Tag: trucking

Lease vs Buy a Car or Commercial Vehicle: Which is Right for You?
Is it better to lease vs. buy a car or commercial vehicle? People have been asking this question since leasing first became a viable option in the 1930s. Around a quarter of new vehicle financing, today is applied to leases, according to Experian. Yet, the answer isn’t quite so clear-cut and will differ depending on your current status and needs. We’ll give an overview of key differences, benefits, and drawbacks of leasing a car vs. buying below, so it’s easier to see what’s right for you.

What is the Difference Between Leasing and Buying a Car?

Both leasing and buying can provide you with a vehicle, but the agreements, terms, and fees are structured differently.

Car Leasing

Car leasing is usually similar to renting. We’ll go over the pros and cons in just a moment, but let’s start with a crash course in leasing terminology since it’s different from what most are accustomed to.
- Residual Value: Vehicles lose value over time and as wear and tear occur. Residual value refers to the vehicle’s value at the end of the lease. The shorter the lease, the greater the residual value is.
- Term Length: A lease is similar to a term length with a loan. It’s the total length of the agreement or the amount of time you’ll make payments. Short-term options are generally more expensive because the residual value decreases fastest during the first 24 months.
- Estimated Annual Mileage: Depending on your lease type, you may be asked to estimate how many miles you intend to drive annually.
- Capitalized Cost: Also referred to as “cap cost,” the capitalized cost is the price of the vehicle. The cap cost is usually fixed when the manufacturer sponsors the lease, though it can be negotiated in other cases.
- Cap Cost Reduction: Any discounts, such as lease deals from the automaker, are referred to as a cap cost reduction.
- Money Factor: Rather than calculate with interest rates, leases use a “money factor.” To calculate your APR, multiply your money factor by 2,400.
- Closed-End Lease: “Closed-end” leases are what most people think of when they hear the term “lease.” With these agreements, all the numbers are calculated in advance. As long as the vehicle is returned in the condition expected, when it’s expected, and with the anticipated mileage, it tends to be a very predictable process. The lessee doesn’t assume depreciation risk when the term ends.
- Open-End Lease: An open-end lease is more flexible. However, the lessee accepts more risk in an open-end lease because they agree to pay the difference between the estimated residual value and actual resale value at the end of the lease. Most businesses opt for an open-end lease over a closed-end lease because they tend to rack up miles, and it’s often less expensive to pay a difference in value than it is to pay a fee for mileage overages.
Buying a Vehicle

When most people talk about buying a car or commercial vehicle, they’re not generally talking about purchasing it with cash. Instead, they’re talking about taking out an auto loan to cover the cost. Nearly nine in ten adults have done just this, according to The Zebra, so we won’t go over this in too much depth.

When you finance a vehicle, you own it outright once your final lease payment is made. So while fees and interest are tacked onto the loan, you’re probably accustomed to the structure and terms offered.

What Are the Advantages of Leasing a Vehicle?

There are many benefits of choosing a lease vs. finance, whether you’re searching for business or personal use.

Lower Monthly Payments

You’ll almost always have lower monthly payments if you’re leasing. A typical lease is $506 per month, and a vehicle loan is $617, according to Experian research.

Free Up Cash Flow for Your Business (if Leasing a Company Car)

Experian’s figures are largely based on consumer shopping. As a business owner, you’ll likely have considerably more cash to put toward expenses and growth each month if you lease your business vehicles.

Latest Technology

Leases rose to fame because commercial enterprises needed to upgrade equipment every 12 months to have the latest tech.

Warranty Coverage and Maintenance

Most leases include all your maintenance and a warranty. That means lower expenses and fewer headaches for you.

It’s Easy to Trade Your Leased Vehicle In

By design, leases make it easy to trade the vehicle in at the end of your term.

Sales Tax Reduction

You have to pay sales tax on the full purchase price of a vehicle when you finance it. However, some jurisdictions only charge sales tax when you lease on the down payment and the contracted monthly payments.

Little or No Down Payment

Many leases don’t require a down payment or only have a small upfront cost. Although this can increase the monthly costs, it’s helpful for those shopping on a tight budget.

What Are the Disadvantages of Leasing a Vehicle?

Even though there are many advantages of leasing a vehicle, there are some disadvantages too. Let’s take a look.

You Don’t Own the Vehicle

Although some leases give you the option to purchase the vehicle at the end of the term, it’s not the norm. Instead, you have to give the vehicle back when your agreement ends.

You Always Have a Car Payment

When you take out an auto loan, you only make payments until the vehicle is paid off. Once you’re done, you’re done. Because leases aren’t intended to pay off a vehicle, you’ll always be making payments.

There’s a Mileage Limit

Estimated annual mileage can be a killer for people and businesses that drive a lot.

You Won’t Have Cash for Your Next Car

If you keep making payments on an auto loan, your vehicle will be worth more than you owe at some point. Known as “trade-in value,” this can help you put a serious dent in the amount you need to borrow for your next vehicle. With a lease, you don’t own the vehicle, so you can’t put your investment toward your next purchase.

Unexpected Lease-End Costs

Excess mileage charges can be hard to swallow. Sometimes leasing companies nickel and dime you for excessive wear and tear too.

Usage Restrictions

Again, you don’t own a car you’re leasing. That means the leasing company can stipulate you aren’t allowed to leave the country with the vehicle or may restrict you from using it in certain ways, such as operating as a Lyft or Uber driver.

You Need Gap Insurance

Gap insurance is insurance that pays off the balance of the vehicle in the event it’s declared a total loss or stolen. Some lenders require this with traditional auto loans because it protects their investment. Especially in the first 24 months, you owe more than the car is worth. Virtually all leasing companies require gap insurance for the same reason.

Leasing Can Be Difficult, Especially if You Have Bad Credit

Subprime borrowers, or those with a FICO Score below 670, only account for around 13 percent of vehicle lease balances, according to Equifax. While it’s technically possible to qualify for a lease with bad credit, the terms offered will not be great.

Lease Deals Are Limited

More often than not, leases are only offered to shoppers with excellent credit, though sometimes automakers will make additional lease options available when sales are lagging.

You Can’t Get Repairs Done Anywhere

Even though maintenance is covered, you’re at the mercy of the leasing company’s network for all maintenance and repairs. Unfortunately, that usually means returning to the dealership for repairs, typically increasing costs for non-covered items.

You Have to Return the Car in Great Shape

Generally speaking, leasing companies use the “credit card test.” If a scratch or scuff is smaller than a credit card, you’ll get a pass on the damage when the lease ends. However, this doesn’t necessarily extend to glass and interiors, and it’s not a hard rule. If the vehicle is returned with any damage, wear, or tear that the leasing company deems is not normal for the period of time you’ve had the vehicle, you’ll get hit with additional fees.

It’s a Binding Contract

Even though leases only last a short time, the consequences of violating your agreement can stick with you and on your credit report for years to come.

What Are the Benefits of Buying a Vehicle?

Now that we’ve covered the benefits and drawbacks of leasing a car vs. buying let’s take a look at it from the buying side.

You Own the Vehicle

Whether you purchase it outright or make payments, once the vehicle is paid in full, it’s yours to do with as you wish.

You Are Creating an Asset for Your Balance Sheet

Any value in a vehicle you’ve purchased is yours. It counts as a personal or business asset, which means you can use it to demonstrate financial strength or as collateral on a loan.

Your Business Can Claim Depreciation on Taxes

If you are weighing the pros and cons to decide whether you should buy or lease a car for your business, tax benefits are an important consideration. Because you own the asset, you can also claim any depreciation on your taxes. Combined, businesses can claim over $1 million on equipment, according to IRS Section 179.

Where, When, And How far You Drive Are Your Choices

As long as it’s legal, you can take a vehicle you own anywhere you wish, whether it’s next door, Mexico, or Canada.

You Can Get Cash to Pay for Your Next Car

The equity in your vehicle is yours, so you can roll it into your next vehicle if you wish.

You Can Customize Your Vehicle However You Choose

Vehicles earmarked for leases are cookie-cutter cars. If you want any kind of upgrades or custom accessories, purchasing a vehicle is the way to go.

Once Your Loan is Paid Off, There Are No More Payments

Whereas you’re tied into payments as long as you’re leasing, you don’t have payments once your vehicle is paid off if you buy it.

You Can Sell on Your Own Schedule

Whether you want to trade your vehicle in after six months or 12 years, it’s totally up to you when you buy.

Financing for a Purchase Is Easier Than Leasing

There’s less risk for funding companies when they’re selling a vehicle than leasing one, so they can typically work with individuals and businesses with light credit files or bad credit.

Refinancing Can Save You Money Down the Road

When you lease, your monthly payment is your monthly payment for as long as the term lasts. However, if interest rates drop after you buy or you do major credit repair/ building, you can refinance to get better terms and save money.

What Are the Disadvantages of Buying?

Even though buying a vehicle has many advantages, there are some challenges or drawbacks associated with purchasing too.

Buying a Car is More Expensive in the Short Term

Your monthly payments will generally be higher if you’re purchasing. Expect to make a down payment too.

You Pay Interest on the Entire Cost of the Car

True, leasing uses a money factor instead of interest, but the general concept applies – you’re only paying toward what you owe. With a loan, you’re paying interest on the full amount borrowed instead of a portion of the vehicle.

You May Have to Pay More Sales Tax

While you can escape some sales tax in certain jurisdictions, you’re on the hook for the full amount when you purchase.

The Car’s Future Value Is Unknown

Compared to a closed-end lease, purchasing a vehicle is riskier. You take the hit if the vehicle depreciates dramatically.

The Warranty Will End

Vehicle warranties only last a couple of years. Once the warranty ends, you’re responsible for handling all repairs.

Lease vs. Buy a Car: The Main Things to Consider

Now that we’ve covered all the benefits and drawbacks, what really matters when deciding whether to lease vs. buy a car?

How Much Does it Really Cost on a Monthly Basis?
- Monthly Payments: Consider your full monthly payment to the leasing company or lender.
- Car Insurance: Leasing companies often require lessees to maintain high coverage levels. If you wouldn’t normally maintain high tiers, leasing can increase your monthly payments overall.
What Are the Overall Costs?
- Down Payment: Leases generally require a lower down payment than loans.
- Interest: Your APR will usually be higher with a lease.
- Repairs: Repairs are yours to cover when you purchase.
- Depreciation: You take the depreciation hit with a purchase and may be unexpectedly saddled with additional depreciation-related fees with some leases.
- Leasing Fees: Each leasing company charges different fees. Make sure you understand all your charges before signing an agreement.
Flexibility

Purchasing an open-ended lease is probably better if you crave flexibility, but remember that you’re assuming more risk with these options.

Mileage for Businesses that Do Long Distances

If you plan to drive a lot, purchasing the vehicle may be more cost-effective, or opt for an open-ended lease.

Owning vs. Leasing a Car: Which is Right for You?

The lease vs. buying a car debate has no wrong or right. It’s a matter of choosing what’s right for you or your business. Use the information outlined here to make an informed decision that will serve you well today and in the coming years.

Charter Capital Can Help Whether You Want to Own or Lease

Are slow-paying clients standing between you and the vehicle you need to expand your business? Maybe you’d like a down payment, want to bridge a cash flow gap without taking on debt, or want to take on more work but don’t have the working capital to cover the expense? Charter Capital can help by unlocking the cash trapped in your unpaid B2B invoices through invoice factoring. Contact us for a complimentary quote.

Is buying a car better than leasing?

The lease vs. buying a car debate has no wrong or right. It’s a matter of choosing what’s right for you or your business. Use the information outlined here to make an informed decision.

Is it financially smart to lease a car?

When you take out an auto loan, you only make payments until the vehicle is paid off. Once you’re done, you’re done. Because leases aren’t intended to pay off a vehicle, you’ll always be making payments.

What are the disadvantages of leasing a car?

Disadvantages of Leasing a Vehicle:
• You don’t own the vehicle
• You always have a car payment
• There’s a mileage limit
• You won’t have cash for your next car
• There are usage restrictions
• You need gap insurance
• Lease deals are limited
• You can’t get repairs done anywhere
• You have to return the car in great shape
August 18, 2022
Heavy Equipment Financing: A Beginner’s Guide to Getting Funding
Need to make a large equipment purchase but not sure where to start or if you’ll even qualify? Heavy equipment financing can help you do just this, but there are many ways to approach it. We’ll walk you through some of the most common solutions and alternatives on this page so that you can make the right decision for your business.

Leasing vs Financing for Heavy Equipment

When you finance your heavy equipment, you own it. It’s yours until you decide you’re done with it. When you lease heavy equipment, it’s not yours. You’re borrowing it for the duration of your lease, though some leases offer the option to buy when the term is over.

There are two main types of equipment leasing: capital and operating.
- Capital Lease: Intended for long-term access to equipment.
- Operating Lease: Intended for short-term access to equipment.
Is Financing or Leasing Business Equipment Better?

Financing is usually better if your company’s cash flow is strong, you plan to keep the equipment for an extended period, and the equipment will help you generate revenue.

Leasing is generally better if you won’t need the equipment long or it will become obsolete quickly. It can be better if you’re short on cash or are not a strong borrower yet too, though there are alternative funding methods we’ll cover at the end that can help if these latter concerns are holding you back.

What You Need to Qualify for Heavy Equipment Financing

Finding traditional equipment funding for a small business isn’t always easy. Borrowers usually need to meet specific criteria for credit scores, cash flow, and time in business. Collateral may come into play as well.

Time in Business Requirements

Companies usually need to be in business for at least one year to qualify for traditional equipment funding.

Credit Score Requirements

Most financial institutions offering heavy equipment financing require a minimum credit score of 600, though some start at around 550.

Cash Flow Requirements

Most businesses will need $100,000 in annual revenue to qualify for an equipment loan, though some lenders start at around $50,000. The amount will vary depending on the total amount of funds requested too.

Down Payment Requirements

Most equipment loans require the borrower to put down 20 percent of the initial cost. For example, if you’re purchasing a $100,000 truck, you’ll need to have $20,000 for your down payment. Well-qualified borrowers can sometimes receive a bit more.

Do You Need Collateral?

One of the primary things that distinguish heavy equipment loans from traditional loans is that equipment loans usually leverage the equipment being purchased as collateral. It secures the loan and offers the lender a measure of assurance that they’ll be able to recoup their money if the borrower doesn’t pay. Sometimes lenders will have borrowers sign a personal guarantee and leverage other business or personal assets as collateral as well. It’s usually easier to qualify for an equipment loan than it is to qualify for a traditional non-specific business loan for these reasons.

Can You Get Heavy Equipment Financing if You Have Bad Credit?

Again, the minimum credit score required for an equipment loan is usually 600. This is considered a “fair credit score,” according to Experian. “Poor” credit is a score of 579 or lower. So, although it’s technically possible to get heavy equipment financing with bad credit, it’s unlikely. You also won’t get good terms like you might if you have a score of 740 or more, which is “very good” credit, or 800 or more, which is “exceptional” credit. If you fall into this bracket, you’ll likely want to explore the non-traditional options covered at the end.

Costs and Terms of Heavy Equipment Financing

At this point, you should have a good idea of whether you’ll qualify for heavy equipment financing. Let’s go over what you can expect in terms of repayment and costs.

What Are the Repayment Terms?

Equipment loans are generally term loans, meaning you’ll repay the principal, interest, and fees in installments over a set period. Anywhere from one to five years is common, depending on the amount borrowed and your qualifications, though some offer up to ten-year repayment terms.

How Much Can You Finance?

Heavy equipment loans are designed to finance the total cost of equipment minus your down payment, so some will offer loans well into the millions. It’s similar to how a car loan works. If you’re well-qualified, you can take out a loan that covers all but your down payment for just about any type of car, whether it’s a $5,000 budget car or a $50,000 sports car. Your down payment addresses the immediate depreciation, so if you default on the loan, the loan company can resell the car and recoup any losses.

It becomes a little trickier when your financing company doesn’t understand the value of what you’re purchasing. For example, you may know your “new car” is worth $50,000 because it’s electric, but if the lender you’re working with only understands gas-fueled cars, it may argue that your vehicle is only worth $40,000 and then lower the amount they’ll finance. It’s usually best to work with a lender who specializes in your industry because of this. For example, if you’re in the transportation industry and want to purchase new trailers, you want to work with a transportation lender who can accurately value your trailers. If you’re in manufacturing, you want to work with someone who understands what’s involved in retooling your machines.

What is the Interest Rate on Heavy Equipment Loans?

Anywhere from about five to 30 percent interest is common with equipment loans. Loan fees, such as origination, underwriting, and packaging, will also be applied to the balance.

How Fast Can You Get Approved and Paid with Heavy Equipment Financing?

While it’s technically possible to be approved and funded within a matter of days, many loans and lenders have processes that can drag out for weeks or months.

What Do You Need to Apply?

In addition to meeting the minimum qualifications as outlined above and being comfortable with the repayment terms, you should be prepared to provide prospective lenders with common business documents, including:
- An invoice for the equipment.
- Up to three months of your bank statements to demonstrate adequate cash flow.
- One to three years of tax statements to prove your revenue.
- Financial documents like profit and loss statements to show you can repay the loan.
- Additional documents such as business licenses.
Alternatives to Heavy Equipment Financing

If traditional heavy equipment financing doesn’t work for you, one of the alternatives below likely will.

SBA CDC/504 Loan

The Small Business Administration (SBA) offers 504 loans through certified development companies (CDCs) or community-based partners that are regulated and certified by the SBA. Qualified businesses can receive up to $5 million. In these cases, the CDC finances up to 40 percent of the loan, and the SBA backs a portion of this. Ten percent comes from the borrower, and the remaining 50 percent comes from a third-party lender like a bank.

Businesses must have a net worth of less than $15 million and an average net income of less than $5 million over the past two years. Ten and 20-year repayment terms are available. Interest is generally lower than bank rates, though it usually takes five to eight weeks to get funded. It’s also harder to get an SBA loan than it is to get a general equipment loan, as companies are usually required to be in business for at least two years, and the minimum credit score is 680.

Term Loans

An equipment loan is a type of term loan, though the broad term encompasses unsecured loans and loans that use other assets as collateral. Rates vary depending on the lender and what you bring to the table but typically range from six to 25 percent plus interest and fees. Some offer variable interest rates too.

An equipment loan may be easier to qualify for than a general term loan, though the term loan may be more ideal if you intend to use some of the funds on things other than your equipment.

Business Line of Credit

A small business line of credit can occasionally work for equipment too. Unlike most of the options here, there isn’t necessarily a definitive end date for payments. Instead, it works like a credit card. If you draw from the account and then pay the money back, the funds become available to draw from again. Lines of credit usually cap out at around $100,000. The APR may be fixed or variable and can range from seven to more than 35 percent.

Qualifying for a business line of credit is similar to qualifying for a term loan, though lenders often look for additional signs of financial security and/or collateral.

Invoice Factoring

Invoice factoring is a completely different way to address heavy equipment financing. Instead of borrowing the money needed for your business equipment, you’ll sell your unpaid B2B invoices to a third party known as a factor or factoring company. The factor provides you with upfront payment for most of the invoice’s value, then collects payment from your customer. When your customer pays, the factor remits any remaining funds owed to your business, minus a nominal factoring fee.

There’s no debt to pay back because the customer takes care of the balance when they pay their invoice. Therefore, your credit is less of a concern with factoring, too, as the customer is the one who ultimately pays the balance.

The amount available will vary for this reason as well. Your factor will run a credit check and determine how much the customer can reasonably pay. For example, let’s say you serve large oil companies that are fiscally strong but take months to pay their invoices. You may be able to factor a single invoice that covers your full equipment purchase. On the other hand, maybe you own and operate a trucking company. Your clients are smaller, and each freight bill is only worth a few thousand dollars. You may want to factor several invoices to fund your equipment purchase. A good freight factoring or oil and gas services factoring company will work with you to find the right funding for your needs.

Get a Heavy Equipment Funding Quote from Charter Capital

As a leading factoring company with decades of experience, Charter Capital helps businesses in transportation, oil and gas services, manufacturing, and more address their equipment funding needs every day. Our competitive rates, flexible and fast funding, and personalized service make managing heavy equipment purchases easy. To learn more or get started, request a complimentary rate quote.
August 2, 2022
6 Best Ways to Check Freight Broker Credit and Reputation
Not sure how to choose the right freight broker? Or wondering if you really need to run a broker credit check once you find a freight broker you want to work with?

Simply put, the broker you choose to work with can make or break your experience. Although it’s tough to get in with top freight brokers because they prefer to work with carriers they know and trust already, becoming established with one or more will help you streamline your work and ensure timely payment.

This article will explore how to check freight broker credit scores, reputations, and freight broker authority, how to compare freight brokers, and how to choose the best freight broker to work with.

How to Conduct a Comprehensive Freight Broker Credit Check and Review Credit Scores

Conducting a comprehensive credit check on a freight broker is crucial to ensure your business interactions are secure and financially sound. Start by requesting a copy of their credit report from reputable credit bureaus. This report should provide a detailed business credit score, which reflects the broker’s ability to pay on time. A good credit score, typically above 70, indicates financial stability and reliability. Additionally, it’s important to check for any history of not paying carriers on time or a history of paying in full, as these are critical indicators of a broker’s financial health.

When examining the credit report, pay attention to the broker’s cash flow and overall financial health. These aspects are especially important in the transportation industry, where timely payments are crucial. Also, consider conducting regular credit checks, as a broker’s financial situation can change, impacting their creditworthiness. By ensuring that the freight broker maintains a good credit score and has a reliable financial history, you set your business up for success, minimizing the risk associated with working with a broker who may have low credit or a history of financial instability.

1. Conduct a Broker Credit Check Through a Third Party

A formal credit check will show you the broker’s payment history and help you determine whether the freight broker you are considering working with is a credit risk or not. When checking a freight broker’s credit score, pay special attention to how long it typically takes the broker to pay and whether they’ve defaulted on payment. Although the credit check will show several years back, the recent history typically matters most. For example, you may notice slow payments five years ago. If all recent payments are made in a timely manner, it may signify the broker has recently become more stable.

If you’re working with a freight factoring company, they’ll usually take care of this step for you. Factoring companies will even help you identify how much work you can accept from each broker without taking on any unnecessary risk. For example, you might learn that it’s better not to accept more than $50,000 of work from one broker but discover another can likely make good on up to $500,000 in payments.

2. Check Freight Broker Authority to Ensure the Freight Broker is Licensed

Freight broker authority is the permission granted by the government that allows brokers to facilitate the load deliveries between shippers and carriers. The Federal Motor Carrier Safety Administration (FMCSA) grants this authority. Brokers are required to be licensed if they’re engaging in interstate commerce. Because of this, accepting work from an unlicensed broker is risky. Instead, use the FMCSA Licensing and Insurance search (also known as the FMCSA Broker Authority Search) to confirm the broker you want to work with is licensed. Having the broker MC number before you search is helpful, but you can get started with as little as the broker’s name and state.

Be aware that the search will return multiple business types, so ensure the entity type and operating status state that it’s an active broker. It’s also worth noting that it’s possible to be a broker owner-operator. Brokers can be carriers too, but they cannot double-broker their cargo.

3. Check Insurance and Bonding Details

Licensed brokers are required to have a $75,000 surety bond, known as a BMC-84 Bond. That way, if the broker does not make good on their payment obligations, the carrier owed money can make a claim against the bond and still get paid. The broker is then liable for repaying the bond company.

Insurance is also vital. Not only is it legally required, but their insurance will be leveraged if something unfortunate happens on the road.

In addition to being required by law, insurance and bonding demonstrate professionalism and help protect you as well. Look for these details when you run your FMCSA search.

4. Explore the Freight Broker’s Industry Certifications and Training

In most cases, freight brokers are not required to undergo any additional training. That means anyone who can get licensed, insured, and bonded can be a broker. Find out if the broker you want to work with has taken the initiative to expand their knowledge through additional certifications and training.

5. Ask Other Truckers and Carriers About the Freight Broker’s Reputation

It is always a good practice to check a broker’s online reputation and to ask around to see what other companies’ experiences have been with the broker in question. If you have contacts in the freight industry, ask for word-of-mouth recommendations. You can also search online for information and company reviews. Think beyond traditional “freight brokers near me” searches. For example, load boards will often have broker profiles or forums in which people discuss their personal experiences with different brokers. You might find mentions of brokers on review sites or with the Better Business Bureau. Check locally and the state in which the broker is headquartered.

6. Ask the Freight Broker for Information

Touch base with the broker anytime you can’t confirm the details outlined above and find out where you can get the information. You may also want to ask questions related to:
- How long the broker has been in business.
- What experience the broker had prior to opening the business.
- If they have references they can put you in touch with.
- How the broker plans to pay you.
A reputable freight broker will be happy to supply you with whatever information you need. However, if you feel like you’re getting the runaround or the information you’re receiving doesn’t add up, it may be best to forego the opportunity. Partnering with an unlicensed or unreputable broker can leave you without your hard-earned pay and potentially legally liable for any issues that occur.

Key Questions to Verify a Freight Broker’s Creditworthiness and Reduce Risk

To accurately assess a freight broker’s creditworthiness, it’s important to ask pointed questions that reveal their financial practices and stability. Inquire about their business credit score, which is a direct indicator of their financial health and their regularity in paying bills on time. Ask for a recent business credit report to verify this information independently.

Questions should also target the broker’s practices regarding their payment terms and history. For instance, how often do they conduct a credit check on themselves? What is their policy on maintaining a good credit score? Do they have a history of paying carriers on time, or have there been instances of delayed payments? Such inquiries can help you gauge the broker’s financial reliability and their commitment to upholding good business practices. Understanding these aspects is critical for forming a lasting and profitable business relationship in the freight and transportation industry.

Streamline Your Broker Checks with Freight Factoring

Freight factoring companies have grown in popularity because they accelerate payment for carriers. As soon as a load is delivered, a factoring company can advance the payment to the carrier and wait for payment from the broker. Some freight factoring companies also offer services like fuel cards to help their clients save cash too.

Because the broker ultimately pays the balance, freight factoring companies can work with carriers of all sizes—even owner/ operators. They’re more concerned about the broker’s credit than the credit history of the carrier because of this, so they run credit checks on the brokers too. That means the carrier has greater protection and faster payment. It’s more flexible than broker quick pay because you can also work with any broker of your choosing. For freight brokers looking to improve cash flow and ensure consistent payments, freight broker factoring provides a reliable solution, offering immediate funding while mitigating credit risk. At Charter Capital, we offer money-saving fuel card programs for our clients, free credit checks, flexible terms, and competitive rates, so you can focus on your load and not on chasing payments. To learn more, request a free transportation factoring rate quote.
July 8, 2022
4 Ways the Transportation Industry is Addressing the Truck Driver Shortage

The transportation industry was short some 80,000 drivers by the end of last year, according to American Trucking Associations (ATA) Chief Economist, Bob Costello. Already at an all-time high, Costello believes the shortage of truck drivers could reach 160,000 by 2030. His sentiments are echoed throughout the trucking industry.

It’s not just a problem for the transportation industry, though. Trucking alone is responsible for moving more than 70 percent of all freight in the United States, per ATA reports. The trucker shortage is impacting the overall cost of goods and has the potential to halt commerce in its tracks.

What is Causing the Truck Driver Shortage Issues?

More than half the shortage of drivers can be attributed to retirement, according to the National Transportation Institute (NTI). Its representatives say the average age of a commercial truck driver is 54, and new entrants are 38. The industry isn’t attracting younger drivers, which many attribute to a reputation issue with the industry. The scarcity of drivers entering the field simply isn’t enough to make up for those leaving and increased demand.

The root of the issue, however, isn’t as clear-cut. Some cite difficult or downright unsafe working conditions and low pay. Others point to the pandemic and note that training and licensing programs reduced capacity or shut down during the early months of COVID-19.

Still, some contend there isn’t actually a driver shortage. “We’ve seen that what economists would call a reallocation of drivers,” Jason Miller, associate professor of supply-chain management at Michigan State University, explained to Business Insider. He believes that truckers simply moved to smaller transportation companies, became owner-operators, or moved to short-haul.

Challenges Due to Driver Shortage

The majority of truck drivers are inching towards their fifties and find it hard to keep up with the growing demand. This predicament often culminates in a high turnover rate. When coupled with extended working hours, the trucking profession can venture into the realm of unsafe occupations due to the potential for exhaustion and fatigue-induced accidents.

The root of this truck driver shortage is multifaceted. The impending retirement of a substantial segment of the workforce is a significant contributor, and unfortunately, there’s a shortage of young drivers entering the profession to fill the impending vacuum. Further complicating matters, the trucking industry’s competitive nature often leads recruiters to prioritize hiring seasoned drivers, creating an entry barrier for those new to the field. Other obstacles that exacerbate the shortage include stringent regulatory and safety standards, the repercussions of the COVID-19 pandemic, and a noticeable gender imbalance in the industry.

4 Ways the Transportation Industry is Addressing the Truck Driver Shortage

With so many causes and potential causes for the truck driver shortage, a multi-pronged approach is being used across the industry.

1. Improving Truck Driver Wages and Conditions

The median annual wage for heavy and tractor-trailer truck drivers was $45,260 in 2019, according to the U.S. Bureau of Labor Statistics (BLS). Truck driver wages climbed to $47,130 in 2020, with many reports that drivers received raises three to five times last year.

But, pay is only one part of the equation. Drivers often spend weeks away from home jutting across the country. Restrictions on hours, set to combat fatigue behind the wheel, all-too-often leave truckers with the decision as to whether they want to stop at the nearest grimy rest stop simply because it has guaranteed overnight parking that will allow them to catch a few restless winks, or press forward to the next stop that may be nicer, but could leave them stranded on the shoulder overnight due to insufficient space.

To combat this, many companies are switching to a hub and spoke system. Similar to the way airlines work with connecting flights, the hub and spoke system has truckers following a single path from a home hub to one that may only be a few hundred miles away, allowing for more work/life balance and precious nights and weekends at home.

2. Introducing Apprenticeships and Lowering the Truck Driving Age Limit

Truckers 18 and up have historically been allowed to drive big rigs in most states, but federal law has prevented them from crossing state lines. However, the Federal Motor Carrier Safety Administration (FMCSA) recently established the Safe Driver Apprenticeship Pilot Program (SDAP) to help address this. Under the three-year program, those 18-20 with an intrastate commercial driver’s license will be able to cross state lines, provided they meet specific criteria, the FMCSA reports.

Many states, such as New York, are easing restrictions on younger drivers as well. The new legislation will allow those 18 and up the opportunity to earn a CDL Class A through a specialized training program, something once reserved for those ages 21 and older, ABC News reports.

These initiatives will make it easier for trucking firms to recruit younger drivers straight out of high school, but it could take years before they provide any real relief.

3. Diversification: More Women and Minorities in Trucking

Moving beyond age, the industry is working to improve diversity on the whole. Greater efforts are being made to recruit female truckers, who presently only account for 6.6 percent of truck drivers, and minorities, who comprise just over 40 percent of drivers per the ATA. Calls are also being made to attract other underrepresented groups, such as veterans. Others, like C.H. Robinson, believe the solution lies in attracting more immigrants to the profession, CNBC reports.

4. Leveraging Technology for the Trucking Industry

When the word “automation” creeps into discussions about the transportation industry, driverless trucks are the first thing that comes to mind. They may be part of the overall truck driver shortage solution as technology improves, but it overlooks one huge problem truckers face: driver detention. While there isn’t accurate or complete data as to how long drivers wait, particularly since it isn’t often tracked unless the length exceeds contractual obligations, around one in ten stops for loading and unloading exceeds two hours, and the average detention time is an additional 1.4 hours according to the FMCSA.

The agency’s big discovery is that crashes rise exponentially as detention time increases. However, its study notes that these delays result in net income reductions of up to $302.9 million annually, which amounts to more than $1,500 for a for-hire each year. It doesn’t even touch on reduced downtime or increased stress and expense.

Through automation and leveraging technology to optimize the shipping and receiving process, the transportation industry can reduce dwell and detention times significantly, thus making the field a safer, more hospitable place to be.

Boost Your Trucking Business with Transportation Factoring Companies

Whether you run a trucking company or operate an established company, maintaining healthy cash flow is key to success. Cash in hand means you have the fuel to take on an extra load, cover maintenance costs, or even add to your fleet, but it isn’t always possible to operate this way when it takes 60 or more days to get paid. With transportation factoring from Charter Capital, you can get paid for your load right away and even get a fuel card that can help save money too. To learn more, request a complimentary rate quote.

April 14, 2022
Was 2019 Just a Pothole for Trucking? Or Something More?

Was 2019 Just a Pothole for Trucking? Or Something More?

Nearly 800 trucking companies failed in 2019, taking almost 25,000 trucks out of the industry’s capacity. Is this a sign of things to come? Or is it an overdue correction?

Celadon Group, by far, represented the biggest name to fall last year when it filed for bankruptcy in December 2019. The Indianapolis-based trucking firm’s demise was the largest in industry history. No surprise, as Celadon was one of America’s 10 biggest trucking outfits at the time. When it closed, more than 2,800 drivers hit the road not with a load to deliver, but a pink slip. Another 1,300 support staffers also lost their jobs.

Ten months earlier, New England Motor Freight shuttered, putting its nearly 1,500 truckers out of work. The company blamed labor costs, excessive regulation, toll increases and insurance rates for its decision to close. Other major carriers that went bust in 2019 included New England Motor Freight, HVH Transportation, Cold Carriers, Falcon Transport and LME.

To be fair, trucking had a banner year in 2018, so anything less than a repeat performance was bound to be a disappointment. A downturn may have even been inevitable. Some believe, even with a driver shortage, there was simply too much capacity in the market. When demand slipped a little in early 2019, it didn’t take much for companies operating with razor-thin margins and little room for error to crack.

But even big companies are hurting. Such industry stalwarts as J.B. Hunt, Knight-Swift and Schneider have revised their outlooks downward. This comes amid news that freight volumes have dropped since reaching a high for 2019 last May. The Cass Freight Index shows shipments in December 2019 at a low last seen in February 2016.

It sure seems like things are bleak. But is this grim view justified?

The United States has entered new trade deals with Canada, Mexico and China. The latter agreement puts an end to a trade cold war between the two giants that has had markets on edge. These trade deals could now spark new demand for equipment, machinery and consumer goods, all of which would absorb excess trucking capacity. Combined with the weaker trucking firms going out of business in 2019, reducing the number of rigs available, rates and revenues should increase, helping boost the industry overall.

No one can predict the future with absolute certainty. While there’s a lot of glum faces in trucking today, there are indicators that better times could be just around the corner. You just have to look for them. Keep in mind that bad news almost always makes for better headlines and generates more clicks. Sometimes you have to read between the lines to get the clearest picture of what lies ahead. Two facts are certain in good times and in bad: Things need to be transported and there’s no more popular or efficient way of getting goods from place to place than trucking.

Is your trucking company currently struggling with cash flow waiting for the turnaround to begin? Do you need the funds presently tied up in outstanding invoices? There is a solution available now. This solution lets you keep on trucking with invoices paid and cash flow problems now in the rearview mirror.

It’s called invoice factoring. With this type of alternative business funding, the factoring company advances you funds in exchange for your accounts receivable invoices. The factoring company pays you right away for your outstanding invoices and takes care of collecting on them from that point forward, freeing you of the troublesome and time-consuming chore.

Invoice factoring is also quick – you can usually get paid within just a day or two instead of waiting the usual 30, 60, 90 days or more. Utilize invoice factoring as often as needed to keep your cash flow running as smoothly as your fleet on a wide-open, traffic-free road. Invoice factoring is a convenient alternative to traditional bank loans or fee-laden online loans. To learn more about how factoring companies work, simply call toll-free 1-877-960-1818

February 4, 2020
Female Drivers Revolutionizing the Trucking Industry

Female Drivers : The next time a semi tractor-trailer truck picks up or drops off a load at your dock, you may well encounter a woman behind the wheel. Once almost exclusively the bastion of men, the trucking industry is now welcoming more and more women.

The profession has seen a 68 percent increase in the number of female truck drivers between 2010 and 2018, according to the American Trucking Association. More than 234,000 women were employed driving trucks last year, the association said. This represents just 6.2 percent of all drivers (3.5 million total), but the trend is on an upward slope.

Equal pay was a main reason more women were getting behind the wheel. Truck drivers earned a median yearly salary of $44,500 in 2017, according to the Bureau of Labor Statistics. This is higher than several traditionally women-dominated careers such as office administration ($38,990), healthcare support ($32,380) and food preparation ($25,580).

Female Drivers Revolutionizing the Trucking Industry

Driver shortages and retention problems have been plaguing trucking firms in recent years, with an estimated 60,000 driving jobs unfilled at the beginning of 2019. That number is expected to grow to nearly 175,000 by 2026. Companies desperate for more gear jammers to meet increasing customer demand aren’t eager to turn away willing, qualified candidates, no matter their sex.

As a female driver from Missouri, Deb La Bree, summed up in a Fox News story: “The steering wheel knows no gender.”

Several changes in the trucking industry have made it easier for women to enter. For example, new truck transmissions are easier to operate and are less grueling to use over a long-distance haul. In addition, truck drivers are no longer required to unload their cargo at their destination.

“New technology and equipment make truck driving a job that’s more geared toward women,” said Lindsey Othmer, a truck driver in Fife, Washington, in a recent Wall Street Journal article on the growing number of female truckers.

Rebekah Koon explains in a recent Fox News story, “I don’t think it’s all about the pay. I can say, on a personal level, that I actually just really enjoy the trucking… I enjoy the people I meet and the sights I see. I also know that the pay was a definite benefit,” she admitted.

Besides equal pay, what are some other reasons more women are jumping in the cab?

“I like being on my own and making my own decisions about how I’m going to get the job done,” driver Lanelle Devlin tells CNBC’s program Make It.

Margo Mitchell of Schneider says on her company’s website that she was born to be a trucker. “My dad raised me to be a driver,” she recalls. “He saw a God-given talent. At 15, I pointed at a tractor-trailer and asked if he thought I could drive one of those. He looked me in the eye and said, ‘You’re a Mitchell. You can drive anything.’ I started studying for my CDL before I even had a permit to drive a car.”

Schneider has a dedicated page devoted to telling women what it’s like to be a female driver for the company. Schneider driver Toni Thomas gives this advice: “Women shouldn’t be afraid to get out of the norm. I think driving can make a woman feel empowered. I also believe that women are safer drivers because they aren’t afraid to ask questions, ask for help and are willing to learn.”

In the 1970s, the Virginia Slims cigarette brand ran an iconic advertising campaign congratulating women on their progress in the business, political and social worlds. “You’ve come a long way,” the ads proclaimed. Today, not only have they come a long way, but they’re going even farther, often behind the wheel of a big rig on the open highway.

November 19, 2019
The Streets are Paved with Gold for Gear Jammers as America Celebrates National Truck Driver Appreciation Week

America’s transportation infrastructure is crumbling, with traffic-clogged freeways, pothole-strewn side streets and aging bridges making travel as much an aggravation as an adventure. But for the nation’s 3.5 million truckers, these troubled byways have lately proven to also be yellow brick roads leading to prosperity.

In fact, according to the American Trucking Associations (ATA), there’s no better time to be a trucker or to own a trucking firm in the U.S. The industry enjoyed a robust $796.7 million in revenues in 2018, up nearly $100 million from the previous year. Truckers moved almost 11.5 billion tons of freight in 2018, representing 71.4 percent of all U.S. tonnage freight. That number could be surpassed this year, as the ATA’s July 2019 truck tonnage index surged up 6.6 percent over June. The association is projecting the growth will continue over the next decade, forecasting a healthy 25 percent jump by 2030.

To celebrate, the ATA has declared Sep. 8-14, 2019, as National Truck Driver Appreciation Week. The week will honor truckers for the jobs they do in delivering tons of products and goods safely, securely and on time throughout the country. The ATA estimates more than 80 percent of U.S. communities rely exclusively on truck drivers for deliveries.

“Truck drivers are an integral part of the nation’s growing economy and deserve to be celebrated by their companies, customers, neighbors, families and friends,” ATA President and CEO Chris Spear said in an association press release. “Everything that we consume – groceries, school supplies, clothes, medicine – gets delivered by a truck driver whether it’s to your front door, your local market, or your workplace. These drivers improve our quality of life by dedicating themselves to safety and making every effort to deliver the things we need efficiently, professionally and responsibly.”

There are an estimated 1.2 million trucking companies across the nation. Combined, these firms operate 15.5 million trucks, two million of which are tractor trailers. The ATA says most carriers are small companies – 91 percent run six or fewer trucks and more than 97 percent operate 20 or fewer. About one in nine of the country’s 3.5 million drivers are independent owner-operators.

However, despite these numbers, there is a tremendous shortage of drivers, with more and more work available and not enough men and women behind the wheel to do it. The ATA estimates that an additional 60,800 drivers were needed at the end of 2018, and that number could be higher at the end of this year. Experienced drivers are retiring (the U.S. Census Bureau indicates the median age for a truck driver is 46 years of age versus 41 for all workers). Freight service demand is rising, due in no small part to a surge in e-commerce, which relies almost exclusively on deliveries. So, for younger workers looking for jobs in demand with plenty of income potential and growth, the trucking industry should be an appealing career choice.

Two issues facing many small carriers and independent owner-operators are cash flow and timely payments on invoices. Having slow-paying customers can put the brakes on a trucking company’s operations and growth. One easy way to improve cash flow and overcome slow pay (or no pay) clients is to sell your invoices to a third party, also called a factoring company. The factoring company can fund you the amount of your outstanding accounts receivable invoices upfront, giving you the cash you need today to run your business today, and eliminating the worry and hassle of slow pay collections. You’re left free to run your business. Invoice factoring is a convenient alternative to a traditional bank loan or fee-laden online loans. Factoring gives you the money you need when you need it with no long-term obligations. You can also get cash quicker through invoice factoring – usually within a day or two. To learn more, simply call toll-free 1-877-960-1818 or email [email protected].

September 9, 2019
The 21st Century Trucker is as Much a Digital Jockey as a Road One

Citizens’ band radios (CBs) were once all the rage in the 1970s trucking industry. The handy communications device truck drivers once used to stay in touch with each other on long cross-country trips became a sudden trend. This was thanks to a popular culture that romanticized the stoic trucker and the freedom of the road. Hit songs such as “Convoy,” blockbuster movies like “Smokey and the Bandit” and TV shows such as “Movin’ On” fueled the hype. Regular folks began buying the sets and installing them in their cars and pickups. They dreamed of being Burt Reynolds and Jerry Reed trying to evade Sheriff Buford Justice and make the big delivery on time.

What many a daydreamer didn’t realize is that being a trucker is more than “Eastbound and Down.” It’s a hard life spent on lonely highways and in greasy diners, far from family and friends. Being a trucker takes a special breed, one that becomes accustomed to the hours of service it takes for their long hauls. This adds to truckers’ near-mythical standard in modern American culture and leads to instant understanding and camaraderie amongst their select group.

Today, the CB radio fad has long since faded. Few of the would-be Bandits of the ‘70s remember their long ago “handles” or what “10-100” even meant. But truckers still go on riding the highways, just not quite as they did in 1976 at the height of the CB craze. Lots of new rules and regulations govern the amount of time they can be behind the wheel. A driver shortage has helped lift their pay as demand for truckers exceeds supply. That’s not the only thing that’s made a trucker’s life easier today than when “Breaker, Breaker” was showing in theaters. Digital technology has turned a generation of highway jockeys into Web surfers and app junkies, and that’s been a big boon for everyone.

A trucker spends a lot of time in the cab. Innovations, new technology, and applications can now turn that cab from a place to not only control the vehicle but to also run an office. Things that once had to be done by hand or manually back at headquarters – such as logs, trip sheets, delivery reports, etc. – can now be more effectively handled directly from the truck itself by the driver. Many of these devices operate via voice command, ensuring the driver can keep his or her eyes on the road and hands on the wheel.

Apps boost driver safety in other ways. Phone and Web apps enable drivers to quickly alert the main office of truck problems, show where to get help when needed, and provide diagnostic information to speed any repairs. Other truck-mounted electronic devices relay vital safety information to the driver, such as cameras, sensors, blind-spot warning and collision avoidance systems.

Data drives the trucking business today as much as Peterbilt or Mack. Thanks to digital technology, artificial intelligence and specialized programs, truckers can quickly determine how to make each delivery more efficient and productive. GPS trackers monitor rig locations, making dispatching easier and timelier than before. Such technology especially aids the small, independent trucker, making them more competitive with the big carriers in a way never possible before. The more efficient their operations, the better they can cut down on waste and boost their bottom line.

Finally, digital technology has aided truckers and trucking companies in recruitment and retention of employees. In an era of driver shortages, the last thing a carrier big or small needs is to not have personnel available to make deliveries. This costs the company money and potential future business. Apps have been developed that function like job boards once did at interstate truck jobs. This gives drivers instant information on what loads are out there and who is hiring. Cledus Snow depended on Bandit and his Trans Am driving far in front as blocker, and CB radio for key information on his run from Texarkana to Georgia. Today’s trucker, meanwhile, has an array of electronic and digital tools at his or her fingertips that can indicate where the next truck stop is located, the truck’s fuel efficiency, tire pressure and how many hours have been logged. Whether eastbound and down, westbound or any direction in between, it’s a new, better road from the 21st century trucker.

July 12, 2019
Texas’ Strong Economy, Pro-Business Attitude Make It a Top State for Truckers

Keep on truckin’. That’s the message the Lone Star State sends over-the-road owner-operators looking to make it big in the transportation and logistics business.

In 2016, more than 3,000 trucking industry professionals throughout the U.S. were surveyed to determine the best and worst states to own and drive a truck. The survey revealed Tennessee as the nation’s best for truckers, with California “raking the leaves” at the back end of the convoy.

The survey factored several items to determine its rankings. These included cost of overnight parking, fees/regulations, if location in the U.S. mattered, and how friendly states were to drivers. Texas finished a solid fourth in the best state’s derby. Were there to be another survey, it’s likely the state could finish higher thanks to the state’s “put the hammer down” pro-business attitude and economy.

Texas benefits from a strong economic base that often booms when times are good and weathers slow times better than the rest of the nation. This creates and sustains demand for consumer and industrial goods and products, goods and products that must be transported over the road. Small trucking companies have plenty of opportunities to compete for these loads, even outfits new to the market. In addition, Texas is home to three of the nation’s largest cities and one of America’s biggest ports. It’s no surprise that Texas cities ranked among the Top 10 in several freight transportation categories in a 2018 trucking survey by DAT Solutions.

The Lone Star State also has a business-friendly agenda. This means fewer laws and regulations that add to costs, sap cash reserves and make doing business harder. These include complex labor and environmental laws that can be burdensome for trucking companies of all sizes, but smaller ones in particular.

In 2018, Texas won CNBC’s annual Top State for Business in America award. It was the fourth time Texas has won top prize in the award’s 12-year existence. Texas Gov. Greg Abbott explains:

“When given the freedom to aspire, Texans risk their own capital and invest in themselves and others by opening businesses large and small. And success is contagious. New business formation in Texas is at a five-year high. Start-ups are growing here right alongside Fortune 500 companies and more than 2.6 million small businesses. It’s no surprise that Texas is ranked by CEOs as the best state for doing business, now for the 14th year in a row. As one Texas entrepreneur puts it: ‘If you like big ideas … build your business in Texas.’”

Meanwhile, Texas placed third in a similar Forbes magazine survey of best states for business.

Texas’ low business taxes and lack of an income tax make it an attractive place to open a business of any size. It’s a top state in terms of access to the capital a business like a trucking outfit needs to expand and grow.

Texas is a big place with tens of thousands of miles of highways. The state has invested heavily in infrastructure and roads in both rural and urban areas. Better and less congested roads make a trucker’s job easier.

Whether you’re eastbound and down, westbound or any other direction, Texas should rank high on your list of places to locate a trucking firm.

Once you’ve set up shop in the Lone Star State, you may find you need to add employees, buy new equipment or improve your cash flow. If so, consider invoice factoring. Invoice factoring allows you to “sell” your accounts receivable invoices to a factoring company. The factoring company pays you upfront for outstanding invoices, giving you the cash you need today to run your business, and eliminating the worry and hassle of slow pay collections, leaving you free to run your business. Invoice factoring is a convenient alternative to a traditional bank loan or fee-laden online loans and risky crowdfunding. Each of these sources require a long-term contract. Factoring, however, gives you the money you need when you need it with no long-term obligations. You can also get cash quicker through invoice factoring – usually within a day or two. If you would like to learn more about how invoice factoring works and how it can put your cash flow into the fast lane, simply call toll-free 1-877-960-1818 or email [email protected].

May 6, 2019
Trucking Industry Holds Great Promise and Poses Great Challenges for Smaller Operators

Trucking industry great promise for small operators: Back in the 1970s, there was an inescapable popular saying you could find plastered all over t-shirts, posters, bumper stickers, and even as part of a Billboard chart-topping song. “Keep on Truckin’!” The saying certainly reflected the times. Truckers were greatly admired. They were seen as a hard-working, independent breed ready for endless adventure on the wide-open highways of America. What little boy didn’t want to be like Burt Reynolds or Jerry Reed in one of the greatest all-time trucker movies, “Smoky and the Bandit”?

Fast-forward 40 years, and little has changed. Trucking remains as popular as ever in the public lore. For those who like the solitude and the call of the road, there’s no better time to drive a big rig. If you’re one of those people who has always dreamed of “putting the hammer down,” this may be a suitable time for you to fulfill that desire with your own small trucking firm. Or then again, it may not be, depending on which side of the wheel you sit.

The good? According to the American Trucking Associations (ATA), trucking is high-balling it towards the greatest era in its storied history. ATA president and CEO Bill Graves says he “see(s) no scenario, no outcome on the horizon that is anything but great for this industry.” The ATA is robustly predicting overall industry revenue will jump 72 percent by 2022 and tonnage moved will climb nearly 24 percent in that same timeframe. Truckload volume, meanwhile, will grow 3.5% a year through 2019.

The ATA reported an all-time high in trucking tonnage hauled in February 2016. Other market research studies have indicated that higher demand and ever-rising shipments could create a capacity crunch down the road. This crunch could pave the way for those wanting to enter the industry. Indeed, one report trumpeted that small independent trucking firms are among the nation’s fastest-growing small businesses.

Sounds great, right? Throttle down and take your foot off the accelerator for a second. Before you shift into high gear, lasso up some friends and start your own convoy down the Interstate in search of trucking riches, a few other important things need to be considered.

The Advantages of Small Trucking Companies

Small trucking companies and owner-operators are carving out their own path to success, armed with a deep understanding of the pros and cons of operating on a smaller scale. Despite facing challenges such as navigating supply chain issues and balancing start-up costs, these entities enjoy distinct advantages over their larger counterparts. The freedom to choose types of freight, coupled with the personal touch they can offer in the supply chain, sets them apart in a crowded market. For those dreaming of a career in the trucking industry, becoming an owner-operator within a smaller trucking company not only provides a more intimate driving experience but also opens doors to a variety of trucking jobs that might not be available in larger firms.

With an emphasis on quality over quantity, small trucking firms are adept at offering customized solutions to shippers, ensuring that even the most specialized freight requirements are met with precision and care. This flexibility extends to their operation model as well, where drivers and owner-operators often enjoy more leeway in choosing their routes, thereby improving job satisfaction and work-life balance. Additionally, smaller companies may offer more attractive packages for drivers, including competitive wages, vacation time, and even life insurance options, addressing one of the industry’s biggest hurdles: driver recruitment and retention.

However, the journey for small trucking companies is not without its bumps. The initial start-up costs, license fees, and the need for a safety team are significant considerations. Yet, for many, the advantages of running a smaller operation—such as closer relationships with clients and a greater sense of ownership and independence—outweigh these challenges. In an era where the impersonal nature of large corporations can be a turnoff for both employees and clients, the personalized service offered by smaller carriers becomes a compelling selling point.

As the trucking industry continues to evolve, the role of small trucking companies and owner-operators will be pivotal. Their ability to adapt quickly to changing market conditions, coupled with their commitment to providing personalized service, positions them well to navigate the highways of opportunity. For entrepreneurs and career seekers alike, the small trucking sector is great ground for growth, innovation, and success, proving that in the world of trucking, size does not always dictate capability.

Trucking Industry, a Few Other Important Things Need to Be Considered.

First off, the trucking industry is undergoing a number of regulatory changes. The new regulations may put a brake on trucking’s headlong rush towards a new golden age. These include stricter limits on the number of hours a driver may be behind the wheel per day and per week. A number of governmental entities are also considering more and stricter health exams for commercial drivers, who have to sit for long periods, making them more susceptible to health problems.

So not only can drivers be behind the wheel for a shorter time, reducing productivity and profits (both for the company and the driver), but there are fewer drivers than ever. A massive driver shortage has stymied practically all haulers, big and small, with rapid turnover rates common as drivers continually jump for more lucrative offers from the competition. Not enough new drivers are entering the industry and today’s drivers are rapidly aging, creating even more significant shortages. Industry watchers speculate that the trucking industry will have to hire 89,000 new drivers every year just to keep pace.

That means wages are rising to entice people into the cab. That’s great news for drivers but not so welcome for company owners trying to fulfill more and more orders.

Finally, new technology is having a big impact on trucking. Companies slow to embrace new technologies are finding they are increasingly less efficient and are becoming roadkill for faster, more nimble haulers who swallow them in a convoy of mergers and acquisitions.

So as you can see, the road ahead for the trucking industry has some great opportunities in terms of increasing demand for service, Still, there are also several potholes to dodge in terms of finding and keeping drivers. One effective solution for small trucking companies is freight bill factoring. By working with a freight bill factoring company, trucking businesses can convert their unpaid invoices into immediate cash, ensuring steady cash flow and the ability to meet operational needs without waiting for customer payments. If you’re a small business entrepreneur looking for a new challenge, trucking could be a lucrative path to prosperity, provided you have a firm grip on the wheel, gear your expectations accordingly and carefully map out your route.

June 7, 2016