Expanding Capacity, the sensible way?

Hey all,
So I own a small towing company and the past three months I've been running a rollback tow truck to move vehicles across the VA/NC/SC states. I stay under 26k and am exempt from all the ELD rules, so no CDL needed. I'm not getting rich, but it's better than sitting around for those two to three days a week, and well more than covers gas and maintenance costs.
I had plans to buy a larger rollback, but still a non-CDL truck, so I could more safely and comfortably haul vehicles, and in the next few months put someone in that truck so I wouldn't have to drive. It's not that bad, it's just young kids at home and a wife with a back problem makes me want to be much more flexible with my time, like I was before I started moving cars.

So I got to thinking maybe a bigger rollback isn't the right way forward since yesterday I got a call from someone looking for work, and that person has a CDL class A license and OTR experience. So it got me to thinking that my vehicle upgrade should be a CDL setup, for the sake of greater revenue per mile. But oh the options!

1. Dually with a 4 or 5 car trailer.
Pros: Marginally better gas mileage than a road tractor (8-10mpg?)
Cons: No sleeping quarters (okay some custom setups have this, yeah)

2. Class 8 road tractor with a 5-6 car trailer. (Surprisingly affordable compared to many dually trucks)
Pros: sleeping quarters more common.
Cons: poorer gas mileage (6-7mpg?)

3. Car Hauling rig (very unlikely anyone will convince me of going this route, but, well, I'm listening!)
Pros: capacity!
Cons: probably don't have the demand to keep the rig full.

All setups would require ELD, so that is what it is.


Also, yes I know maintenance matters. I have a fleet maintenance mechanic that works on road tractors and dump trucks that's next door to my office/impound lot, and a fleet maintenance facility right down the road. Both very knowledgeable people who I have relationships with and trust, so there's that.

Purchase Costs: options 1 and 2 don't seem to be much different, surprisingly.

What about insurance costs? Is one setup significantly different than the other?

Maintenance Costs? Between the dually and a road tractor, the trailers won't differ too much. It's more the difference between a dually (I'd go Cummins), and a road tractor (not sure of make).

I'm sure there's other factors I'm not considering, so educate me if you'd like to help a brother out!

Thanks!

Erik

 

Erik, You asked for it, so don't shoot the messenger. I have nearly thirty years between towing and car haul so this comes from personal experience as well as intimate knowledge of the industry rules and regulations.

First, only you can actually answer the question of what is right for your business. If you were to buy a class A truck and trailer just to hire the guy that was looking for work and he quit 6 weeks later (which happens very often) what would you do to pay for that rig? Can you run it? Do you want to be in the auto transport business and hire drivers just for that operation?

Next, dually vs. tractor trailer is often debated in this forum and there is no one right answer. It depends upon how much work you have and what type of capital (financing or cash) you have available. Many folks start with a dually because they can finance it as a personal vehicle since commercial credit is hard to obtain, and even harder to get a good rate on. I will say, I never owned a dually and car trailer but my business partner did. He started what became the auto transport side of my company with a dually and three car wedge, it worked for him but neither of us would do it that way again.

Another thought is what type of units are you hauling? Salvage and inoperable units (repos, no keys, etc) are perfect for a rollback, not so easy to load on a trailer without keys or having heavy damage. Make sure you get the right truck for the jobs you have available.

If you are only doing this part time to supplement your towing business perhaps you need to buy a piece of equipment that can support the towing company as well, maybe upgrade to a 4 car rollback. Then you can do car haul and also move salvage, junk/scrap units and such.

As for insurance, it is likely you are not properly insured right now. If your primary business is towing unless you have specifically informed your insurance agent. From your other post it appears you have spoken to your agent about this, however most still get it wrong, so be sure it is correct coverage. You are doing transport work which is always rated differently than your insurance written as a tow company. These policies are much cheaper, example here in Pennsylvania my rollback used exclusively in the garage/tow side of the company is $4,000 per year but the exact same make and model rollback on the car haul side is $11,000 per year. Cargo insurance for car haul is much different than on-hook for tow trucks and rollbacks.

Insurance for duallys with trailers is cheaper, but not much, than a road tractor and 6/7 car trailer. There are also legal issues with these trucks regarding overhang (not legal in most states despite what many operators actually believe) and they are easy to be over weight on.

Going from non-CDL trucks to class A or B CDL trucks will increase insurance costs, require fuel tax (IFTA) decals, apportioned registration and a drug testing consortium. ELD is based on the model year of the truck not the size or gross weight, so you can remain ELD exempt if you have an old enough truck (model year 1999 or older). As you know it will trigger all of the regulatory compliance issues that you currently avoid by operating non-CDL trucks.

You are an interstate motor carrier and all commercial vehicles greater than 10,001 pounds used in interstate commerce (which is what you are doing) are subject to the hours of service rules, including ELDs. Now, you may be able to work your tri-state area and stay under the 150 non-CDL air mile rule (short haul), however if you do not meet those restrictions you need an ELD even in a small rollback. Reading your other post on this subject you quote super dispatch which has the short haul exception correct, but it is for vehicles requiring CDL. As a non-CDL vehicle you get 150 air miles and 14 hours. See 395.1 (e)(2) for short haul provisions for non-CDL vehicles eCFR — Code of Federal Regulations

If I were in your shoes, and that is what you asked, I would expand the towing company before trying to work into a new industry. If you are dead set on car haul, get the 4 car carrier and do inops, that is the only segment of the market left that is not in the toilet, plus 4 car rollbacks are much cheaper than 4 car trailers to insure. Our 4 cars were about 50% of our tractor trailers and produced the same net profit being they were more versatile.

 

I need a daycab tractor pulled from VA to NC ASAP