By Candace Jarrett
Morning News Reporter
Published: May 28, 2008

FLORENCE — The soaring price of diesel fuel — more than $4.60 a gallon from $2.50 a year ago — has stripped the profit from hauling and raised concerns regarding the trucking industry’s future.

“It’s breaking the trucking industry,” said Lee Riding, a driver for Denton, N.C.-based Furr Transport. “The two biggest costs associated with trucking have always been fuel and wages. It used to cost more to pay the trucker, but now it cost more to fuel the truck.”

Diesel used to be the cheaper way to fuel vehicles. Ridings said he doesn’t understand why the trucking industry isn’t being supported more right now.

“I’m 55 and all my life diesel fuel has always been 25 percent to 30 percent less than regular unleaded fuel,” he said. “So why now is it 25 percent to 30 percent more than unleaded? I don’t get why the government isn’t doing more to protect what transports almost everything people need to live.”

Seventy percent of the nation’s freight tonnage is transported on trucks on the nation’s highways. And there are more than 350,000 independent diesel-powered tractor-trailer operators in the United States.

Billy “The Trailer Man” Lowe, who has a trailer business in Darlington, said independent trucking eventually will become a thing of the past. He said large carriers — such as J.B. Hunt, Yellow Freight and others with fleets in the thousands — have a much longer reach than small truckers.

“You don’t see a lot of trucks driving around now without a name on it like a Wal-Mart or something,” he said. “Those independents that are hauling for hire can’t make it.”

Frankie Perkins, owner of Perkins Transfer Service on West Lucas Street in Florence, is an agent for companies, connecting trucks drivers to loads that are ready to be transported. He said large fleets are better able to minimize their debt, which is considered the number of miles a truck runs empty, not collecting revenue, while trying to get to the next load.

“They don’t get paid for debt,” he said. “They don’t get paid when they’re not carrying anything, and even larger carriers that used (to) be OK with one in their fleet driving empty after dropping off a load and then driving far to the next pickup, now try to make trips more efficient. The shorter the distance between loads, the better.”

Perkins said truck drivers are at the point where they have to park their trucks.

“The trucker has to think about how much money he’ll make after he puts fuel in the truck,” he said. “Trucks have 200-gallon to 300-gallon tanks and you multiply that by the average price of a gallon of fuel, $4.75. Then you take freight cost, at about $1.80 per mile, to carry the load, with only a 60-cent surcharge, and see what the trucker’s making.”

A surcharge is an option that helps truckers offset the cost of fuel. More and more trucking companies are charging businesses mileage to drop off their products, but that can be a bit harder for small truckers to enforce, especially with the abundance of truckers looking for loads.

“With a lot of shippers, you still have some companies trying to haul freight very cheap,” Perkins said. “People call me looking for loads close to each other because of the fuel cost.”

Some lawmakers are looking to aid the trucking industry, which is watching for the support. Web sites for such group as the Owner-Operated Independent Drivers Association, http://www.ooida.com, and http://www.thetrucker.com, post updates on laws and issues concerning fuel costs.

An amendment has been included in the federal Defense Authorization Bill, which stipulates that for any Department of Defense contract for truck transportation or service using fuel, the motor carrier or broker must pass any fuel surcharge on to the person responsible for paying the cost of fuel and requires them to disclose that surcharge.

What's the Most Profitable Unit Size in Expediting?
There is two basic decisions involved in expediting and they apply to the new Owner/Operator and Veteran alike: what company to lease with and what size unit to run. We're going to focus on the second question and try to analyze which size unit is most profitable in expediting.

Jeff Jensen
Senior Field Editor

Typical "D" Unit

In researching the information presented here, we talked to expediters (naturally), recruiters, and others in the expediting industry. In some cases, we utilize estimates when no hard data was readily available. While not a scientific analysis by any means, we hope it gives a broad overview of the subject of unit size profitability. Income projections were based on very rough averages available to us through the companies and owner/operators. The figures are widely ranged between different companies, dependent on a variety of factors. Vehicle prices were based on new price estimates for "A" and "B" units. The straight truck and "E" unit prices included used truck figures as a low end reference due to the extended service life for these units.

"A" unit

Typically a 1/2 ton van such as a Ford E150, small pickup or minivan. Only a few companies utilize this size unit, with it being phased out in favor of full size vans, but we include it here in the interest of thoroughness.

Price Range: 12k - 20k

Cargo Limit: usually 500 lbs.

Revenue Range: 22k - 35k

Being the smallest size unit in expediting, the "A" unit is also the most limited in freight capability. As many of the larger size units can attest, there always seems to be plenty of minivan loads that wind up on their trucks, however, given the "right place, right time" nature of this business, the "A" unit can be subject to extended waiting time for a load in that size. Although not profitability related, comfort, or lack thereof, might be an issue in the case of a minivan or small pickup when sleeping in that size vehicle. We were unable to interview an "A" unit O/O.

"B" unit

With the companies we spoke to, the "B" units accounted for 40% - 70% of their total fleet size.

Price Range: 15k - 35k

Cargo Limit: Up to 3000 lbs.

Revenue Range: 25k - 65k

Typically the "B" unit is a 3/4 or l ton van, regular length or extended, However some companies allow the larger cube vans to operate as "B" units. Still other companies operate with full size pickups with tall caps as an alternative to cargo van. The"B" unit has long been the primary choice for newbie and veteran alike. A substantial percentage of expedited freight is "B" and "A" size with a few expediting companies permitting vans to carry "C" loads, although not always paying over a "B" rate. A downside to this size unit's popularity has been the over-staffing problem some companies experience frequently requiring occasional freezes on "new hires" in "B" units.

Judging by initial cost and overhead vs revenue and by the O/O's comments we received, the "B" unit earns high marks for profitability. Some of the O/O's we talked to had this to say:

"I started in a van 3 years ago, and I'm getting ready for a new one. I've thought about moving up in size, but the main thing that holds me back is that I only want to run single, no co-driver. I don't think I could do as well dollar wise in a "D" unit as I am right now.

I grossed 47k last year with no major breakdowns, and I'm just afraid of that financial commitment of the bigger truck. And the vans aren't as heavily regulated as the straight trucks."

"Money wise, I think a van is the only way to go. For under 25k, you can get a vehicle that still drives like a car, and my last truck got 18 miles/gallon. I like being home on the weekends, and I don't think I could do that in a bigger truck. I run a gas engine so I can do some of my own work like tune-ups, oil changes and minor repairs. I've talked to some of the "D" units and they really spend some big money for repairs and maintenance."

"I've been on with this company about a year now, and I'm considering a "D" unit. I prefer driving a van, but the money just hasn't been what I thought it would be. It seems like everywhere I layover already has 6 "B"'s ahead of me, and I'm just not getting loads. When I break down the revenue vs overhead, this size truck isn't too bad a deal, but it looks like I'll be luck to break 35k gross this year. The other van drivers I talk to seem to be doing better, at least that's what they say. I'm from upstate New York, so maybe I'm out of the freight lanes."

We talked to a couple of husband/wife teams in "B" units and found they had a different perspective:

"We're partners in a small fleet leased to several companies, and my wife and I ran "D" units for a number of years before her surgery took her off the road for awhile. At that time, I switched over to a van because it was difficult for her to get in and out of big truck, rougher ride, etc., so it was more of a comfort issue than economic. I knew the dollar figures on the van before changing over, but the revenue has actually been better than what we projected. The past couple of years have been rough on the 2 "D" units we own, so the van has been the most cost effective vehicle we have. We've been pretty lucky as far as getting team loads in the last year or so. We miss the sleeper in the big truck, but we really like the freedom of the van, and we take it home just about every weekend now instead of staying out for the two or three weeks in the "D" unit. Plus no logs, no scales in most states."

"We've always run a van because my wife doesn't like driving the bigger trucks. Over the last 6 years, gross revenue averaged out at 56k annually, and that's good enough for us. With this company, most of the freight is one-way loads, but we still average out to 50 cents a hub mile."

" I talked to a recruiter from my company, went out and got a new truck, then they tell me they're not putting any more "B" units on. Well, after about a week of arguing with them, they agreed to put my truck on. That's about a year and a half ago, and I'm real disappointed. The problem is too many vans! There's maybe 10 other vans based in my town and getting that first load of the week is a real problem. Then when I do get a load, a lot of the time it's discounted automotive freight and it's tough to make a living with that. When I complain to my recruiter, he tells me to upgrade to a "D", but there's more "D"'s around home than vans, and I'd have to run single, or pay a co-driver. I've got a Ford diesel that's been down 4 times in the last 10 months, and that's been taking a real chunk out of the money."

"C" unit - This size truck is unique to a few expediting companies.

Price Range - 30k +

Cargo Limit - 5000+lbs.

Revenue Range - 40k +

The "C" sized unit, depending on your point of view, is either a grown up van or downsized "D" unit. This straight truck is a dock-high vehicle, 14'-20' box, in most cases sleeper equipped.

We were able to get input from 3 different units about their trucks:

"My truck was on with one company for 4 years until it got too old, then I leased on with my current company. It's been payment free for a couple of years now. I'm hauling discounted freight now, and I try to keep expenses down the bare minimum. It's a UD with small sleeper and 16' box. With my company, I'm only running 3 states and Ontario, and it's worked out OK so far. I do my own oil changes and basic maintenance. As long as I don't have a bad breakdown, I'll be alright, but the truck is getting high miles on it now, so I'm thinking about maybe a new "D" unit and switching companies again, especially if I can get my wife out on the road with me."

"I'm in a somewhat different situation than some of the other Owner/Operators out here. I'm running expedited airfreight out of Detroit for several companies. No sleeper on my truck cause I only run maybe 100-200 miles out with no backhauls. I might make 4 or 5 stops when I go out, and usually small freight. I don't really need anything-bigger truck wise, and the one I'm running is almost paid for. I grossed 45k last year without running too hard. I could probably increase the gross by another 10k if I didn't have another business that keeps me in town sometimes. This truck is getting 12 miles/gallon and it's only got 450,000 miles on it, so I'll keep it for another couple of years."

"My husband and I have 3 "D" units on with the same company, this is the only "C" we own. The truck's not too bad to drive or stay in, but 50% of our loads are "B" loads, and we don't want to haul so much van freight. We put this "C" unit on when some friends of ours said they wanted to get into expediting through us. The only lasted 4 months, so we put our son and his wife in our "D" unit, and thought we'd try this one. It's not a bad truck or anything, It's just those "B" loads! We figure if you're going to run a straight truck, might as well be in the large size. Grossed 87k in the last 10 1/2 months, but still way below what we're used to."

"D" unit

This size truck is most closely associated with expediting, with many companies using an image of a "D" unit as part of their logo or advertising. It's a dock high vehicle, 20' box or larger, most often sleeper equipped, generally a 6 wheeler, though sometimes with tag axle. For high value freight, special cargo handling equipment and temperature controlled box.

Price Range: 45k +

Cargo Limit: 13,000 lbs. and up depending how equipped

Revenue Range: 50k - 150k + Very wide range on upper end of revenue.

With this size unit being the standard expediting vehicle by which the others are measured, we allotted more space for the comments of the "D" unit O/O's. We spoke to a few that we caught up with in the truckstop in a group interview and tried to pass on some of the more pertinent comments; if the answers are shorter than usual, or seem out of order, that's the reason.

" I've been in expediting 11 years, always in a 6 wheeler. With the increased competition lately, it's getting rougher out here. I'm hauling more discounted freight shorter distances. Still like this kind of work, just wish I could make better money like I used to. Fuel costs are up, maintenance costs are higher now, plates, insurance, etc., all higher, and now I'm hauling cheaper freight."

" I keep my overhead down where ever possible. I'm fortunate that I've got a great mechanic back home that charges me really low rates (my brother-in-law).

My wife and I pack food with us to save on the restaurant bills, and try to stay out a month or more at a time. I think this size truck is the only way to go. I've got a buddy with a tractor leased to another expediting company, and my gross is usually half again what his is, and he's got a truck payment 800 dollars more a month than mine."

"We put 3 trucks on with this company over the space of a year, all with family members in them. Over a period of years, we've tried the different size units, a couple of "B"'s and one big truck, but it's been our experience that the "D" unit works out the best. So much of the expedited freight market seems to be patterned for this size unit that we've never really had a problem keeping the trucks rolling. We've had to take our share of the smaller loads, but never a steady diet of them. I can only give just a basic economic picture because that's my accountant's job, but our fleet has been grossing 15% this year over last; I don't think we're doing anything different this year, just been lucky I guess."

" In our case, my wife and I are both in "D" units, based in Canada. We're hauling automotive freight, but medical problems for both us might force us off the road. Before this came up, we were making ends meet, but now we're facing either putting drivers in the units, or selling the trucks. Not sure what we'll do right now."

"Judging by some of the responses by the others here, I guess we're somewhere in the middle of the road, business-wise. My wife and I have been running this one "D" truck since I retired, about 2 years now, and we've actually been surprised at the money we've made, 125k last year and took a month off. We understand that the truck is still fairly new, and haven't gotten into the big repair bills yet, but so far it's been a good deal for us. Aside from the economics, we enjoy the lifestyle, the traveling to new places, and being together."

" I agree with most of the other O/O's and I'm probably somewhat average in my truck's revenue. I consider some of that information private, but I'm comfortable with the figures they've been discussing, they seem to be fairly accurate."

"E" Units - This size vehicle is being utilized by a small group of expediting companies.

Price Range - 45k +

Cargo Limit - 44,000 lbs.

Revenue Range - 60k - l50k +

The "E" unit represents the expediting industry's closest tie to traditional trucking. The Owner/Operators most often come from a background in over the road conventional trucking, utilizing their own trailers, or those of the expediting company.

" I guess I'm pretty typical of most of the truck drivers that moved into expediting, I was involved in regional hauling for trucking companies in the Midwest as a company driver, became an O/O, then talked to a recruiter from this company I'm leased to now. Started expediting about 2 years ago. It's been up and down dollar-wise, I've been running solo for the past couple of months until my wife can re-join me out here. The overhead is so high, I'm considering getting into a "D" unit, and cutting my losses. The big truck tariffs aren't too bad if I could just get the miles, but when the company is only offering 200 mile loads, or running me around in Detroit, that's not the way to make a buck."

" I'm pretty satisfied so far, only been on with this company about 3 months. This is my dad's truck that I'm buying from him. He was leased to a couple of companies before he came over to this one, he says it's the best of the bunch. Because of our arrangement, I'm only paying for the fuel right now, he handles the rest of the money so I don't know the whole economic picture, but he says we're doing alright. Had another family member as co-driver, but I'm running by myself for the next two weeks. Would like to get my girl friend out here with me, and keep the income in the immediate family. My dad was semi-retired for a little while, but now he's back out here in a "B" unit, says he's doing OK."

We hope this admittedly unscientific analysis gives some small amount of insight regarding the profitability of the various size units in expediting. Judging by the unit's popularity and the comments of the Owner/Operators, it would seem that the "B" and "D" units have the definitely edge in revenue, but again, the variables come into play; we were told by a recruiter of one company about a team in a "C" unit that runs their doors off, and turns as much revenue as half of the "D"'s in their fleet.