Junk Yard Truck Parts

Rebuilding ELD exempt 1999 9900i International with junk yard and after market truck parts!

When I modify my truck, I do so by locating and purchasing as many Junk Yard Truck Parts for the modification as I can. The easiest way to get used truck parts is to find a quality junk yard with OTR trucks. I have been known to spend hours with my tool bag at my favorite junk yard collecting Truck Parts. I enjoy the time invested in saving money while collecting parts to improve my trucks performance and profitability.

When truck owners see my truck and ask about my modifications they are shocked and in disbelief when I tell them that the majority of the parts I used are Junk Yard Truck Parts. Take for example the picture of my 1999 International 9900i shown above. As you can see I added 2 fuel tanks on the drivers side. The first is a 30 gallon fuel tank for my APU mounted directly in front of my first drive axle. The other is a 130 gallon fuel tank for truck fuel mounted below the drivers door. On the passenger side of the truck I added another 130 gallon fuel tank for the truck below the passengers door. With my original fuel tanks, that is a total of 560 gallons of truck fuel and 30 gallons of APU fuel! I purchased both 130 gallon fuel tanks, their carriers, their straps and all mounting hardware for a total of $300.00. If I had purchased all those parts new it would have cost an estimated $4,000.00. By using Junk Yard Truck Parts I saved $3,700.00. The best part is I improved my trucks performance and increased my profits by more than .30 cents per gallon of fuel!

After I decided to add the fuel tanks, I had to decided where and how to mount my battery box. You guessed it, I found my solution using Junk Yard Truck Parts. I simply walked around the junk yard looking at different trucks and focused my attention on the older trucks since they had different battery box styles and mounts. And I saw my solution on an old International cab over. A battery box mounted right behind the cab on the frame rails. Because of the other parts I was purchasing that day (fuel tanks, hangers, straps, etc.) it’s cost, free!

Watch for my upcoming post “How Does IFTA Work?” to see why I added 3 fuel tanks to my truck and exactly how I did increase my profits by more than .30 cents per gallon of fuel. I must read for any truck owner.

If you would like to learn more about modifying your truck using after market truck parts, lowering your maintenance cost and saving money, read my post After Market Truck Parts.

After Market Truck Parts

Once you have successfully financed your truck it won’t be long until you want to improve your profits. Using after market truck parts to modify your truck can lower your maintenance cost and save big money every year. I have had amazing success with some products while others left me disappointed. My best after market truck parts successes include oil by-pass filters, heated fuel filters, and tire inflation systems. My worst experiences were early on in my truck owning career because I failed to use common sense. Don’t make the same mistakes I did. Before you buy after market truck parts there are a few rules to remember.

1. Ensure you really want or need any product before you purchase it! If your goal with after market truck parts is to increase your profits at the end of the year then you need to verify the ROI (return on investment). The only way to do this is to verify that your total cost paid for a product is lower than the estimated savings in 1 year. If it is a larger purchase and your ROI plan is for 3 years, then multiply your estimated annual savings by 3 and compare it to your total cost of the product.

2. Don’t automatically believe what the salesman is telling you. Ask for references that he has already sold the product to. Talk to other truck owners who are using, or have used, after market truck parts because they will provide you with their uncensored product information. Truck Owners that are not referred to you by the salesman are your most reliable resource for the performance of after market truck parts.

3. Look for any competitors that might offer a similar product. If you find one then repeat rule #2 until you decide on which product you are going to purchase.

4. Keep looking to improve your trucks performance by using after market truck parts. In doing so it helps you stay competitive with your competition while maintaining your profit margin.

After market truck parts aren’t the only way to lower maintenance cost and improve your profit margin. In my next post, Junk Yard Truck Parts, see how I dramatically reduced my fuel cost by over .30 per gallon!

How IFTA Works

IFTA rates available from the International Fuel Tax Association, Inc.

One of the most frequently asked questions I get is “So how does IFTA work anyway?” Once truck owners understand IFTA they all change their fuel purchasing ways. In doing so they lower their fuel cost and improve their profits.

In the day of the original “bingo card” registration, which no longer exists, truck owners had to buy just enough fuel to drive in each state. Since then the International Fuel Tax Agreement (IFTA) was created. IFTA completely eliminated the need to buy fuel in every state. In fact, doing so all but guarantees you are paying far more for your fuel than necessary.

IFTA fuel taxes are collected in all states and jurisdictions that have a state or jurisdiction fuel tax. Oregon does not have fuel taxes but they do issue IFTA accounts. All carriers who operate an apportioned IRP are required to have an IFTA account and a list of states or jurisdictions they operate in. At the end of each quarter you will file your quarterly IFTA fuel taxes. Here is where the value of understanding IFTA turns into lower fuel cost. You owe each state it’s fuel tax based on how many gallons you used while driving in their state. Not how much you bought! What that means is when you buy fuel at the lowest cost BEFORE taxes you will almost always be due a refund at the end of the quarter. Here is how that works using 2nd quarter 2015 IFTA fuel tax rates.

Illinois Pump Price $3.399

Missouri Pump Price $3.259

Most truck owners will buy Missouri because it costs less at the pump.

2015 2nd Qt. IFTA Fuel Taxes

Illinois .4270

Missouri .1700

Your truck averages 5mpg

You drive 50 miles in Illinois and 50 miles in Missouri

You owe each state a IFTA fuel tax on 10 gallons of fuel

Buying fuel in Missouri

You buy 20 gallons of fuel in Missouri for $3.259 a gallon

Actual fuel cost without tax is $3.089

You have an IFTA tax credit of $1.70 from Missouri

You owe Illinois an IFTA tax of $4.27

You owe a IFTA tax Payment of $2.57

Instead, Buy fuel in Illinois

You buy 20 gallons of fuel in Illinois for $3.399 a gallon

Actual fuel cost without tax is $2.972

You have an IFTA tax credit of $4.27 from Illinois

You owe Missouri an IFTA tax of $1.70

You have a tax credit and Refund of $2.57

In this example the answer for “How Does IFTA Work” means purchasing fuel in Illinois is a 3 month investment that lowers your fuel cost by almost $.12 a gallon! If your truck averages 5 mpg, you are increasing your profits by $.025 per mile. If you drive 175,000 miles in a year, that is a total savings of $4,375.00! Yes, understanding IFTA can save you thousands of dollars every year for each and every truck you own! Learn more ways to save money and increase profits in my After Market Truck Parts post.

How to get an FMCSA Operating Authority

Letter of Authority

Deciding to get your own FMCSA operating authority and DOT number is a big step. Most use agents to help them get started. Unfortunately they cost a lot of money. I’m going to share with you all the different regulating agencies and how to contact them. By doing so, I’m giving you the ability to get set up with all of them so you can avoid paying an agent more than necessary. What better way to start your business than by saving money and learning compliancy requirements at the same time! Here are the basic Federal requirements (there are more and I’ll discuss them soon).

1. FMCSA Operating Authority “MC” “FF” or “MX” number

2. Department of Transportation (DOT) number

3. Commercial Insurance

4. *Unified Carrier Registration (UCR)

5. *International Fuel Tax Agreement (IFTA)

6. *International Registration Plan (IRP)

7. BOC-3

* These 3 are frequently done at the same time at your state or jurisdiction office. In most cases you can apply, pay and receive all of them in person and on the same day. It is wise to verify in advance what types of payments your state or jurisdiction will accept as they are all different.

FMCSA Operating Authority “MC” number

The FMCSA website states…

“In general, companies that do the following are required to have interstate Operating Authority (MC number) in addition to a DOT number:

Operate as for-hire carriers (for a fee or other compensation)”

Since the one time fee is only $300.00, I recommend every “For-Hire” carrier to not take any chances or run the risk of operating without having their MC (Motor Carrier) number. It is a fairly simple process and can be done through the SaferSys website (an FMCSA website).

Department of Transportation (DOT) number

I have never seen a truck or met a truck owner that wasn’t required to have a USDOT number. The FMCSA’s website states…

“You are required to obtain a USDOT number if you have a vehicle that:

Is used in transporting material found by the Secretary of Transportation to be hazardous and transported in a quantity requiring placarding (whether interstate or intrastate).

OR

Has a gross vehicle weight rating or gross combination weight rating, or gross vehicle weight or gross combination weight, of 4,536 kg (10,001 pounds) or more, whichever is greater”

and goes on to state…

“AND is involved in Interstate commerce:

Trade, traffic, or transportation in the United States—

Between a place in a State and a place outside of such State (including a place outside of the United States);

Between two places in a State through another State or a place outside of the United States; or

Between two places in a State as part of trade, traffic, or transportation originating or terminating outside the State or the United States.

You are required by FMCSA to obtain USDOT Number and comply with the Federal Regulations.”

The FMCSA concludes with…

“Apart from federal regulations, some states require commercial motor vehicle registrants to obtain a USDOT Number. These states include:

Alabama, Alaska, Arizona, Colorado, Connecticut, Florida, Georgia, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Michigan, Minnesota, Missouri, Montana, New Jersey, New York, Nebraska, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Washington, West Virginia, Wisconsin, Wyoming”

Obtaining a USDOT number is free. The FMCSA made it convenient to apply for a USDOT number at the same time you apply for a MC number by using the SaferSys website. You will be required to complete and submit the MCS -150 form which defines your business to the USDOT before they will issue you a USDOT number.

Commercial Insurance

Once you have applied for your FMCSA operating authority you will need commercial insurance before your MC number is ready to be used legally. Your insurance company is required to notify the FMCSA once you have purchased your insurance. This process of the insurance company notifying the FMCSA of your policy and the FMCSA updating your MC number with the insurance does take time. Your insurance agent and/or company will be able to provide you with the coverage requirements from the FMCSA.

Unified Carrier Registration (UCR)

The Unified Carrier Registration (UCR) is a registration based on the number of vehicles (trucks) you operate. You can complete your UCR either through the UCR website or many times through your state you operate from. UCR is paid annually.

International Fuel Tax Agreement (IFTA)

IFTA accounts are free and depending on your state or jurisdiction you may or may not pay for the IFTA stickers that are required for each truck in your fleet. I normally start my IFTA account and receive my stickers on the same day I pay for and receive my IRP plates (which I will discuss next). Renewal each year is typically done either on a state or jurisdiction website or by mail. Filing your IFTA taxes is a quarterly requirement.

International Registration Plan (IRP)

The International Registration Plan (IRP) is the registration and license plates for all your vehicles. It is an apportioned registration. Meaning you will pay a portion of each states registration fee based on the percentage of miles you operate in each state or jurisdiction. When you apply for your first IRP you will be required to use “estimated miles.” This does not mean you get to estimate your miles. The estimated miles are provided to you by your state or jurisdiction. In most cases it will be your responsibility to put the correct estimated miles for each state or jurisdiction in the correct field. If it is not correct the IRP official (in most cases) will not fix the mistakes but rather give it back to you and have you fix them. That means going back to the end of the line. I failed to get the correct estimated mileage one time and it took me 3 hours to get back to the IRP official so I could pay my bill and complete my registration.

BOC-3

The BOC-3 is one of the most overlooked requirements by the FMCSA. The reason is simple. There is not a “check and balance” or verification process before being allowed to operate using your new authority. The purpose of the BOC-3 is to provide the FMCSA with a list of agents from the states or jurisdictions you operate in that will receive legal documents. The FMCSA describes it’s purpose this way…

“A process agent is a representative upon whom court papers may be served in any proceeding brought against a motor carrier, broker, or freight forwarder. Every motor carrier (of property or passengers) shall make a designation for each State in which it is authorized to operate and for each State traversed during such operations.”

Now I don’t normally recommend using an agent for much of anything. However, in this case it is best. Otherwise you will need to locate representatives for every state or jurisdiction and continually verify that the representative is still in business. Personally, I have enough to do without calling 50+ representatives every week or 2 to verify they are still in business. Through an agent, a BOC-3 will cost you a 1 time fee of normally no more than $50.00. A list of agents is provided by the FMCSA on their website.

Deciding to get your own FMCSA operating authority and DOT number is a big step. Most use agents to help them get started. Unfortunately they cost a lot of money. I’m going to share with you all the different regulating agencies and how to contact them. By doing so, I’m giving you the ability to get set up with all of them so you can avoid paying an agent more than necessary. What better way to start your business than by saving money and learning compliancy requirements at the same time! Here are the basic Federal requirements (there are more and I’ll discuss them soon).

1. FMCSA Operating Authority “MC” “FF” or “MX” number

2. Department of Transportation (DOT) number

3. Commercial Insurance

4. *Unified Carrier Registration (UCR)

5. *International Fuel Tax Agreement (IFTA)

6. *International Registration Plan (IRP)

7. BOC-3

* These 3 are frequently done at the same time at your state or jurisdiction office. In most cases you can apply, pay and receive all of them in person and on the same day. It is wise to verify in advance what types of payments your state or jurisdiction will accept as they are all different.

FMCSA Operating Authority “MC” number

The FMCSA website states…

“In general, companies that do the following are required to have interstate Operating Authority (MC number) in addition to a DOT number:

Operate as for-hire carriers (for a fee or other compensation)”

Since the one time fee is only $300.00, I recommend every “For-Hire” carrier to not take any chances or run the risk of operating without having their MC (Motor Carrier) number. It is a fairly simple process and can be done through the SaferSys website (an FMCSA website).

Department of Transportation (DOT) number

I have never seen a truck or met a truck owner that wasn’t required to have a USDOT number. The FMCSA’s website states…

“You are required to obtain a USDOT number if you have a vehicle that:

Is used in transporting material found by the Secretary of Transportation to be hazardous and transported in a quantity requiring placarding (whether interstate or intrastate).

OR

Has a gross vehicle weight rating or gross combination weight rating, or gross vehicle weight or gross combination weight, of 4,536 kg (10,001 pounds) or more, whichever is greater”

and goes on to state…

“AND is involved in Interstate commerce:

Trade, traffic, or transportation in the United States—

Between a place in a State and a place outside of such State (including a place outside of the United States);

Between two places in a State through another State or a place outside of the United States; or

Between two places in a State as part of trade, traffic, or transportation originating or terminating outside the State or the United States.

You are required by FMCSA to obtain USDOT Number and comply with the Federal Regulations.”

The FMCSA concludes with…

“Apart from federal regulations, some states require commercial motor vehicle registrants to obtain a USDOT Number. These states include:

Alabama, Alaska, Arizona, Colorado, Connecticut, Florida, Georgia, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Michigan, Minnesota, Missouri, Montana, New Jersey, New York, Nebraska, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Washington, West Virginia, Wisconsin, Wyoming”

Obtaining a USDOT number is free. The FMCSA made it convenient to apply for a USDOT number at the same time you apply for a MC number by using the SaferSys website. You will be required to complete and submit the MCS -150 form which defines your business to the USDOT before they will issue you a USDOT number.

Commercial Insurance

Once you have applied for your FMCSA operating authority you will need commercial insurance before your MC number is ready to be used legally. Your insurance company is required to notify the FMCSA once you have purchased your insurance. This process of the insurance company notifying the FMCSA of your policy and the FMCSA updating your MC number with the insurance does take time. Your insurance agent and/or company will be able to provide you with the coverage requirements from the FMCSA.

Unified Carrier Registration (UCR)

The Unified Carrier Registration (UCR) is a registration based on the number of vehicles (trucks) you operate. You can complete your UCR either through the UCR website or many times through your state you operate from. UCR is paid annually.

International Fuel Tax Agreement (IFTA)

IFTA accounts are free and depending on your state or jurisdiction you may or may not pay for the IFTA stickers that are required for each truck in your fleet. I normally start my IFTA account and receive my stickers on the same day I pay for and receive my IRP plates (which I will discuss next). Renewal each year is typically done either on a state or jurisdiction website or by mail. Filing your IFTA taxes is a quarterly requirement.

International Registration Plan (IRP)

The International Registration Plan (IRP) is the registration and license plates for all your vehicles. It is an apportioned registration. Meaning you will pay a portion of each states registration fee based on the percentage of miles you operate in each state or jurisdiction. When you apply for your first IRP you will be required to use “estimated miles.” This does not mean you get to estimate your miles. The estimated miles are provided to you by your state or jurisdiction. In most cases it will be your responsibility to put the correct estimated miles for each state or jurisdiction in the correct field. If it is not correct the IRP official (in most cases) will not fix the mistakes but rather give it back to you and have you fix them. That means going back to the end of the line. I failed to get the correct estimated mileage one time and it took me 3 hours to get back to the IRP official so I could pay my bill and complete my registration.

BOC-3

The BOC-3 is one of the most overlooked requirements by the FMCSA. The reason is simple. There is not a “check and balance” or verification process before being allowed to operate using your new authority. The purpose of the BOC-3 is to provide the FMCSA with a list of agents from the states or jurisdictions you operate in that will receive legal documents. The FMCSA describes it’s purpose this way…

“A process agent is a representative upon whom court papers may be served in any proceeding brought against a motor carrier, broker, or freight forwarder. Every motor carrier (of property or passengers) shall make a designation for each State in which it is authorized to operate and for each State traversed during such operations.”

Now I don’t normally recommend using an agent for much of anything. However, in this case it is best. Otherwise you will need to locate representatives for every state or jurisdiction and continually verify that the representative is still in business. Personally, I have enough to do without calling 50+ representatives every week or 2 to verify they are still in business. Through an agent, a BOC-3 will cost you a 1 time fee of normally no more than $50.00. A list of agents is provided by the FMCSA on their website.

Aside from the cost of your insurance and IRP, the entire cost to you should not exceed around $400.00. Many agents charge thousands of dollars. Since I’m always looking to save money and improve my profits, it only makes sense for me to spend a little time educating myself, complete the applications or filings, and saving money at the same time. If you want to learn more check out the category Business of Trucking.

Aside from the cost of your insurance and IRP, the entire cost to you should not exceed around $400.00. Many agents charge thousands of dollars. Since I’m always looking to save money and improve my profits, it only makes sense for me to spend a little time educating myself, complete the applications or filings, and saving money at the same time. If you want to learn more check out the category Business of Trucking.

Avoid the FMCSA ELD Mandate

Avoid an ELD at all cost! Straight from the FMCSA.

Like most everyone else who owns a truck, I have no desire to use an FMCSA mandated ELD. I was surprised to discover that not everyone will be required to use an ELD. There are a few exceptions to the ELD mandate. For over the road truck owners, there is only 1 possible exemption to avoid the FMCSA ELD mandate.

I began my research by reading the FMCSA’s 4910-EX-P. More commonly known as the FMCSA’s “Final Rule” for ELD’s. As a truck owner, what caught my attention more than any other was the following paragraph.

FMCSA also includes an exception for to those drivers operating CMVs older than model year 2000, as identified by the vehicle identification number (VIN) of the CMV. Comments have indicated and FMCSA’s research has confirmed that pre-2000 model year trucks may not allow the ELD to connect easily to the engine. While the Agency has confirmed that there are ways of equipping older vehicles to use an ELD consistent with today’s rule technical specifications, these are not always cost beneficial or practical. Further, the Agency lacks confidence that the technology will be available to address this entire segment of the market (pre-2000 model years) at a reasonable cost.

“CMV” is an abbreviation for “Commercial Motor Vehicle.” The FMCSA realized the challenges for pre-2000 model year trucks to meet the ELD mandate. While that in itself didn’t surprise me, what did is that the FMCSA is not requiring the costly retrofitting of ELD’s to pre-2000 model year trucks.

For all of us who already operate a pre-2000 model year truck, it will be in our best interests to keep our trucks on the road for as long as we possibly can. When the time comes, I plan to have my 1999 9900i International completely reconditioned. Everything including removing, stripping and painting the frame rails, replacing all wiring, gutting, customizing and detailing the interior, rebuild the entire drive line, a fresh paint job and anything else that needs done. While that all sounds expensive, it is far more affordable than a new truck that sells for around $150,000.00. Plus you can still depreciate rebuilding your truck over a 3 year period just as if you would by purchasing a truck.

I plan to keep my truck on the road for many years to come. In doing so, I will avoid the FMCSA ELD mandate until the FMCSA changes the rules again or until I buy a newer truck. Read more on how I keep my pre-2000 truck on the road in my other posts After Market Truck Parts and Junk Yard Truck Parts.

Meeting Potential New Customers

I received an email from a reader who asked some great questions for meeting potential new customers. He wrote…

“I have had my authority now for about 6 months and have been solely using brokers.  As you have already stated, the profit margins are very low and I feel the need to acquire my own direct customers in order to be more profitable and build up my company.  I am currently re-working my business model and after that I will make out my business plan as per your articles. The way you have described the processes greatly reduce my apprehensions.  Couple questions I do have are: What are some tips or the best ways to go about doing research on a prospective company, especially concerning what they are used to paying to ship out? Also, who determines shipping origination? For example, does a shipper control which carriers to use or would a receiver determine which carriers it prefers its shippers to use? I would need to know that to determine who to contact.”

First is determining the rates. As I mentioned in my Carrier Rate Agreement or Carrier Contract post, it is important to secure long term customers. I never concern myself with how much my customers are paying another carrier. All I focus on is ensuring I am successfully providing my customers with a rate that is profitable for both of us to succeed. This has enabled me to secure long term and successful business relationships.  However, in order to negotiate I had to at least have an idea what the rates were in the lanes I planned to be working within. What has worked best for me is using a combination of 2 different resources.

The first is brokers. As a rule, when I’m trying to learn rates for a new lane, I call 5 brokers and inquire about available loads they have posted. It is also important to note that different days of the week will sometimes have different rates. This is most common in the fresh food industries such as meat, dairy and produce. The best rates for produce tend to be on Monday and Tuesday with delivery before the upcoming weekend. Likewise, the best rates for meat and dairy are normally found on Thursdays and Fridays for Monday delivery. So plan to do your rate research more than once and change up what days you check it on. Locating free load boards is easy but I will share the ones I rely on the most when researching rates.

Pick A Truck Load – Dry van, Flat bed, Reefer and misc.

LandStar – Dry van, Flat bed, Oversize, LTL, and misc.

Car Hauler Dispatch – Cars, Trucks, Boats and Camper/Cargo trailers.

Once you have the rate quotes from the brokers, simply add 20% to their rates they are quoting you and that is the rate they are quoting to their customer. Then take the average of all the quotes you were able to acquire and you now have a solid rate for that lane. IMPORTANT – You’re not done yet! In order to be profitable in the trucking industry you need to know what the rate will be going back to your customer. Except for specialty loads that only transport product in one direction, we all need loads that get us as close to our customer as possible when we return. So do your rate research with brokers for returning loads as well. In most cases you will rely on those brokers for loads. So take their rates at face value (what they quote is what you will get). When doing the return research, be mindful of how many loads are available. For example, there are very few dry van loads out of south Florida. So you need to plan accordingly if you are taking dry van loads to south Florida.

The other way I learn the rates is directly from the potential customer. I will always do my research using the brokers before meeting potential new customers. Then when meeting potential customers I compare the 2 rates. Sometimes the potential customer will surprise you and the rate they quote you will be higher than what your research revealed. The reason is because they know direct carriers are far more reliable than a broker and are willing to pay additional for it. It doesn’t happen often, but it has happened to me on 2 different occasions.

Most certainly customers do have preferred carriers they use. I have made it a personal requirement of mine to be that preferred carrier for all my customers. The rewards for doing so include more loads, faster pay, better rates (over time), the best lanes and above all success for both my customers and myself. Read my post Trucking Customers – Vital for Truck Owners to see my best tips to becoming your customers preferred carrier.

Sometimes when meeting potential new customers they will tell you that their customer coordinates the shipping. This is common with volume buyers such as Walmart, Costco, Tyson, Goodyear, GE and more than I could ever list. In these cases, the potential customer will most likely not provide you with the receivers contact information. Don’t be offended. They are typically bound by the contract not to give out the information. Simply give your contact information and politely let them know that if they ever do need a carrier you’d be happy to provide them a quote. There are instances the potential customer will provide you with the receivers contact information. When that happens make sure to contact the receiver because chances are high that since you were given the information the shipper isn’t getting enough trucks to ship the product on.

Before meeting potential new customers, read my post Make a Business Plan. It details many lessons I learned when I was meeting potential new customers.

Thank you for the email. I hope to hear from you again soon. Above all, Good luck!

Trucking Customers – Vital for Truck Owners

What is trucking? Getting your customers (trucking customers that is) product to market so they can succeed and in turn make you successful. Welcome the responsibility your customer has entrusted you with… their success! That responsibility should never be taken lightly.  If you do it could jeopardize your own business. More importantly, realize the wonderful opportunity that responsibility offers you and the unlimited potential for your business’s success.  In any business customer satisfaction is always paramount. In trucking that means reliability and reliability begins with dedication to your customers.

1. Always be early for pickup and delivery. Never plan to be just in time (unless you are doing “just in time” service for your customer). That provides you with at least the possibility to overcome a flat tire, dirty fuel filter, DOT inspection, etc. and still pickup or deliver on time.

2. Set yourself apart and be the one carrier your customer can count on during the holidays. Holidays are the hardest time for customers to find reliable dependable carriers. If you separate yourself above your competition for the holidays your customer is more likely to give you their business during the slow season. They will want to keep you because you are there when they need you the most.

Be thankful for their business and never miss an opportunity to show your thankfulness like…

1. Be kind, wear a smile and always say “please” and “thank you.” No one likes working with someone with an attitude or a chip on their shoulder. Just like Grandma used to say “you reap what you sow.”

2. Give gift certificates. Not only to the person responsible for giving you their business but also the employees loading your trailer. It is a very inexpensive way to show the forklift operators you appreciate them and what they do. In return they will be more inclined to take additional care when loading your trailer.

3. Be understanding. Just like trucking has unexpected chaos our customers businesses do too. If you are not willing to be understanding, patient and cooperative do you think your customer will be understanding, patient and cooperative the next time your pickup or delivery is late due to a break down?

Treat all your customers as valued business partners. Always remember that a customer is who you send your invoice to and expect payment from. That includes brokers. Brokers are not the enemy and sometimes come in very handy when the need arises.

Locating potential new customers is not as hard as you think. With only 1 truck to offer my customers I have successfully negotiated contracts with and hauled for a variety of companies. To name just a few of the companies I have enjoyed successful business relationship with – Perdue Farms, Odom’s Tennessee Pride Sausage, Performance Food Group, Letica Corp., JL Gonzalez, Redline, Omni Meats, Saputo Cheese, Atlas Cold Storage, Gulf Stream Coach and many more. The key to all the successful contracts and business relationships I have enjoyed began with locating them. I’ll share with you how I found my customers in an upcoming post “Find Customers Who Need a Truck.”

How to be Profitable Owning a Truck

Standing in front of my 2007 Peterbilt.

David sent me a message that is all to common for new truck owners. His concern is how to be profitable owning a truck.

“How did you manage to make a profit? It seems as though I find loads but they are so underpaid that it feels I’m only making money to cover the fuel. I would appreciate any input you have!”

In order to answer David’s concern of how to be profitable owning a truck, “How did you manage to make a profit,” I am going to make a few assumptions.

1. There is a truck payment

2. There are no or few direct customers

3. “Agents” or “Professionals” are being used for some or all compliance

For me, initially profit did not come easy. In fact, in the very beginning it didn’t come at all. In my first week of owning my first truck I suffered a major set back. My truck blew out the front rear end. To make matters worse, the mechanic discovered that the previous owner had custom machined gears made and put them in both rear ends. So I had a decision to make. Give up or fight back. I have a “Never Fail” mentality so giving up wasn’t and isn’t part of my vocabulary. So I took the harder path of fighting my way back from financial disaster. My key decisions that helped me overcome my setback and succeed were as follows.

1. Do the hardest and most demanding loads because they pay the best

2. Run the maximum amount of miles I possibly could

3. Improve my equipment to lower my operating costs

4. Stay as tight fisted with my money as possible

While all those sound easy they can be very difficult to implement and stay committed to. I’ll take them one at a time.

Do the hardest and most demanding loads because they pay the best. For me this meant going back to LTL. To me LTL is some of the most aggravating freight there is especially with a refer. Fighting traffic to get all the pickups and deliveries completed on time, the unsavory atmosphere with most refrigerated freight shippers and receivers, the never ending “Wait” for the product and baby sitting the refer just to name a few. I point this out because I knew how much I hated it but it is what I knew had to be done to meet my self inflicted demand of “Never Fail.” So reached out to a broker I knew who specialized in refer LTL and I verified with my direct produce customer that he could buy produce and load me out of California. You know what, it worked too! To learn how to locate direct customers and find out more about customers in general read my posts “Trucking Customers – Vital for truck owners,” “Meeting Potential New Customers” and “Finding Customers that Need Trucks.”

Run the maximum amount of miles I possibly could. Along with recognizing the need to return to LTL freight I knew I had to maximizes my cash flow and profits. That meant keeping the left door closed and running as many miles as I possibly could. I knew what lane that meant I had to run. I gave up my modest Illinois to Florida and began LTL pickups in Indiana, Illinois and Iowa and delivering to cities throughout southern California. Then I chased produce up and down the coast with pickups and delivered it to Chicago. Yep, it worked as well!

Improve my equipment to lower my operating costs. This one takes the longest. My finances dictated what I could do and when I could do it. Bottom line is “Preventative” maintenance is vital. When you know something is going to need repairing, fix it on your terms not the truck or trailers terms! In doing so it won’t cost you as much money, down time or lost revenue. So even if you need to borrow or use plastic, always do preventative maintenance! When you can, make modifications to your equipment to lower your operating costs. If you look closely at the pictures there are a lot more changes than just the paint job to my 1999 International. I have a great post detailing many of the successful modifications and another post on how to save money on parts.

Stay as tight fisted with my money as possible. I have been accused of being a “tight wad” more times than I can count. I proudly ware it as a badge of honor! That may seem to contradict what I said about preventative maintenance when in actuality it goes hand in hand. Paying for something that cost a lot on your own terms is being frugal to the max. You are ensuring that even though it does cost a lot today, it is a small percent of the cost if you waited for it to be a disaster. Even though I wasn’t aware of my rear end issue, if I had, I could have gotten it fixed on my terms and not caused my financial crisis. So I learned two lessons from my first weeks owning a truck. First and most important, always have a financial back up plan and do better preventative maintenance.

As to my 3 assumptions to answer David’s question.

There is a truck payment. If you discover that your truck payment is simply unrealistic you do have an option. Purchase a truck that will be within your budget and sell your current truck. While that may sound harsh, it is the best and most financially sound option available to you. You can learn more about my truck choices and what I recommend in my posts “Choosing the Right Truck” and “Avoid the FMCSA ELD Mandate.”

There are no or few direct customers. Read the section above “Do the hardest and most demanding loads because they pay the best.”

Agents” or “Professionals” are being used for some or all compliance. In most all cases I have very little use for “Agents” or “Professionals” for most day to day compliance issues and in many other cases. I do my own IRP, IFTA, UCR, Canadian eManifest (yes, I go to Canada), MCS-150, Weight and Distance, Highway Use Tax, New York Highway Use Tax, Oregon Mileage Tax and everything I have failed to remember while typing. The reasons are simple. Once you do these for yourself you will become efficient (fast) at them, have a better understanding of your business and save in most cases thousands of dollars. All are a plus for you as a truck owner. If you’d like to learn more on how easy and low cost it is to get your own authority read my post “How to get an FMCSA Operating Authority.”

Last, choose an easy to use software to help you manage your money. I designed TruckBytes and continue to use it today with my own trucking company.

I hope my experiences and lessons have helped you know How to be Profitable Owning a Truck. If you have questions or would like for me to expand on anything I discussed in this post please let me know! I’m happy to accommodate.

Lease Purchase – What You Need to Know

“Lease Purchase” programs sound very appealing to a driver who wants to own his truck. Most carriers that provide “Lease Purchase” programs sweeten the offer even more by making guarantees that seem to mirror those of a true “Independent Owner Operator” (those who own their truck and operate with the own FMCSA issued operating authority). Guarantees like no forced dispatch, all the time off you want, all the miles you need, drive only the lanes that you want and more. Sounds good right? The reality is that entering into a “Lease Purchase” contract is the worst option to purchase a truck.

First lets look at the company “Road Runner,” AKA “Skinny Chicken,” who offered a Lease Purchase. Road Runner enjoyed the services of approximately 1,100 Lease Purchase drivers at the time of their demise. The real tragedy isn’t that Road Runner went bankrupt. The real tragedy was the devastating impact to all the drivers who entered into a Lease Purchase contract with Road Runner. To understand the financial severity of the loss the Lease Purchase drivers suffered you need to understand how the Lease Purchase programs work.

These 4 general requirements found in most all Lease Purchase contracts are the main reasons those who sign Lease Purchase contracts fail. They are:

1. Little or no deposit required

2. Escrow terms

3. Payment amount and schedule

4. Legally obligated to only operate with the leasing companies FMCSA issued operating authority

We’ll take these on one at a time.

1. Little or no deposit required means it will take you longer to fulfill your Lease Purchase financial obligation and actually payoff and own the truck.

2. Escrow terms are included so the carrier can collect additional payments separate and above the payment amount from the Lease Purchase driver. In theory this Escrow account is for licensing, truck repairs, tires, insurance and a variety of other expenses listed by the leasing company.

3. Payment amount and schedule is the most straight forward section you will find in a Lease Purchase contract. It is simply how much your payments are and when they are due. Your payment amount can be a percentage or a set dollar amount and the schedule can be anything from weekly to bi-weekly or monthly.

4. Legally obligated to only operate with the leasing companies FMCSA issued operating authority gives the one guarantee that everyone should be extremely concerned about. It legally binds you to financially fulfill the Lease Purchase contract before you can operate under someone else’s authority or your own authority.

So what does all that mean? It means that the leasing company (the carrier) holds all the cards and you are at risk of loosing your entire investment. Take the case of Road Runner. When they went bankrupt it was without notice and immediate. All the approximately 1,100 lease purchase drivers were in the nightmare of their lives. First, they didn’t own the truck they were Lease Purchasing the bank did. So the bank repossessed all the trucks. Since Road Runner went bankrupt all their assets (property, bank accounts, etc) were locked up in litigation (court proceeding to determine which creditor would be paid how much from the Road Runner assets) for all the creditors Road Runner owed money to. That meant that all the Escrow payments that were made were also locked up in litigation. OOIDA filed a lawsuit that took about 3 years to settle but did not disclose how much of the escrow accounts would be refunded. None of the Lease Purchase drivers received a refund or partial compensation for their payments made toward the ownership of the truck. Many had made payments for years and should have been compensated accordingly. Unfortunately the legal term “Lease Purchase” means you don’t own it until the final payment is made fulfilling the Lease Purchase contract.

There are other just as alarming reasons to steer clear of Lease Purchase agreements. Since the Leasing company (or the bank they financed it through) has 100% ownership of the truck and you are legally bound to only operate under their authority they can impose one of the oldest tricks in the trucking business on the driver. They can (and many do) “Starve Them Out.” In other words they let you make your payments for 2 or 2 ½ years and then there just isn’t enough loads for you so you can make your payments and you are forced to quit because you are in default with your payments. The the Leasing company gets to start all over with the same truck with the next driver who will sign a Lease Purchase agreement. Another dishonest practice utilized by Leasing companies is all the fees they “forgot” to mention when you signed the Lease Purchase agreement. There are a wide variety of conjured fees such as admin fees, filing fees, HR fees, statement fees, parts warehousing fees, shop fees, parking fees and many more that you couldn’t hardly imagine.

There are more reasons not to enter into a Lease Purchase agreement such as high interest rates, lower priority to dispatch compared to company trucks, higher insurance costs and many more.

The bottom line is that Lease Purchase agreements are the worst possible way to attempt to buy a truck. I have never met anyone who said they successfully bought their truck through a Lease Purchase program. I have met countless who said it was the worst thing they ever did. If you ask someone who is in the middle of a Lease Purchase agreement ask if they have ever finished buying that truck. The answer will be “no.” If the answer is yes then email me the details. I’d love to hear about it and share at least one Lease Purchase success story!

Trucking – Never Been Better!

2007 Peterbilt & Reefer Trailer

There has never been a better time to own a truck and operate your own authority! Most truck owners would strongly disagree with me. Most all of my detractors would cite the high cost of fuel, the ever increasing maintenance costs and most of all the ELD mandate.

Lets start with the biggest obstacle to profitability. The ELD mandate. To be clear, I do NOT support the ELD mandate. However, if you are using an ELD there are a few nominal positives that have came with the FMCSA forced ELD mandate. Since the April 1st date of full enforcement the truck availability has dramatically decreased creating a vacuum of trucks and an increased volume in available freight. This has led to 2 very positive circumstances for truck owners. Rates are significantly increasing and load availability is excellent. So higher margins per mile and less down time between loads.

If high fuel costs are cutting into your profits then I strongly recommend you read my posts “How Does IFTA Work,” “Fuel Surcharge” and “Carrier Rate Agreement or Carrier Contract.” You should never loose profits due to the fluctuation of fuel prices. Likewise and equally important, neither should your customers. If you demonstrate fairness to your customers in your “Carrier Rate Agreement” and utilize a “Fuel Surcharge,” you will earn their respect and enjoy a long term business relationship together.

There is no doubt maintenance costs are on the rise for everyone. You can and should use all available resources to minimize your maintenance costs. Such as installing a quality “Oil By-Pass Filter” on your truck, locate “Junk Yard Truck Parts” and utilize “After Market Truck Parts.” All 3 of these will decrease your maintenance costs and down time while simultaneously increasing your profitability.

Without any doubt at all, the best way to fully maximize the current opportunities in the trucking industry is to own a 1990’s model year truck or older. In doing so your operating costs will be less (lower or no truck payment, lower insurance rates and no DPF or DEF down time / repairs / costs) and you will not be hamstrung with the ELD mandate. You will enjoy operating a higher quality of service and reliability for your customers and they will appreciate you for it. Anyone with a 1990’s or older model year truck will always be more profitable than a model year truck requiring an ELD.