Today's Fleet Owners

[ATeam]

Diane and I recently visited over breakfast with four other expediters and the subject of fleet owners came up. The six of us knew of several fleet owners but also knew most of them to be either shrinking their fleets or getting out of the business altogether. We knew of no fleet owners who had recently entered the business, except for Expediter Services that entered in a big way with over 100 trucks running with various carriers.

I later remembered one person who intends to become a fleet owner and is taking action to do so. I was recently told of another person who is beginning his fleet owner venture with one truck that he recently purchased.

What is your sense about today's fleet owner? Is the traditional small fleet (less than 10 trucks) still a viable business model in expedited freight transport? Or are we seeing the demise of small fleet owners as big fleet owners come on the scene?

Of the fleet owners you know, how many of them are relatively new to the business, how many have been at it a while and are still fighting the good fight, and how many are out or on their way out?

To the extent that you see a trend(s), what do you think is driving it?

 

[OntarioVanMan]

Easy...SPRINTERS...and like vans...and shipper education..why put 3 or 4 skids on a straight when if the shipper can just open the ramp door to load us...AND that leads to the economy and the cheaper mode of shipping...sprinters!! We have to be taking a percentage of loads and that percentage will shave off the straight market....

 

[garyatk]

Thank you for posting this thread Phil. As a person who recently purchased my first tractor, I can tell you that I am very interested in hearing the responses of experienced fleet owners. Especially owners of tractors.

We made our decision based on what we saw, and our own situation. Our ability to finance our start up, and the ability of the carrier we leased on with to keep our truck moving.

Our business plan is to have 5 tractors in about 3 years. To do this with little or no debt, and to provide the best tools possible for our contractor/partners to succeed with.

We know that only time will tell if this was a wise choice, but for us, this business makes a lot of sense.

Thanks again Phil!

 

[greg334]

What is your sense about today's fleet owner?

The same as it was in the past 4 years. Nothing has really changed, freight is freight and we have seen more of a mix of LTL/TL work into expediting than we have anything else.

Is the traditional small fleet (less than 10 trucks) still a viable business model in expedited freight transport?

Yep more so than the big fleet owners. There has to be a bit of flexibility involved with a diversified fleet. Just because there is an idea that different carriers means diversified, doesn't spell success.

Or are we seeing the demise of small fleet owners as big fleet owners come on the scene?

They've always been on the 'scene', a few carriers cater to them but overall there isn't much to do about them.

Of the fleet owners you know,

how many of them are relatively new to the business; 3

how many have been at it a while and are still fighting the good fight; 7 no fighting just business smart.

and how many are out or on their way out? 2, not because of any external forces, they both are retiring.

To the extent that you see a trend(s), what do you think is driving it?

The uncertainty economy.

I should have put this at the top, many believe that this is an eclusive market and the money made here can only be made here. I handled a medium fleet last year where we moved the trucks out of expediting because it was a losing money maker and traded those trucks for tractors. The fleet revenue increased by 60% and the people are not sitting still now.

OVM if I was going to start another fleet, I wouldn't even consider a van.

 

[BigBusBob]

I think you're going to see more sprinters, and some vans. The way fuel prices and regulations are going with semi's, I think that semi tractor work in expediting may shrink some as shippers (as was said earlier) get more savvy in their shipping methods. Straight trucks will probably always have a use in expedited freight- but aerodynamics and good trip planning will continue to play a role- but as fuel rises, it will be even more important.

Large fleets are taking over? To a certain extent, in semi work, with regular freight. With expediting I think you'll see less small mom and pop operations with their own authority as PII and FCC and a few other primary carriers in expediting get more aggressive in their bidding on loads.

Will you see less people coming into the industry with 3 trucks or more, yes. Why?
The regulations are scaring them off, the fuel prices are making it difficult as well.
CSA scores are also going to end up playing a role as well- and might even effect insurance rates to a certain extent.

Those who are in the industry now will probably stay, and may become fleet owners if they're not already- but I see them shrinking their current fleets and/or changing to different trucks in some form or another- with more emphasis put on fuel savings and efficiency as a whole.

Todays fleet owners are getting like the shippers- educated. Not because they want to, but because in order to stay in business and be profitable they have to get themselves educated. Or they are done. Fuel, CSA scores, Insurance, regulations, new laws, tolls, not in that order perhaps, but all those are playing a role - as they have in the past, but now it's making business plans change, it's making load decisions change, and it's making truck choices change as well. Todays fleet owners can't just buy a truck and lease it onto a carrier with a hired driver and look the other way after they make the insurance and truck payments. it's gotten to be much more advanced now. Sure, there's probably some that still run that way- but the changing face of trucking is "get educated or get out".

You can drive for a living, but if you want to make money while doing it- and I mean really make a profit- then you better pay close attention to details.

That's my 2 cents... for now. Lets see what that stirs up.

 

[teamjdw]

I can see surface freight going more to van's and sprinters,but not tval freight.Br unit's don't seem to be working out.Not to sure husband & wife teams would be willing to give up the comfort of a straight truck sleeper for a van sleeper.

 

[OntarioVanMan]

What is your sense about today's fleet owner?

The same as it was in the past 4 years. Nothing has really changed, freight is freight and we have seen more of a mix of LTL/TL work into expediting than we have anything else.

Is the traditional small fleet (less than 10 trucks) still a viable business model in expedited freight transport?

Yep more so than the big fleet owners. There has to be a bit of flexibility involved with a diversified fleet. Just because there is an idea that different carriers means diversified, doesn't spell success.

Or are we seeing the demise of small fleet owners as big fleet owners come on the scene?

They've always been on the 'scene', a few carriers cater to them but overall there isn't much to do about them.

Of the fleet owners you know,

how many of them are relatively new to the business; 3

how many have been at it a while and are still fighting the good fight; 7 no fighting just business smart.

and how many are out or on their way out? 2, not because of any external forces, they both are retiring.

To the extent that you see a trend(s), what do you think is driving it?

The uncertainty economy.

I should have put this at the top, many believe that this is an eclusive market and the money made here can only be made here. I handled a medium fleet last year where we moved the trucks out of expediting because it was a losing money maker and traded those trucks for tractors. The fleet revenue increased by 60% and the people are not sitting still now.

OVM if I was going to start another fleet, I wouldn't even consider a van.[/QUOTE]

Neither would I....Greg...

I was speaking from a solo operator view point...I think CV fleet owners are a dying breed...operating costs too high...profit margins too low.....

 

[skyraider]

T/K, a friend of mine talked to a T/k driver yesterday at the J in Knoxville. The T/K driver was in a new 2500series Nissan van. T/K is starting to buy the new NV 2500s and the driver said they are doing just fine in his OP. Well that is all I know for now, maybe some of u have seen these vans out here.

 

[greg334]

Yesterday I saw a bunch of Ford Transits being driven to the upfitters shop. I don't know about the Nissan yet, I have one scheduled for this week to use but the one I drove I wasn't impressed with.

 

[moose]

not to highjack the OP, but since the sprinters loads came up here...
i recently became aware of carriers out of Expedite ,moving sprinters expedite freight in an efficient way across many regional areas of the country. it will take more then just 'stealing st. trucks loads' to keep those sprinters moving at a good rates . from what i seeing, traditional expedite carriers will have a real hard time competing for the rates or services.
just an outside observation .
recent changes into airfreight security also 'forced' many carriers into sprinters expedite freight.

BTW, how many 'short/regional' loads offers do you sprinters gets dose days ? how many did you used to get 2 or 4 years ago?
- ever wondered hoe is hauling this freight now ?

by the end of the day, freight and load availability, are a supply & demand needs, not only marketing.

 

[greg334]

recent changes into airfreight security also 'forced' many carriers into sprinters expedite freight.

I would think it is just the opposite, using vans may be a risk on the tsa radar due to the nature of their ability to hide or just disappear.

 

[davekc]

I don't really see and increase with sprinters other than replacing some of the standard vans. More like airport courier work than what I would list as "expedite loads". Primarily because of the short distances. I do see straights taking more van freight than the other way around. Just look at the border freight.

As far as less fleet owners, that probably is true. Higher financing and operating capital requirements have kept many out compared to several years ago. Kind of a high dollar hobby.
Couple that with running for dollar carriers and buying the wrong equipment did many in.
By wrong equipment, I mean many fell for the cheap financing of Hinos only to find out their investment was worth half after a year in. Put that with many drivers who wouldn't drive them, and that investment went south in a hurry. Many were warned, but some just have to find out for themselves.

 

[jelliott]

I personally think the opportunities for fleet owners are still good. I think a well capitalized, steady and structured growth plan can be very successful. I think 5 to 7 units is probably the sweet spot, with 10 on the high side. A fleet owner can run a business this size without needing a staff or full time office facility. The minute you add this overhead the cost of operation per unit on a fixed basis really jumps. At the 5 to 7 level an owner can be very involved in every aspect and really on top of the business. This will allow him or her to focus on quality equipment, drivers and carrier relations. This focus will drive dollars to their drivers and thus in turn their bottom line.

 

[moose]

. The minute you add this overhead the cost of operation per unit on a fixed basis really jumps. .

O'h i see, so that's why 'some large expedite carriers' are in bed with large fleet owners...
you know, better PPM/FSC/dispatch favoritism,Ext.
but don't tell anyone just yet...it's the industry most kept secret. and i always thought it was simply to screw over the little guy,
guess i was right all along...
they might be winning the business of large fleets, but us micro fleets are doing VERY well elsewhere, and will never try to compete for the carriers freight nor entry level drivers.

 

[moose]

recent changes into airfreight security also 'forced' many carriers into sprinters expedite freight.

I would think it is just the opposite, using vans may be a risk on the tsa radar due to the nature of their ability to hide or just disappear.

don't know what was your personal experience, but from what i witness, those vans are carefully monitors, and a nice piece of technology.
a carrier can no longer hold TSA certificate for freight going on passengers aircraft without participating in the full TSA program.
if you ask me, the problem is not transportation providers 'stealing' Expedite freight , but
THE LACK OF EXPEDITE CARRIERS from thinking out of the box and getting certified with the TSA to haul this outstanding large new market .
ever seeing an Electronic seal on the back of a sprinter van ?

 

[jelliott]

O'h i see, so that's why 'some large expedite carriers' are in bed with large fleet owners...
you know, better PPM/FSC/dispatch favoritism,Ext.
but don't tell anyone just yet...it's the industry most kept secret. and i always thought it was simply to screw over the little guy,
guess i was right all along...
they might be winning the business of large fleets, but us micro fleets are doing VERY well elsewhere, and will never try to compete for the carriers freight nor entry level drivers.

Moose,

I am not sure what every larger carrier does. I do know that some have worked out "different" arrangements to attract or retain large fleets. On one hand it could be argued that dealing with a large fleet is more efficient for the carrier than dealing with an equivalent number of individual owner operators. It could be also argued that a large fleet is a product and has the right to negotiate their own deal based on supply and demand. While both are valid arguments, I personally am not in favor of either one. I think fair is fair and if your carrier structures it pay structure and compensation package well and combines it with a good sales/operations team than those who want to sign on will. I suppose it would not be as bad if a carrier had a pre-set program where once a fleet reached so many units compensation changed. Again, I think a lot of these type issues would not be issues if the carrier put the program in writing upfront and it was available to all.

Just my 2 cents.

 

[moose]

By wrong equipment, I mean many fell for the cheap financing of Hinos only to find out their investment was worth half after a year in. Put that with many drivers who wouldn't drive them, and that investment went south in a hurry. Many were warned, but some just have to find out for themselves.

Why on earth would a truck owner be even slightly concern about the vehicle resale value ?

 

[highway star]

Why on earth would a truck owner be even slightly concern about the vehicle resale value ?

You're kidding, right?

 

[moose]

Moose,

I am not sure what every larger carrier does. I do know that some have worked out "different" arrangements to attract or retain large fleets. On one hand it could be argued that dealing with a large fleet is more efficient for the carrier than dealing with an equivalent number of individual owner operators. It could be also argued that a large fleet is a product and has the right to negotiate their own deal based on supply and demand. While both are valid arguments, I personally am not in favor of either one. I think fair is fair and if your carrier structures it pay structure and compensation package well and combines it with a good sales/operations team than those who want to sign on will. I suppose it would not be as bad if a carrier had a pre-set program where once a fleet reached so many units compensation changed. Again, I think a lot of these type issues would not be issues if the carrier put the program in writing upfront and it was available to all.

Just my 2 cents.

the question is not WHY they do it, but what are the result of such action ?

AND is if lawful !

if the fleets are giving a copy of the full sign contract to the drivers to keep in the truck, it MIGHT hold grounds.
but if those fleets are keeping some of that cheese to themselves, then the carriers are involved in wrongdoing !
in MY own opinion, there are Millions of $'s industry wide annually, in wages ,being wrongly kept by fleet owners .
maybe EO is the wrong place to bring it up.
maybe i need to STFU...

 

[jelliott]

Well like many parts of business that goes back to integrity. It is also the responsiblity of the driver for the fleet owner to make sure they have a GOOD working understanding of both the carriers pay system and the fleet owners pay system. They also should have in writing with their fleet owner how they are going to be paid.