Why small fleets tend to remain small

by Bill Cameron

Believe it or not, I occasionally get e-mails about this column that are not calling for my head on a platter. In one last year, a gentleman was in complete agreement with my criticism of the rates and driver pay practices of large carriers, as opposed to small carriers. He asked the rhetorical question “Why aren’t smart guys like you and me CEOs of large companies?”

His question has nagged me ever since. We are all in the same industry; we just have vastly different operational ideas, yet we are all successful in our own right. After nearly a year’s reflection, I think I have some answers.

The first reason is obvious: the economy. Nobody, regardless of business practices, is rapidly expanding a business in any sector. The optimism, consumer confidence, and available credit are all conspicuously absent. In our particular industry, add another issue at the top of the list, namely a severe lack of a willing and capable workforce, a problem that is critical even in a slow economy.

The resources of a small carrier tend to be much more restrictive than our large counterparts, so we are usually more selective in our hiring practices, making this an even bigger problem. Drum up all the business you like. If you can’t hire sufficient capable staff, or have limited credit to capitalize on your new projects, that newly acquired business will actually pull you down, rather than help you grow. If you are already incredibly wealthy from other business ventures, looking for new investments, may I strongly recommend almost anything other than the trucking industry as your next challenge?

The second reason goes a little deeper. I spent the first 10 years of my adult life in a futile, hopeless attempt at being the next Richard Petty. Lacking only talent, finances and connections, I have no clue why this failed, but the experience of frittering away thousands of hours and dollars touring Southern Ontario’s short tracks taught me an invaluable business lesson, one I unfortunately ignored. The best run, best attended, most profitable facilities were operated by people who had never strapped into a car. The ex-racers often were one rain date away from financial ruin, because they were thinking like racers, not business people.

Same holds true in trucking, with some exceptions. There is a rather successful ex-driver in Cambridge, Ont. who would rightfully challenge this statement. He is one of the few instances of people who were able to take the industry experience, then apply it as a businessman. How many of you can honestly say the same about yourself?

As humiliating as the admission was, I can’t. To this day, I will act in such a way to make the job slightly more pleasant, likely at the cost of potential growth. For example, we will, if even remotely possible, avoid hauling steel, as will a lot of smaller carriers.

Even if the load pays $100 more than a comparable load of building materials, we will avoid it, because I consider the extra time required to load and unload it unacceptable. The driver will like it, and the truck stays on schedule, but in the larger picture, deduct $200 of weekly earnings from each truck in a 500-truck fleet, and you start to see why saying not to these loads is not a good practice from a business standpoint.

Dry vans are another example. Due to their huge numbers, rates for dry vans are frustratingly low. They are, however, easier to find drivers for. It is as easy to get 10 van drivers as one flatbed driver. Using this math, you can still be profitable, and grow your truck numbers very quickly, yet we smaller carriers often avoid vans. This could be poor business on our part, or avoiding potential risks involving marginal profits; you decide. The business outlook of a small carrier is usually vastly different than that of a large one. We just can’t play the game with marginal profits relying on volume to stay afloat.

Next, we have the difference of opinion of equipment specifications. A lot of smaller carriers, since they have less equipment, will make sure it is nice equipment. I’m actually on board with the big guys on this one. Buy equipment that is properly spec‘d, but forget the frills. A lot of extra lights does nothing to the functionality of a vehicle, but since they are there, they have to work. Your extra candlepower could get you parked at a scale if some quit working. I’ve happily driven a lot of older, drab equipment in my day, because at least some of the money saved on extras went into my paycheque. My Scottish lineage makes me one of those that views chrome and stainless goodies as shiny eyecatchers, but a completely unnecessary expense.

Probably the biggest reason, at least in the past decade, that the small remain small can be displayed on your birth certificate. The workforce is getting older. I believe that most younger entrants to trucking have no intention of retiring here; it’s just a job “for now.” As such, the urge to make their place in the industry more than just that of a regular employee is missing. The risk involved to develop the next Challenger, Bison, etc., is tremendous, maybe immeasurable, and even more likely, impossible. If you are already in your fifties, it’s a little late to start adding dozens of trucks to your headache list. At the age of most of us long-timers, are you prepared to risk everything you’ve worked for to be the next big entity? I’m not.

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