Planning for a Negative Economy

Planing for negative economic swings is a must for all truck owners. There are plenty of warning signs that have been detailed recently by several economists and business publications such as lombardiletter.com, Fortune.com, Bloomberg and Fox Business that indicate our economy is beginning to slow. That means less freight transportation opportunities for non-essential items. Products such as: building materials, boats, RV’s, new vehicles, electronics, plastic products, books, general house hold goods and the list of products that will all be negatively impacted is endless. Avoiding transporting these types of products and choosing a more economy resistant product is your best defense against a slow economy or even a recession or depression.

My view of the best freight to haul is based on my business philosophy. I strongly believe in consistent and reliable cash flow. In trucking that means hauling freight that is the most reliable during both good and bad economic times. Currently the economy is booming and my article “Trucking – Never Been Better” outlines some of the best times I’ve enjoyed in Trucking. However, economies are ever changing and the days of our good economy are certain to end. Preparing now for a negative economy ahead of it’s impact on trucking is your best defense from a financial disaster.

Transporting food, especially refrigerated food, is the most consistent freight to transport that is the least impacted by a bad or down economy. Food is the last product that consumers stop purchasing. As such, choosing a customer that supplies refrigerated food products to the most basic supplier of foods to consumers is the most stable freight you can transport. If you have a choice to haul fresh beef to a grocery store warehouse or to haul fresh Caviar to an exclusive retailer you would be more secure hauling the beef. Beef products are purchased by a much larger customer base and are a staple of virtually every home in the United States and around the world.

Nothing is a guarantee. But it does seem obvious to me that transporting fresh food products that are a staple in almost every home refrigerator in American is the most resistant to economy swings. Thus they are the very best product to haul to enjoy a successful and profitable trucking business.

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.

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!