A Tale of Two Stories: Fleet Ownership
You've probably seen the tips to business success many times on the pages of Expediters Online and the various trucking publications. Let's assume that you've taken those tips to heart and you've done all, or at least most of the right things.
In your case, you drove for a truck owner for a time to get your feet wet in expedited trucking, you bought your own truck and a short time later, your spouse became available to co-drive, so your team was born.
Your revenue seems to be inline with the top producers with your carrier; you've run hard, you've run smart and you've done well in this business. The only problem is, you're thinking, "what's next? We're in the top percentile of earners with this company, but we seem to have hit our revenue ceiling. Where do we go from here?"
Often, the grass appears to be greener with a different carrier and many expedited owner-operators make the jump to another carrier in hopes of finding more miles, a better rate or, ideally, both.
We'll assume that you're content with your current company and want to remain there. Increasingly, expedited trucking owner-operators have chosen expansion of their business and have taken their enterprise to the next level: fleet ownership. But, when you add trucks you also add responsibilities, administrative requirements and financial stress.
Presented here are brief capsules of two fleet owners' operations. A complete guide to starting and managing an expedite fleet to success would fill at least one book, if not volumes, so this piece will touch on just a few of the key aspects.
For example, what's the profit picture in your one-truck operation look like? Some experts say your profit should be approximately 5% to 6% of revenues before you even consider growing the business. That's too low, says Dave Corfman, an expedited trucking veteran who has experienced the business as both an owner-operator and
non-driving fleet owner.
He says, "If that's all the profit that was in it, I wouldn't waste my time. I can turn more money in the stock market or in real estate. My benchmark would be 15% to 20%. At that point, your business can support another truck."
Corfman relates his history: "In the mid-80's, I became involved in expedited trucking as a sideline venture. This was back in the early Roberts Express days and I owned everything from pickups with a little box and a small sleeper to pickups pulling flatbeds, kind of like the oil-equipment hauling 'hotshot' vehicles. I also had some box trucks - Hyundai's and GMC's. I had a pretty good deal with this guy from whom I leased the trucks with unlimited mileage."
"I leased the trucks to a variety of companies - Suzy's Express, Bobtail Express, Nation's Express, Roberts Express, Tri-State and others."
He adds, "During this time, I began to acquire more trucks as a fleet owner while I still worked in the vending business. When someone would quit or a truck would be empty, I would take a load."
Dave says that being a fleet owner had it's own set of challenges, particularly in dealing with the drivers and their troubles.
"It was difficult to find people who wouldn't tear up the truck. I was always getting calls like, 'I'm stuck in the mud' or 'I backed the truck into a dock and busted the top of the truck.' The drivers would load the truck wrong, not secure the load and bust the back door. I can't tell you how many times that happened!"
"I had both singles and teams in my trucks. I would find the drivers through word-of-mouth and some of the expedited carriers would find drivers for me."
At the peak of his fleet ownership days, Corfman had converted to an all straight truck fleet of 15 units. It was a profitable venture, but over the ensuing years, he scaled back his operation to today's present fleet size of 3 expedite trucks.
Points to ponder
Corfman says that finding qualified drivers is a continuing challenge: "You get a large portion of that accomplished through the driver screening process of the carrier you're leased with. If the driver is coming to you from another fleet owner, call that owner for his appraisal."
Corfman says that a fleet owner needs to have a sizeable cash reserve for repair and maintenance, especially after the truck's warranty expires: "I think you should have at least $10,000 (roughly) behind each truck you own. If you can't afford to repair the truck in the event of a breakdown (and you've go to remember the downtime involved) you'll soon be out of business."
Another route to ownership
Tim Hopkins says that he had a mentor to rely upon when he took the big jump into fleet ownership: "My brother Pat has owned a fleet of expedite trucks for the last 14 years and I watched him operate his business. He makes a good living and it seemed like something I could do. I thought about it for maybe six months before my brother helped me get my first truck (a 2001 Freightliner Century) in January 2005.
What makes Hopkins' story unique is that he was not in expedited trucking before buying that first truck - his career had been in the printing business.
"In fact, I drove a box truck for a printing company back in the pre-CDL days and I don't have a CDL now. When I bought my first truck, it sat for close to two months until I went through the FedEx Custom Critical orientation as an owner and found a team to drive it."
He says that his business plan called for him to have two trucks working by the end of 2005, but Hopkins is a little ahead of schedule.
He says, "I bought my second truck (a 2000 Century) from my brother in May of last year and by the end of the Expedite Expo in August, I had a new Sterling Command Cruiser (from Freightliner of Knoxville).
"So far, the most difficult part of owning a fleet has been in driver retention. I've taken some chances with some drivers. I don't regret it because they were great people but I had an idea going in that it probably wouldn't work. I gave them a chance, anyways."
"I've got two wonderful husband/wife teams in my trucks right now and the third truck is waiting on a team. One couple (former police officers) is new to driving and the other team came out of tractor-trailers. I found one team through an ad I took in Expedite NOW magazine and I met the other couple at an Expediter Workshop in Columbus. Both teams are hard workers, they stay out for six weeks or more."
He tells us that truck maintenance is performed when the teams can make it to the company's "headquarters" in central Ohio. This gives the team the opportunity to take another truck if one is available, or to take time off. Otherwise, he has warranty or repair work performed on the road, hopefully with minimal downtime.
Hopkins says that his relationship with his drivers is very casual with few rules, the primary rule being, "take care of the truck as if it were your own. "If a driver has to leave us," he states, "we'll try to part as friends and maybe we'll work together again. Pat and I both have a policy (in our respective companies), that we're available to the drivers for advice or help on a 24/7 basis, but we don't call them to check on them."
Hopkins says that his drivers have the typical concerns of all professional drivers - fuel prices, dispatchers, learning the good freight areas, border crossings, etc.
"From watching Pat, I knew that fleet ownership would not be easy. When things are running good, it provides a good income and it gives you a lot of free time, but things can happen in a split second. But, being so new to this, when I can meet the challenges, it gives me a sense of satisfaction. There have been some bumpy times in this business, but I have no regrets."