Can i be profitable?

[mjaafar]

hey guys. you have some great discussion on this forum.

my question is this: can i be profitable in this climate?

i am an attorney who has been involved in the trucking business on the legal end for a few years now. 8 months ago, i decided to start my own operation. i partnered up with an experienced driver, and we bought to tractors (a 98 freightliner, and a 2000 volvo) and two trailers (a dry van 53' and a flatbed-48'). we paid cash, so there is no overhead. we leased on to a carrier, but were not making any money. so, we went to OOIDA, and obtained our own authority.

we have had our own authority for two months now. we get our loads from load boards.

my question is whether i guy in my position can be profitable, and what i needs to do to become profitable. should i buy more trucks through loans, or should i wait to build up cash? should i by new trucks, or stick to old ones? should i spend over 40k per truck purchase, or under 40k? can i be profitlable on load boards? what type's of trailers should i buy?

HELP!!!!!!!!

 

[m_fumich]

Being knew to this aspect of the industry, I'd suggest staying away from specialty type trailers because you don't specifically know that part it. What I mean is don't buy drop deck to haul heavy equipment if you don't know where to get that kind of freight. I'm not a veteran by any means but common sense should come into play here. Dry van and Temp Controlled is where the bulk of the freight is and regular old flat bed is pretty straight forward. Temp Controlled is extremely flexable because they can haul dry freight as well.

I've been researching the pros and cons of truck ownership. One area where O/O's have the opportunity to save money is in maintainance. If you can do your own service, you save money. Since you're no longer leased to a company, maintainance cost are all on you. O/O's leased to big companies can get those companies to do the service at reduced rates. I don't have a solution as to how to reduce those cost if you or the drivers can't do the work.

Which truck to buy really come down to repair cost in my opinion. You pay more for trucks in better condition which, hopefully, would mean lower maintainance cost for a while. Cheaper trucks could mean some repairs will be needed soon or major components are reaching their end of life. Saving 10K on a truck doesn't help if you have to put in an engine in 6 months.

One question I have is "exactly what experience does your partner have?" You can be an experienced driver but not know how to run a trucking business. If your partner knows how to run the freight, that doesn't help much when it comes to the business end.

As with any business, you have to increase revenue and decrease expenses. Increasing revenue can only be done by getting higher paying loads. Some expenses cannot be changed. Permits for example. I'm sure insurance cost can be reduced by only hiring drivers with more experience. Fuel cost, maintainance cost, and driver pay are the main areas where where you have some control. I would recommend using APU's on your trucks to reduce idle time. Make the comparison of fuel usage and you'll see that you can save $8,000 a year in fuel and maintainance cost by using an APU. It would pay for itself in a year then it's all to the bottom line after that. Another way to reduce fuel cost is to take lighter loads. Staying out of the mountains will reduce fuel cost also. I would expect that purchasing a more expensive truck would be woth the cost if you can get a warranty to eliminate some of the repair and maintainance cost. As a driver, I don't recommend skimping on driver pay. You don't have to pay a kings ransom but don't pay bottom scale either.

Probably the best advice I could give is the same I would tell anyone in ANY business. Consult with someone who is making it in the business even if you have to pay for their advice and direction. If they can succeed, pay them to show you how to succeed.

 

[mjaafar]

thank you

thank you so much for the advice. it really helped. i never thought about the APU's.

in answer to one of your questions, we've been getting all of our business by scanning the loadboards, and calling those brokers. THAT'S IT.

so, my question was whether this is a wise strategy, and whether i can be profitable at it (all else aside).

what do u think?

 

[Mike]

I would try to get away from load boards as much as possible. If nothing else, at least for your outbound freight. Look around at what is close to you and see if you can get an account or two. Avoiding brokers just means more profit for you.

I would also start monitoring the freight that is available to you in the different outbound locations that you go, and start looking for freight in those areas, as well as pay attention to what locations have the better paying freight.

And defiinitely stick to one type of trailer. If you don't have experience wiht load securement, you don't want to get around flatbeds, and especially any sort of heavy haul.

 

[mjaafar]

thanks a lot bullwinkle.

your advice is definitely the way to go. my only question is how to go about getting freight without the use of freightbrokers and loadboards. in your post, you said that i should get "accounts." I am unsure as to how to accomplish that.

any extra advice you can give me?

 

[m_fumich]

I'm a company driver but just the other day I was fishing with a guy that runs his own small company. He has two trucks of his own and 6 or 7 other truckes leased on with him. He said he gets all of his outboud freight directly from the campanies he picks up from. He uses the load boards to get freight coming back home. He also said that freight going into some areas cost more. He operates out of memphis and tries to stay with 8 hours of home. He said that anything going into Texas he charges $2.50 a mile because it's hard to get more than 90 cents a mile coming back. He also added that if the company request the load to be pick up that very day that the price goes up to $3.50 a mile. He also adds 25% for a fuel surcharge. Keep in mind, this is what he told me. I have no first hand knowledge of this but it does sound reasonable.

 

[mjaafar]

that's great advice. that's what we've been trying to do.

however, we are unable to get freight from the companies we pick up from because we are not allowed to solicit them directly due to the fact that we met them through brokers. how exactly can we accomplish that?

and the $3.50 a mile seems like gold. we can't do more than $2.00 per mile.

how are these guys getting freight directly from companies? are they calling in advance?

thanks guys

 

[sandmike123]

OK Mjaafar... I am sorry but for an attorney you really didn't do your homework did you? especially one that is already in the business.

 

[Midnight Hauler]

that's great advice. that's what we've been trying to do.

however, we are unable to get freight from the companies we pick up from because we are not allowed to solicit them directly due to the fact that we met them through brokers. how exactly can we accomplish that?

and the $3.50 a mile seems like gold. we can't do more than $2.00 per mile.

how are these guys getting freight directly from companies? are they calling in advance?

thanks guys

Have you signed some sort of contract not allowing you to deal directly with companies that you have dealt with through brokers?

As for getting freight directly, it is a matter of contacting companies and finding out what rates they will pay, and if they have any loads that you can haul.

 

[mjaafar]

thanks midnight hauler.

we've been trying to get freight directly from companies, but they seem reluctant to deal with a carrier. they already outsource all of their logistics to brokers. at least, that's what i've noticed about the ones that we've shipped for.

but anyway, all of the advice i've received here has been helpful.

the problem is that the drivers we started out with wanted to run all over the country, in unpredictable patterns, and they wanted to stay out for weeks at a time. but those drivers all turned out to be unreliable deadbeats.

that's why we are now trying to obtain a more stable schedule of freight; something that would get the driver home every couple of nights; because this would help us attract the more reliable, professional drivers.

what do u guys think?

 

[Midnight Hauler]

Getting drivers home on a regular basis, while still getting decent miles, is great for driver retention.

You might not be able to find any freight without going through a broker, but I would keep trying. Even those that tell you no, I would check back with them every few months. You never know when they are going to be stuck with a load that the broker couldn't get covered, and they might be desperate. That could be your "ticket" in the door.

 

[Aleck]

Not knowing the state your inand given your desire to have your drivers home every couple of day midht I suggest using multiple brokers contracting instate hauls.When one sends you outbound you automatically ask him for a return. then shop the truck to other trans brokers multiple people working on the same task is how I find trucks. Hope it works for you

 

[Aleck]

Re-reading my previous post I should mention again depending on how large a state you live in the option to travel say a tri state area would still get the driver home every couple and expand freight options.

 

[NEWGUY]

I HAVE A QUESTION BECAUSE I'M THINKING OF STARTING AN OPERATION. ARE U MAKING ANY MONEY OR JUST NOT ENOUGH

 

[lowest]

mjaafar, there is a book out there and you can get it for 500.00.It's a list of shippers you deal with directly, no dumbass brokers involved. Get that and start making phone calls and somrtimes you may have to visit the traffic manager yourselve in person. Stay away from sumbag brokers. You can do everything they do and pocket their commision. Just make sure you have operating money when you do this. Shippers will NOT advance you money for fuel or other expenses that arise. You DO NOT want to ask them either!!!! GOOD LUCK!!!