Cargo Van New company needing help building fleet

cargoJoe

New Recruit
Fleet Owner
Offline
Trying to find a way to pay much less for cargo vans

Need the following:
White
Under 10 years
250+ cubic feet
Not savaged
No visible damage

Paying 1400 a month for rentals now which is killing me.

Not in business long so can't qualify for financing.
I'm looking for a place I can lease or owner financing, etc.
Any ideas?
 

terryandrene

Veteran Expediter
Safety & Compliance
US Coast Guard
Offline
CJ. Your first visit to EO and it seems that you're already in a fiscal crisis in a business that is not very forgiving to an under-capitalized business owner with little experience in expediting. This is a business in which the typical, successful fleet owner stated by driving for an owner for a few months while learning the business and leaning one's own potential to achieve success. The next step is to buy a vehicle, new or used depending on resources, and enter into a lease agreement with an established carrier. After a while when a fund is available, a decision is made to either go out on your own by obtaining your operating authority or staying with a carrier and slowly building a fleet of reliable vehicles and trusted drivers. This process takes that average person a few years to realize a business on many levels of success.

Reading your scant amount of info, it would appear that you thought that $45 a day each, to rent one or more cargo vans, was a realistic way to a successful business. I'm guessing that you have come to learn that even the best of us can not keep a truck of any size, particularly a cargo van, busy every day of the year. I speculate that the best of the van operators is being paid for the equivalent of 50% of the year. So, your $45 a day is now $90 dollars for each paid day. All of the other expenses of a start-up business quickly eats into the earnings of a business owner who has bitten off more than can be chewed. Vehicle, liability and cargo insurance; driver pay; fuel, oil and other supplies; preventive and corrective maintenance; and, business profit will quickly eat into the daily revenue.

I seriously doubt that you would have success in expediting by finding reliable vans for less that your current costs. Anything less would probably cost you more in breakdowns and frustration. Please give some serious thought to my opening comments if you want to be a successful fleet owner, not a fleet renter. To coin a phrase, "Rome was not built in a day, neither was an expedite business."
 

cargoJoe

New Recruit
Fleet Owner
Offline
ntimevan, haha... ok sorry.

Terry, appreciate the information. I'm in the fast lane due to a contract with a large company and have grown to 10 full-time routes and 20 drivers from nothing in under 2 weeks. I already have a MC# and DOT and pricey liability insurance about 10k a month. Spending 15k a month on rentals when I could buy a used van every month instead is depressing. Unfortunately, I've spent a great deal of capital getting started. I'm down to about 35k and they're asking me to pick up another 20 to 30 routes before the end of the year. I checked my credit.. it's mid 600's with nearly 300k (home, personal cars) of debt I'm juggling. I have to seize this opportunity so I'm looking for creative ways to finance vans but when I tell them I've been in business less than a month the conversation usually ends there.
 

terryandrene

Veteran Expediter
Safety & Compliance
US Coast Guard
Offline
CJ,
Since you are here on EO, I reasonably thought you were another broke person with a get rich quick scheme in the expedite community. It now looks like you are involved in an Amazon type business model and leasing your Sprinter type vans through the company. I'm sure others join me in wishing you well in that evolving growth industry. I'm sure they keep you busy with the holidays coming.
 
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ntimevan

Veteran Expediter
Owner/Operator
Offline
CJ,
Since you are here on EO, I reasonably thought you were another broke person with a get rich quick scheme in the expedite community. It now looks like you are involved in an Amazon type business model and leasing your Sprinter type vans through the company. I'm sure others join me in wishing you well in that evolving growth industry. I'm sure they keep you busy with the holidays coming.
I thought of the Amazon deal right away and now he is saying 20 to 30 more routes. Its a whole different Business world with Amazon as they are pushing you further into debt. As the Old saying goes ...RESEARCH, RESEARCH, RESEARCH..

Money not Miles
 

BigStickJr

Veteran Expediter
Retired Expediter
Offline
Ever hear of Roadway Express ?
Amazon probably won’t do this but..,,
Roadway went around the country feeding/pushing small trucking companies.
To keep the every expanding business they had to build a Roadway designed terminal.
Then once heavily leveraged, Roadway would pull the rug out from under the people and buy the assets cheap.
Again, Amazon probably wouldn’t do this, but they could change plans mid-stream and leave you hung out to dry.
I wouldn’t recommend a guy with a 600 credit score and lots of debt to risk so much.
On the flip side, you could be one of the wealthiest people on this site in a few years.
Good Luck
 

BigStickJr

Veteran Expediter
Retired Expediter
Offline
Have you talked to a reputable rental company about long term leases?
Should be much cheaper than renting.
The longer you commit, the cheaper per month .
Do you have any kind of financial guarantee from the shipper ?
And how do you find 20 drivers in 2 weeks?
 
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cargoJoe

New Recruit
Fleet Owner
Offline
BSJ, I'm looking but I'm maxed leveraged and my very new business means nothing to underwriters.
I had 2 weeks before kick off to hire 10 and I hold interviews daily.

As for guarantees, I'd think my shipper is good for it, and yes you all guessed them right.
The pay is NET7 and they even paid me the first week in advance.
The only danger I face is trying to grow too fast and not being able to meet payroll due to eating upfront rental costs which are reimbursed NET30.
I'll just deal with the lease for now.
It's still quite profitable, more so after the first month.
 
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BigStickJr

Veteran Expediter
Retired Expediter
Offline
It’s still quite profitable.....
Do you know that, or hope that ?
Do you have an accountant, not H&R Block, but an accountant that tells you you’ll be profitable figuring future tax liabilities, etc?
Are your drivers employees ?
I hope so. That’s more expensive than most people can imagine. If not, what happens if they are ruled to be employees in the future ?
Do you have an attorney?
I’m sure you don’t understand the whole contract you entered into. Probably none of us would.
Hope it works well for you.
You got bigger gonads than me.

I don’t mean to scare you, Amazon wants you to succeed so they can benefit from your Services.
That’s good.
 
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BigStickJr

Veteran Expediter
Retired Expediter
Offline
You may find a Ryder or Penske type operation that will carry the note if they’re stuck with a quantity of vans coming in off a lease. Probably the smaller the company the more interest they’ll show in you.
Or find dealers that buy large quantities of used vans.
Can you hire your own sub-contractors to run your routes ?
That way you get a driver and equipment.
 

BigStickJr

Veteran Expediter
Retired Expediter
Offline
Missed that you may be leasing the vans from/thru your shipper.,
If you can do so profitably, it may be in your best interest to continue doing so.
If lots of people get other vans, the company may not tolerate thier vans sitting. So they may favor people with their vans.
A big selling point when Fedex Ground started was you own your own route/territory. A relative owns the territory encompassing one midsized city. If he grows the business to need a second truck he has the right to expand.
I offered him $50,000 for his territory without a truck and he turned me down.
 

Grizzly

Veteran Expediter
Owner/Operator
Offline
I'd never get in bed with a company that large. Nothing to stop them from screwing you. No matter how successful you are ... you build it, they can take your business away. I'm sure they already have lots of creative ways figured out.
 

BigStickJr

Veteran Expediter
Retired Expediter
Offline
Amazon could easily do this without these contractors.
Seems like the idea is to pass the worker’s compensation and unemployment liabilities on to these smaller guys.
Anyone see any other motive ?
 

cargoJoe

New Recruit
Fleet Owner
Offline
Anyone with ideas on acquiring vans or equipment leasers please send me a direct message.
 

Grizzly

Veteran Expediter
Owner/Operator
Offline
It doesn't matter to me what their contract says, they can break it. Who's to stop them? ... nobody! If they do break it what alternatives do you have? Court? Good luck .... You can take the contract and wipe your ass with it.

I was a Snapple distributor on Long Island for a few years. My geographic territory was the North Fork .. Wading River to Calverton all the way to Orient Point. As far away as I could get from the shenanigans that went on in the boroughs and Nassau County. I had an employee driving a beverage truck handling deliveries and me supporting in a cargo van, F350. I could throw a couple of pallets in the van during summer months when extra capacity was needed. Every deli, gas station, supermarket, 7-11, Walmart, etc .. all outlets in that territory. About 100K cases a year at the time. It grew steadily each year ... ~5% ... new supermarket opened up, it was an instant increase in sales for the year.

The company was a pain in the ass to deal with. When they first started distribution in Manhattan, they had guys own territories. Distributors built them up and then Snapple took them back. Literally took their businesses away. Distributors in other boroughs and Nassau county had to deal with dumping of cheaper product through different outlets; this was when wholesale clubs started on the scene. I believe they copied a script that Coca-Cola used on distributors years ago.

When real estate prices went nuts we sold our house and the business at end end of 2004 and moved south. Gotta know when assets are overvalued, good time to sell.

If you're not a praying man, might be a good time to start ....
 
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cargoJoe

New Recruit
Fleet Owner
Offline
The original carriers Amazon contracted with are all large beyond belief. So I'd say they've treated them right. As malls close this all just benefits my companies circumstances even further. Grizzly, sorry for your loss.
 

Grizzly

Veteran Expediter
Owner/Operator
Offline
Hey cargojoe,

At a pretty early age I got out of NY with a small little pot of gold .... free and clear ...

I've never had any debt other than a modest household mortgage. Just the way we do things.

I am not the one on a trucking public internet forum trying to figure out my business plan ... because ya know, I didn't do it prior to investing my money.

Good luck to you! Not everyone has the opportunity to invest in the next great thing.
Oh, wait ...
 
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