Snack Food Distributor in Vegas, Considering buying Tractor/Trailer to move my inventory from PA

Discussion in 'Motor Carrier Questions - The Inside Scoop' started by Rmchispas, Jan 21, 2020.

  1. Rmchispas

    Rmchispas Bobtail Member

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    Jan 21, 2020
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    Hello to all. I own a potato chip distribution company in Las Vegas NV, I purchased the route a few months back. Business is booming. I have so much opportunity to expand but I'm handicapped as there not much mark up in profit for potato chips and shipping is killing my bottom line. My biggest competition is Lays chips and of course Lays is big enough to have their own fleet to keep costs down. Right now I'm currently running about 10 Full truckloads (reefer 53') a year. I have the reefer vans loaded floor to ceiling with boxes of chips to maximize the usable space. I have the chips frozen to keep the bags from expanding and popping. I always have the drivers take i40 as it is the smoothest route with the fewest elevation changes. cannot come down through Colorado. So I'm currently spending around 45-50k per year shipping potato chips. The entire load only weighs around 8-9k lbs. My total cost of the product and shipping is at 200k annually. I'm doing 300k in gross sales a year. I've got to cut my costs. I have an opportunity to buy a 2003 Freightliner Classic sleeper & 2001 ThermoKing Reefer 53' for $20k. I have a driver that wants to drive for me part-time... and considering I will only need a load about every 6 weeks, I'm fine with that. The only way this will make sense is If I can get hooked up with a load board and take loads east en route to pick up my chips. from what I gather, as long as I take a load east I should almost eliminate my shipping costs. I really don't want to get into another industry but I don't see a way around it if I want to expand. I have new companies wanting to carry their products but I feel my Profit margins right now are not worth all the hassle. If I can't make it work while it's small, I doubt ill make it work when it is a big cumbersome operation. I'm already a contractor in the construction industry but I'm looking to diversify so I don't have all my eggs in one basket. Any wisdom will be greatly appreciated. Thanks
     
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  3. Bakerman

    Bakerman Road Train Member

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    You will need a drop deck trailer that has more cubic space than your standard 53' trailer.
    I also see the chip trucks using a single axle truck, because like you said it is only 8-9K lbs.
     
    Dino soar Thanks this.
  4. Rmchispas

    Rmchispas Bobtail Member

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    Jan 21, 2020
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    Ive considered a single axle but the only way to make this worth doing is I would have to haul for other people out to the east coast and I may be hauling something really heavy and need a tandem axle?? I couldnt deadhead 2500 miles. Plus the tractor needs to be a sleeper. Do they make a step deck/high ceiling reefer trailer? It must be reefer to keep chip bags from popping. thanks for the reply. Much appreciated Bakerman
     
  5. Chinatown

    Chinatown Road Train Member

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    Henderson, NV & Orient
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    Some moving van (household goods) companies have those high cube reefer trailers. They use them to haul high value loads such as electronics, artwork, etc.
    They're like this, but have a reefer unit on the front.
    upload_2020-1-21_17-8-41.jpeg
     
  6. Chinatown

    Chinatown Road Train Member

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    This one isn't clear, but it's refrigerated.
    [​IMG]
     
    Badmon Thanks this.
  7. Rmchispas

    Rmchispas Bobtail Member

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    Jan 21, 2020
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    Are they insulated like a standard 53' reefer van? Will they keep frozen foods froze during the summer months? As I may end up hauling frozen products for other clients. Pardon my ignorance, just trying to gather as much info as possible to make a wise decision.
     
  8. Chinatown

    Chinatown Road Train Member

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    I don't know about all that. Maybe @Sharky88 can answer those questions.
     
  9. Dino soar

    Dino soar Road Train Member

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    Is Pennsylvania really the only place but you can get potato chips? If it were possible I would be looking for a closer place to get your product.

    Overall, it's probably not a good idea to get involved in trucking just simply to try to expand the business you're in. I'm not trying to be funny or insulting in any way at all, but your profit really should be profit after your transportation costs. If there is a lot of opportunity for a business but it has little profit, that's very possibly why the route became available.

    But to answer your question, you would have a lot to think about to get involved in trucking. It is definitely a whole other business that you would be starting that is extremely regulated and there are many issues especially if you do not have experience in this.

    The truck and trailer that you are looking at is nearly 20 years old. It would be nothing, absolutely nothing to buy that truck and trailer and put $30,000 into it. If it breaks down on the road, you could easily put $50,000 into it, and you'd still be waiting for your product while the truck is broken down. Plus insurance and tags and drug testing and ifta and 2290 and all of the other things that have to be paid and kept up with.

    Think of it like this. If you were going to buy a car that you wanted to be Dependable that you could go back and forth across the country without being at the mercy of repair shops and waiting for your product, would you buy a car that was 20 years old that had 300,000 miles on it? That's what buying that truck and trailer is like. That is a lot of time on that truck and it is a lot of time on that old reefer.

    At this moment you have someone that says they would drive for you part time. What happens if that person won't or he gets a different job and can't? Drivers are difficult to find and it's even more difficult to find drivers that don't destroy your truck and cost you more money yet.

    So you can pay the $20,000 for your truck pay another $20,000 for insurance probably put another I don't know 10 to 15 easily into the truck and trailer just to get it going, and if you don't have a driver it'll just sit there... as you pay the bills and pay someone to deliver your product.

    And Dot Fines can be several thousand dollars at a time.

    What happens if the driver abandons the truck in Pennsylvania? It happens. What would you do? Can you fly out to wherever the truck is and drive it back yourself?

    There are different ways a driver can steal off of you. Do you know how to spot them?

    This goes on and on and on and on. I'm not saying that it's impossible, but it is not nearly as simple as it seems.

    I would say that it's not a good idea especially with the truck and trailer that is that old.
     
    Western flyer Thanks this.
  10. Rmchispas

    Rmchispas Bobtail Member

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    Jan 21, 2020
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    @Dino soar :

    I agree with everything you stated. I am one of two distributors for Wise brand chips west of the rockies. If i could get the chips closer i would, but id probably have a lot more competition too. I am a diesel mechanic as well. I have a mechanic that also works for me on my construction equipment, so maintenance wouldn't be a problem. But crap does happen, i have 2 drivers that will work and they are both local. Im sure they wouldn't want to abandon the truck, especially one of them being my older brother... I agree that its an older truck, but given my experiences on lighter duty trucks with dpf and def, i definitely want to get pre-Def & Dpf. The truck will only be used approximately 10x a year. Im getting all the insurances quoted out this week. There is another east coast brand of chips called Herr's that wants me to become the first distributor in the west for them as well, but again he said he has not gotten a distributor because shipping costs so much. Im expecting a 35% profit margin this year, but if i can move that to 45% + then I could justify taking on more clients, brands and employees. my other thought was to just get a 48' gooseneck enclosed trailer and pull with my 1 ton dually. Ill know within a few days how it pencils out with insurance etc. Let me ask, what are the going rates right now to move a truckload of refrigerated goods out to the east coast (from west coast)?
     
  11. Dino soar

    Dino soar Road Train Member

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    Well if you have family that you can depend on and you guys can do the maintenance then that's definitely positive.

    My suggestion after you add up all your numbers, would be to spend more on the truck and the trailer.

    I agree that pre egr is the best thing. But if it were me I would be looking to pay more like 30 to 40 thousand for the truck. Then you would have a truck that has a newly rebuilt engine with paperwork and a long laundry list of repairs that you won't have to do or worry about someone having to do on the road.. Older trucks are good but you have to start with the very best truck that you can.

    The same way with the trailer. If you're planning on hauling reefer loads for other people you have to have an absolutely dead reliable reefer. If something happens to that engine or something happens that that trailer can't keep the cold in and you lose a load of whatever you're hauling they will make a claim and your rates will go up, and that is something that they will say is purely your fault. Reefer rates are already high for insurance as it is.

    And don't forget that if you haul for other people if the truck breaks down you are responsible to repower that load and get it where it has to go. That can sometimes be costly and a big headache and you still have to fix the original truck to begin with.

    So it's best to really start with the best that you can get.

    If the truck is only going to run occasional loads, maybe you could try to find some more local or semi local work to bring in extra Revenue.

    Good luck.
     
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