How Crazy Am I At These Times? New CDL O/O?

I have followed this excellent Forum for a while and have a new question.

I have wanted to start a small carrier as a semi-retirement plan of sorts. I need to earn a supplemental income, but not a massive one as I have raised my kids, no dependents now etc. My thought is to buy into the depressed equipment market, get a decent $35K truck (pre-emission or post-2016 fuel efficient truck) and a used reefer trailer. I plan to run 1500 miles per week reefer/dry van regional. I recognize that insurance will be high, and that fuel is a variable cost that can get expensive at these lower rates these days. I also appreciate that I'll need to have a decent maintenance fund set up as I am using an older truck with 500-700K miles.

Even with lower load board rates, can one make a decent monthly income out here, or will I simply be running a truck for less than I'd make working the deli counter at the Piggly Wiggly?

I've spent over 35 years at a desk job, and have the crazy idea that I'd like to be running a truck in the sunshine (and rain and snow) for my retirement years.

Save your money and become a company driver for a few years then reevaluate.

Rates are low, companies that have years of experience are shutting down. As a newbie it would be next to impossible to get by let alone make money.

There is alot to say, but the most important thing right now in my opinion.

Brokers are going broke at a high rate. Those are the ones that have taken hugh risks for the most part.

The good and/or large brokers have been combating very high fraud/theft and are being pickey who they trust. Last I heard they have adopted a widespread standard not to do business with any authority that is less than 18 months.

There is alot to say, but the most important thing right now in my opinion.

Brokers are going broke at a high rate. Those are the ones that have taken hugh risks for the most part.

The good and/or large brokers have been combating very high fraud/theft and are being pickey who they trust. Last I heard they have adopted a widespread standard not to do business with any authority that is less than 18 months.

This is an excellent point, and might foreclose even a new small carrier with a good business plan to struggle, if brokers won't negotiate a BOL with a new carrier with a newer MC. A few business owner small carriers I am familiar with lease on to small or mid-sized carriers in their area, and operate for 70-80 percent of the load and utilize that business' MC number, insurance, etc. That might be the best way forward for someone looking to start out without access to a variety of loads from the loadboards.

I appreciate that what I am proposing is fraught with potential problems. However, with the right plan, I still have the sense that it might be doable, given certain fundamentals in place. Clearly, to get this balloon off the ground, we might need to see rates stabilize in 2024-25 at some point, and hope to see diesel at a reasonable price with a good fuel card in use. There's still going to be a need for the spot market to move freight, and the megacarriers can't move all of it.

Anytime someone thinks the time is right to start a trucking business, I like to point out that the economics of the trucking industry have not changed in 40 years. Trucking is a commodity service where the lowest bid almost always wins.

How do you differentiate yourself from the competition?

What advantage do you have that would inspire a shipper to pay you a worthwhile profit when someone else will do the same job at almost breakeven?

In the short term, a matter of 6 - 12 months, you can find a boom cycle in trucking where freight pays well. Those times draw in a huge number of new competitors, and soon, the boom becomes a bust, and it all starts over. Everyone makes money during the boom, and most lose all of their gains during the bust.

There simply isn't much in the way of worthwhile profits in a commodity business for the overwhelming majority of players. You'll have a good year or two, then give it all back over the next year or two. In the end, most people get nowhere with it.

You can make 5% a year with almost zero risk by buying short-dated government bonds. You would be lucky to make that over the long term in trucking, even if you risked everything you have and then some.

It just doesn't make economic sense, especially as a retirement hobby, which is what this sounds like. If you want to start a business, do it in an industry with better economics.

If you like the idea of driving, I highly recommend becoming a company driver for two or three years while you research the possibility of starting your own business down the line. You'll know you've done your proper research once you've determined that the trucking industry is not the place you want to be a business owner.

I just want to add something to what Brett said...

For some unexplained reason, people assume the person willing to take the risk of owning a small commodities business is going to make more money than the person who actually puts in the work like the driver working for that same company. That seldom works out properly.

We have an O/O member here who had two trucks. He drove one and his employee drove the other. That seems to make perfect sense. But it didn't. It should double the revenue. That always sounds good! He finally saw the handwriting on the wall and sold one truck.

Not only did it double the revenue, it more than doubled the expenses and headaches. He found himself in a losing battle.

I have spent my life as an entrepreneur. I get real excited about good opportunities. I don't get excited about your plans. I like the advice you've been given. You could do much better by being a driver. The problem I see, is you don't want that time commitment.

It sounds easier for you to just commit some capital. That's not a good plan in my opinion. Your idea of only running a truck about 1,500 miles per week sounds completely unrealistic. I suggest you study this hard and come up with a different approach to retirement.

I just want to add something to what Brett said...

That's not a good plan in my opinion. Your idea of only running a truck about 1,500 miles per week sounds completely unrealistic. I suggest you study this hard and come up with a different approach to retirement.

Thank to all so far with the constructive comments. I want to mention respectfully, that what I am studying is not a "hobby" but a vocation, albeit not running 12,000 miles a month. It may be true that owning and driving my own semi and reefer for half of those miles a month may not pencil out as profitable. I am only trying to do some exploration and due diligence, to see if such a business plan is workable. Most importantly, I mean no disrespect to the many owners and drivers that are running hard to just stay afloat. This industry may be particularly difficult, and I hold no illusions as to how difficult and volatile a business this is. To the extent that any of my comments seem unreasonable, one hope is that others that entertain ideas of being a one truck carrier or O/O might "go to school" on these discussions and not get themselves into debt and trouble. There are a number of second careers that people might consider in retirement, but perhaps being an O/O or small carrier is not one of them. Perhaps the industry is tilting toward blessing the larger carriers and megacarriers with a monopoly on the industry; perhaps that is the industry purge that is going on now...washing out the smaller guys. But, I am still a believer that with the right plan, the right effort, and the right foundations that most business ideas are profitable, and so I'll continue to explore this idea, but very mindful of the sage advice I am getting here.

Perhaps the industry is tilting toward blessing the larger carriers and megacarriers with a monopoly on the industry; perhaps that is the industry purge that is going on now...washing out the smaller guys. But, I am still a believer that with the right plan, the right effort, and the right foundations that most business ideas are profitable

This isn't some special time where the big guys are being blessed and the little guys are getting squished. I can't even call it a "purge."

Did you notice how Brett said the economics of trucking hasn't changed in forty years? This cyclical feast and famine torture goes on all the time in trucking. That is how the larger well managed companies make their profits. Commodities businesses always benefit through leveraging economies of scale.

Approximately 35,000 trucking companies closed down during the first three quarters of this year. Most of those were very small operations. As soon as rates start turning around we will see people jumping back into the fray.

Is it possible to make money in trucking? Of course it is. The better question would be: Is it likely a brand new person with no experience could make money at it on a part time basis?

I think we've been trying to help you answer that one. Here's a suggestion that might help you... Go talk to a banker. Give him your ideas and plans. See if he's willing to loan you some money for the venture. His reaction may help you realize if your ideas are valid or worth pursuing.

Michael, what the others have said is sound wisdom.

What I would add is that you should consider your idea from a mechanical standpoint. You said your background is at a desk job. How much of a mechanic are you? From what I know, many 0/0’s are able to stay in business because they can do most of their own work on the truck and trailer. They might even have a machine shed to keep the rig in and work on it inside. If you have a used truck, what will you do when it breaks down or needs PM? Take it to a commercial shop and pay $150 per hour for shop time? I’m not even sure what rates are for shop labor, that was just a guess. But the point is that it’s dang expensive unless you can do it yourself.

The other thing is your retirement business idea. Truck driving can be great for a retirement job. It’s what I did and am now doing. But I would not for a nanosecond consider becoming an O/O. To me, it’s all downside. People like yourself need to understand the similarity of being a company driver to being a small business owner. We are out here running our own show, making serious decisions and making long and short term plans. My thinking is that it’s very similar to owning a franchise. The headquarters gives you all the support needed to be successful even if you are inexperienced in trucking. But they assume almost all of the investment and risk. You can build with confidence on their business model. This gives you a more stress free retirement gig and a much greater chance of success.

Michael, what the others have said is sound wisdom.

People like yourself need to understand the similarity of being a company driver to being a small business owner. We are out here running our own show, making serious decisions and making long and short term plans. My thinking is that it’s very similar to owning a franchise.

BK, thanks for this insight, and to all others for the previous comments.

I see this excellent forum as almost like a classroom, where even a stupid idea or question might be considered, on the premise that asking questions is simply a good way to learn and grow. BK I like the insight that it may be possible to hire on with a large carrier that does not force dispatch, and might allow a person in semi-retirement to run lanes and hours that are both acceptable to the carrier and to the driver. Perhaps I could structure this as a 1099 position, and operate (as you so well put it) as a franchisee of sorts. This would shift the risks of dispatch, maintenance, insurance and so many of the liabilities that being as small carrier might present. At the same time, this plan might give me a few years behind the wheel to learn the ropes well, and to develop a strategy going forward in the event that being an owner and doing self-dispatch makes sense. Maybe in this industry it will never make sense to do this, and that might be OK.

As a semi-retirement strategy, what someone like myself might bring to a carrier is good prior business sense, a strong work ethic and willingness to learn both the business side and mechanical side of the business, selflessness, an ego that can take some hard coaching well, and a willingness to focus on customer (shipper/broker) satisfaction, communication etc. In other words, a capacity to learn to be as skilled and capable as so many on this forum.