Conventional wisdom says that if you’re a small-business truck owner and the freight market is in a downcycle, good luck trying to survive against your larger-carrier competition with deeper pockets more equipped to weather the storm.
Lewie Pugh disagrees.
“I would say you can operate at a higher caliber during tough times than a larger carrier,” Pugh said during his keynote conversation with FreightWaves’ Kaylee Nix to open FreightWaves’ Small Fleet & Owner-Operator Summit on Wednesday.
As executive vice president of the Owner-Operator Independent Drivers Association, Pugh is used to hearing how companies like those that make up OOIDA’s membership — 150,000 owner-operators leased to motor carriers, small-business motor carriers with their own operating authority, and employee truck drivers — are at a disadvantage when the economy cools and rates plummet.
But as a former owner-operator himself, Pugh knows from experience that it doesn’t have to be that way at all.
“I wondered a long time ago whether or not it’s fair that when you deliver a load, the receiver looks at you as an extension of whoever you’re hauling for, even though you don’t work for those people,” he said. But Pugh used this to his advantage.
“I learned if the receiver had a problem — maybe they needed a seal fixed — I would fix it, even though it wasn’t technically part of my job, and the little extra made the receivers happy. And it made the shipper very happy because they wouldn’t have to send their employees out there to do it.”
His point: satisfied customers remember who you are.
“In times like this, if you’re a small business, you should have shippers and customers that you work for directly. You should be somewhat insulated like the big fleets are and able to ride these trends. The important thing though is to continue good customer service, continue to give them what they pay for, and they will be so much more likely to continue to use you — and even maybe pay you a little more.”
Taking the ownership plunge
Small-business trucking represents roughly 94% of all fleets hauling freight, but getting started in the business can be a challenge.
“If you have no experience behind the wheel, you need to find a good training facility — not one that promises a CDL in a day or a week,” he said, noting that community colleges seem to offer some of the best programs. “Find a good quality school that will train you. That’s very important to us as an association. We see that problem so often, where guys and gals are not trained well when they’re just starting out.”
He also recommends getting training on a standard transmission engine as opposed to an automatic. “Trucking is going automatic, there’s no doubt. But there are still carriers out there that have manual trucks. So by all means, don’t get that automatic-only endorsement, because you’d be limiting yourself.”
When it comes time to land a job after training, a common first job is working for one of the larger truckload companies, or an apprenticeship program being offered by many of the LTL companies, Pugh contends.
“The key is to take your time and pay your dues, and after a year or two, maybe consider making a switch to a private fleet, or to becoming an owner-operator. But remember: it’s one thing to be a truck driver, it can be quite another thing to own your own business.”
Once you’ve made the decision to go it alone, Pugh recommends creating a business plan.
“Our foundation [website here], which is dedicated to the training and education of truckers, has a lot of videos you can watch for free. They also offer a course called Truck to Success — it’s three days, very detailed, very deep. It’s a bit of an expense, but I always tell people that you’re getting ready to make one of the biggest, if not the biggest expense of your life. My trucks all cost more than my first house.”
Pugh strongly cautioned against getting into company ownership without at least a small amount of capital and credit behind you. “Don’t go into this broke. If you don’t have some money saved and no credit, don’t go into the trucking business – because you’re going to fail.”
Just as important: steer clear of lease-purchase agreements, Pugh said. “There are exceptions to every rule, but I’d recommend against it, because the vast majority of those fail.”
Keeping the wheels rolling
The first few years can be tough in the trucking business, Pugh concedes, but it can also be very rewarding. In his more than 25 years as a successful owner-operator, he accumulated more than 2.5 million safe, accident-free miles behind the wheel.
“I miss it every day — I’d much rather be on the road sometimes, but I also know I’m doing good things here.”
To be successful and to beat the competition, you have to constantly think how to save money, he said, because the average owner operator’s per mile cost is higher than the average large fleets.
“But I always tell people that you need to figure out how to get your operating numbers down to their numbers. For example, I would buy tires that were more expensive, because I found out how many more miles I could run on them. It turned out to be a better deal because the cost per mile was way less.
“So take care of your equipment, maintain it and figure out economical ways to get ahead. That’s how you outsmart the other guy and bring home the profits.”
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How 2 freight agents found success with asset-based brokerage
Click for more FreightWaves articles by John Gallagher.
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