F2F Transport / Farm2Fleet: My story with no happy end...

That's just a 100x more ways for money to bleed. And they bled a lot of it in many different ways. Sometimes from drivers getting loans to make mortgage payments before they even hauled the first load. Or outright fraud and thievery. All kinds of craziness, if you can imagine it, probably it happened there. But even within the office there were other ways money bled out not related to a loose hiring/leasing policy. It just wasn't a tightly run ship. You can run a 100 trucks as a well organized machine keeping costs under control or you can have 100 different nightmares costing you money.

 

That's ALWAYS the cause Rollin, because there are very, very few other problems that money can't make go away. As rates start declining, so does their percentage. Then the turnover starts, which makes overhead go up with declining revenue, until it just doesn't work anymore. That's a terrible place to be.
After agent commission, LS takes about 19%. They pay for all cargo, liability and compliance, and pay every week. I haul 80% direct freight. So if the average broker only takes 8%, then LS would be equal to a 81% lease deal that only utilizes spot. All of the publicly traded brokerages average around 20%, so the 8% number isn't very realistic.

 

Okay, so now there's a hundred trucks with the average weekly income of $4500 (some are not working every week, just using industry standards) you, the company are floating $1.74 MILLION dollars EVERY DAY between payables and receivables. I'm not in the banking industry but the interest alone on that line of working capital for a few year old company has got to be exorbitant, and that money comes off the top. Therein lies the problem of trying to grow so fast, especially with owner-operators as you have to come up with the money to pay them every week but wait a month or more to get paid. If you grow too fast you can't build up this buffer off the 10% to be able to pay this out without somehow borrowing money.

 

Well if they were paying 90% and not charging for liability and cargo I can easily see why it didn't work. Not nearly enough money for operational costs. If I were ever to lease anyone on, the only way I would do that big a percentage would be if the operator paid everything. If we did it the regular way 80% would be it. If you were really good and didn't cost me more money than you were worth you would maybe get up to 82% after a while but I would have to think hard about it. I would like to know from @RollinCoal if F2F was paying cargo and liability and still paying out like 90%? If that was the case I'm surprised it lasted as long as it did because they didn't know what they were doing to start with. If not, just too much growth too fast will put you in a tenuous position if something goes wrong. I said on the thread that got hammered that you can't support that many trucks long term on spot market freight. The people leased on there that don't get how it works will start costing you more money than they are worth when the board tilts the other way.

One thing I will say for BBB. If he doesn't have a marketing degree some university should issue him one immediately! This is one of the greatest marketing jobs I have ever seen using social media, endorsements from trade groups, cheerleading, etc. to advance a "new, innovative way of doing business". I'm sad that people lost money, but that is the best way I know to learn. When it gets down to it, he's #### lucky those Max Trans people bailed him out, probably just to get access to whatever capacity he still has left.

 

The only thing new or innovative that I seen with his whole plan was basically to give independent trucks authority to run under yet push the burden of finding the freight onto them. Now had he gone with a pay when paid business model he may have kept his head above water but paying weekly, then waiting to get paid on only 10% is aggressive and volatile at best. But paying when paid he would have had a hard time finding more than a couple trucks because as a general rule of thumb anyone who has the operating capital to run 60-90 days till receivables start coming in also have the ability and acumen to get their own authority and keep 100%.

Now if someone is willing to pay for their insurances, plates, fuel, find their own freight and wait to get paid till I get paid and accept 90% then sign me up, I'll start the company next week. However the 1 in 50,000 owner-operators willing to sign up for that is not enough to make a paycheck let alone cover the startup outlay or ongoing monthly expenses.

I know someone is going to jump in here and still say 10% is more than enough so then put rubber to the road, start a company, pay for fuel for all the trucks (has to be paid daily BTW), advances for drivers who don't have money to run on, pay all the trucks for what they've hauled each week then wait a minimum of a month for your money to start coming in then tell us how profitable that business model is.

 

And i think what he meant by his statement is that the inability of f2f to honor its obligations was everybody else's fault,except bigbadbill's

 

No, you're dead on @catalinaflyer. The outfits that run on the 90% model can't operate in the semi-babysitting mode you describe. The O/O's are expected to run on their own money, and cover all their expenses. And the 2 I worked for that ran that way also had a customer base that paid invoices quickly. As I said up ^there, 90% is doable with the right model. But with what's available for O/O's, and the fact the most seem to think their carrier should be their banker for operating loans, I don't know how tenable that is in today's market. It's been over 15 years since I left that segment of trucking, back when the fleecing first started really taking off. And fleecing ruined a number what could have been a fair crop of decent O/O's. They never learned to be financially self-sufficient.

 

You guys ARE aware that was a photo shopped picture, right?

 

Not misleading, that's what the splits are and WHY it works

That's the deal mainly, the 90 per cent outfits have the owner ops paying all or part of those costs. No comparison to 75/25 operations. Something will be lacking.

 

What picture?