A different kind of business model

Phil Madsen | March 01, 2012

I learned today (and over the last few days) about a business model in the expediting industry that is, well, let’s say, unique. Learned by reading about and discussing it in an online forum.

Diane and I woke up this morning in our Florida vacation house where we have been since early January. We are dispatched to pick up a load on Monday that will get us out of Florida and back on the road.

Expediting is a tiny sector of the greater trucking industry. It is what Diane and I do, along with the owners of about 15,000 other trucks that haul expedited freight. Many of those are cargo vans and Sprinter vans that, because of their small size and payload, are not required to register with the U.S. DOT.

I did not know about this unique van business model before because vans never interested Diane and me. We drive a straight truck. For lack of a better term, I’ll call this van thing a no-authority, multiple-carrier operation. It is a model in which certain carriers (no major brands) and van owners exploit the fact that vans do not have to register with the DOT. The vans run with multiple carriers. These carriers have little overhead. Some work out of their homes.

The model does not seem to be widespread and I can understand why. Most of these carriers get their freight off the bid boards, which are often cheap to begin with. It gets even cheaper for the van owner when the multiple carriers he or she has signed on with bid against each other on the same load (thereby running down the price) for the privilege of putting that load on that van. The winning carrier will make some money by taking his or her slice before the freight goes on the van, but if there is any money left over for the van, it isn’t much.

Why would a van operator enter into such an arrangement? Those who do say that being signed on with multiple carriers increases their chances of getting loads and makes it easier for them to keep moving. Vanners who have tried this model and left say that it not the case. There are others who continue in the model but none shared any financial success stories. They only claim that they are busier than other vans.

There is nothing illegal about this model but it differs quite a bit from how straight trucks and big trucks operate because those trucks must register with the DOT and are subject to additional regulations. All of the big expedite carriers prohibit their vans from running with multiple carriers and you will often see DOT numbers on branded vans even though they are not required. This is something that goes on more with unmarked vans and under the radar.

If you are interested, you can read more about this in this thread in the ExpeditersOnline.com Open Forum.