Although it’s wise to never say never, starting a trucking business usually requires a bit more than getting the appropriate license and purchasing a vehicle. The logistics pose challenges you need to overcome if you want your startup to be a success.
Surmounting those obstacles is not impossible – it can take time and effort, and perhaps even some grit and determination, but it is possible. If you do it, you’ll find out first-hand just how much the trucking industry has to offer.
Below, we’ll explore the biggest challenges in the industry—challenges that startups and many established businesses face. We’ll also share a few tips that can put you on the right path to overcoming them.
Trucking Business Financing
In 2019, the initial cost of getting a trucking business up and running ranged between $10,000 and $20,000 and those figures haven’t changed too much since. Of course, it’s best to seek professional guidance if you want to keep the cost manageable, but even then, financing can be a challenge.
Thankfully, it’s one of the easier challenges to overcome and there are several ways you can do so. Consider approaching a business financing company or applying for a lending product at a bank or other financial service provider.
Some loans you can apply for include:
- Startup business loan;
- Unsecured business loan;
- SBA loan;
- Business line of credit;
- Merchant cash advance; and
- Equipment finance.
Use your trucking business financing to purchase or lease equipment and get the required permits and licenses. You can also use it to set up a base of operations, to maintain and repair your vehicles and other equipment, and to grow your business.
Compare funding options carefully to choose the best solution for your business.
The trucking industry has faced various safety concerns since its earliest days, and recent events such as the COVID-19 pandemic have compounded them. The challenge here is to do what you can to prepare yourself, your business, and your drivers for both the known and the unknown.
Some safety concerns that you need to prepare for include:
- Driver fatigue—Heavy work schedules can lead to fatigue, sleep deprivation, and highway hypnosis AKA white line fever.
- Pandemic-related issues—Your drivers may have to travel to COVID-19 hotspots, and will need a supply of sanitizer and PPE. They may also have difficulty finding restaurants or rest stops that are open during lockdown periods, during which only essential services and businesses may operate.
- Hazardous distractions—Smartphones, portable TVs, other road users, motor vehicle accidents, GPS alters and instructions, and attempting to multitask while driving can be hazardous distractions for drivers.
- Bad weather—Even with constant improvements in technology, weather forecasts are still educated guesses, and mother nature always has the final say. Apart from unpredictable weather, you also need to prepare for the increasing number of extreme events such as super storms.
Encourage drivers to take regular breaks, to maintain constant awareness of speed and stopping distance, and to stay informed about weather conditions.
Shortage of Truck Drivers
In 2018, the American Trucking Associations’ (ATA) Chief Executive, Chris Spear, revealed that the trucking industry was short on drivers by 63,000 positions. Not even a 15% increase in median salary over the preceding six years was enough to attract enough drivers to prevent such a dire shortage.
According to ATA vice president, Bob Costello, the annualized turnover rate of drivers is a massive 94%, which means only 6% of drivers remain in their position each year. The drivers’ average age of 49 years also plays a part in the challenging truck driver shortage predicament.
The Federal Motor Carrier Safety Administration (FMCSA) proposed a pilot program that could see an apprenticeship program for commercial driver’s license holders under the age of 21 to operate commercial vehicles in interstate commerce.
Contact the U.S. Department of Transportation and express your support for the DRIVE-Safe Act, which could help ease the truck driver shortage.
Whether you consider state or federal regulations that affect trucking businesses, you’ll find that they’re under constant review and revision. The challenge it poses is that it becomes more difficult for you to operate strictly according to the letter of the law.
Among the regulatory changes implemented in the last few years are:
- Increased minimum wage, which varies from state to state
- Requirements for electronic logging devices
- Issues around hours of service, such as shift length and voluntary and involuntary breaks for rest or poor weather
- The cost of required alcohol and drug sobriety tests
Keep yourself updated regarding state and federal laws and regulations. The FMCSA is a great resource for this.
Decaying infrastructures such as roads, bridges, and tunnels have been a widespread problem in the U.S. for decades.
What’s more, they’re a challenge that you can’t do much about, other than encourage your drivers to be alert regarding road conditions and to report problems with infrastructure to your state’s Department of Transport.
You’ll find that there are many relatively steady expenses involved in running a trucking business. However, there also are variable costs, and they can vary considerably.
Some of those costs include:
- Tolls—The cost of road tolls vary from state to state.
- Fuel—Fuel can make up as much as 20% of your business’s operating costs—and its price also varies from state to state.
- Maintenance and repairs—Regular maintenance costs may be relatively steady, but that’s not the case if repairs enter the picture. Repair costs can vary wildly, depending on the nature of the problem.
- Lodging—Spacious truck cabins are great, especially if they’re equipped with a comfortable bed, laptop or portable TV, and microwave. But they’re no substitute for a real motel room that offers plenty of space and room to rest—and rest is what drivers need to avoid fatigue.
Prepare to face at least some of the challenges involved with variable costs by opening a business credit card, from which you can withdraw funds as and when required.
There’s no getting away from the biggest challenges facing trucking businesses, even if you do manage to avoid one or two.
The important thing to remember is that with foresight, planning and determination, you can overcome the challenges and see your business thrive.