Trucking to success

[The Estonian]

Hello all!

I guess my story is a bit different than of the typical person who starts a progress thread in this forum.

So, a little bit about me. I’ll be honest, I’m a young guy who has had it all quite easily for most of his life. My father owns a trucking company that has been in business for more than two decades already. I have the chance to continue running our family business and I most definitely feel like that this is the right path for me. I have been working in the company for about four years now as a logistics manager and I have understood that this is something I want to continue and hopefully take to the next level. However, there are problems that I must face.

Firstly - business problems.

Although I cannot say we are struggling, there are some huge problems in this field.

1. It’s a very one sided business, I haven’t found a solution for getting clients any other way than lowering the price. There are some exceptions, but it’s extremely rare.
2. First problem brings us to another - competition has eaten up all the prices and there’s no room for going lower.
3. A lot of our customers are bigger logistics companies so we are heavily dependent on them rather than manufacturers, importers etc.

The solutions I could think of.

1. Lower the price - get the job - expand - small profits combined make a bigger profit. This has a huge financial risk of leasing new trucks etc and most probably is not the best idea in the long run. In addition to that, it’s not that easy to find good and reliable drivers.
2. Hire subcontractor carriers - pay them a fixed kilometer price. Might turn out to be unprofitable at some point, no actual knowledge of who the carrier is at the beginning. On the plus side, it’s way less risky. This can be done two ways - hire them with their own truck and trailer or rent them our trailer. Second option is riskier, but potentially more profitable.
3. Expand to different areas in the field - build a warehouse and start renting out space, buy trailers for carrying gravel, asphalt etc, expand our small truck service area to a bigger one.

Secondly - my own problems.

1. I feel like I haven’t done anything myself - I haven’t built this business from the bottom and I feel unachieved.
2. Lack of business knowledge - I do understand that this can be fixed only by me.

I think that would be all for my first post, I do plan on continuing with this thread as often as I feel I something worth sharing has happened.

I am absolutely looking forward to all the replies, criticism, suggestions and whatever else any of you great minds in this forum would like to write.

Best wishes from Estonia!

 

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[Get Right]

Welcome to the forum!

I used to own a trucking company. It is pretty much a commodity business now in the US. The only way I expanded was to provide some additional value. For example - have the best on-time percentage or the best dressed drivers. Find some unique leverage and you can out-truck the competition.

 

[Longinus]

The solutions I could think of.

1. Lower the price - get the job - expand - small profits combined make a bigger profit. This has a huge financial risk of leasing new trucks etc and most probably is not the best idea in the long run. In addition to that, it’s not that easy to find good and reliable drivers.
2. Hire subcontractor carriers - pay them a fixed kilometer price. Might turn out to be unprofitable at some point, no actual knowledge of who the carrier is at the beginning. On the plus side, it’s way less risky. This can be done two ways - hire them with their own truck and trailer or rent them our trailer. Second option is riskier, but potentially more profitable.
3. Expand to different areas in the field - build a warehouse and start renting out space, buy trailers for carrying gravel, asphalt etc, expand our small truck service area to a bigger one.

I work in a trucking company and see how "lowering the price to get the job" is the easiest road to bankruptcy. There will always be someone cheaper.

Subcontractors are a good solution, but you lose control as well.

Transport has very low entry. So why don't you choose a niche with a higher entry, for example ADR or heavy and exceptional cargo? Your country has an excellent situation between Scandinavia, Russia and Eastern-Europe. There's definitely potential.

 

[The Estonian]

Welcome to the forum!

I used to own a trucking company. It is pretty much a commodity business now in the US. The only way I expanded was to provide some additional value. For example - have the best on-time percentage or the best dressed drivers. Find some unique leverage and you can out-truck the competition.

Thank you for your feedback! Unfortunately that's the case in Europe as well. I am certain that we are providing additional value by always being on time and by having really polite and good drivers, but it seems to be irrelevant for the clients. I often hear complaints about my competitors, but when my price is 100-200 euros higher for a full truck load it still is high even though many others are known for not making the deadline. Maybe I just haven't been working hard enough on finding clients that really appreciate what we do. I have found out that the best way to get at least inquiries is cold calling, nothing else seems to work that well. I need to start working on that, try to make appointments and maybe get the clients trust that way.

I work in a trucking company and see how "lowering the price to get the job" is the easiest road to bankruptcy. There will always be someone cheaper.

Subcontractors are a good solution, but you lose control as well.

Transport has very low entry. So why don't you choose a niche with a higher entry, for example ADR or heavy and exceptional cargo? Your country has an excellent situation between Scandinavia, Russia and Eastern-Europe. There's definitely potential.

Thanks for your reply aswell!
I agree with your first point - it actually is a road to bankruptcy or at best it is extremely risky. We had a huge amount of cargo forwarders entering the market and that really hit the prices hard. They had the opportunity to get clients by lowering the prices, because many Lithuanian and Polish companies were driving to Estonia when the Russian borders were closed for them - this situation has now showed signs of getting better. Just to be clear, we are talking about Central Europe - Estonia routes.

We are thinking of entering niches, that's why I mentioned building a warehouse etc. I see a deficit for warehouse space in my region, however I might be wrong since I have no data on how many companies have their own warehouses. I only see how many logistics companies are offering warehouse services. About ADR - we are already doing it. Heavy and exceptional cargo could be a profitable niche, we have thought of that. I definitely agree that there is potential, that's why I am certain that I can make it happen and expand the company. I just have to find the ways to do it!

 

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[Napoolion]

Cool, another Estonian. Good luck on your endeavours.

 

[Guest3722A]

Have you considered offering training for new drivers? Out here classes run once a week at $1000-$5000 per student and there are usually a few to several students per class. Then build a system where you hire some of them at reduced new-driver rates once they obtain licenses. This will give you a little more of the spread to play with and a slight edge on competitors your size.

 

[Napoolion]

Have you considered offering training for new drivers? Out here classes run once a week at $1000-$5000 per student and there are usually a few to several students per class. Then build a system where you hire some of them at reduced new-driver rates once they obtain licenses. This will give you a little more of the spread to play with and a slight edge on competitors your size.

Possible, but getting trucking license can take a lot of time. Maybe it would be good to sponsor percentage of truck licenses, so they have motivation to take it very seriously. Good idea though. If I would be in a trucking business in Estonia, I would get new truck drivers differently. It is not tested, so I don't really know but for new truck drivers, I think the solution might be Estonian mandatory millitary service what lasts 8 to 11 months. There are a lot of people who get truck licenses in the army service, but when they get out in spring, they will be looking for a job . They already have the licenses and experience in driving army trucks, but otherwise clean sheet to teach them your process. Not tested though and I am very far from trucking business.

 

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[Najma]

You will find competition everywhere in any business. And i guess with trucking business you can earn a lot.

 

[Jerwood]

Hello matey,

I run tipper lorries on highway maintanance works across the UK. 16 of my own currently and looking to double that in the next year!
You on tractor units I assume?

 

[The Estonian]

Hello again!

It's been a while since I wrote here, but I guess better late than never. A lot of things have been happening - some problems with trucks (as always), some new clients, some new drivers and so on. I think the biggest news is that we are now really close to getting a big client for at least the first half of 2018. I had a meeting with them at the end of last year and I'm feeling optimistic about it. This deal would guarantee a lot of work for us for the quieter months of the year. We'll see how that goes.

Have you considered offering training for new drivers? Out here classes run once a week at $1000-$5000 per student and there are usually a few to several students per class. Then build a system where you hire some of them at reduced new-driver rates once they obtain licenses. This will give you a little more of the spread to play with and a slight edge on competitors your size.

Thanks for posting! I guess it's different everywhere, in Estonia there are a lot of companies offering schooling to new drivers, however there are not many people interested. It would mean getting a licence to be able to run a driving school basically.

Possible, but getting trucking license can take a lot of time. Maybe it would be good to sponsor percentage of truck licenses, so they have motivation to take it very seriously. Good idea though. If I would be in a trucking business in Estonia, I would get new truck drivers differently. It is not tested, so I don't really know but for new truck drivers, I think the solution might be Estonian mandatory millitary service what lasts 8 to 11 months. There are a lot of people who get truck licenses in the army service, but when they get out in spring, they will be looking for a job . They already have the licenses and experience in driving army trucks, but otherwise clean sheet to teach them your process. Not tested though and I am very far from trucking business.

Yes, but the problem is, these young guys don't want to work as lorry drivers, most of them never choose this line of work. Also, in my experience, young people are not the best employees, at least in the trucking business. They tend have really high demands and they usually don't last that long as they see better opportunities everywhere, which may not be the case. Middle-aged men have experience in the field and usually know that what we offer (trucks, nature of work) is actually good.

Hello matey,

I run tipper lorries on highway maintanance works across the UK. 16 of my own currently and looking to double that in the next year!
You on tractor units I assume?

Hey! Yes, we have tractor units with curtainsider trailers. Glad to hear that there are people in the same business in this forum! 16 trucks is a good amount, good luck to you, hopefully it all works out!

 

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[Armen9]

Welcome to the forum!

I used to own a trucking company. It is pretty much a commodity business now in the US. The only way I expanded was to provide some additional value. For example - have the best on-time percentage or the best dressed drivers. Find some unique leverage and you can out-truck the competition.

Get Right, hi!
Is you opinion "trucking business = commodity business" same for dispatch service model?

I am newbie in trucking and from this post

Recession-Proof businesses?

Hey guys, long time since I’ve been around! Hope everything is going good. Okay, so here is the deal I have been busy with school, preparing for the ACT test, and getting ready for college. I have not been able to create a few websites that I set goals to do over the summer. I'm kind of...

www.thefastlaneforum.com

got impression that some companies try to focus more on dispatch service and to avoid owning their own trucks.