LOL.. yeah I'm not going to repost the total estimated operating cost of a carrier. My point was adding trucks to that operating cost does not cost them very much money a point that I stand by.
I have seen different figures quoted by different sources, some of them line-haul carriers. Depending on the source, it costs somewhere between $3,000 to $7,000 to recruit a new truck into a fleet. So the cost of increasing the fleet size by 10 trucks would be $30,000 to $70,000. Adding 100 trucks (a less than 10% boost to our carrier's fleet size) would cost $300,000 to $700,000. Let's split the difference and call it a half-million dollars to boost the fleet by less than 10%.
Once those trucks are on board, the ongoing overhead mentioned above would increase by the amount needed to service (not mechanically maintain) those trucks and replace them as they turn over.
Even in a large carrier, that kind of money gets noticed in departmental budgets for which individual department heads are accountable. I do not believe that a decision to increase a fleet by even a small percentage is one that is casually made.
If anything your point about the carriers operating cost makes me think that with all that invested why would they not want more trucks flying their colours?
This is a good question to think through.
Expedite carrier fleets are 100% owner-operator trucks. Since they don't pay a dime for the truck itself and pay nothing to maintain it (mechanical maintenance), and since the cost of recruiting a new truck can be made up on the first few loads (assuming that cost is applied only to recruiting and the ongoing overhead is made up later...which in the real world is not how the accounting works), why don't carriers add new owner-operator trucks to their fleets without limit?
Clearly, they could. All they have to do is change their fleet-size goal, ramp up their recruiting efforts, flood the truck stops and publications with advertising and let things fly.
So if they can do it, why don't they do it? There must be reasons. Otherwise carriers would be seeking to double their fleet size all the time.
We have been with our carrier for 5.5 years. In that time, the fleet size has never been smaller than it is right now. If it is true that they can expand the fleet size at will, and if it is true what you say that it is in their interests to add, add, add trucks; what keeps them from doing so?
Losing business to the competition might explain a reduction in fleet size, but industry-wide it does not. Industry wide, the number of expedite trucks on the road is declining, not increasing. How can that be if carriers can add trucks at will and it is in their interests to do so? Something is keeping carriers from increasing their fleet sizes.
What is it?
...have you ever asked them how many is too many? I wonder if they would give you the truth?
Yes I have, and I believe they are giving me the truth.
Some years ago, I was on a kick about fleet size management and especially aware of a time in our carrier's history when the fleet size was at a record high; and soon after, hundreds of expediters died on the vine for lack of freight. Listening to stories from veterans who survived, I got a sense of what it was like to struggle through those days. It had me deeply concerned about our future. I wanted to know more so proper expectations could be formed and good contingency plans could be made.
Would it be possible that our carrier would over-expand again? Might Diane and I one day find ourselves devastated by a carrier that abandoned the owner-operator/carrier partnership that we then enjoyed for a carrier-serving fleet over-expansion? Might we one day be a team that dies on the vine because our carrier added too many trucks and cared little for us?
It was with more than a passing interest that I sought answers to these questions. These are not hypothetical questions. This is real-world stuff that can make the difference in our success or failure as expediters.
Every now and then, Diane and I have the chance to visit with some of the higher-ups at our carrier. This is nothing special. When we are in the area for training or a truck inspection, we simply contact them to see if they are available to visit. They may say yes to me more often than others because of my being the editor of Expedite NOW, I don't know. But they usually say yes. I like to think they say yes because we are reliable contractors, exceptional customer-service providers and top producers; and they want to know what is on our minds (which they always ask when we meet).
I asked several of them more than once about fleet size, over-expansion and a contractor's risk of dying on the vine. I discovered something that gave me great confidence in our carrier and peace about the over-expansion risk being minimized at our carrier.
It had been several years since the fleet size record was set and the contractor devastation followed. The higher-ups I was talking to about those days were lower-rung people then. They then worked as agents, dispatchers, contractor-coordinators, recruiters, etc. In other words, they were on the front lines during this period.
When they spoke to me about those days, they did not speak like they speak about most other things. They spoke with emotion and discomfort. Those were not fun days for them either, and they remember with the core of their being how difficult those days were.
Staff turnover at our carrier is low. Most of the people in top leadership positions have worked their way up from the bottom. The people now running the place were on the front lines when hundreds of contractors died on the vine because the fleet became too large. They remember well the financial and emotional pain suffered by all parties. Fleet over-expansion is not something they want to repeat. It is not a mistake they are likely to make again, if they can help it. And being in the positions they now are, they can help it.
I believe it to be true because I saw it in their eyes and heard it in their voices as they said so; not once but several times as I asked them the same questions at different times, and not one person but several, as I visited with several people about this when I was on the kick.
As I said, this gives me great confidence in our carrier. Freight may slow because of a slowing economy but it will not slow because the fleet is recklessly over-expanded by our carrier.
This I believe. But what about proof? The proof is in the pudding and I don't have to go far to find it. Again, we have been with our carrier 5.5 years and the fleet size is smaller now than at any other time in those years.
Several people in the Open Forum complain that freight is slow for them and they see their carrier is continuing to add trucks. What they say is absolutely true. Freight is slow and trucks continue to be added.
But the word "added" should be carefully used. "Replaced" would be the better word. The fleets are not growing in size, they are being maintained at a particular size. New trucks are "added" to maintain that size as existing trucks leave for a variety of reasons.
A logical question is, if freight is slow, why do carriers not shrink the fleet size further so contractors can make a living? To answer that question, it is helpful to look at it from the carrier's point of view.
Carriers have a customer base to cover. Carriers that cover freight nationwide need to have enough trucks available to respond to customer needs. In terms of maintaining an ongoing customer relationship, it is a very bad thing to have a shipper call and not have a truck available to respond.
Reducing the fleet size by say 25% in these slow times would unquestionably benefit a contractor who wished to stay in service, work hard and operate in proven freight lanes. But the same 25% cut would leave gaping holes in the carrier's coverage map and significantly reduce the carrier's ability to serve its customers.
Carriers don't exist to serve contractors. They exist to serve customers. When carriers fail to serve their customers, the customers go to carriers that can.
Seasonal considerations also enter in. This is a slow time of year compared to other times. While a carrier may have the theoretical ability to add trucks at will, it does not have the ability to add them instantly. It takes time to increase fleet size by significant amounts. Spring is coming, which means a busier time in the freight cycle (we all hope). A carrier cannot wait until then to begin its recruiting effort. It must begin now.
I do not envy the task certain people have at our carrier to balance projected customer demand with "right-sized" fleet numbers. These cannot be easy estimates to make and the consequences of being wrong on either side are severe.
Are they telling me the truth about fleet size? I believe they are. Are they sincere in their efforts and rightly concerned about the contractor half of the equation? Again, I believe they are. Is it an easy task to balance fleet size against projected customer demand? No.
There are some very good people doing this difficult and important work at our carrier. They know what it is like when things go wrong. They know the pain of over-expanding the fleet. With time, their industry knowledge, formal education and job skills have grown. I believe in these people and trust them.
Ok I'm really confused here.. are you saying you hit your number with the load including the DH miles?
Yes, that's exactly what I am saying. The load paid our price or better to run all miles. With deadhead and loaded miles combined, this was a 3,000 mile run. With the total pay for the run divided by 3,000, we were paid our price on every mile.
If it works for you then great.. there you have it but that has little relevence to the subject of having more options to freight for someone trying to get the most profit out of their rig.
I see it as relevant because these are reefer, lift-gate, HAZMAT, White Glove, and other types of "special" loads that we are equipped and credentialed to haul. Because we are so equipped and credentialed, loads often "reach out" to us that do not reach out to other trucks. Having more options absolutely helps get the most profit out of a rig.
The flip side to that is the cost of equipping the rig to create the options in the first place. The ongoing costs of training, equipment certification and maintaining the added equipment must also be considered. By combining the equipment with our lifestyle and business skills, we have done it and done it successfully; as have many others in ways that work for them.
Granted you've drank the carrier koolaide but when you you realize that the sugar ain't really sugar you'll either get mad and sell out are you'll stay the course.
Some of my comments above will be cast by some as those of a Kool-Aid drinker or being a carrier cheerleader. Readers who think this through will see such criticisms to be empty ... having no meaning or valid content.
Think about it. What does it mean to drink your carrier's Kool-Aid or be a carrier cheerleader? If it is to suggest a blind, cult-like loyalty to a carrier that may prove harmful in the future, saying that would better communicate one's meaning. If it is supposed to mean anything else, it is meaningless.
I happen to believe that our carrier choice is the best possible choice we could make in this industry; not for everyone, but absolutely for us. If we thought a better choice could be made, we would make it. We did not look at our carrier's recruiting literature and wander in with star-struck eyes. We looked at numerous carriers and industry entry methods. We researched our way into our carrier and style of expediting with objectively-obtained and rigorously-tested facts.
Based on those facts and our subsequent 5.5 years of success, it can be said that we researched well. We are part of the success equation. Our carrier of choice is another. When putting together one's personal formula for success, why would you do anything other than choose a carrier you can sincerely cheer about?
One more thing, when I'm not driving OTR you know killing my chances of being a successful expediter I sell Farm & Ranch land here in TX. What I'm getting at is that right now might be the last chance to sell that truck and actually buy a little place in the country. I've got a smokin deal on a little 14 acre place with a creek, nice house and a barn that would be great for your RV..
What area of Texas do you work in? We may be interested, not in selling the truck but in buying the land. With real estate as slow as it is these days, ridiculously low offers are not so ridiculous any more. Real estate has nothing to do with expediting. Send details by private message please.
Be forewarned that if you take us on as a customer, there will be a lot of work to do for which you may not be paid a cent. We won't drink your Kool-Aid either. Anything you tell us will have to be justified by the numbers and we will want to know far more about your market than the average buyer.
