Power-only trucking, where carriers pull trailers owned by other entities, might seem like an attractive option for new trucking companies due to its perceived flexibility and ease of entry. However, this sector of the trucking industry is fraught with hidden challenges and costs that can be detrimental to the unprepared and inexperienced. This guide aims to unveil these pitfalls, providing a stark reality check for new trucking companies considering a foray into power-only trucking.
The Deceptive Allure of Non-Owned Trailers:
Opting for power-only trucking means dealing with non-owned trailers, and this choice comes with a substantial set of drawbacks. Carriers often experience an increase in deadhead miles, are subjected to inflexible rates, face higher insurance premiums, and encounter logistical nightmares. These challenges can quickly erode profit margins, making power-only trucking a risky venture for new entrants.
Limited Load Choices, Limited Earnings:
When new carriers choose power-only trucking, they inadvertently limit their load options, constricting their ability to earn consistent revenue. The industry is dominated by a few major players like UPS/Coyote, TQL, J.B. Hunt, and Amazon Relay, each with their specific systems and requirements. These platforms often offer less room for negotiation and a lower selection of high-paying loads, leaving new carriers struggling to maintain profitability.
The High-Stakes Game of Load Booking:
Engaging with platforms like Amazon Relay can be particularly challenging, as securing loads becomes a competitive, time-sensitive endeavor. The rapid-fire nature of these platforms leaves little room for thorough cost/revenue evaluation, often leading to less-than-ideal financial outcomes. Furthermore, the prevalence of bidding wars on platforms like Coyote and J.B. Hunt's 360 can result in carriers undercutting each other, ultimately driving down rates and profits.
The Misleading Appeal of Load Out Trailers:
Some carriers might consider Load Out Trailers as a workaround, moving empty trailers from one point to another while potentially hauling other loads along the way. While this may seem like a clever strategy, it often results in additional deadhead miles and forces carriers to make compromised decisions on load selection, all of which chip away at the bottom line.
The Sticker Shock of Insurance Costs:
New trucking companies must also brace themselves for the substantial insurance costs associated with power-only trucking. Liability insurance can skyrocket to $30,000 or more annually, with additional costs for trailer interchange and non-owned trailer coverage. Opting for usage-based policies to reduce costs can limit operational range, further constraining earning potential.
In conclusion, power-only trucking is laden with hidden costs, logistical challenges, and competitive pressures that can be overwhelming for new trucking companies. The limited load choices, high insurance premiums, and operational complexities create a precarious business environment, often leading to financial instability. New entrants to the trucking industry are advised to tread cautiously.