The Two-Truck Transition

Max Kvidera | June 03, 2011

The extra profit of a small fleet comes with the high price of investment, planning and stress.

With freight demand increasing and rates improving, it could be an opportune time to add another truck to your operation. For a one-truck operator, though, that’s a huge step, no matter how buoyant the economy. Adding equipment requires detailed planning, substantial financial resources, more time devoted to management and, consequently, more headaches.

Finding and keeping dependable drivers represents a big hurdle to expansion for Jerry Kissinger of Independent Operator. Behind him is the “Freedom”-themed trailer pulled by his 1991 Mack Superliner show truck.

 An owner-operator with solid relationships with a broker, shipper or consignee who has consistent loads may be able to tap into improving freight to keep an added truck moving. But “you have to remember that could dry up in a matter of months,” says David Wolff, a consultant with financial services provider ATBS. “You have to have a backup plan. You don’t want to put all your eggs in one basket.”

Managing a second truck requires daily attention, no matter how experienced and efficient its driver. It is your responsibility to keep both trucks busy and running legally and to arrange for maintenance and repairs. Even in the smoothest of situations, these added responsibilities cut into your time on the road and at home.

In most cases, another driver isn’t going to take care of your truck or drive it as efficiently as you do. You will have to monitor the truck’s condition to make sure it will make you money. A breakdown of one truck could affect the other truck because arranging for repairs will require your attention.

It often takes two years to break even when adding a second truck, Wolff says. The odds of making money improve when you add third and fourth trucks.

Before making any move, calculate expenses, such as truck payments, licensing, taxes, fees, driver pay, insurance, fuel costs and maintenance and repairs, recommends Tim Brady, a small fleet consultant. Some operators have found it necessary to finance a second truck’s startup expenses with credit cards or small loans until the extra income is flowing steadily, he says. Added debt is always risky for an owner-operator, so it’s preferable to have enough money saved to sustain yourself during startup or later slow periods.

There are two common ways to structure a multi-truck operation. You can get your own operating authority and run a second truck under it. Or you can lease your trucks to a carrier, operating under the carrier’s authority.

Under your own authority, you have to find loads for all your trucks, and you’ll face additional administrative and regulatory responsibilities. “You might as well consider yourself a carrier because you’re going to have all the same reporting, safety and CSA (Compliance, Safety, Accountability) problems that the major carriers have,” Wolff says.

Leasing trucks to a bigger carrier will allow you to hand off some of the paperwork and regulatory tasks. Plus, you’ll enjoy the security of available load choices, though the earning potential isn’t as great.

Under either option, you’ll have to hire a driver. That means added obligations for state and federal taxes, worker’s compensation insurance and drug testing, among others. Are you ready to motivate that person? Do you have time and know-how to handle the paperwork? Or will you need a family member or hired help to take care of it?

You’ll also have to stay current with the driver’s logs and safety record. Violations by your drivers will reflect on your CSA score as a carrier.

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