How to start the transport business in the USAMarch 5, 2022 2022-03-06 11:48
How to start the transport business in the USA
How to start the transport business in the USA
Hi everyone. The topic of today’s video tutorial is how to get started in the transport business in the USA. We will talk about starting off in this business, the basics of transport business and the types of trucks, their advantages and disadvantages and are best suited for the transport business. Let’s talk about two main options in getting started in transport business.
The first option is to become an owner operator. This is where you own and operate all the trucks in your fleet. In my opinion, this is the best option as you will be working on your own trucks and drivers. This doesn’t mean you need to have a lot of trucks. You can start small and increase the amount of trucks you have as business grows. In this scenario, all the income goes to you and your business.
The second option is to buy a company. If you’ve decided to purchase a company, please do your homework on the company you’re purchasing. When buying a company, you need to be fully aware of the relationship it has with brokers, whether there are any problems or negative marks with this company. Most importantly, whether there are any terminations or problems with insurance companies. Also taking the account the person you’re buying from and their cooperation, insist in contract that they remain with company for one year. In the United States, this is perceived in such a way that the existing owner already has certain accumulated experience. If a company is sold to you outright, it will be considered as new company. You can lose all insurance preferences and lose all preferences for working with brokers.
Let’s discuss the purchase of trucks and their pros and cons. The success of any business is steady income. In the transport business, that means, keeping your trucks on the road as much as possible. The easiest way this is accomplished is when you buy new trucks as you don’t spend time and money on the repair as often thus keeping them on the road more. The drawbacks to purchasing used trucks is, they breakdown more often and are not as reliable as new trucks. This can lead to high repair costs and less time on the road.
Let’s compare the most popular brands of trucks in the transport business. Volvo and Freightliner. In order to evaluate these trucks properly, we need to consider the main costs associated with them. Service and repairs and fuel consumption. Service and repairs costs are determined by how quickly the old change is carried out, what warranty repairs are available, how old the truck is and if there are any issues with the electronics or other problems with the operation of the truck. Fuel consumption is just what it sounds like. How much fuel the truck uses per haul.
Let’s talk about the Volvo truck. The greatest advantage of this truck is that it’s made for the driver. It moves [0:02:57 inaudible] and the cruise control, it allows you to set an optimal speed that will save you money on fuel. Also, they have a powerful engine and quite a comfortable cabin. Volvo is also fairly affordable when it comes to service or repairs. And the older model of Volvo can break down like any other truck but the damage is often minor and a skillful driver can easily repair them. The key here is to know as much about the repairs of your truck as possible so that you don’t spend much downtime for the repairs.
Here’s the average fuel consumption on the Volvo after 50,000 miles. Volvo averages 6.5 to seven miles per gallon depending on the type of load. The optimal speed for such fuel consumption, cruise control at 70 miles per hour or manual pedal speed at 72 miles per hour.
Now let’s move on to the Freightliner. The Freightliner Evolution second edition is easy to operate, more spacious, very reliable and easy to repair. Shouldn’t have problems. Yet, its fuel consumption is nine miles per gallon depending on the type of load. You can save up to 30% versus that of Volvo. The biggest drawback is that it’s less comfortable for the driver which is important for those long hauls. Now, let’s discuss the pricing on trucks and the return on investment.
For example, let’s say you have a million dollars. You can easily buy seven or eight trucks. Let’s break this down by truck. On average, a brand-new truck will cost you $142,000 provided that you have your own MC and DOT insurance and dispatcher. This truck will on average net $4,000 a month. So, let’s say you own seven trucks. Multiply that by 4000 per month and your monthly income is $28,000 per month. Now let’s calculate the payback period of the project.
If your monthly income is $28,000 multiplied by 12 and your annual net income is $336,000 with those calculations, the payback period for seven trucks in this project is three years. You can earn more, you can earn less. Why? Because the truck will operate for two years at almost no cost. These costs I’m referring to are oil changes and tire replacements which is a natural depreciation. After two years, these costs will start to come up. Let’s estimate that the cost for these is $1,500 per truck multiplied by seven equals $10,500 per month, multiplied by 12 equals $126,000 per year. These are your expenses which are absolutely objective and will appear.
Therefore, well, the payback period for seven trucks in this project is now four years. Of the four years, you have your base. This scenario is based on seven trucks. You can always increase every component of this project. Buy more trucks, increase the number of hauls. Keep the most current programs that search for cargo jobs, choose competitive insurance. Most importantly, you can contract to other owner operators to increase your jobs and income potential for the first two years and earn more by simply having your own MC and DOT. Your own insurance company and managing the business yourself controlling everything.
Additional advantages are possible with the percentage of MC and DOT. When you transfer an operator to another owner operator, you have insurance which you can sell at a higher price and you can make contracts directly. Thank you for watching. Goodbye.