Is Now a Good Time to Get into the Trucking Industry?

Episode 212: As we look around the world today, we see growing inflation and stagflation. This is a scary time for many people. With all of these challenges, is now a good time to get into the trucking industry?

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Transcript

 Jamie Irvine: (00:01)
You're listening to The Heavy-Duty Parts Report. I'm your host, Jamie Irvine. And this is the show where you get expert advice about heavy-duty parts that keeps trucks and trailers on the road longer while lowering cost-per-mile.

Jamie Irvine: (00:15)
You know me as the host of The Heavy-Duty Parts Report, but did you also know that I am a co-host on a radio show on TNC radio called Mind Your Trucking Business? Each week we talk on this radio show about how to help people in the trucking industry make their fleets more professional and operate more efficiently. In one of the recent radio shows that we did, there was a clip that I thought was particularly applicable to the listeners of The Heavy-Duty Parts Report. And so I wanted to share that with you. That'll be the basis for today's episode. I hope you enjoy it.

Tom Kelley: (00:48)
Hi and welcome back to TNCradio.live. This is Mind Your Trucking Business. I'm Tom Kelly, along with Jamie Irvine and James Rogers and guys, you know, as I look around the world right now, looking at this economy, looking at these supply chain issues, inflation, stagflation, quite frankly, turning on the TV right now just is enough to give a guy an ulcer, right. It's a scary time. So my question to the two of you, I'm gonna start off with James. James, people are listening in, let's say that they're a company driver thinking about getting their own authority and jumping into is now a good time to even be in the trucking business. Or should you just sit on the sidelines? What is your take on where we are right now and the kind of response and kind of action that somebody who maybe isn't quite sure what they want to do? What should they be looking at?

James Rogers: (01:55)
Well, you're asking the million dollar question right now. I've had multiple conversations with a lot of my peers and even a lot of my own contractors about this very topic. And it's not an easy one to answer because, and I share two opinions to it, is one there's never a bad time to get into this industry because this industry is needed. You know, that's the first thing it's, we're very much in demand, especially right now on the other side of it. If in that scenario, if I'm a company driver, I would honestly be giving you bad advice if I said, yes, now is the time to do it. And I can't give that good advice because one it's good. It would, I would say yes, if you had a substantial amount of cash to get in at the beginning, because there's just no getting around it.

James Rogers: (02:47)
The price of equipment to get in right now is extremely high, is extremely high. The cost of insurance is extremely high right now, as well not to mention, you know, just, just the learning curve coming from a company driver to being a small, you know, a business owner, and I'm gonna use the air quotes of the title of owner operator, that learning curve. If you make a mistake, you could be out of this industry just as quickly as you came into it right now. As well as looking at what kind of equipment are you gonna get? Are you gonna spend the exorbitant amount of money on a truck that you may not be able to get for another two to three years? Because I've talked to many Freightliner dealerships that I deal with and they're not looking, they're telling me they're not gonna get any trucks till like 2023, 2024.

James Rogers: (03:34)
Then you're looking at, if I go with a used truck now, am I gonna be able to get parts for it? Because you know, I've got a contractor, who's had a truck down that was trying to get one sensor a, you know, I think it was a DEF pump sensor that was on national back order. And the makers, you know, Paccar, Cummins and Detroit were all trying to find workarounds to be able at the approval of the EPA to delete that sensor so they could still run the trucks legally. Or do you go with a pre emissions truck then you're talking about an older truck to, to get in it. And once again, you're back to, if it breaks down, am I gonna get parts? You know, the truck that I operate, it was recently in the shop for well over a month trying to get parts to it. So it's, it's a catch 22. I will never say it's not a good time, but you have gotta be a very, very special person and you better have a very large amount of cash or a very good backing for credit to get in here because the, the cost to get in is extremely high. And you have a very low margin to make an error because you can, I mean, you can be out of it just as quickly as you can into it.

Jamie Irvine: (04:41)
So from my perspective, Jamie here, I've started, I started my business that I sold in 2016, in 2009. It was not as volatile as today, but it was pretty bad. And I would add on to what James said in this way. If you can find somebody who is able to line up enough work for you, if you could find somebody perhaps who is in trouble themselves, or is at an age where they've just decided, you know what, I think, I think I'm ready to retire. You know, the world's crazy right now and you could, you could get that truck and that equipment at a reasonable price from them, or you could pay them over time or some kind of like, you've gotta be creative. You're gonna be an entrepreneur, you've gotta look for the opportunity where everybody else sees a problem.

Jamie Irvine: (05:35)
And when I started my contracting business in oh nine, that's exactly what I did. I absorbed equipment from somebody who was looking to get out. I found somebody to supply me with like the first $90,000 worth of work that I needed to get the business off the ground. And so I was able to mitigate some of those upfront costs and I was able to ensure that I had cash flow coming in, that I was able to operate the business successfully for the first year. At that point, you know, things started to subside with some of the economic pressures and I was able to start to scale and grow in year two and three. So if you're gonna be a business owner, you've got to be flexible, you've got to be assertive. You've gotta find the opportunities. And I would, I'm with you, James,

Jamie Irvine: (06:21)
I would say if you, you know, it has to be the right circumstances, but when things are bad, that is actually the time when a lot of wealth can be created and businesses can be established. We're gonna take a quick break. We'll be right back. Don't have a heavy-duty part number and need to look up a part? Go to parts.diesellaptops.com or download the app on Apple or Android to create your free account. Looking for high-quality fuel injection for heavy-duty applications? Having one supplier for fuel injection allows you to better serve customers by providing them with a complete line, which increases your sales and profitability. Learn more at ambacinternational.com/aftermarket.

James Rogers: (07:04)
Absolutely because it's, you know, like you said, there can be the opportunity in the right circumstance. One of the big things that I'm seeing, and I have a lot of conversation with, you know, peers and stuff with is that a lot of them are selling their equipment and it might be an opportunity where, Hey, they're just trying to sell it to get out from under what they may owe the bank, or they may already be behind. And the bank will work with you to say, Hey, if you catch them up, you can take this over completely because the truth is a lenders don't want the equipment back. They just don't because what are they gonna do with it? They can't really auction it right now because prices are so high. People are already getting out of the industry. So that right situation very well may present itself.

James Rogers: (07:46)
It's like I said, that's the part of me that says it's never a bad time to get into the industry. And it's like you said, you know, it's gonna take that right circumstance to do it and then obviously coming into it, like you said, if you could find contracted freight, that's gonna cover you for that first 90 days, have a good relationship, either with a broker or a direct shipper or direct receiver, that's gonna put you miles ahead of the game coming into it. But if you come into it hoping to work every broker on the board or whatnot, if you're working on a spot market it's not gonna happen, or another course of action could be, would be, you know, Hey, maybe you could get the truck and lease onto like a mega carrier, not something that I promote for my own personal reasons. But you could get on with a mega carrier who already has the contracted freight and then you're basically absolutely from their pool.

Jamie Irvine: (08:38)
And you could go the other direction too. So you might be able to get an over the road truck, like, uh, let's say you could pick yourself up and a nice Kenworth T680 or even a T800. And you could, uh, if you could get that truck off of somebody who's in distress at the right price. Now you might be able to rig that truck and go into some vocation. Because one of the things about being in business is you do not want to be in that, what they call the bloody red ocean, where competition is fierce and prices are being driven down. You wanna find that nice wide open blue ocean, where there's a little bit of opportunity for you to establish yourself. So maybe there's some vocations you could focus on you, you rig that truck, you get it for a good price.

Jamie Irvine: (09:18)
And now you're not out there beating your head against the wall on spot rate, but you're actually making some good money in a vocation. And you've got some nice, consistent work coming in. That could give you that year, two years to establish yourself, learn the business. And by that time, the economic pressures we're facing now are gonna be different, better, worse, the same, who knows, but they're gonna be different. It probably won't be the same. And you'll be able to capitalize on future opportunities from there. I have seen so many businesses over my 25, 30 years in being around business. And my 20 plus years of being around trucking, I've seen so many great businesses started when the economy was at the worst and the lowest point.

James Rogers: (09:56)
Oh, absolutely. And it also lends credit to, is the piece of advice I could give to it is if you choose to come into the industry, is don't be afraid to make mistakes, but also understand it. You're gonna have to learn quickly how to mitigate those mistakes, because a mistake in this industry, it can cost you, it can be very pricey. It can be very costly. So understanding that coming in, and then also understanding that you're gonna learn from it. Mistakes are gonna happen. You know, they just are. Whether, you know, you're booking the wrong kind of freight, whether your equipment may not be set up, right. Maybe you picked the wrong kind of truck for what you need or whatnot. So simple things like that. And this industry is not cookie cutter. That's the good thing. No matter whether the economy's bad or whether it's great, this industry's not cookie cutter and there's so much you can do in it to be successful,

Jamie Irvine: (10:51)
No matter what you do, don't, don't cheap out on compliance, safety or maintenance and repairs, 'cuz that'll sink you every single time.

James Rogers: (10:58)
Absolutely. Absolutely. 100%. I mean, every time I take one of my trucks home or my contractors do, we've got, that's like an unspoken word is the first place it goes to the shop to see, make sure we can prevent it.

Tom Kelley: (11:10)
You know, you hit on something I think is very important there, Jamie, that I wanted to follow up on. And that is timing. You know, a lot of people will look at today's economy and what's going on in the industry today and say, yeah, bad time. Now it's not a, you know, sometimes it's all about timing and when everybody else is running out, sometimes that's exactly the right time to run in, but you have to do it with a plan. I'm not saying blindly run into the burning building. You gotta have the right equipment with you. Right. But to pull on that analogy a little bit further, sometimes when you run in and everybody else is running out, gives you the best opportunities to do some of the things that you, I started a radio station in the middle of a pandemic who the heck does that, you know? That sounds absolutely crazy. And maybe it was, but I think it also gave us an advantage at a time when a lot of people had kind of pulled back. They weren't really sure what to do next. They were hesitating and we found that there was a whole group of people who were dying for good content.

Jamie Irvine: (12:25)
Hey Tom, sorry, James. I just wanted to say I started a contracting business that primarily focused on housing in a, in a housing collapse that had never been seen before in 2009. And I started a consulting business that focused on digital sales and marketing in the middle of a pandemic when we were under complete lockdown. And for the first time in history, nobody was at the office. So I'm a big proponent of finding opportunities when everybody else is trying to run the other direction.

James Rogers: (12:56)
And just like you said, it's like for us during the pandemic, when you know, we work a lot on the spot market at the time, but we've developed a lot of good relationships when so many driver, I think we lost like, was it 80,000 drivers over that period of time is the fact that we grew, we actually grew, I was able to add two trucks based on the relationships hauling relief loads. But at the same time, it took me back to an acronym that I learned in the military, which was KISS, keep it simple stupid. And it goes back to even the same thing. When you come into the industry at a time like this, that you gotta keep it simple. You've got to know your numbers coming in. And that's something we could talk about later, but that's what it comes down to is keep it at the basics and keep it just simple. So, you know, your numbers coming in, just like any business owner

Jamie Irvine: (13:46)
And the acronym I follow is FOCUS, follow one course until success.

James Rogers: (13:50)
Exactly

Tom Kelley: (13:52)
Fantastic. I like that, follow one course until success.