This month’s column is a continuation of last month’s theme, entitled: ‘So, you want to start a trucking company?’ If you decide to set out on your own, stay with the sector you know.
Don’t pull a dry van for years, then start up a flatbed trucking company to enjoy higher freight rates. You should not combine the necessary learning curve of a different line of work and different rate structure, with the fresh challenges of self-employment.
Unless you have a signed contract in hand, clearly stating the amount of work you will be offered, rates you will be paid, and payment terms, you really do not have any firm customers.
Anyone can, and will, agree to use your services, for a number of reasons. They may be too polite to say no, or maybe having your business card on their desk will help them renegotiate freight rates with their current carriers.
Or, maybe they are just nice people who want to encourage everyone who shows ambition.
I started in business basically for the sole purpose of working for a medium-sized company, whose owner and I shared a mutual friend. With a request to contact him as soon as I had a truck, I started the business.
Twelve years later, we have yet to haul a load for that company. Will you be able to find customers that require you to run round trips? Highly unlikely.
You will then need to affiliate yourself with someone – your previous employer possibly, if you left on good terms – to find freight one way. This service does not come free, but when starting with one truck, you obviously can’t afford or justify your own dispatcher.
Don’t dismiss the positive side of empty driving. Although this goes against everything you’ve ever known or been told, sometimes empty miles can be profitable. Dispatchers at most large companies work under a policy that limits empty driving, either by actual miles, or percentage of dispatched round trip miles. As a small carrier, you have the luxury of following the money.
For example, you deliver in Boston. Any east coast freight is being offered at $700-$800 back to southern Ontario. Travel to mid-New York or northeast Pennsylvania, though, and you may get upwards of $1,000 or even more, while only adding 50-75 miles to the round trip.
Also, with southbound freight still scarce, some shippers will happily pay empty driving into the US to get their product picked up. There is no downside to receiving your required rate while running empty.
When the business starts to grow, you will need more trucks, and I very strongly recommend hiring owner/operators rather than buying more equipment. Your business growth plans will slow to a snail’s pace if you must buy another power unit every time you need to grow. Don’t count too strongly on all those former co-workers to come work for you.
Truck drivers, like the rest of the world, enjoy whining, but will rarely do what is necessary to change their situation. Out of every 30 owner/operators that claim they want to work for you, one or two actually might.
It is also best to not assume that logic will have much impact on the actions of your potential hires.
Years ago, I interviewed a driver, who wanted to be home weekends, because he had small children. I offered him a job driving a Freightliner, home every weekend. He was going to think about it, declaring that he really preferred a Peterbilt.
A week later, he took a job with a different company, paying six cents a mile less, away three weekends per month. But they had a Peterbilt for him. This example, memorable as it is, is not as isolated as you would hope. People are usually your greatest challenge, even more so than equipment breakdowns or financing issues.
Crossing the border gets more challenging every year.
ACE entries for US-bound freight is already a reality, and is soon coming to Canada-bound freight. Do you have someone in mind to handle these entries?
You no longer have a carrier to perform this for you. There are third-party agents for such tasks, as well as, obviously, fuel tax and permit processing.
Have you factored in these costs? Is your agent flexible, or strictly nine to five? The wrong agent could delay your border crossing by half a day, if you can’t provide paperwork until after 5 p.m. Also, when it comes to new and pending government regulations, on both sides of the border, you no longer have a safety department to keep you informed.
The governments of North America will not inform you of every pending change; it’s up to you to stay compliant.
Maintenance records, maintenance policies, and logbook documentation and reviews just landed on your plate as well.
Driving and maintaining your truck is your weekly job, but your weekend job is now to spend several hours in your office. If none of these issues have scared you off, you are probably as ready as you will ever be to become a trucking company owner. But here’s one final piece of advice: Learn to practice frugality like never before.
In the wealth producing years of a vibrant economy, companies large and small tend to forget where to find small savings. The recent economic crash left everybody reeling, but those of us still standing obviously found new and creative ways to work smarter. A newly-formed company needs to practice cautious spending from day one.
Acquaint yourself with maintenance managers at the larger freight carriers. Pick their brains for as much advice as possible, from equipment selection, tire recommendations, even suggestions for suppliers.
The tiniest savings can multiply quickly when you have little capital to work with.