Making the jump: Cost, profit potential, biz basics of adding trucks on offer at Expedite Expo

user-gravatar

The entrepreneurial elements of the trucking business are alive and well in the expediting segment of the industry, as evidenced in an informal panel/Q & A session with three leased fleet owners at Expedite Expo.

The show floor at the Lexington Convention Center opened at 11 a.m. today at the only trade show in the nation devoted specifically to the expedited segment of trucking. Morning workshops and educational sessions are followed by a variety of networking opportunities.The show floor at the Lexington Convention Center opened at 11 a.m. today at the only trade show in the nation devoted specifically to the expedited segment of trucking. Morning workshops and educational sessions are followed by a variety of networking opportunities.

The early 8 a.m. session on the first official day of the show saw the panelists fielding questions from a packed house of mostly aspiring multi-truck owners. The majority of them, as evidenced by a show of hands in response to a question from panelist John Kelsh, noted they were at least not new to the business. Most of them were driving today, many as one-unit owner-ops, whether in straight large trucks, tractor-trailers or smaller cargo vans.

Driving history, panelists agreed by and large, was a good thing for their future potential.

Key to the success of Load One-leased Tom and Tina Evans, with seven power units (two tractors and five straight Class 8s) in their TNT Expedited fleet, has been their past, with more than a decade of experience as an owner-operator team with a variety of companies, Tina said. “For us,” that long experience as leased owner-ops “made it a lot easier” to make the transition to managing driver contracts, financing multiple pieces of equipment and keeping everybody happy. “You can understand the driver’s point of view – you’ve been there.”

Expediter of the Year finalist and fleet owner Eric Escobar (left) with Load One-leased Tom and Tina Evans.Expediter of the Year finalist and fleet owner Eric Escobar (left) with Load One-leased Tom and Tina Evans.

Among two other panelists, Fudpucker Expedited owner-operator Eric Escobar brought a similar viewpoint to the business. He still runs team as an owner-op in a straight Class 8 expediter himself today, in addition to owning a fleet of six sprinter-type cargo vans leased to Premium Transportation Logistics (PTL).

“Your drivers are going to make you or break you,” Escobar said. Building that group of drivers is perhaps the “key topic” in any discussion of fleet ownership, he added.

Escobar’s recent-years history in expediting follows years as a company driver with PAM Transport. He spoke to the value of mentorship in his move toward investment in cargo van expediting, which had been a boon to his initial start-up. “Look for a fleet owner who can be your mentor,” he said, someone who can give you the lay of the land from their perspective and be a sounding board for questions. “You don’t want to take this on without any knowledge.”

For Tom and Tina Evans, that mentoring influence came in part from Load One CEO John Elliott, known around the industry for his close relationships with Load One contractors.

Before Elliott came along with the idea that the Evans would be a pair capable of great earning potential should they choose to invest in more equipment, they’d had a different run at expansion. Long prior to leasing their one-truck operation to Load One, they were on the verge of signing paperwork on a couple of used trucks. They’d “drawn up plans and were ready to sign on the line” for a couple trucks when they found out their former fleet – Con-way Now – “was getting out of the expedite business” altogether, Tina told.

But after Elliott approached them fairly early in their time at Load One, the pair put the decision to make the expansion off for several years.

When they made the jump, they benefited from a relationship with their local bank, which was in the process of opening a commercial credit arm. Financing on a use trucks — the Evans typically keep any loan term below three years — led to the first purchase of an additional unit in September the year they began to expand. By the following March, they’d found and purchased two more expediters, bringing the fleet size to three. Within a year they were all the way to five and are now at seven with two recent tractor purchases, all operating within the Load One fleet.

“There are different thoughts on that,” Tom said, noting that splitting the fleet among different carriers was an option — and one some owners consider as an effective way of managing business risk. For the Evans, though, likewise for the remainder of the panelists, getting comfortable with a solid partner before making the jump into further truck investment has been the safe strategy.

Speaking of that investment – for John Kelsh, owner of four-straight-truck Cyclone Logistics, leased with FedEx Custom Critical, new-truck investment can be as high as $250,000 in his temperature-controlled operation, given the amount of customization required in the upfit.

Unlike other panelists, Kelsh comes from a transport-logistics-consulting background, not that of a driver/owner-operator. He was quick to play devil’s advocate to the Evans’ advice to a prospective owner on initial investment in used or new equipment. While the Evans detailed their experience with used vehicles, “be prepared to deal with the maintenance on any older truck,” Kelsh said. “With a new vehicle, you get a bit of a grace period.”

Just look out for the emissions failures, Tina said.

Cyclone Logistics small fleet owner John KelshCyclone Logistics small fleet owner John Kelsh

Kelsh emphasized, too, that the bigger investment any owner put in a truck, the greater value of a driver team being in the unit to enhance utilization and meet customers’ need-it-now expectations. “With a new temperature-controlled straight truck, you might have a tough time getting it to work” from a dollars and cents perspective with adequate business profit “with a solo driver.”

Less-expensive equipment could be a different story. Owner-operator Escobar has two solo drivers among his cargo van haulers, four teams. The Evans and their units, mostly bought new, are by and large driven by solo drivers, with an exception. Teams, however, all acknowledged, offer greater nearly-always-available earning potential for both driver and the fleet, given the nature of most expediting.

“Expediting is getting the freight delivered directly,” Escobar noted, whether a run that can be completed in a single day or a 2,300-miler to California. He hauled into the show from such a haul out west, then a load from Torrance, Calif., to Dallas, a further deadhead that put him and his driving partner in Lexington in the wee hours this morning.

As a solo driver, none of that could have happened that way. “Our teams do really well with PTL,” he says of his cargo van haulers.

Kelsh wrapped things up, noting that, as a fleet owner “you’re constantly putting all of these issues,” whether having to with your drivers, your equipment, your leasing carrier or your own balance sheet — “all together” to find the right balance.

The Business Manual for Owner-Operators
Overdrive editors and ATBS present the industry’s best manual for prospective and committed owner-operators. You’ll find exceptional depth on many issues in the 2021 edition of Partners in Business.
Download
Partners in Business Issue Cover