Tips On Buying
The knowledgeable people of expediting generally advise owner-operators to enter this business by first driving for an owner and learning the ways of expediting without that substantial financial investment.
Then, when it's time to buy your first truck, conventional wisdom often says: Buy a used vehicle. A used truck will typically run 40-50 percent less than a new truck. Of course, we're all familiar with the "surprises" that sometimes accompany a used vehicle, and you might not be able to find one with all of the features and creature comforts that you're looking for.
For the purposes of this discussion, we'll assume that you've already paid your dues in expediting. You've been in the business now for a period of time, all the while driving used equipment. You enjoy the lifestyle, it's generated decent revenue and you've even been able to put a little money aside.
That truck you've been running is about to "time-out" with your company or it's coming up on major overhaul time. You and your driving partner are thinking about the purchase of a brand new truck.
Of course, buying the right truck will have a lot to do with the success or failure of your business. In addition, it can be maddening to have to live with a truck that just doesn't suit your needs, i.e., it's underpowered, the sleeper is too small, etc.
Obviously, there are no guarantees that your purchase will be perfect in all areas, but the time you spend investigating the available equipment will go a long ways toward ensuring your satisfaction with that new truck.
Depreciation is an important factor to consider in your new truck purchase. Trucks typically lose their highest percentage of market value in the first year of operation. So, if you decide after a year or two that your choice of that new business vehicle doesn't suit you, prepare to take a substantial loss if you find it necessary to trade for another.
You've no doubt discovered that drivers love to talk about their trucks! Other owner/operators can be a great source of information and, without much prompting, will tell you about their current vehicles. Along with performance, reliability and fuel economy, ask about the kind of service they receive from the manufacturer and their dealer. Ask them if they would recommend their dealer.
Ask them what options or accessories they wish they had equipped their truck with. Use their experience to your benefit.
Expediting truck salespeople are typically very knowledgeable about the trucks they sell and available options. Most dealerships have computer software that enable them to quickly and easily determine price, performance, and availability of various options.
From the Dealers
Don Portice is the Expediting Truck Specialist at Alumi-Bunk of Woodhaven, MI. He says that his years of experience in equipping the expediting trucks for his customers has taught him some lessons about expediting truck sales:
"With the specialized nature of the expediting truck and its requirements, it's probably not in the customer's best interest to simply call their local truck dealer and tell them what they want. The chances are that the typical dealer will only have a basic idea about the requirements of the expedited carriers and the expedited freight business."
"I've had people call me and say that they tried to shop at dealers who don't specialize in this market and it's been a frustrating experience for them. The reality is that there are a limited number of expediting truck dealers out there, but it's also true that these specialized trucks need people who specialize in building them."
Heath Wood, Expedited Truck Specialist of Middle Georgia Freightliner-Isuzu agrees with the importance of specialization: "One area in which expediting expertise benefits the customer is in the technical area. We can help the buyer with wheelbase issues, weight distribution questions, etc.
"We also know which options will benefit the customer, items such as larger fuel tanks, as well as those options that he might be considering, but would not be of value in his application. An expediting truck specialist also has a better understanding of what it takes to get these trucks financed."
Jon Mosier is the Expediting Truck Professional at Freightliner of Knoxville who says that with a dealership that specializes in expediting, "You get the truck that you need at a price you can afford. We will take the time to personally fit the truck to you and your needs."
"With my background in expediting, I know exactly what equipment is needed in the business. We won't try to oversell a buyer just to make money on the truck. We want to sell them a truck that will help them in their business and one that is also affordable. That will increase their profitability right off the bat."
Bill Moore of TSI Western Star in North Jackson says, "Expediting Specialists know their specs. Expediting trucks are different than most trucks; they have a smaller wheelbase, different weight capacity and ratios, etc."
The new truck buying process will probably mean that you will be sitting and talking with the salesman in his office as much as you will be test driving and walking around the trucks. Don't be shy about asking the salesperson to explore your alternatives. You should come prepared to explain how the truck will be used and any special preferences or needs. Ask a lot of questions.
"The truck buyer of today is extremely knowledgeable," says Heath Wood, "and becoming more aware of what they need."
Get price quotes from several dealers and for several makes. Be sure they include all added costs, such as taxes, licensing, transportation and any pre-delivery prep work or modifications done by the dealer.
"We have a wide range of people who visit our dealership," states Jon Mosier, "from people who are just getting into expediting with no trucking background at all. They depend on me to put together just what they need."
"On the other end of the spectrum, I see people who have years of experience in expediting and know just what they want; my role then is just to fill out the paperwork and get them the truck they want."
"My customers are pretty loyal," says Bill Moore, "they've been coming to our dealership for a number of years. They will go out of their way to make it back to our company - not only for the Western Star trucks, but for the Proheat generators we distribute as well."
Spec'ing the Expediting Truck
If you're planning on leasing your new truck with the established expedited carriers, many of the equipment decisions have already been made by the companies' vehicle requirements, and you're probably familiar with their restrictions.
This is an area where the experienced expediting truck dealer will be of assistance; he has probably worked with many of the carriers in truck setup and is aware of the companies' requirements.
Even using those basic company requirements as your guidelines, there are still many choices to be made in setting up that new truck. For the typical general commodity freight that expediters transport, most buyers will opt for the standard 22-24 foot cargo box; usually, the biggest decision to make regarding the box is whether to choose roll-up or barn doors.
Of course, the 24-foot box will limit the sleeper size, so if you've had your heart set on that 168"- two bedroom townhouse behind the cab, it's time to reconsider one or the other. That might be the toughest question for many: How much more revenue-producing cargo could you haul if you decided not to buy that big sleeper with all the creature comforts?
On the other hand, for that expediting couple for which the sleeper is home for a few months at a time, an undersized sleeping/living module can really test the limits of their relationship. Lack of comfort or convenience items in the sleeper can also make that time spent in there a trying experience.
"When I first got into the business," says Jon Mosier, "a 72 inch sleeper on an expediting truck was a pretty good sized unit. Now, most sleepers I deal with are the 84" and 96" models. People are looking for standup height. Customers are not asking for as many features in the sleeper; they're most concerned with the size, storage and comfort."
Jon Mosier says that many options now exist in regards to power trains. No longer is the expediting truck buyer limited to the low-horsepower engines of the past. The new breeds of transmissions, particularly the automated transmissions, are now a viable option for the expediter.
"I work with my customers in designing a totally integrated package: engine, trans, rear end and chassis. I know that if they're not happy with the end result, they'll let know, for sure. I want to get them in the truck that they want, and I want to get it right the first time."
Mosier adds, "Freightliner of Knoxville has been building expediting trucks since 1993, starting with the FL60 and the FL70. We've recently moved into the next generation of expediting trucks with the Freightliner M2 and the Sterling Acterra."
Is Bigger Better?
A growing trend among expediters has been the use of Class 8 platforms for their businesses. Don Portice says that a certain percentage of his customers do specify the big truck cab and chassis, but reports that these customers typically come from a Class 8 trucking background or are looking for a "ten-year" truck.
Tilley says that the majority of the expediters he deals with are Class 7 buyers and they find that size unit more than fills their needs.
Jon Mosier tells us that he will meet customers who are looking for a downsized Class 8 truck. Generally, the people that ask for the Class 8 platform are from the specialized divisions of expedited carriers, and those companies sometimes require a heavier duty truck.
Bill Moore, not surprisingly, has a different perspective on the topic: "The advantages of Class 8 are obvious, you have heavier duty components, longer warranties and rebuild able engines. On a smaller engine in a Class 7 truck, you might have a life expectancy of 300,000-400,000 miles. On a Class 8 motor, the owner might be able to pull 800,000 to a million miles out of it."
Warranties don't guarantee reliability, but they do pick up at least part of the cost if a part or component fails prematurely. Beyond time and mileage, look carefully at written warranty statements to determine what's covered and what isn't. Along with parts and labor, some warranties cover towing and even the cost of a rental vehicle if your truck has to be in the shop more than a day or two.
"Most warranties are very competitive. The customers are knowledgeable in most of those areas and they insist on the best coverage that's available," says Jon Mosier.
First-time buyers need excellent credit. Lending experts say that a record of on-time mortgage or car payments helps. So does a history of prompt credit card payments and minimal debt. If you've had a recent bankruptcy or you're delinquent on a credit card, auto or even rent payments, you've got a big obstacle to overcome.
First-time buyers will pay a little more. According to one "big truck" dealer, new owner-operators with driving experience and "decent" credit should still expect to pay 10-11%.
"There are very few businesses that you can start with zero down. We really believe that an individual who is looking to get into business needs to make an investment."
Bill Moore says that financing has gotten easier for established expediters in the business, but it's still tough for first time buyers. He says that the lenders require first-time buyers to have a very good credit score as well as being homeowners. They also require a sizeable down payment and a commitment letter from the carrier they're leased with.
"First-time buyers are also faced with higher interest," says Moore, "I've seen it as high as 12.5 percent."
Don Portice says that a smart truck buyer should look into lending options other than dealer financing. He does caution that, for example, two Freightliner dealers will receive the exact same rate quote from DaimlerChrysler financing; it comes from DC, and not the dealers.
Lenders prefer owner-operators who have been with the same carrier a number of years. As another Class 8 truck dealer explained, whenever owner-operators change carriers they interrupt the revenue stream.
There's a period of time before the cash flow resumes, but in the meantime, they still have truck payments and other fixed costs. That cash flow problem is worse for owner-operators shifting from carrier lease to running under their own authority.
"If I had a recommendation it would be to understand revenue and expense, and try to match financing to cash flow," says Don Portice.
"Typically, for an individual with decent credit and over-the-road experience," Tilley continues, "the lender will require 10% of the purchase price as a down payment."
"For discussion purposes, we can use this unit as an example: A new, fully equipped Freightliner M2 with 84" Alumi-Bunk condo sleeper is priced at $76,500."
"Obviously, that means a $7,650.00 down payment. Now, with approved credit, the lender will finance the balance of $68.500.00 at 8.75 per cent over 60 months. That works out to $1,421.06 a month."
Portice says that many lenders he deals with will require two years over-the-road professional driving experience as part of the loan applicant' credit-worthiness.
Truck buyers should also be aware of the fact that many finance companies offer other products and services like insurance, credit cards, even bookkeeping and compliance services. It's always smart to shop each item separately before buying a bundled package, but it never hurts to put the full menu on the bargaining table.
Don Portice says that most of the dealers in the expediter truck market will make every effort to win the customers' business, but sometimes, they're limited on price flexibility.
Don't start until you have a firm price quote. Shaving a little off the purchase price is every buyer's wish, but don't overlook other possibilities such as an extended warranty or preventive maintenance services at a reduced rate or no charge.
Caution: Insist that any free or reduced charge extras be detailed in writing.
If it's a warranty, find exactly what's covered and how it's administered. Does work have to be done by the selling dealer or is the warranty good wherever you travel? What's included in a maintenance plan, and where can you get service?
Don't make the final choice solely on the basis of price and incentives. Find out something about the dealer. Do they have a reputation for honesty and good customer service? What happens to their customers - especially their owner-operator customers - after the sale?
So it makes sense to shop first among dealers you know or those who have been recommended.
The value of your truck in three years, five years or whenever you plan to trade or sell it will depend on the make, model and specifications - as well as the condition of the vehicle and the market for used equipment.
To get some idea of what various models and specifications might be worth in the future, ask a dealer to let you thumb through their copy of the NADA Commercial Truck Guide or National Market Report's Truck Blue Book. Or cruise the many used truck locator and sales sites now on the Internet.
As a general rule, Comfort, convenience and appearance features are usually worth a little something extra at resale. A well-equipped sleeper usually brings more than a bare bones unit. Other add-ons that typically boost resale include dual fuel tanks, air-ride suspension, power windows and a full complement of gauges. Extended warranties are also a resale plus, if they can be transferred to the next owner.
At Delivery Time
Inspect your new truck before taking delivery. Make sure it has everything you specified. Look for missing or loose bolts, chafing hoses and wiring, lube levels. Make sure doors fit properly, the heater and A/C work, dash controls are functioning, and the truck is properly lubed.
Do a test drive, checking for vibrations or unusual noises, problems with steering or balance. Review the paperwork to make sure any promised "extras" have been included in writing. Review the break-in schedule and recommended maintenance with the dealer's service manager. Make sure any discrepancies or problems are corrected before you drive off the lot.
"Most of the people in expediting," Heath Wood of Middle Georgia Freightliner-Isuzu states, "and even those coming to this industry from outside of trucking, are business people. They're worried about cost per mile and maintaining their bottom line. They are aware of profitability of their truck."