The shortage worsens, small / mid size co folding

--Lual

 

It's economies of scale.

Say Bob makes bird houses in his garage and can sell an unlimited number at price X. He can make 10 a week by himself, and make an acceptable profit. If he hires a worker, the two together can make 30 bird houses a week. His inputs (wood, paint, etc) go up threefold, but cost only goes up 2.8x due to volume pricing and less wastage. Labor costs double, but fixed costs (tools, building, etc) remain virtually unchanged, so profit per unit is the same, but overall profit is up.

If Bob hires another guy, total production goes to 36. The 'pinch point' is painting and storage. If they had a separate paint area, one guy can be cutting wood and assembling while the other two paint. As it stands Bob is paying for non utilized labor and is unable to leverage bulk pricing on supplies because he has no place to put them.

So Bob needs to acquire larger premises to grow the business, which will dramatically increase his fixed costs compared to working from his garage. In order to afford the larger space, he needs to sell 60 birdhouses a week. Selling 60 a week will require two trips to market and someone to help with sales, changing 'breakeven to 70 bird houses. Three people working at peak efficiency with the tools on hand can only make 50 a week, which means more tools and people. All in, to expand Bob would need a minimum of 6 people. If he only find 4, he couldn't expand. If at one point he did find the workers and made the expansion then experienced a labor shortage, it might be better financially to just sell it all than try and "right size".

This oversimplified example assumes an unlimited demand at a constant price point, which is unrealistic, but you get my point.

There are a lot of guys on here who have been successful 1 truck operators who have tried, with varying degrees of success.l, to become fleet owners. A common theme I have seen amongst there stories is getting the second truck going was challenging, but doable. With each additional truck, the headaches and costs rose, until about truck number 10 when they had the size to hire additional support.

 

I found truck 1 by far the hardest.

Trucks 2 through 31 were all much easier.

But if a company can't survive with 10 trucks, they sure as heck can't survive with 20, 200, 400, or whatever number.
Management is the problem, and will not improve with more trucks.

 

Say Bob's Transport grew to 100 trucks, and stayed that size for 20 years. Bob needs a minimum of 85 trucks running at any one time to service their contracts, but is struggling to find enough bodies to keep the seats warm and won't keep the main contract. Yeah, Bob can reduce the size of the company and go in a different direction, putting in a large amount of effort with fair bit of risk Or he can sell off the assets and retire.

A trucking company (particularly a small carrier) doesn't have a lot of inherent value outside it's equipment and land. The freight contracts may or may not be transferable and even money won't be renewed at the sames terms with a new owner. Odds are the easiest way to maximize value for an owner looking to sell is to shut the doors and sell things off piece meal.

 

Sounds to me like when unemployment "drops" because many people quit looking for jobs altogether

 

I work at the airport now while I decide if I want to finish my Commercial pilot license and CFI/II instructor rating.

 

This is EXACTLY what I heard from a driver who was waiting to get loaded. I was waiting for him to get done so I could get loaded and we got to yakkin'.
He had been with his company 12 or 14 years.

 

If the local airport opens a sweeper / snow removal gig again, I'll be tempted to go for it.
Last time it was posted, seemed like a decent deal.

 

if you guys want a good company for dryvan in IL go to Jeep Transport LLC 2700 McDonough St, Joliet, IL 60436 they used to be named TABOR express 3 of my friends work there and their happy. they take 20% and thst covers trailer, authority insurance you just pay your fuel and they have fuel card and pretty good freight rates to be dryvan

 

Are they looking for drivers? Willing to pay 100k plus?