Exploring The Possibility..

snakeo2

New Recruit
Researching
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Hello,

First and foremost I want to thank each and every one for taking the time to read and provide feedback to my question(s). Up until two weeks ago I knew nothing about "Expediting", since then I've been reading and researching as much as possible to better educate myself. An acquaintance approached me about two weeks ago with a business proposition involving "expedite delivery". I listened to his sale pitch and it sounded good on paper. He has his own company and has been in the expedite delivery business for about 3 years. From the information he provided, he has his broker license and own authority and has contracts with several companies. The sales pitch is basically this: "Buy a new or used Van (preferably a Sprinter) since they provide the most cargo area and payload capacity, and he would find a driver and procure the loads for my unit". The profit would be split as follows:

25% His commision
35% goes to the driver
40% goes to me. Out of the 40%, I would be responsible for gas, maintenance cost, car payment, insurance. Immediately, it started to look like a bad deal as it relates to me. I asked what is the average gross amount a unit is making and he said on average a unit is expected to make 10 runs every two weeks, which can sometimes come out to be 4k-8k/month. While on paper the numbers look good, once you start crunching the number, the math doesnt quite add up.

As I researched the industry more, I learned that if you own your unit, you can lease it to big companies like Panther and they will provide the driver, dispatch service, freight and thus eliminating the middle man and the 25% commission. This is what I'm really interested in. Can someone provide more information as to how this partnership works? How does Panther or any other company make their company in this type of arrangement? I assume they bid the delivery at say $1.40/mile and then pay $1.00 mile to the unit owner? Even if this is the case, it's more profitable partnership than the one I was proposed. Another question is the insurance..I know it can be really high. In a partnership like the one I described above where my unit is leased to Panther, would my unit be in that scenario be driven under Panther's authority and therefore my unit would be covered under their liability insurance? If anyone can provide information regarding this type of partnership, I would really appreciated. So far I'm just exploring and learning as much as possible to determine if it makes business sense or not. I have the capital to buy a Promaster or Ford Transit T-, which are more affordable than the Sprinter but the business has to be profitable for all parties involved, otherwise it's not worth the effort. Thanks in advance.
 
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terryandrene

Veteran Expediter
Safety & Compliance
US Coast Guard
Offline
My opinion. If your acquaintance has a good thing going, he could present his business plan to a bank or other source of finance. Your acquaintance could also lease a vehicle using his line of credit and save you the grief of sleepless nights wondering where your van is and who is driving it. . If you are inclined to think about this arrangement, ask to audit his records, check his customers and interview his other drivers. His $6000 - $8000 per month is not an average, it's an ass-pull number that is merely a potential under good circumstances, Also closely review the written contract he will have with you. How will you feel if his driver takes a load to Las Vegas, falls in love with a lass from elsewhere and spends a week or two parked at the No Tell Motel. I think you'd be better off putting your money under your mattress; it'll still be there when you return

Expediting can be a good business opportunity but, buying a van for an acquaintance and paying for insurance and maintenance is risky with little hope of a good return of investment.
 

snakeo2

New Recruit
Researching
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terryandrene

Appreciate the honest opinion. It does sound too good to be true and we all know how that goes. I was presented as a "set it and forget it" potential extra income revenue stream. One where I wouldnt have to do anything as he would essentially manage the entire operation. However, the numbers dont add up. I'm however interested in the 60/40 partnership between unit owner and driver when leased on to a carrier. I'm hoping some of you who have been doing this business for some time can provide some information to add to my research.
 

terryandrene

Veteran Expediter
Safety & Compliance
US Coast Guard
Offline
Ok Snakeo2 That would be a much better option. I've met many successful non-driving owners who ran their own business. I've also seen some fail because they did not fully understand the expedite business model. As a novice, you should think twice about investing in the very saturated cargo van market. An investment there would be akin to establishing a McDonalds franchise next door to a struggling McDonalds franchise and hiring a manager who didn't know how to properly cook a good burger. If you would really like to wet your whistle in the business, take a vacation and visit the Expedite Expo in July at Fort Wayne, IN. See details here: Expedite Expo 2019 | America's Largest Expedited Trucking Show At the Expo, you will meet many folks like you that started by learning about this biz at previous Expos, a trucking show that has been instrumental, since 2001, in providing entry level education to many thriving expediters and their drivers. Whatever line of work with which you are now engaged, you didn't get there without some form of education. Learn to Earn is essential.
 
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