5 Risks of Running An Independent Trucking Company

A trucking company can prove to be a lucrative business to start. Regardless of whether it is across the street or across the country, all goods need to travel from where they were made to where they will be sold. Moreover, entrepreneurs could help relocate small businesses or residential customers between different areas. For any entrepreneur looking to start a trucking company, there are risks that a person needs to overcome. These risks come from many different directions in trucking. The industry is high risk, high reward and single bad move could spell disaster. Here are the risks of running an independent trucking company.

Equipment Underutilization

One risk that could destroy a new company is underutilization of equipment. Demand for trucking services isn’t steady over the course of the year. There are times when every truck needs to be moving to keep up with demand. At other times, whole sections of the industry are without demand. As a new company, failure to find steady contracts could leave the business with an idle fleet of trucks. The business will have no money coming to pay for wages and maintenance. There are brokers who can help the company find new contracts. However, the best way to protect against these down periods is to plan for them.

Maintenance Costs

With the high overhead associated with drivers and trucks, the company can not risk losing any funds to grow. It’s important to come up with an accurate cost per mile number for each of the trucks. This number should factor in everything from gas and repairs to wages and expenses. Then, use these numbers to come up with a budget that lets covers the overhead and investment money in growing the business. Business owners may have to think ahead and plan how to offset rising gas prices. Without such a plan, the company could slowly drain its cash reserve and buffer without anyone noticing. Then it’s only a matter of time before a crisis wrecks the company.

Following Regulations

Regulations and governmental red tape can improve safety at the expense of the business’ ability to turn a profit. More and more, the government is instituting new regulations to make sure truck drivers do their jobs safely. These regulations impose maximum driving hours and new safety guidelines. They are then backed up by electronic monitoring and required paperwork. While these new steps have improved safety, the red tape and restrictions create extra expenses and limit actions drivers can take. It is important to be familiar with all these regulations and take care to put together company practices that enforce and prepare for them.

Driver Recruitment

A major risk for every trucking company is a lack of skilled operators. This is an industry-wide problem. As the current generation of drivers ages into retirement, new drivers are not coming in in enough numbers to replace them. This shortage drives up wages and hinders company functionality. Even when there are drivers, many of them are not trained an acceptable level. According to Schwartzapfel truck accident lawyers, “The drivers of commercial trucks, vans, buses, and other vehicles often require little to no training, and yet they are often time-pressed to deliver goods on tight deadlines. These factors can lead to accidents with tragic consequences.” Potential drivers are more and more concerned with health issues associated with the job. They also want to remain closer to home and avoid the solitary life of the long-distance trucker. These issues, mixed with higher wages in other jobs, could leave the trucking company horribly understaffed.

Management Distraction

In a trucking company, management is always at risk of becoming distracted by operational problems. With so much costly equipment and so many staff to look after, management for a trucking company will always be operations heavy. It is important to make sure that this does not become a distraction. Owners and managers should prepare to work on both operations and the business side. Such planning ahead will save the business side of the company from being ignored.

Starting an independent trucking will involve many risks. There is a risk that fleet will be underutilized. Maintenance and operating costs can swallow capital required to expand the business. Regulations make it difficult for owners to make a profit. Moreover, managers may have difficulty recruiting drivers for a newer trucking company. Operations issues can take up too much resources without proper process and efficiency. These risks can be avoided, but entrepreneurs must be prepared to overcome them when starting an independent trucking company.

Melissa Thompson writes about a wide range of topics, revealing interesting things we didn’t know before. She is a freelance USA Today producer, and a Technorati contributor.