .95 cents in Italy. Then it hits him...

He postpones the sale of his tank truck and uses his savings to fill the truck with 8,000 gallons of unleaded gasoline. He catches another ferry back to Italy and sells the load to an independent gas station for 4X what he paid for it. He can't believe how his good fortune, he has made almost a years salary in just a few days.

How does he make 2 million a year? Let's look at the math,

8,000 Gallons of gasoline costs $7,600 in Egypt 8,000 Gallons sells for $47,600 in Italy. That mean that the Egyptian gas can be sold in Milan for $40,000 Profit. Or $4.00 profit per gallon.

The distance from Cairo to Milan is 1599 miles. Let's say that you take a ferry that travels at 20 knots or 23 mph, It will take you about 69 hours if somehow you had to travel the whole distance by boat. (realistically you could drive up the Italian peninsula at sixty mph) Add in a few hours for filling and emptying the tank, waiting at the border, and you can complete an entire cycle in a week. (144 hours)  If you complete one cycle per week for a year, that's $2,080,000 annual gross profit.

As if that wasn't exciting enough, the process really gets interesting when you add in another truck. Let's say you have a company with a fleet of five trucks, you could be making $10,400,000 before expenses.

If you had a 15,000 DWT tanker (which is a small boat with a capacity of about 4,000,000 gallons) you could have a one cycle profit of... I'll let you do the math.

Obviously some research into the trade procedures, taxes, liscences, equipment, and transportation issues are required, but the fundamentals are the same.

So, Who is this truck driver? It's you.

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