The End of an Era

IMG_1979There may be a few who will disagree with me on this topic, but from what I’ve seen in the past couple of years, I think I can safely say that what we’re seeing is the tail-end of the independent hotshot era.

It was fun while it lasted, but dang, it’s pretty much over for most of us.

Not to be too discouraging, but the truth of the matter is that the big boys are in the mix up to their eyebrows, there are too many idle trucks, the rates are being driven down by too much competition, and it’s darned hard to justify the expenses involved in independent hotshotting if you don’t have a gob of good customers to keep you running a bare minimum of three decent loads per week.

And by decent, I mean $1000 plus loads.

That kind of load volume is tricky to obtain, nearly impossible to predict, and exceedingly difficult to maintain.

The other trouble there is the fact that loads never, ever end up distributed evenly throughout any given month, so the first and last weeks of a month may be busy, or the middle, or whenever the customer has their shipping rush, so inevitably the independent hotshot guy is going to have weeks where nothing is moving, which means no cash is flowing, and other weeks where he misses out on good loads because he can’t be in two places at one time.

That’s the catch to hotshot work. I’ve said a million times before, hotshotting is a feast or famine roller coaster, and I don’t say that just to be cute.

It’s a grueling, brutal, super-competitive field and the little guy, unless the stars just magically line up perfectly every week, is not going to win. At least not enough of the time to thrive. It’s a struggle that repeats itself over and over again, and getting ahead is pretty much unheard of these days. The normal for independent hotshotting in this modern age is fighting for every load and hoping to God that something else will break loose before you go broke waiting. And that’s if you have a few good customers to start with, otherwise you won’t even get out of the gate.

Now, if things were like they were in the “good old days” of hotshotting, one hotshot could manage to have all the work he could handle, simply because not everyone and their dog who had a pickup truck was out there competing for the work. But these days, it’s a real madhouse of competition.

The trouble with competition on steroids like this is that when you get two or three big outfits sucking up all of the customers, and giving the biggest and best customers cut rates to get their business, you’re not only killing off the little independent guys, you’re also taking bread off your own driver’s tables. But from the big outfit perspective, that’s the way to get enough customers to run their volume-driven business model.

Where the independent guy tries just to get enough volume to keep himself busy and fairly profitable like in the old days, the big outfits have to suck all the air out of the room just to make a small profit per truck. It’s the fact that they have thousands of trucks making weekly little profits for them that drives this business model. And the big guys know how to defray all of their daily costs onto their drivers, while also getting paid by each truck, which is their bread and butter. So they have to run more and more trucks, even if those trucks only bring in one load a week. If you have 3000 trucks handing you around $200 a week each, then you have something going on. They don’t care what the load is, what truck hauls it, what trucks are sitting idle, or what drivers get the “good loads” or the “bad loads”, as long as their trucks move a little and pay out the basic minimum every week they’re happy. And that’s how they work.

They bring in enough to cover their office folks salaries, pay their own light bills, and set aside a chunk for profit. To do all that takes a lot of cash, and that’s what the big outfits are all about.

In order to get that necessary volume, these big outfits set out years ago to starve out all of the little independents by slowly but surely luring their customers away. And it’s not that the big outfits are evil, they’re just doing what big outfits do best. They do what the independent guy can’t possibly do.

They provide a full stable of drivers on call 24-7, never turn down a load, take crap loads and good loads indiscriminately, and send the big oil outfits one easy to pay bill at the end of the month. From the perspective of the big oil players, this is a great way to get their stuff moved. One call to get a truck, one account to keep track of, and one check to cut come pay-time. So really you can’t blame either the big hotshot outfits or the big oil outfits for working hand in hand in this fashion, it’s efficient, it works, and everyone involved is happy.

Except the individual leased owner/op and the independent hotshot, that is.

Now, I’ve been there, done that on both sides of this coin, so I can tell you from personal experience that when your operating costs are a minimum (if your equipment is paid off, that is) of $600 per month in insurance alone – if you are old enough and have a good enough record to get commercial, cargo, and liability that cheap, – plus every other cost involved in moving the loads you do get including fuel, truck maintenance, tires, motels, food, and everything else you can think of that it takes to get something moved from point a to point b, and you have to have continual cash flow to meet those obligations, it’s tough to sit idle for a week or two out of every month waiting for loads to shake loose.

In fact, if you get stuck in a bad cycle for more than a couple of weeks it can and will set you back to square one. With no loads for that long, and waiting for your next loads to pay, you can easily sit for a month and a half with no money coming in. It doesn’t help much to know it’s on the books when it won’t hit the bank for a month. And somehow you still have to keep things moving in the meantime.

Which is where the big outfits get you. You can’t afford to starve as an independent, but you likely will since the big oil players are all using the convenient big hotshot outfits, and what happens is the independent guy finally hits the “no load” wall, gives up his (or her) authority, and signs on with one of the big outfits just to survive.

It’s how the whole thing works, and it’s important to know this up front. Unless you’re “Lucky Luke” or something and just happen to have an inside track to never ending, steady weekly loads, this is usually how independent hotshots end up being big hotshot worker drones once the dust settles.

So this brings me back to the beginning of this post and my rash statement, and I’ll stand by it since I’ve been through the cycle myself, this is the end of the independent hotshot era, and unless the big outfits miraculously decide to close up shop and go home, I don’t expect it to be revived.

Sorry to be the bearer of bad news, but dang, fighting it kicking and screaming doesn’t make it anything else than what it is, and that, folks, is pretty much what it is.

That’s all I’ve got.


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