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100% real advice: Buy a new truck?

Trucking and Dealership Business Operations Advice BadgeDear Jim:
I own a trucking company and we have seven trucks. Business is doing okay and I’m thinking we could use another truck. Should I add another truck to my fleet?

Sincerely, Gettin’ Better Trucking.

Dear Gettin’ Better:

You’re not giving me much to go on here. The truth of the matter is only you can decide if it’s time to add another vehicle or not, and the answer is never simple. There are a lot of factors to consider but here are a few guidelines that might help.

  1. Make sure your sales funnel is strong and (relatively) predictable. Reconnect with your customers and get commitments for work through any busy AND slow seasons coming up. Remember that as you are soliciting new business that your competitors are knocking on your customer’s doors too.
  2. Make sure your assets are efficiently used now. Minimize out of route miles and one way trips. Maximize round trips A-to-B-to-C trips to get more work done in less time can improve fleet efficiency by 5 to 20% and may delay that need for a new truck.
  3. Know your costs. I mean, really know them. Are you buying because of an aging fleet that suffers chronic maintenance down-time? It could be time for a heavy duty overhaul to buy you another year or two on older vehicles.
  4. Take another look at your billing. Are you billing for idle time or is it built into your cost? What is it per driver? Per customer? Per jobsite? Know these answers and compute the resulting costs as part of our overall job costing. Have a chat with your dispatchers or customers to see what can be done to reduce idle time and more rolling time, allowing more work to get done with the same vehicles.
  5. Can your office handle another vehicle without additional cost? Analyze your back office processes for efficiency and capacity, and add those factors into your buying decision.
  6. Consider short-term leasing if you have a spike in business. Daily, weekly or monthly lease/rentals can be cost effective ways to handle a surge in business without huge financial commitment a new purchase can require. When you’re keeping that short term truck busy with no end in sight, then its probably time to buy.
  7. Consider double-shifting or split shifting trucks to maximize rolling time each day. Drop-and-hook solutions and very careful dispatch decisions can help with Hours of Service and scheduling requirements to ensure the best vehicle utilization.

Most importantly remember that these decisions should always be about value. Don’t put the cart before the horse. Make sure the decision brings value to your company and doesn’t tie you down with a payment that might be difficult to cover later.

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Posted in Business
Written by: Carolyn Lee