Manual for a downturn: How to keep your operation above water.

| May 27, 2009

There’s no one tried-and-true method for an owner-operator to weather the current economic storm. There are many different problems, after all. One man’s slow freight is another’s low broker rate, which is to say nothing of the dire situation Marysville, Ohio-based Marvin McDaniel found himself in as his carrier shut down. Leased to small fleet Harrington Transport, he’d seen the writing on the wall as the primary customer, a Honda plant, dramatically scaled back production.

“I’ll probably see if I can get on with Byline Transit,” he said in February, knowing his contacts there would help get his foot in the door. “I grew up with all these guys.”
Exploring local opportunities is one of the many strategies an owner-operator can take to boost revenue in a tough economic environment. Read on to learn others.

Stay available
You can accomplish a lot simply by being willing to accept hauls, says Todd Amen, president of Colorado-based owner-operator business services firm ATBS. “A lot of it is just managing your time and being available when freight is available,” he says.

Stan Brown, based in Fontanelle, Iowa, hauls in the power-only trailer delivery and relocation operation of RexDon of Charleston, Ill. Though he was used to getting home every couple weeks, by late February he’d been out for about a month. As he anticipated drivers who take time off in the winter coming back in April “because they’ve got to pay for their new plates,” he was adjusting his schedule to stay out even longer.

You can also increase your availability by asking about your carrier’s or shippers’ problem loads. “One of those loads might well be attractive to you,” says Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association. However, be aware of every cost associated with the load. Loads of less than 250 miles often have a premium rate but take extra time to pick up and deliver, he notes.

All freight-related businesses, says freight broker Preston Greer, are caught in a volatile environment in which service is often reduced quickly as shippers fall back on movements only as needed. Being as available and versatile as possible is crucial.

Manage time by the calendar
Take vacation time or plan major maintenance during the first two weeks of the quarter (early January, April, July and October), when freight is slow. Never take time when freight is most abundant – the last two weeks of the quarter or the last week of the month. Try working around the following schedule, recommended by ATBS, to maximize your week, as well.

Monitor your partners’ health
Last year, with the bankruptcy of Bombay furniture, New Jersey owner-operator Thomas Lemon found the dedicated Bombay account for which he hauled intermodal for Container Port had disappeared.

While he hadn’t seen it coming, he’d been aware of the potential. “Bombay was high-end furniture,” he says. “High-end furniture is not something you have to have.”
For leased dedicated haulers and independents with one or two primary shippers, a shipper’s bankruptcy could mean their own. Watching the health of your business partners, whether carriers or shippers, is vital.

Late payments from usually prompt customers, reduced freight or unreturned phone calls can be red flags, says OOIDA’s Todd Spencer. “You’ve got to pay attention to those finer points.”

2008′s losses
-127,000 trucks
-2,700 trucking companies
-6.5 % capacity

Net capacity decline due to business failure in 2008, calculated by Avondale Partners.

Change carriers
After Bombay’s bankruptcy, Lemon couldn’t make two runs a day consistently with his carrier. Paid by the run, he felt like he was on the verge of falling behind on his $2,200-a-month truck payment and other expenses. Last summer, he leveraged prior experience in the local/regional dump business to lease on with Arkansas-based Oakley Transportation.

His experience hauling dump trailers made the switch somewhat simple, as his 2005 Peterbilt 379 was outfitted with the hydraulic “wet kit” necessary for Oakley’s operation. Still, he says, “I hate making a change, because it takes a long time to get into their routine.”
Indeed, that and other factors make the cost of changing carriers as high as $11,000, Amen says. For that reason, he says, “I hate recommending guys look at changing what they’re doing.”

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