Jared Flinn [00:00:18]:
You're listening to the Boltloads podcast, your number one resource for everything bold freight truck.
Jesse Runions [00:00:28]:
Hey, guys.
Jared Flinn [00:00:29]:
Jared Flynn with the Bulk Loaves podcast. Got Tyler in here with me.
Tyler Allison [00:00:33]:
What's going on?
Jared Flinn [00:00:34]:
This is going to be a favorite. This is. I can sense it already.
Tyler Allison [00:00:38]:
Yeah.
Jared Flinn [00:00:39]:
Today's podcast.
Tyler Allison [00:00:41]:
I've been anticipating this one.
Jared Flinn [00:00:43]:
Yeah, we've been strategizing this one. We brought the man myth, the legend, Mr. Jesse Runyons, the freight wizard on again to talk about just what it takes to start a trucking company. And over the years, we realized a lot of people have no idea what it takes. Maybe even some people that have been trucking for 1015 years. Some of all the intricacies, because there is a lot to do with filings, with getting registered, all the overhead stuff. But yeah, I had a buddy of mine come by the office and he's a local guy here, friend that I work out with, and he started up a trucking company and he was like, jared, he goes, I wish there was a playbook or a list of things you need to do. He goes, I didn't know that I had to do all these.
Jared Flinn [00:01:32]:
You know, we told him, what do you need to do? We also put him in contact with the permit shop here locally and they helped get him set up with his authority and all that. But there's just a lot to cover on getting set up. So that's why we're excited to have Jesse.
Tyler Allison [00:01:45]:
Yeah, I think there's so much value in this episode simply because Jesse covers literally everything from step one all the way through. And I think it'd be good just for the brokers and shippers to learn just what it takes to run a trucking company and all the hoops that these guys have to go through. But yeah, Jesse covers how to get insurance, your authority permitting. If does he even talks about how to even goes into what the best banks to go to for securing a truck loan and what those loan officers want to see. Really, it's just a gold mine of a podcast to show how you can start a charging company, but also how you can even grow the one you've already started.
Jared Flinn [00:02:28]:
Yeah. So there's a lot to unpack in here. Even if you're a veteran in the industry, I think there's going to be some golden nuggets that you're going to take away. So this is one that you're going to want to kick back and listen to. Before we get started with the show, just a couple of things going on. We want to feature today, instead of doing a truck feature, we actually want to feature a video that we did. One of our members, Matt Demel, we had our video crew go up and do a video of his son Jacob and his race car. And, man, Joe, if you want to get up and show, or if you want to show the video of this, it was really good.
Jared Flinn [00:03:02]:
There's a separate YouTube link that you can go and watch the full episode. But it's just an awesome family video. Watching a child and his dreams, man, we hope Jacob goes to the moon and back and racing. So awesome.
Tyler Allison [00:03:15]:
I tell you what Joe is, man. He's got some skill when it comes to a camera. This looks like a NASCAR video or something. I got pumped up just watching it and he told me that just, he thought he was on like ESPN or something, had his own camera crew filming him driving his go cart down the driveway. But yeah, it's really cool. So check it out.
Jared Flinn [00:03:36]:
Yeah, really cool video. Why we're talking about that. It's 2024. We did a lot of sponsorships last year for race cars. And if you are out there and you're in the racing and would look for or would love looking for sponsors, we would love to sponsor you. We want to give back to the community, especially to members that has graciously done business with us. So if you have a relative, especially like a son or daughter that's in racing, even sports, we've done rodeo stuff, we've done fair stuff, then reach out to us. We would love to sponsor that and be a part of your community.
Jared Flinn [00:04:13]:
So if you can, what's probably the easiest way?
Tyler Allison [00:04:15]:
Easiest way is just to send it to
[email protected]. Just get in contact with us and just explain kind of what you're looking for. And if you have any pictures of a little league team or the car or whatever you're wanting sponsored, just send it over to us. We'd love to see it and we'll chat with you from there.
Jared Flinn [00:04:34]:
The only thing we ask in return are photos and feedback so we can share that with more of our community out there. I love seeing the videos of kids racing around or different sports events, rodeo events, stuff like that. But yeah, get a hold of us, even drop down in the comments box. And we are very diligent on getting back with you and we'll do that as well. So cool. Well, back to the show. Here is my conversation with Mr. Jesse Runyons.
Jared Flinn [00:05:04]:
All right, I got the freight wizard back. Mr. Jesse Runyons. Thanks for coming back on the show.
Jesse Runions [00:05:10]:
It's always a pleasure to be here.
Jared Flinn [00:05:12]:
Yeah, well, I hear always after your shows, I get a lot of feedback. Mr. Dan Redding commented how much he enjoyed your last podcast on here, but you're probably one of the most guests we hear about a lot on coming back. So thanks for making the trip up.
Jesse Runions [00:05:28]:
No problem.
Jared Flinn [00:05:29]:
Yep. Well, we're going to talk about starting a trucking business. Some of the feedback that we've gotten from listeners of the podcast is basically, how do you start a trucking business? Actually, a friend of mine just recently started a trucking business and he said, jared, I didn't realize how many steps there were in starting a business. So we're going to actually today go through each and every one of those businesses that we think now there may be something we may be missing and we can even plug those in later on. But we really want to talk about what are those steps if you're out there looking to start a trucking business. But I'll also say maybe you've already started a trucking business and we're going to lay out some things that maybe you didn't plan on or maybe didn't incorporate into your trucking business that you might be able to put in there.
Jesse Runions [00:06:14]:
Right.
Jared Flinn [00:06:16]:
So, well, let's start off with like Jesse, I'm going to let you kind of kick it off and I'll interject as I go along. But talk about what we see a lot of people, and there's different aspects of it, but there are usually maybe company drivers that want to get their own authority and want to be their own boss. So they want to go out there and start their own trucking business. We also have people out there that maybe they know someone or a business that needs trucks or has freight to move so they look into starting businesses. But then also like my friend that I mentioned, he's actually in a whole separate industry. He's in financial planning, but he had a friend that has a trucking business and he wants to invest in the trucking business.
Jesse Runions [00:06:54]:
Well, the first thing with any business is study a market area with trucking. You don't want to be deadheading 100 and 5200 miles to get your first load out of the house. So that's the most important thing. What is in your area? What does it pay? What possibilities do you have to build your own customers outside spot freight? And then the next important thing is finding the capital to start it up. So you got to have the business and then you got to have the money. You got to have money to make money.
Jared Flinn [00:07:36]:
Yeah. And I think that's number one. It's just like in any business, this isn't just trucking, but it's having a business plan in place. And like you said, actually knowing the market and where those opportunities lie with the trucks, and again, where that freight is. Because if someone wants to get into trucking, they got to know what opportunities they are, kind of where they're domiciled or where they're going to be moving and whether that's going to be van freight, refrigerated freight, flatbed freight, bulk freight, like we do. And a lot has to do with geographically where you're located.
Jesse Runions [00:08:06]:
Yeah. And the business plan is the most important aspect. Nine times out of ten, if you're going to a bank or a lending institution, they're going to want to see your business plan before they even think about giving you an application for a loan. So there's a lot of resources to create your business plan. The Small Business Administration has ten steps to start your business. First thing right there on the screen, conduct your market research and then build your business plan. And then right after that, funding your business. So again, it comes back to finding your money, finding your market.
Jesse Runions [00:08:49]:
To close the circles, this is probably.
Jared Flinn [00:08:52]:
More of obviously a banker or financial institution question, but typically if you're going to go to a bank, there's going to be so much money or capital that you're going to have to put down on. So if you're looking at trucking again, starting with one truck, and I'm going to use easy math, but say it's $100,000 truck, I'm talking about a used truck, not a brand new truck, and then probably a 30 $40,000 trailer and we'll talk. There's other ways too of leasing and renting that, but typically you're going to have to have 20% of that, give or take.
Jesse Runions [00:09:25]:
And trucking right now is viewed as a risky industry. So it may well be more that the bank requires the startup put up capital. And again, you want to go in there with a bulletproof plan. You want to go in there with a list of your customers or potential customers that you've already lined up and what resources are available to you outside of your organic customers to keep the truck rolling, to keep it earning revenue. And when you're talking about equipment, you got to look at the front end costs. What kind of equipment do you want? You got to look at the maintenance aspects of it. Do you go Kenworth or Freightliner or whatever brand? What power plant do you want under the hood? What are the problems with it? Especially with the newer engines? You have all the EPA functions of the engine that unfortunately makes downtime more frequent rather than less.
Jared Flinn [00:10:26]:
Yeah, well, that's what my friend, I'm going to keep referring to just because he's walked through this process. He found it was a used truck, and I don't know the maker model, but I know it was 53,000. But he bought a warranty with it. And I know from experience other guys that have done that. And actually one of the partners at Smart Freight, Rachel, her husband took a route and ended up having more trouble with an older truck model versus having a newer truck model. So I would just say do your homework and try to figure know less is not best when it comes to a semi truck.
Jesse Runions [00:10:57]:
And regarding older trucks, as time goes forward, we've seen this during the pandemic when supply chains get strained. What's going to get the higher priority? The 2001 Detroit diesel for parts that has a shrinking population or the 2024 Cummins engine? So as time goes forward, getting those parts for the older engines will become more.
Jared Flinn [00:11:24]:
Yeah, yeah, that's really good. So we talked about, and one last thing I was going to ask on the financial lending, and you may or may not know this, Jesse. Like, are there certain banks that are more apt or have more of an appetite for lending to trucking companies? Or is it more just going to your local bank and seeing what they could provide or opportunities that they have?
Jesse Runions [00:11:46]:
Probably your first stop should be your local bank. My experience is smaller banks actually will have more of an appetite to lend to a trucking company because it's there. It comes down to relationships. If you already have a relationship with your bank, so you already got somewhat of a trust factor there. Start there. There are out bigger institutions that will lend to trucking companies. Anchor finance comes to mind. Right off the top of the head, I want to say exclusively loans to trucking companies, but a big portion of their business is trucking.
Jared Flinn [00:12:25]:
And while we're talking on the banking, obviously it's one thing to get a loan for the asset itself to be on the road, but also talk about a little bit about the cash flow aspect of it or just having a credit line because it's one thing you got the truck purchased, but as many people know or maybe don't know, there's a lot of fuel tied up that you got to have a lot of costs up front before you're ever getting one dollars of income off that truck.
Jesse Runions [00:12:51]:
Yeah, just starting with the receivables. If you're doing everything on your own, some customers will pay faster within 72 hours to a week. Others are usually between net 14 and net 30. So you have to have enough cash to support your operation throughout. All those vagaries or invoice gets messed up or something goes on hold status, it gets lost in the mail. You don't want to be so totally dependent on your receivables revenue that at the end of the week you're rolling pennies to see if you're going to operate the next week.
Jared Flinn [00:13:24]:
Yeah. Is there a mathematical equation to know how much you need to have in cash on hand?
Jesse Runions [00:13:31]:
I mean, per truck, one week's operating cost, one week's operating bare minimum.
Jared Flinn [00:13:36]:
Okay.
Jesse Runions [00:13:37]:
Otherwise you are literally sweating from day to day. Am I going to be able to fuel this truck? Am I going to be able to pay my driver? Yeah, at least one week. I mean, preferably a month. On a personal level, they always recommend you have six months income stashed away. Good luck with that. In a trucking business, I doubt even the mega carriers have that kind of a reserve.
Jared Flinn [00:14:04]:
Wow. Well, talk to this and then we're going to get back to getting the truck set up because there's a lot of legal stuff and just getting a truck license and all that. But talk about another option when you're looking at cash flow is actually factoring because there are companies that are going to be a net 30 days, like you're going to haul today and it's going to be one month before you see that money.
Jesse Runions [00:14:27]:
One month before they mail the check.
Jared Flinn [00:14:28]:
One month before they mail. Yeah. So yeah, you're talking about the time they receive it, process it, and then the 30 days that you actually receive.
Jesse Runions [00:14:34]:
You could be looking at 45 to 50 days before you see turnaround on the payment. But definitely factoring. I'll cite the bulk loads alternative, smart freight 2%. You're not going to get much better of a deal than that, especially if you're a one or two truck or three truck business. You're not going to hire an accountant to do all your invoicing and your receivables monitoring for you. So factoring is a way to go. It'll pay for itself. That 2% is basically payroll that you're not having to pay even a minimum wage person.
Jesse Runions [00:15:13]:
You're looking at 30,000 a year to keep up with your invoices and whatnot.
Jared Flinn [00:15:18]:
Yeah. And so again, smart trade funding is another resource that's under the bulk loads umbrella of companies. And we offer that for companies. Again, starting off, we have thousands of companies that use it today. And again, we think of it just like Jesse said, as kind of like think about outsourcing your receivables and not being at the mercy of when you're getting paid. Know when you send that ticket in the day you haul that load, that money is in your bank account the next day.
Jesse Runions [00:15:45]:
Even though at PRB we don't use a factoring company, my contingency plan, if I ever get a plus net 30 payer, is going to be picking up the phone and calling Rachel and seeing is this an approved shipper? Let's get set up.
Jared Flinn [00:15:58]:
Yeah. And we do have companies like that where there are ones, they build direct, and then if there are ones that are plus x amount of days or longer, then we will factor them.
Jesse Runions [00:16:06]:
And this is self serving to what we're talking about. But the one thing on factoring companies to watch out for is the contracts. You do not want exclusivity where you have to run every invoice that you do through them. You want that flexibility that, hey, if I want to bill direct, I bill direct. Or run it through the factoring company, because you need the cash fast. You don't want to wait 30 to 50 days for that cash to come to you.
Jared Flinn [00:16:31]:
So let's go back to talking about you've went to the bank, you've secured the loan, you found a truck, you've got the truck purchased. We're going to go ahead even and say, you got the trailer purchased, you got all that purchased, own it. What's the next step on licensing? I think this is where people get confused on what needs to be set up in the process of getting a truck legally on the road.
Jesse Runions [00:16:55]:
Well, before you even get the licensing part, your lender is going to want that truck insured.
Jared Flinn [00:16:59]:
Oh, yeah.
Jesse Runions [00:17:02]:
And then to get your authority to operate your fleet, you'll need insurance before.
Jared Flinn [00:17:09]:
You can get your authority, I believe.
Jesse Runions [00:17:10]:
Yeah, that's absolutely correct. You will need to get your insurance before you put the truck on the road. It will need to have physical damage. So all three of those answers are insurance. Then you get to the point of registering with your state, doing your 22 90 with the IRS, drug screens, even for yourself. One truck, you got to purchase queries from the FMCSA or go through a third party. It'll do it for you to do your drug screens. Because the clearinghouse that FMCSA has now, the national clearinghouse, when I take a drug test, the results are registered with the FMCSA, especially if they're bad results.
Jesse Runions [00:17:50]:
They want to get the people that probably shouldn't be on the road, off the road. And the best way to do that is know he's got to go through this program before he can even re qualify to drive OTR, do you know.
Jared Flinn [00:18:05]:
And just kind of break that down a little bit because some of that's even still unclear to me how that works. So if you're the owner and you're going to be driving it or going to have a driver underneath you, they have to get a drug screen. And that's got to be submitted through the FMCSA and approved before that driver can.
Jesse Runions [00:18:24]:
Well, the approval process, you come up clean on your screen, the result gets submitted to the FMCSA, you're good to go. Add to that, you got to do the back one truck operation. You still got to run your MVR on yourself every year and submit, keep it on record. Because trucking companies are required once per year to run mvrs on all drivers in their fleet.
Jared Flinn [00:18:47]:
Is that a certain time of year or is it just once a year?
Jesse Runions [00:18:49]:
Typically most companies do it around July, but I don't think there's an actual set period as long as there's something in your established procedures that you have a policy. Because I remember working for one company, they did on your anniversary year, and then most companies, it was mid year, end of quarter two, and they ran it.
Jared Flinn [00:19:08]:
Okay, I'm going to actually backpedal a little bit too. A lot of people, and I'm going to try to throw everything we can even before that person gets licensed or gets approved the drug screening, he's got to carry a CDL as well.
Jesse Runions [00:19:22]:
And that's a bigger hurdle now, too, because you require accredited training. So it's no longer, hey, I drove with my uncle for a while under a learner's permit, CDl learners, and I went and took my driver's test. Now you got to have so many hours for the air brake component, all the different components of driving. Take that written test from an accredited school, training school, then take the test again at the DMV and then get licensed after your driver's test.
Jared Flinn [00:19:58]:
And all that gets submitted to the.
Jesse Runions [00:20:01]:
Supposed, it's regulated by. I don't know how much gets actually submitted. You're talking to an accounting guy, not a safety guy.
Jared Flinn [00:20:10]:
Okay, well, let's go back to talking about just the licensing of that truck with the FMCSA, getting your authority. And what does that really mean, getting.
Jesse Runions [00:20:22]:
Your authority means you have the authority to operate interstate. As far as FMCSA, you actually go through your start of record to get your authority. Actually, you go through USDOT and FMCSA to get your authority to register your truck. You go through your state where your business is and through your state. And every state has different procedures on that. Every one of them have websites that can kind of guide them through. Some states are better than others. And I always say, do it yourself.
Jesse Runions [00:20:56]:
Learn how the process goes. But the alternate route, there are third party entities that will do that all for you.
Jared Flinn [00:21:04]:
They're typically called permitting businesses. There's one here locally in Springfield called the permit shop, which we recommend all the time pageant. She's been on our show. Welcome you to go back to previous episodes and listen to her. But there are companies because I think it can get in the weeds there. Someone trying to understand how to get set up. And if you can just pay someone to do all that for you.
Jesse Runions [00:21:26]:
Yeah, it's a boggle, but it's just a bureaucratic boggle. It's paperwork. None of it is rocket science. It's just you got to have patience and time to take time to read. It's just like putting together your kids toy at Christmas. You got to read the directions.
Jared Flinn [00:21:41]:
When you're getting set up to having your authority and being apportioned for certain states, can you kind of talk about that? Because you can get set up right just to run in trust start. So we're in Missouri. So that truck is never going to leave the state. But then you can also get a portion to run surrounding states, but you can get a portion to run all 48. How does that really work?
Jesse Runions [00:22:03]:
Well, now.
Jared Flinn [00:22:05]:
And why is that? Because you're paying more to run more states right now.
Jesse Runions [00:22:11]:
When you get your IRP cab card.
Jared Flinn [00:22:14]:
What does that mean?
Jesse Runions [00:22:15]:
You have to ask me. I have to look it up later. But no, when you get your cab card or your registration, it used to be you had to select the states you would operate. Now they automatically assign you all 48.
Jared Flinn [00:22:29]:
Okay, I didn't know that.
Jesse Runions [00:22:30]:
So that's not an issue anymore. Now there are some oddball states that have their own fuel permitting process. That's outside of IFTA. Oregon comes to mind. I think New Mexico too. Colorado used to. They're kind of on again, off again, but now interstate, you're not even going through the FMCSA. You're going through your state of record.
Jesse Runions [00:22:57]:
Whatever their interstate authority and registration requirements are. Some are really simple. Some are just as involved as FMCSAs but interstate, you can't go outside the.
Jared Flinn [00:23:13]:
Guess. You know, back in my day when we were hiring trucks and I worked at, you know, there were some trucks, hey, we have a load going. I'm just saying Kansas down into Texas. Well, I could always remember some haulers like, well, I can't run Texas or I can't run.
Jesse Runions [00:23:28]:
Put it on their IRP. Yeah.
Jared Flinn [00:23:29]:
Okay. But you say today, though, they register where you're all 48.
Jesse Runions [00:23:34]:
Yes.
Jared Flinn [00:23:35]:
Okay. So that's not the case as of today. Like it used to be. Okay.
Jesse Runions [00:23:39]:
And I think the FMCSA did that at the urging of the ATA because they did run into their owner operators. Hey, I don't have that on my cab card. I'm sorry. I'm not going there.
Jared Flinn [00:23:49]:
But I will say from an insurance perspective, your insurance company that you're going to work with, they are going to want to know what states that you're going to be operating in.
Jesse Runions [00:23:58]:
They're going to want to know as.
Jared Flinn [00:23:59]:
Far as your quoting premium.
Jesse Runions [00:24:01]:
But unless you're doing something really an insurer way outside the normal commercial trucking insurance spectrum, they already know that that truck is going to be insured wherever you're tagged. Okay, that makes sense.
Jared Flinn [00:24:20]:
Talk about when we're talking about getting licensed and all that. So we've kind of walked through the process of getting set up and getting your card. What is the ongoing reporting that has to be done on that trucking as a business owner? Because it's not like you don't get set up and then you're just once a year. But I know that there's certain things that that truck or that company has to report through the FMCSA.
Jesse Runions [00:24:46]:
There's two things that are separate, and this is actually department of Treasury, IRS. Once a year, July 15 is your 22 90, your heavy highway use tax. Right now, it's been the same for years. $550 a year.
Jared Flinn [00:25:01]:
Per company.
Jesse Runions [00:25:02]:
Per truck.
Jared Flinn [00:25:03]:
Per truck. Okay.
Jesse Runions [00:25:05]:
And then outside of that, and it flows through your state is the IFTA agreement that it's intrastate federal tax agreement where all the states agree to collect out of one pool their individual tax rates, where the truck operates.
Jared Flinn [00:25:26]:
Hey, guys. Good morning. As you can see, it's pretty dark, but wanted to get this out to you all. Can you do me a favor? And I'm not trying to tell you to use our services and board, but, man, I want you today to go out and do one just small act of kindness for someone else. And I mean, it can be super small if you're at a truck stop today, man, buy the person behind you's lunch or snack or whatever he's getting, man, if you're in a drive through, pay for that person in there, man. If you can write just a short letter to someone out there and mail it to them, just letting them know they think about it, man. I guarantee you trying to think about other people and less about yourself will, I mean, pay dividends on your life. I think we go through life always trying to think what I need to get done today.
Jared Flinn [00:26:19]:
What's the next thing I need to do to excel and taking care of my family and all that's important, but I want to encourage you today. Just do one thing, just one simple thing. I learned this trick at a church 20 years ago. But go out and just do one random act of kindness. It can be something super small. I mean, a lot of you guys out there on the road, maybe it's, man, just waving to a kid or honking your horn on, but, man, do that today. Make a mental note. Try to do it every day.
Jared Flinn [00:26:50]:
One simple act, and I promise you it will pay dividends on your life, on your development, and on your career. Thank you and God bless.
Jesse Runions [00:27:01]:
So you have to make a quarterly report on your IFTA. And sometimes you'll be owed a refund, and it's just like any other tax and sometimes you're paying it, but that's based on your mileage per state and gallons consumed per state.
Jared Flinn [00:27:17]:
So talk about in simple terms because it can get confusing. And I have people ask all the time about IFTA. I know a lot of drivers we talk to, especially running fuel cards, they have to keep track of that. So they know. But how does that work? So I'm in and, but I'm going to be crossing over and filling up in Oklahoma. I'm going to be filling up in Arkansas.
Jesse Runions [00:27:39]:
Well, today, most of your fuel card providers will do your IFTA reporting for you. Another route to go. A lot of your eld providers will do your IFTA reporting for you, too. Even if you do the taxes yourself. You can pull your IFTA report smiles per state. Then you got to fill in the blank how many gallons you filled in each state.
Jared Flinn [00:28:02]:
I'll say permit shops do that as well.
Jesse Runions [00:28:04]:
Right?
Jared Flinn [00:28:04]:
They'll outsource and do all that for you. But I think today, and I'm not downplaying whichever is easier, but with technology today elds, from what I've heard, it's not that hard to do.
Jesse Runions [00:28:15]:
No, it's not. And like I say, the hardest part, when you got a fleet of more than five to ten trucks is making sure you have all the mileage is accurate. And if you're dependent on drivers turning in receipts, the safety person may not have easy access to the fuel card account. And they're having to get that information to give an accurate report because you don't want a fuel audit. State of Kentucky, if they find you non compliant in fuel tax payment, you'll have to post a fuel bond. And the amount varies, but usually it's a minimum of $1000 to $5,000 to operate in their state. So you want to make sure your IFTA is right just as much as anything else in your trucking operation.
Jared Flinn [00:29:00]:
Wow. Again, just to reiterate, you said that's done how often? Quarterly.
Jesse Runions [00:29:04]:
Quarterly.
Jared Flinn [00:29:05]:
Okay. And typically, if you're running four or five trucks, usually the owner of that company is collecting those receipts or however he's getting that collection of all those fuel tickets to do that reporting.
Jesse Runions [00:29:19]:
And the reason being, I always had a rule of thumb when I drove or was an owner operator. If I drove more than 50 to 100 miles in that state, I usually stopped and fueled at least once or twice in a monthly period. That usually balanced out my FTA, where I didn't pay that much, maybe 20 or $30, or I got a refund. But if you fuel all in one state, that's a low tax state, and you go in high tax states, you're going to pay in. If you live in Kansas, whose fuel tax is higher in Missouri's and you fuel all the time in Kansas, you'll get a refund all the time, but you're paying more taxes at the pump. You're paying those taxes. That's kind of like balancing your checkbook. They're reconciling how much in tax money you've actually paid versus what's actually due.
Jared Flinn [00:30:05]:
Somebody told me one time, and maybe this is not as related to this, but sometimes they say it's better to fill up in a high tax state because actual cost of the fuel is less because of the tax is so high. Is there truth to that?
Jesse Runions [00:30:19]:
Depends on how much you operate in high tax states. Like if you're an east coast, which most of your audience, I'm assuming doesn't, you always benefited fueling in Pennsylvania once or twice in that run because their taxes were higher in new Jersey's. But New Jersey's fuel prices were cheaper because they had cheaper taxes. So again, it's a matter of whether you're paying it now at the pump or paying it later in your IFTA. So it's a balancing act, but in the end it's a p and a shell game. It's just a tax payment you have to keep track of.
Jared Flinn [00:30:54]:
Well, let's move on and talk about you've got truck, you've got the authority, you've got the driver, you got that set up. Now you're running, talk about when you're running a business, how you keep track of what's going on within the trucking operation, talking about how you're keeping track of basically the miles that you're running, what the truck is doing, getting paid, what systems are out there for people to use. Kind of setting you up here.
Jesse Runions [00:31:26]:
Yeah, well, bulk TMS for starters, and there's higher price ones. McLeod Axon for dry freight and van comparable to bulk tms would be a send TMS, and it links you to the boards and whatnot. So that's one way to track your mileage. The split side of that is you want to track your accounting. If you're not doing your accounting, money in, money out, balancing your checkbook every month, seeing what the company's holding in cash, what its net income is, you're probably going to be in trouble somewhere down the line, because just checking your bank balance every day. Oh, there's plenty of cash. Now, without knowing what's outstanding in payments and receivables, you're driving in a foggy day in a mountain pass.
Jared Flinn [00:32:19]:
Well, and I want to camp out just a little bit there because growing up and my dad had a business, and they, he, not to throw my dad under the bus, but he ran his business that way. He ran his business like how much cash he had in the bank and not really knowing what the costs were or what when he was charging. We had a pallet mill and love my father, but I just used that example. But it was one of the reasons why even getting into this business, I've seen so many owner operators really kind of running just off cash flow and not really understanding profits.
Jesse Runions [00:32:56]:
Well, the thing to remember about your profit and loss, it's an opinion. Profit and loss is an opinion. Cash is a fact. What your net profit is, is important, but it's an opinion because there are certain expense factors. You can move over to your balance sheet for later depreciation. You rebuild your engine in your trucking, you spend $40,000 swapping an engine. A trucking company already has enough expenses, so you want to capitalize that. You want to make it an asset and depreciate that over time to bring that expense back to you as needed, so to speak.
Jesse Runions [00:33:41]:
So when you move those things over in the car, even though you paid cash for it, you declared it. It's an asset, because technically it is. An engine is almost a separate component unto itself when you start thinking about how the truck is put together. So the income statement is the first thing a business owner should be looking at every morning. Of course, all the information has to be there. It has to be kept up to date. The most important thing beyond income statements, balance sheets, all that accounting mumbo jumbo is reconciling or balancing your checkbook every month to understand what's out there, what your real balance is in cash, because you can have a net loss of $100,000 in your cash, be stable and still pay your bills. For a small business owner, the ability to pay your bills, to pay your drivers, to buy your fuel is as important, if not more so, than your net income number.
Jesse Runions [00:34:42]:
And sometimes those will contradict. Wow, you can post a phenomenal yearly profit and have your cash flow just crazy. You feel like you're rolling pennies. And because you did have two truckers where the engine blew up or you decided to do an upgrade, or in some cases, the business owner, you know what? I need this boat for $80,000. So I'm going to do an owner withdrawal or shareholder dividend, whatever you want to call it. That cash went out. For the small business, cash is everything. The ability to pay your bills.
Jesse Runions [00:35:20]:
Because why does a business go out of business? Nine times out of ten ran out of money or are going to run out of money.
Jared Flinn [00:35:27]:
Yeah, it makes perfect sense. You always think about profit, profit like money making, but the cash is the king there. That's the strength of the business.
Jesse Runions [00:35:41]:
But that being said, the profitability of your operation is very important because if.
Jared Flinn [00:35:47]:
You'Re not making profit down the road, eventually it's going to catch up. It's going to catch up.
Jesse Runions [00:35:50]:
Yeah, that gets into operating ratios. And everybody has a different metric for measuring that. And I say it's just the direct cost to move that truck down the road. Fuel driver, if you want to throw tolls, and you can throw everything on your income statement, every expense category, to operate that truck, to get a true operating ratio. If it gets much above 90%, you're going to start rolling backwards in cash, because that means there's other things, too. Your office overhead, you don't want that more than seven. Depends on how small or how big the company is. You don't want that much more than seven or 8% of your total gross input.
Jesse Runions [00:36:35]:
So for every dollar that truck makes, it's probably going to consume $80 to $0.85 under optimum conditions. And I'll even focus that down more. Even in today's price structure for an outfit, especially when it stays local, within 150 miles, you want your day to be between 801 $200 per truck. You want to keep your fuel consumption under 25%. So $200 to $300 of that 1200, if you can keep your fuel cost just that below the 25% mark. You're doing something interesting.
Jared Flinn [00:37:16]:
Yeah, I think about it just. And we're going to get back to erps because that's what stemmed from this conversation, is just making sure that you have a tool or system that you're managing it. You're not just solely looking at the checkbook, you're balancing your checkbook, but you're knowing where these costs are coming from or where if you're really savvy, you.
Jesse Runions [00:37:34]:
Can do it on spreadsheets. The problem about spreadsheets are, unless you really know all the vlookup tools, and I don't, it's not automated, you're doing everything manual transfer. If you manually transfer money from one account to the other, you're having to manually move that. For a small business under ten trucks, I'd recommend Quickbooks online. And I say online over desktop because desktop is going by the wayside. Quickbooks is gradually making that more expensive and phasing it out simply because it's an SQL database. And the people that know those best are like me and are getting in the dinosaur stage. And they don't want to train people in old technology.
Jesse Runions [00:38:17]:
They want to go to the new web based technologies, the Java based, the AI, and that's where Quickbooks online. Eventually it's going to become even more intuitive than it is now because right now it's clunky. You don't want to use the rules in the system unless you set hard parameters. Otherwise, you set one rule with loose parameters, and I'll sort everything that looks like that in one expense category or one income category.
Jared Flinn [00:38:45]:
So, yeah, just to kind of finalize that, make sure that you have a system. I mean, it can be started off as a spreadsheet, but using some kind of management accounting system. TMS transportation management system is what it stands for. There are a lot of them out there. There are some that are bare bone beginners. Bulk TMS is the one that we provide through bulk loads that's connected and offers all of that capability and functionality before we get off that. And we'll keep moving on here because we've still got a lot to cover. And again, this is really good stuff for any owner.
Jared Flinn [00:39:18]:
I mean, I think someone thinking about it, someone just starting or somebody maybe has been in it for a while and they're just meant to sharpen. But we're going through a little bit of a correction right now. And obviously it's probably we can assume, yeah, these companies that we're seeing going out of business, I mean, obviously they're running out of cash. But if you can kind of credit to two or three things, what's happening to cause these companies that like two years ago were posting record profits to now are folding the doors.
Jesse Runions [00:39:44]:
A big part of that is lack of vision, expecting that pandemic boom to last forever. The other part of it is everything is more expensive, it consumes more cash. It's not hopper but Pam transport. They're one of the few companies and they're about 50% spot market dependent, and they've managed to keep their cash flows and their cash balances relatively high. The last time I looked at them was the second quarter, but they were doing better than their competition and money in bank. They had the resources to ride out the storm, but resources are finite. They're not unlimited. And so they started aggressively and early on attacking cost synergies.
Jesse Runions [00:40:33]:
Anything that was an unnecessary drain upon cash flow or an unnecessary expense, they started doing their best to trim that down. And so when the downturn happened, they were relatively ready for it. What they did after that fact was fine tuning as opposed to a major bailout of a sinking boat.
Jared Flinn [00:40:53]:
Interesting. Yeah. And again, I think this was even our last podcast. We talked about how there's still going to be, we feel a little bit of more of a shakeout before we see a rebound in the market, at.
Jesse Runions [00:41:07]:
Least the next six months. And this gets into monetary supply and a bunch of deep stuff I'm only just now really diving deep and learning into. But historically, when the monetary supply contracts and that's what interest rate increases do, they contract the monetary supply. That slows down economic activity because there's not more dollars than products or services running around. Economic activity slows down. Jason, I mentioned this in my post I did yesterday afternoon. Jason Miller is on to something here. Single home startups are going to be the indicator when trucking comes back.
Jesse Runions [00:41:47]:
If you look at the timeline of the numbers or the graph timeline, trucking and single home startups are almost synonymous. So when single home or single family startups rise, the trucking performance numbers rise too. And that makes sense as a single household home, be it food, appliances, the house itself, the building materials, that's the consumer's house. And 70% of our economy, roughly is consumer driven. And the flip side of that is, in terms of goods, 70% of our economy rides on a truck.
Jared Flinn [00:42:28]:
Yeah.
Jesse Runions [00:42:29]:
So there's a lot of similarities, but in terms of what's going to be put on that truck to be hauled, the single family household is the number one consumer.
Jared Flinn [00:42:38]:
That's awesome. I mean, that's cool to know if you look at that.
Jesse Runions [00:42:41]:
Well, I wouldn't have thought of that, even though I've always drove home the point, the consumer is everything for trucking. He pulls eyes in on the one statistic that gives a little more insight on that. And I was like, that's phenomenal.
Jared Flinn [00:42:56]:
Keep moving on. Talking about this. Now that we got this trucking company up, we got a license, we have a system in place that trucks running down the road. We talked a little bit about fuel and IFTA and all that, but talk about options with fuel. I mean, obviously that's a huge cost. You just talked about that, trying to keep it below 25%, but that's fuel. And all of us consume fuel in our vehicles, unless you have only electric car. But talk about the options to look at fuel and more importantly, fuel management on that truck.
Jesse Runions [00:43:33]:
Well, this is a good time to be in a small company. And it used to be unheard of that the big boys pilots out brothers Iowa 80 would call a small company offering a cost plus deal. They're offering those deals now.
Jared Flinn [00:43:55]:
Directly to small companies.
Jesse Runions [00:43:56]:
Directly to small companies. In our case, I refuse to make a gallon commitment because our lanes are so outside the norm. You're going through more rural America than Interstate America. So there's not the big name. Fuel stop is always available. So even the fueling commitments that went to the wayside, we just want your business. So we'll give you this cost plus arrangement. One of those is almost $0.60 below the street price.
Jesse Runions [00:44:21]:
As a small company, you can't beat that.
Jared Flinn [00:44:23]:
And when you talk about that, they're offering basically cost plus.
Jesse Runions [00:44:26]:
So that's their cost plus a few cents, or what they're stating to be their cost. There may be a little pee in the shell game there. It's marketing and it's justifiable, it's legal. But yeah, what they state is cost plus a few cents. Usually it's cost plus three, five, seven, whatever they think they can get away with.
Jared Flinn [00:44:46]:
So that's working directly with fuel stops. There's also fuel card companies, one that we always recommend again, for a lot of people, the mud flap app. And it's not even necessarily a fuel card, but it's an app.
Jesse Runions [00:44:56]:
Well, and I think that is what has put the pressure on the big names to do it because right now, I'll go ahead and drop a name out here. SAP brothers. If you're in their lanes, SAP brothers is actually given a deeper discount than any mudslap transactions giving right now.
Jared Flinn [00:45:13]:
Oh, wow.
Jesse Runions [00:45:14]:
If you're in their cost plus deal.
Jared Flinn [00:45:18]:
But that's another option. If you're not in that lane, obviously SAP's here in the midwest, but if you're running their network and all, another, that's another option that you can use. I just want to say kind of mudflap, the way it works, it's an app, but you put your debit card or credit card in there, you typically fill up at full price and then they rebate you back a certain discount later on. I mean, they tell you what the discount is going to be, whether it's $0.20 off or $0.17 off.
Jesse Runions [00:45:45]:
Well, they only bill you for the discounted price. Now we play around with it for a couple of our trucks. Actually, Benny uses it and entire rail uses it. The thing that mudflap did is they said, hey, and I'm just going to throw a number out there. I got 25,000 subscribers here that's using our app. And that's how they go into individual and chains and say, hey, we want a fuel discount. You can't turn away business. So they're going to get the discount.
Jesse Runions [00:46:15]:
So that put pressure on the big fuel providers traditional to trucking that, you know what, if we want to stay relative to the small fleets, we're going to have to do this, too. Because the simple fact is, if you look at registrations, the small companies are still the biggest piece of the pie.
Jared Flinn [00:46:35]:
So that's another option is talking about that. But I guess overall, in starting a business, there are opportunities out there to get fuel below the retail price.
Jesse Runions [00:46:47]:
Oh, absolutely.
Jared Flinn [00:46:48]:
And you should always be using some kind of tool, whether the fuel card or some kind of program.
Jesse Runions [00:46:53]:
I recommend more than one.
Jared Flinn [00:46:55]:
Yeah, using around. You don't have to be.
Jesse Runions [00:46:57]:
Now when you got a fleet of drivers, that may be tricky because you don't want to have. You're throwing a lot at a person that's already having to operate a piece of equipment going down the road weighing 80,000 pounds, or in some states, more. They already got enough on their shoulders. So you want to keep it simple. But yeah, I recommend more than one fuel payment option. In traditional fuel cards, we run two. And then again, we're dabbling in mud flap, I think, too, I've talked to.
Jared Flinn [00:47:31]:
Guys, and especially if you're a rural America, but even talking to the mom and pops, and maybe it's just a one fuel stop operation, but a lot of times if you talk with them and let them know that, hey, I'm going to be filling up x amount of gallons here every week or month, they're likely to give you a discount.
Jesse Runions [00:47:48]:
Normally that happens when you operate in a confined area or you have enough trucks in that area. Most of the time, a small company will work out a deal with a neighboring fuel stop. They'll set up an account, and they'll get preferential treatment and prices and whatever the credit limit is. And to be the exclusive fuel provider for that fleet, at least on their close in operations. And you can score significant discounts that way, too.
Jared Flinn [00:48:18]:
Yeah. So that's enough on fuel. Let's talk a little bit about safety and compliance. And that's a big one. I know it's not directly in your wheelhouse, but a big thing. If you're getting into trucking, typically you're going to have to have. Why? I would just say, typically you'll have to have some kind of eld device right on that truck.
Jesse Runions [00:48:38]:
If it's newer than 2000, you got to have an eld.
Jared Flinn [00:48:42]:
And ELd stands for electronic logging device. It's been mandated by the FMCSA. Basically, it's a device that hooks into your truck and your system.
Jesse Runions [00:48:53]:
And it basically, yeah, it monitors the ECM of the truck, what controls the engine and other functions of the truck, to make sure that the driver is in compliance with the hours of service rules. As much as it aggravates people, especially in bulk commodity hopper, that's almost a thank you, because if you looked at rates prior to 2017 and after, and I'm talking before pandemic, there was a significant increase in rates for hopper traffic post eld than it was pre eld, because they expected you to just move the lines around your logbook to keep everything going. Now, that's not possible. And another thing the eld and hopper has pre 2017, we had two customers that would consistently paid attention. Now it's almost all of them. Yes. And there used to be one of them that would never paid attention. Now that was probably post Eld and post pandemic combined, that would never paid attention, and they are now.
Jesse Runions [00:50:06]:
So in that aspect, the most important thing to pull a benefit out of it is that the ELDs put a price tag on time, a firm price tag. It's not a matter of a broker or a shipper telling you, you know what, you can fudge things a little bit. You can get that load there on time no matter. So what if you had to sit here in line waiting for your load four, six, 8 hours? Now they don't have that option because the company doesn't have that option.
Jared Flinn [00:50:35]:
Yeah, a lot of people, again, if you're not in the industry, you might not know this, but it used to be, and it's still a big thing that plagues the industry. Detention. But basically, truck arrives a receiver, and if he's there more than an hour free, and there's different people have different ones. But sometimes if that guy's there over an hour, then that company should be paying that truck for every hour that he's there. Right. Additional hour.
Jesse Runions [00:51:00]:
The industry standard is two, but that fluctuates. There's some that will pay after an hour. Those are rare. You get in the agribusiness side of it and you got to fight a little more. But usually after a truck sat somewhere 3 hours, you usually can get what you need out of the truck or at least something. And something is better than zero.
Jared Flinn [00:51:22]:
Yeah. Making sure you have an eod. We jumped over it, but it involves safety. But talk about truck insurance.
Jesse Runions [00:51:33]:
In terms of truck insurance, you got to have it, and that's a cost factor.
Jared Flinn [00:51:40]:
Within truck insurance, there's two things that most companies that's going to be required. You have to have general liability insurance, and we won't get into the weeds because we're not insurance people. And we actually have an insurance group, bulk insurance group that handles truck insurance. We'd love for you to check that out if you're out there starting your business or even an existing business, to quote, but typically you'll have to have general liability. Typically that's around a million, could be more than that. And then you'll have to have cargo coverage. So the general liability is if you get in an accident, you're covering that people, the cargo. Obviously you're covering the.
Jared Flinn [00:52:13]:
And then your physical damage and physical damage. Yeah, that's another one.
Jesse Runions [00:52:16]:
So three components there and even liability split into your general liability per occurrence and your overall aggregate liability, which is most people do for two occurrences. And after that, the policy is played out, you have to go reinsure if you got two claims pending where it locks up that liability. Trove. And I knew someone that got in that situation. He had one truck, he got in an accident. It was out in California. They basically locked up his liability. Pending the outcome of that claim.
Jesse Runions [00:52:53]:
He had to go to another insurer, get a second policy so he could keep.
Jared Flinn [00:52:58]:
Wow.
Jesse Runions [00:52:59]:
So insurance is probably the toughest expense outside of fuel and the driver for a company to manage. And it's a tough cookie. You have to do all your homework to get the best rates. These insurers now, it drives me nuts. I'm not a paperwork person, even though I have to deal with it all the time and get this encyclopedia thing that I got to fill out. But that gives the information points for the agent that's trying to sell you to try to get you the best deal possible on your insurance. Without that information, they're flying blind. You're an insurance company.
Jesse Runions [00:53:43]:
You're insuring somebody out of your pocket, out of your customers pockets, and you don't know anything. What are you going to insure? You're going to insure at the max risk, whereas the information you provide your insurer or aspiring insurer is what's going to pull your risk rating down, hopefully.
Jared Flinn [00:54:07]:
I think what we're seeing, especially now that we've got involved in more than insurance, is really trying to figure out better ways that companies are being safe and not having claims. Because again, the more claims there are, more insurance pays out, more premiums go up. And again, we had another company in here talking about that a couple of episodes ago, but it's really trying to make sure, heaven forbid you have an accident, but trying to do everything you can to make sure that you're safe. Even the drivers that you're hiring have good and safe records.
Jesse Runions [00:54:46]:
Yeah. And even the unforeseen happens, be it a chain of events, a driver has a medical event. I read an article about a driver had a medical event, went in the median in Kansas. Two farmers actually rest.
Jared Flinn [00:54:59]:
I read that. Yeah, I think I posted that in the news section. Yeah.
Jesse Runions [00:55:07]:
Insurance, an accident is something not planned, and insurance is protection against something that is not planned because nobody is planning on wrecking their truck normally.
Jared Flinn [00:55:18]:
Yeah, let's move on. And we're kind of getting down to the tail end here. But talk about that. You got everything set up now within that company. I think we've covered most of it. We're going to probably look back and there's going to be some small ones that we missed out of here, but you got that truck running down the road. Talk about making sure that you're load planning right. You're finding the right freight to haul, you're getting the right freight rates, and that's market conditions.
Jared Flinn [00:55:50]:
But talk about just by going out there, making sure you're establishing relationships and getting obviously good freight to haul, you're going to be hauling loads that are going to be making you money.
Jesse Runions [00:56:00]:
The biggest part for a small company owner, you just said it. Getting out there, he is his own salesman. And building those relationships. Even if you know you're not going to get the business from that facility, always do your best to meet and greet the policymakers, the people that actually make the decisions. Introduce yourself. You never know what kind of opportunity will pop up out of that. The second part of that is service always sells. If you do a lot of trucking companies, because they don't have the time to do anything else, simply pick up that load and deliver it.
Jesse Runions [00:56:35]:
Nothing more, nothing less. Whereas especially if you have a dispatcher, they look for problems that may occur, they go ahead and resolve those. Or occasionally, we had this happen yesterday. A merchandiser is like, you know what? I have no homes for this product. I need you to haul. Our dispatcher gave him two locations to check out. He got a sale on one of those locations for two loads, which was beneficial for us because we had a home for that product, because we're not a warehousing company. It was beneficial for him because he got it sold and it's a byproduct.
Jesse Runions [00:57:12]:
So if he doesn't sell that product that stays in the bin, the mainline operation stops. So he's in trouble, I think, too.
Jared Flinn [00:57:21]:
And you talk about service, but even making sure you're hiring the right people. I was at church last week and sat down next to an older gentleman and come to find out he was an ex truck driver up out of Iowa and hauled, actually, cement out of Mason City for transwood. And anyways, we got talking and he made a comment and just stuck in my goes, you know, I had a dispatcher up there. And he goes, it's probably the only dispatcher that was truthful to me. Like in all of his, like he mentioned. Yeah, this dispatcher, he was the only one I liked. He was actually truthful to him.
Jesse Runions [00:57:53]:
We're blessed in that category at BRB, Shannon is probably the best, in my opinion, around.
Jared Flinn [00:57:58]:
But there can be a disconnect between the drivers and the dispatchers, the load planners.
Jesse Runions [00:58:03]:
But think about it. Dispatcher, a lot of times is a salesperson too. There's a load know there's places that drivers like to go, there's places they don't like to go. There's loads that pay really great and there are some that don't. You can't pick and choose only the things you want. You have to take without really getting deep in lost territory. You have to make the trucks roll, and sometimes that's in less optimum rate conditions or even less optimum destinations. So a lot of times a dispatcher is selling that load to a driver, whether it be it a company driver, owner, operator, or a broker carrier.
Jesse Runions [00:58:43]:
If they have broker authority, they're having to sell that load right now. Spots real tight, so they're not selling as hard. But when things are running hard and fast, they'll do whatever they got to do to make that load get down the road. And some of them, well, they get out in left field to make it more than probably what it should be.
Jared Flinn [00:59:09]:
Talk about, this is a big one too. When you're talking about hiring drivers and compensating drivers, there's different ways that you can pay or compensate drivers to run your truck. And I think, I guess there's not a one size fits all. But talk about different ways that you can structure because typically drivers are paid. I shouldn't say typically, but in this industry, a lot of times I hear drivers paid on a percentage of what the truck makes.
Jesse Runions [00:59:40]:
Yes. And for most small companies, especially on start first ten years after startup, the driver gets paid 25% to 35% of what the truck makes, of what the.
Jared Flinn [00:59:50]:
Truck profits, or what the truck grosses.
Jesse Runions [00:59:53]:
Grosses.
Jared Flinn [00:59:53]:
Okay, dollars that truck is bringing in.
Jesse Runions [00:59:56]:
And usually that's the freight, not the fuel surcharge, because the driver is not buying the fuel. If you think of a fuel surcharge, that's technically reimbursement of the fuel price. Or usually, typically the percentage pay is based on the freight pay. And like I said, sometimes it's lower if an owner has a really high revenue structure or a real high cost structure because he's doing something specialized. And usually they go hand in hand. It might be 20%, but typically 25% to 35% is the norm. And it depends on what the rates are. If you're getting high volumes of low rate stuff, that percentage is usually higher.
Jared Flinn [01:00:40]:
What about if a company is allowing another company to basically run their trucks or dispatch? If they got their own authority, what's usually the fee that's charged?
Jesse Runions [01:00:52]:
You're talking about dispatch companies or brokerages.
Jared Flinn [01:00:55]:
Well, I guess we can talk about both, because I know there's a difference.
Jesse Runions [01:00:57]:
Dispatch companies be careful of, because a lot of them are acting as brokerages without brokerage authority. And usually when you run into that situation, the trucking company is going to get burnt somehow, some way. Usually it's just they don't. Eventually the dispatch service that was operating in a way that they were not licensed for gets nailed or out of business, and the trucking company is out out money. And so when it comes to pure dispatch services, you know what, I'm not that familiar with them because I've never had to use them, never really interacted with them. The biggest thing is make sure they're booking the loads that you do for them in your authority. If they're booking it under their name, they're acting as a brokerage. That would be the number one litmus test, whose name is on the bill to for that load.
Jesse Runions [01:01:52]:
Then they should be charging a back percentage of 3%, 4% to do the dispatch service of the load.
Jared Flinn [01:02:02]:
Talk about. So we're talking about compensating drivers, but then even just when we're looking at loads to haul and the rates out there, because you brought it up, when you talk about fuel surcharge and all that. But is there a metric or mathematical formula when you're looking at a load on what to charge? Because I think that's the biggest discrepancy in the 20 years I've been in trucking. One guy could be at and I'm just throwing numbers out here, $3 a mile, then the next guy's at $4. And what's the difference? Difference in the one.
Jesse Runions [01:02:31]:
I always forget his name. Amal. Amal.
Jared Flinn [01:02:35]:
Yeah.
Jesse Runions [01:02:36]:
Emile Martin. His tool. You need to know your cost per mile. How many.
Jared Flinn [01:02:41]:
Marty, Emile.
Jesse Runions [01:02:42]:
Marty, Emile. That's right. You need to know how many miles you're running on the load to include your deadhead. You need to know your cost per mile. That includes your fuel, your driver, and what your average aggregate cost of maintenance, insurance, everything else underneath that is. So at least you can calculate your break even point. Sometimes you're going to be in a market area where just getting out of the area is going to be tough. You're going to make the decision, do I deadhead out of here or do I take something? You want to know what your truck is making per mile? I'm going to use a rough number here.
Jesse Runions [01:03:22]:
$3 a mile. In the high fuel price regime, it costs your truck to operate 1 mile down the road, loaded or empty. And you get this 200 miles load. You want to at least break 600 just to pay for that trip and pay your driver. So anything above that will be profit.
Jared Flinn [01:03:43]:
Yeah, that's good. And I think that's probably one of the biggest in our industry, too. Typically, truckers or owner operators can be price truckers and not price makers. I mean, they got to know the price. But when we're dealing with loads and load boards, typically that merchandiser has kind of got a freight in mind, but that owner operator has got to know the cost to make that work and not just take whatever the rate is at hand.
Jesse Runions [01:04:07]:
Brokerages probably hate it when somebody does this, but I would say they quote your rate, they quote you 1000 or they quote you 950. Ask, hey, can you go up another 50? Because especially if you're in a high deadhead load, just explain to them, I know this isn't your problem, but I'm having to do a lot of deadhead here. And if it's somebody you've done business with that you've had a good record with, you're probably going to get that extra $50.
Jared Flinn [01:04:32]:
$50? Yeah, that adds up x amount of.
Jesse Runions [01:04:37]:
Times over a course of a year. Don't be afraid to ask for that extra. And at the same time, don't ream them for, hey, it's a terrible rate. You know what, let me run my miles. Let me see if I can make that work for you. When that phone doesn't ring with you calling back, they know that rate is not going to do it. Neither going to wait for somebody else that takes that rate. If they need it moved, they're going to call you back.
Jesse Runions [01:05:01]:
What do you need?
Jared Flinn [01:05:03]:
The last question I'll ask you, Jesse, and we'll kind of finish here. But you're an accounting guy. I know you're not a tax guy, but I hear this all the time. Know, there's some people, they get into trucking and not people necessarily because they want to be truck drivers in trucking, but they look at, they say, hey, there's really good tax advantages to owning a truck. Explain. Is that truth or is that myth?
Jesse Runions [01:05:30]:
And how in the short term it'd be truth, but trucking is an expensive operation. Sure, if you got some mega money operation, you need to dampen your tax.
Jared Flinn [01:05:42]:
And the people I'm talking about, like I know my dermatologist, he's got 40 trucks he said that he's built over the past five years that he's running and he's going to get a million dollar depreciation this year off of it.
Jesse Runions [01:05:54]:
Yeah. And like I say, but again, he's got to stay in the business. He's got to keep buying new trucks because the average lifecycle, depreciation lifecycle of a truck, no matter what methodology use, is usually five years, sometimes seven, but five to seven years, unless you do a special depreciation. And now that's starting to slide backwards. 20, 17, 22.
Jared Flinn [01:06:21]:
Talk about what depreciation is, though. So people understand that. I think people don't quite understand. What does depreciation mean?
Jesse Runions [01:06:27]:
It's the depletion value of your equipment. So let's just use a five year depreciation. Tax wise, the assumption is that that truck will have a useful life of five years. You pay $100,000 for that truck. Now I'm talking book depreciation. There's actually more complicated regimes here. But for financial reporting, you would divide that truck's life over five years. So 20,000 a year in depreciation expense in 2023, the bonus is not as an attractive option because it's no longer 100%, it's 80.
Jesse Runions [01:07:07]:
So you might be better off going the long road instead of the short road. But we got about a five year run of 100% depreciation now. It's sun setting. It'll probably roll back the 50% pre 2017 tax changes here in the next few years. I think it rolls back 20% per year.
Jared Flinn [01:07:31]:
So those will actually change? The IRS will change those every year?
Jesse Runions [01:07:39]:
Yes.
Jared Flinn [01:07:40]:
Okay.
Jesse Runions [01:07:40]:
But again, that's something I don't deal with on a regular basis. So I say consult your CPA. But it is expensing out your truck, because when you buy your truck brand new, that's not an expense, that's an asset purchase. That's not going on your income statement. That's going on your balance sheet as an asset. So depreciation is a way to get a portion of your truck to that expense sheet on the anticipation that that truck is wearing out, and it becomes expensive to maintain and has lower value. So it's a way to impair that asset value without actually doing it and getting a tax benefit while you're at it.
Jared Flinn [01:08:23]:
I see that a lot of people get into real estate because there's a little bit of the same taxation process. You can buy an asset and there's depreciation, but typically that asset, whether it's a house or building, will appreciate. But typically a truck is going to depreciate, right?
Jesse Runions [01:08:41]:
Yes.
Jared Flinn [01:08:41]:
The actual value. So you're getting to depreciate it, but the building is actually increasing in value.
Jesse Runions [01:08:46]:
Residential real estate is 27 and a half years depreciation. A commercial building is 39. So the truck has a shorter life cycle. You spend $100,000 for a truck or closer to 200. Now you're getting that truck. The value deplete out in the five year cycle versus 27 and a half years for a house. If you decide to go and buy a bunch of rental properties.
Jared Flinn [01:09:12]:
Well, I want to throw that one out there. It was one that we keep hearing around here. And again, it's interesting when I hear people not in trucking, and again, I'm going on 20 years now in the industry, but some of these people thinking that, hey, it's a great, if they.
Jesse Runions [01:09:29]:
Have a mainline business that's making a ton of revenue, we always tease, if you need a tax break, if you need a tax break, buy you a trucking company and there's no shortage of expenses. But in terms of what they're doing, it wouldn't be my first choice as a tax shelter, but to each their own.
Jared Flinn [01:09:52]:
Yeah. Well, Jesse, we'll kind of end it here, but, yeah, just kind of final remarks and would love to hear your thoughts and then I'll close this out. But for those out there that are maybe looking at getting into trucking and with the steps to take, or somebody that's just started in trucking, maybe somebody that's been in it five years, or someone maybe listen to this, then they're going 1015 years. What would be kind of your final thoughts? Just kind of talking about this whole process.
Jesse Runions [01:10:20]:
Number one thing is know what you're getting into. If you're new to trucking, talk to others that's been in it for a while and to gather your resources on the governmental side, small business Administration has information to set up your business, even find funding. The IRS has guidelines on taxes to get yourself set up. Like I say, it's like going to battle. You don't go in blind or you don't get. Yeah, yeah, that's really good.
Jared Flinn [01:10:54]:
And I think what I would just add to what you said, being in this business for so many years, I think do your homework. I think there's opportunities out there, and that's why we exist at bulk loads and our sister companies to assist companies that are wanting to get into it and simplify some of these processes we just talked about today, specifically bulk loads. We started as a load matching system. So really helping find the business to do the work that's going to be paying you to run that truck and make a profit. But then some of those other ancillary operations, again, we handle insurance, we handle factoring, getting you paid, and then we also handle the software aspect. And again, as we grow, we're continuing to add some more and more of these because we realize, like owning a truck, it's not just getting in the cab and turning the key on and going down the road. There's so much to it. And again, in the years and you've been in this for a while, you drove for a while.
Jared Flinn [01:11:50]:
The problem that we see, and we're hoping to correct, and it's our mission is to help more guys be profitable in trucking. We don't like seeing the turnover. We don't like seeing the washout. We want to see people be successful, providing an income for them and their families and their community.
Jesse Runions [01:12:04]:
Well, talking about outside the governmental resources, absolutely. Bulk loads, especially the bulk commodity hauling, that would be my first place. I would stop if I bought a company or started a company. One, because I know you guys, but two, resources are resources and nothing good is totally free. But if it's good and cheap, you might as well run with it if it works for you.
Jared Flinn [01:12:31]:
Yeah. Awesome. Jesse Runyon's man, thanks again for coming on the podcast. Have a happy 2024 and God bless you.
Jesse Runions [01:12:37]:
You too.
Jared Flinn [01:12:38]:
So Jesse told me after this interview that he was a little more prepared. He said the last one, I guess he had a dry throat, but he was drinking water more. But I was like, I think I go, you killed it, dude. It was awesome.
Tyler Allison [01:12:52]:
Yeah, he always does a good job. And I think next time he said he may put together a PowerPoint slideshow to even enter. Yeah, man, there's so much gold in this episode, and I think we might have Joe kind of chop it up and create a playlist of shorter form content that these guys can go back and watch. Oh, what did Jesse say about insurance? Or what did he say about banks and securing a loan? That way you can just watch those specific clips of the podcast.
Jared Flinn [01:13:20]:
Yeah, and he brought up a lot of our entities and what we do as well. Again, we don't handle 100% of everything, but a lot of those Jesse touched on. Obviously, people know bulk loads. We can help you find your freight. Smart freight. We can help you with the whole payment piece and making sure that you have positive cash flow at all times, taking care of all that back end work that you don't want to do. Tms, we have the trucking software as well as encompasses. And then last but not least, we have the insurance.
Jared Flinn [01:13:45]:
So our goal is to hopefully one day be a full one stop shop, but we can get you pretty far in what we offer today.
Tyler Allison [01:13:56]:
Yeah, and you can find those all pretty easily. If you have an account on bulk loads, you can just log into bulk loads. You can find those all on our site. There's a factoring tab, an insurance tab, and also a transportation management tab. You can click on those separately and dive into those. If you don't have a bulk loads account, go ahead and create a free one. It's completely free, no obligation or anything like that. And you can still check out our services there.
Jared Flinn [01:14:19]:
And if you've been on for bulk loads for a while or maybe let your membership. Um, we do know industry is getting tight.
Tyler Allison [01:14:25]:
It is.
Jared Flinn [01:14:25]:
We talk to our sales team all the time and get feedback. What's going on, man? If you're looking for freight out there, get a hold of us. We can get you set up. We do offer some trials and demos to show you around. If you haven't been on there a while, I guarantee we could help. So, man, if you haven't been on boatloads a while and want to renew your membership or start a membership, get a hold of us. We can help you out there.
Tyler Allison [01:14:45]:
Awesome. Jared, the conference is 97 days away. It's getting close.
Jared Flinn [01:14:50]:
I got to get my speeches ready.
Tyler Allison [01:14:52]:
Yeah, it's time to start finalizing all the itinerary and getting all that stuff together. If you have not got your tickets yet, go to bulk freightconference.com or you can click the banner on top of bulk loads website. It'll take you to the website. You can click on get tickets and you can go ahead and purchase your tickets there. We're seeing them come through every day. We've got some really good speakers, Jared, that's going to be there. And the whole conference is just going to be about what you can expect in the industry for 2024. All about bulk freight and also just how to really ten x your business and how to take it to the next level to get more contacts, more business and keep the wheels turning.
Jared Flinn [01:15:32]:
Just like this podcast we talked about how to start a company and be successful in trucking. The conference is going to be that times ten. It's going to be the next step to really get you ahead of the game, get you in communication with those out there that can really help grow your business. So we don't say this for our sake, we want you there. We know that you are going to be positively affected like so many of the guys last year I talked to have said that it's helped them and they're going to be back. We want to introduce you to them. So if you haven't yet, go to bulkfraightconference.com. You can buy your tickets.
Jared Flinn [01:16:07]:
Really easy on there. Get your tickets bought before they sell out. Yeah.
Tyler Allison [01:16:11]:
And Joe will throw up. Some of our sponsors of the conference, we are very thankful for those guys participating this year and helping us put this on. I'll even say this, if you are kind of hesitant on whether you're going to get value or not, you can go to the website and see some of the testimonials on there from past conference attendees. Or if you buy your ticket, you attend the conference and you want to let us know. Hey, I didn't really get anything from this. We'd gladly be able to reimburse you for your ticket.
Jared Flinn [01:16:39]:
Yeah, absolutely. So I'm going to do something random. I've been wearing this vest on several episodes, and do we have extras or they just.
Tyler Allison [01:16:46]:
We do, I think.
Jared Flinn [01:16:47]:
Okay. I know we bought them for them, some for the employees, which everyone has.
Tyler Allison [01:16:51]:
They're very nice vests.
Jared Flinn [01:16:51]:
Yeah, I wear this every week. I probably wear it to bed if my wife's going to give me a hard time. But I'm going to give away two of them. And we have all the way from small to double xls out there. They do run a little large. So, I mean, this is actually a medium that I have on. But if you would like a vest, comment down below. And we're going to pick two people and we're going to give you a vest.
Jared Flinn [01:17:12]:
I think these things are 100 plus dollars. These aren't cheap vests. They're awesome, man. Sometimes we buy gear, and sometimes you never know what you get. This is one that we hit a home run with these vests. They're beautiful vests. You can wear them out, but comment below. I want to send you one of these vests.
Jared Flinn [01:17:30]:
Yeah.
Jesse Runions [01:17:30]:
Awesome.
Jared Flinn [01:17:31]:
So awesome. Well, last but not least, before we close out of here, prayer is something big in our office. I know people maybe get tired when I say this at the end of the podcast, but we never say it out of repetition. We say it out of our heart. We know that there are companies out there struggling. We know that there are families out there struggling. Life happens. We know that the ebbs and flows in life.
Jared Flinn [01:17:52]:
There are ups and downs. I go through a lot of them all the time. I feel like I'm probably on the top now, but I'm ready for that next trial that's going to happen on there. But I know many of you out there are facing trials or need prayer or have family members that need a prayer or friends or family. We know trucking is tough out there. If you can do one quick thing today, I want you to do one thing. Send us an email to
[email protected] give us a prayer request man. A lot of people feel like I don't need this or it's not for me or I'm embarrassed to send a prayer, man.
Jared Flinn [01:18:27]:
Send us a prayer. We keep it anonymous. We don't let other people know. We pray over that. I guarantee God will answer those prayers in one shape or form. Maybe not exactly the way you want, but when we pray to him and we petition our prayers to him, he is a faithful and true God and he listens to us. So we want you to send us the prayers.
Tyler Allison [01:18:47]:
[email protected] yes, I couldn't have said it better myself. I also want to point out too, I know a lot of these guys are on the road and sometimes whenever you're on the road it can get lonely. And if you go through something, you may feel like you don't have many people to talk to. If you ever want to call our office, talk to some of our guys, be sure to do that. Anytime. 805 189240 and we'll always be glad to chat it up with you.
Jared Flinn [01:19:10]:
We've said it 100 if not a thousand times. We are people serving people out there and we want to be servants to you and we believe that from the bottom of our heart. Well, last but not least, if you found value in this one, which we hope you did, this podcast, man, we would love for you to share this with others. Maybe, you know, other people in the business are thinking about getting in the business and this would be a good podcast for them to listen to, man. Just quickly really share the link. You can do it through text, you can do it through email. Pretty much any podcast meeting that you listen to, YouTube, there's quick, easy share buttons. Don't forget to subscribe to this.
Jared Flinn [01:19:46]:
That would mean so much to us and allow us to get this out to the people out there that can find value in it. So as always, thank you for listening to the Bulk loads podcast and God bless.
