Denied funding? Meet an angel

"There’s riches in the niches." That saying might be key to small carriers finding sustainable growth and profitability. Today we're spotlighting insights from an investor focused on trucking entrepreneurs. 

Meanwhile, Pilot is opening new travel centers, just as a new study finds a lack of truck stops is harming emergency preparedness.  Plus, one fleet is giving its drivers the biggest pay raise in the company's history. But first: check out the carnage left behind after a thief went on a joyride with a stolen firetruck. Let's get rolling.

Breaking bank barriers: How small fleets can grow

Have you ever struggled to get a business loan from a bank? You're not alone. Financial institutions often view small trucking fleets as high-risk businesses, and they may be reluctant to loan out money. 

But there are still plenty of ways to grow in a financially sustainable way, and a lot of it comes down to understanding your costs and your niche. We get tips today from Stephanie Winston, the founder of Barbs’ Angel Investing, which is focused on entrepreneurs in the freight trucking industry. —Shefali Kapadia

What are the most common financial pitfalls for small business trucking companies?
The most common financial pitfalls are cash flow management, poor financial planning and management, lack of financial literacy and short-term gratification. Most companies have not calculated their cost per mile (CPM), which results in running loads at negative, zero or slim profit. Another common pitfall I see is carriers sourcing all their freight from load boards such as DAT or Truckstop. They put all their eggs in one basket. Diversifying and including direct contracts in your business model will mitigate spot market volatility. 

Why is it so difficult for small fleets to gain access to capital that would help them grow their business?
It’s difficult for small fleets to gain access to capital because of its high-risk market and cash flow management. A lot of banks and financial institutions categorize trucking as high risk and shy away from giving loans. When a trucking company provides its bank statements, it shows clearly the revenue and expenses. With poor cash flow management, instant gratification and high expenses, there are a lot of cases where companies will end their month in the negatives after generating $15,000, which gives financial institutions a perspective to deny capital.

What's your No. 1 piece of advice to trucking owners to sustain growth, even in a tough freight market?

My advice to trucking owners to sustain growth in a tough market is to understand your operating costs, rent or lease your equipment, think long-term, grow strategically, find your niche, and have a solid plan and foundation. Think deeply of where you are and where you’d like to be. Write your plan and all the steps you’d need to get there. Utilize technology to save time and automate processes. Instead of being open to all freight, find something that interests you and attracts you. For example, if you love cars, maybe focus on car hauling. If you love strawberries, maybe focus strictly on hauling strawberries. There’s a famous saying, "There’s riches in the niches." Focus on one or two things and master it and execute it.

Thinking long-term and knowing your costs will allow you to think of your trucks as an asset investment. For example, real estate investors may only see $400/month in passive income for one property, after their loans and expenses are paid, until the loan is paid off to recoup more of the rent for passive income. It starts to make sense long term after the fifth property. They don’t rely on the first property, they reinvest into more and think long term. Think as an investor. 

Squashing the skeptics: Are driverless trucks closer than we think?

Skepticism often surrounds new technology. "That will never happen," or "It's years away from reality," have been common refrains.

Autonomous trucks have been met with this same skepticism, but veteran truck driver Clifford Petersen thinks driverless trucks may be coming sooner than we think, just as ELD technology became commonplace, despite many in the industry thinking it would never catch on. 

As companies such as Aurora put AVs on the road in Texas without a driver, Petersen sees autonomous trucks slowly but surely coming to fruition. The technology raises a question that's even broader than the trucking industry. As Petersen writes, "If AI’s doing all the work... where does that leave us in the societal mix?"

Why this matters: Autonomous truck operations may improve efficiency and enable long routes that would be tiresome for a human driver. But as with any new tech, plenty of questions remain, from regulatory practicalities to philosophical debates about the morality of swapping people for technology. 

Get more details at Overdrive. 

PAY HIKE: Averitt raises driver pay, biggest increase in 54-year history

C-SUITE SHUFFLE: ArcBest CEO to retire at end of the year

NEW STOPS: Pilot opens, completes renovations at dozens of travel centers

CLEAN TRUCKS: Oregon rules link to California zero-emission truck regs

"I find with a lot of smaller carriers, they're not looking at the long game. They're just looking to put butts in the seat."
—Brandon Wiseman, transportation attorney and President of Truck Safe Consulting 

Hiring in any industry can be tricky, and fleet executives don't always have the liberty of long interviewing or onboarding processes, especially when they need to quickly scale up the workforce or replace quitting or retiring drivers. Wiseman sometimes sees small carriers fall into the trap of hiring drivers without taking a closer look at their records. Those fleets are thinking short term, rather than playing the long game, he said. Listen to his podcast interview on This Week In Trucking podcast. 

Lack of truck stops puts emergency preparedness at risk

A new study finds that a dearth of truck stops negatively affects truck drivers not only during "normal" operations, but also when truckers are delivering supplies to aid in disaster relief, such as for hurricanes. In fact, among the 144 counties in the U.S. that are at relatively or very high risk for natural hazards, nearly 30% lack truck stops from the Big 3 operators. 

Why this matters: Trucking plays a critical role in good times and bad. A lack of access to adequate infrastructure, such as truck stop amenities and parking spaces for drivers, can impede fleets' ability to do their job—especially at times when supply transport is essential. The study sums up the root of the problem: "Many aspects of the current freight system neglect the human side of logistics." (Land Line)

DOT calls for public feedback as it shapes transportation bill

The Department of Transportation put out a Request for Information, asking the public (including consumers) to share “ideas, comments and information” for the next surface transportation rule. The agency is seeking feedback on areas such as safety, including a callout to truck parking, and project delivery, which could affect infrastructure projects related to freight. The current five-year authorization expires next September. 

Why this matters: This is a rare instance for the general public to weigh in on what it sees as priorities in transportation. If the feedback is taken into account for the surface transportation regulation, it could affect some of the ways trucking companies are governed for the next five-plus years. (Yahoo!)

Cargo theft rises at distribution hubs

Cargo thefts are trending in an unfortunate direction. Thefts in Georgia rose 34% from May to June, with ports and distribution hubs near Savannah being a key risk area. Electronic thefts were up 28% month-to month, according to the report by Verisk CargoNet and GearTrack. Bad actors are using fraudulent carriers to reroute truckloads or deploying phishing schemes to target freight.

Why this matters: With criminals' methods growing ever more sophisticated, fleet executives have to keep themselves informed and up to speed on the best ways to try to prevent theft or fraud. GearTrack recommended real-time tracking and visibility, minimizing trailer dwell time and training staff to spot fraud schemes. (Fleet Equipment Magazine)

FMCSA headcount to shrink as staff take buyouts

The Department of Transportation will lose about 7% of its overall staff as employees opt for early buyouts and deferred resignations. The workforce reduction is expected to be even greater within the Federal Motor Carrier Safety Administration, where 169 employees, or 13.7% of staff, have taken buyout offers. 

Why this matters: The news comes around the same time that Derek Barrs is undergoing Senate confirmation hearings to become the next FMCSA administrator. While Transportation Secretary Sean Duffy said the buyouts are designed to reduce "bloat," it may be tough for the agency to carry out its safety mission without sufficient staffing. (Politico)

Thanks for reading today's edition! You can reach the newsletter team at editor@theinsidelane.co. We enjoy hearing from you.

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The Inside Lane is curated and written by Shefali Kapadia and edited by Bianca Prieto.