Economies of Scale among Mega Carriers

Easy.

Drivers coming here to America for a better life do not know our history dating back 100 years in trucking terms. They do not know what the wages were 40 years ago and don't know enough to understand that they are being paid very little as possible. Maybe the wages to them are much better here in USA than where they came from.

Trucks have gotten grotesquely expensive. Rates have not changed much. In fact it's down to the bottom for those willing to take a load at .80 a mile. Instead of say 3.00 We actually negotiated a truck load in 2010 out of Fairbanks to Arkansas at .55 however the company had already more than profited with the run up and did not expect to make a dime coming back to Montana Empty. So they were pleased to offer us .55 for the freighting.

We realized the total revenue at that would be worth more than the actual contents of a house that was the cargo. We could buy the same type of contents here in Little Rock for about 70% what we would have paid montana to deliver here. So we did not do it. They still did not expect to have a load there (Home) from Fairbanks having made their profit.

The emissions I deliberately left aside from my semi rant. I thought that the engines we had in the 2000 time period or even the 90's even ran really well on hardly more than a muffler and a particulate collector if that. Now you cannot find high sulphur fuel in the old way since 2007 and have to buy low sulphur fuel with water and god knows what else in it. Let it sit long enough and you have bacterial or plant life growing in your 18 wheeler. Sheesh.

It's not going to get any better until a state say California finally bans all fossil fueled vehicles. Including personal cars. Once the USA does that then trucking as we know it will go away. No more 3000 mile hauls, it will be a series of relay say from little rock to... Knoxville on one battery charge and give trailer to the next driver. Then sit there in Tenn for a day that it will take you to charge back for a load to Little Rock. it will take longer for the freight to travel the USA. Like that is a problem (It's not)

The biggest company with the most money able to establish a sort of Pony Express relay routes covering the Entire USA and able to charge all those electric vehicles to maintain the system as well as replacing the batterys or entire vehicles in a few years when they burn out. My smart phone's battery is a year old now and im ready to replace the #### thing because you don't get but two hours working time with it. Not worth it on days you need it to last a whole 10 hour working day.

What cost fuel. Suppose all you had to do is generate power and then use it to charge your trucks. 400 miles at a time. Your trailer load will still get to Jersey or wherever in a rather slower but more steady manner. That should be less than the millions a company pays for fuel each year. The US Navy is actually migrating to where their ships generate more electricity than what is consumed by Little Rock because they require it now. Ordinary nuclear power does not cut it anymore. You are leaning towards technology where you use the saltwater itself to generate power in unlimited amounts. Imagine being able to run the entire USA with a big enough extension cord dropped into the ocean.

These are thoughts that have no end, or no direction because you cannot get a trucking company with balls big enough to actually buy say 10,000 electric nickolas have them on hand nationwide with chargers in every yard 400 miles apart. No company will do that until one is brave enough to kick off that process. If they make a mountain of money going all electric say 20 years from now, then everyone will fall over themselves to do the same thing.

And still pay the driver .35 a mile.

 

Emissions or more complicated engines have nothing to do with driver wages, drivers are not expected to know anymore about the truck than how to drive it.

 

He must have that much in headaches, that's an awful lot of responsibility, I think I'd rather be irresponsible.

 

the more truck, the more problems. The number of drivers out on workers comp, the cost of wrecks, etc all starts to eat away at the extra margin earned by adding additional trucks.

Matlack had over 2000 trucks and the safety director dealt with more accidents in a day than I see in a year.

Diminishing returns shows that the increase number of earning units increases the drag of negative effects.

A twenty truck fleet feels the effect of one driver being out.

A 2000 truck fleet might have 200 out possibly another 40 or 50 in the body shop making the earnings of the units still working pay for the non productive units.

You end up getting less income along with more worries and extra 'out of pocket' costs that nibble away at the profitability..

 

As with any business, the market value is generally based upon the net proven income over a period of years. There are always exceptions.

This is one of the better threads I have read on this site for some time now.

 

It would be irresponsible for me to say. So many factors to take into account that are unknown.

1. How much is the equipment worth? Is it on it’s last leg or have a lot of life left? This goes for trucks and trailers. Does this equipment make the drivers happy or contribute to turnover?

2. Type of freight ran and the steadiness and profitability of it.

3. Staff. Once the owner leaves can these people run the business on their own or will things fall apart? A good owner/leader will have invested a lot of time in training and molding their team into how and why things are done. These team members ideally have been around for quite a long time. My guess is the company making 400k with 30 trucks the owner tries to do it all himself resulting in doing no one thing great but many half assed.

4. Safety record. Will insurance be an easy renew or is the company potentially at risk of a large increase or drop? No insurance no business.

5. Driver experience and length of employment. Are the trucks being moved by pros? Or has the company short cut pay, have high turnover, and steering wheel holders only? If it’s still very profitable with highly paid and happy drivers that’s ideal.

6. Capabilities. Can this carrier run hazmat? How many different types of trailers do they have? Do they have an attached brokerage that may help increase profits or get new customers?

7. Potential. Is there glaring untapped potential that this business has that they don’t realize? This is hidden value that helps you justify the purchase price even more.

8. What about cash flow and past profits? A carrier can look profitable on a P and L but when you factor in depreciation of all the equipment payments being made, then there could actually be negative cash flow which obviously is bad. If a carrier is factoring, why is that? Not a good sign.

Those are just off the top of my head and I won’t go on and on. I have no idea what is industry standard as far as revenue times x amount of years or net profit times x amount of years. These other things I’d be thinking about.

 

I had a uncle that owned 4 dumptrucks. He ran the dumptruck business for about 10 years, and then he started a new venture (general contractor) and turned the day to day dumptruck business over to his main driver. He was completely hands off and told me he would keep running it as long as it made money. He said if he made as little as $100 a day off of it, it was $100 more than he had. His main driver ended up going into business for himself and he then sold the trucks, but he ran it for several years like that.

This is very similar as to how the megas operate. If they can make $50 or even $25 per day off of 1,000 trucks, that is a pile of money. The only saving grace for the little guy is most of these mega companies waste a pile of money.

 

there are driverless trucks on the road as we speak (with drivers aboard)

 

yeah but they won't impact anything we do for at least 15 years. The laws for this haven't even been created and there is a lot of liability issues that have not been discussed.

 

^^This
In my opinion, should the Boeing crashes be software related, and should Boeing be held financially responsible, this will have a significant negative impact on autonomous highway vehicles.