Logistics companies and owner-operators walk a fine line between maintaining healthy profits and remaining price-competitive with other providers in their region. The dramatic shift in supply chain and now rising inflation exacerbates an already delicate balance. Tack on a conflict a world away putting a strain on energy availability and pricing has seen fuel prices rise to the highest prices in more than a decade. Operational costs including fuel and repairs are eating into the profit of even the most savvy operators. What’s the answer?
The greatest single cost for a logistics company or owner-operator is the cost of equipment: a new 18-wheeler can cost as much as $200,000. Multiply that by five, or even 10 rigs, for a small-to-medium size trucking business, and you have a multi-million operation going. That’s a lot of money. Thankfully you do have options for reducing costs starting with commercial truck financing and equipment upgrades. Improve your bottom line with a focus on decreasing these fixed costs for your business.
Save Money with Commercial Truck Financing
Starting a trucking business is a huge investment in both time and money. Back to the price of a new tractor-trailer. If you have $200,000 in cash sitting around, count yourself fortunate. For 99 percent of the rest of Americans looking to enter the field of freight hauling, that kind of cash investment for a trucking business is only a dream. The main way to establish a trucking business is through commercial truck financing. In the banking world, an equipment loan of this size would have stringent terms, and a regular payment schedule. Enter the commercial finance company specializing in transportation.
Specialist lenders such as ENGS can provide flexible payment terms tailored for the type of work you do, structuring higher payments during busier seasons and reduced or deferred payments in the off-season, enabling you to ensure your debt obligations match the market availability. Before you go to your truck financing provider to negotiate your trucking loans, note the following:
- Your loan and lease payment history should show that you have consistently paid on time and without issue before you ask to negotiate these costs.
- Have all of the proper paperwork on hand, such as your loan papers or latest credit report. Read through these and have a solid understanding of your costs and credit history before you contact your lender for negotiation.
- Have an idea of how much you want to negotiate for, along with a valid reason backing up your request.
- The more prepared you are for a negotiation, the more likely you are to come out on top.
Benefiting from Equipment Upgrades
Another way to reduce your cost per mile is by upgrading your equipment and replacing old rigs. Not only are newer rigs more fuel-efficient, but also more reliable, reducing unexpected down-time and expense during a busy season. For some, purchasing equipment with a loan may not be financially viable, however an excellent money saving route to take is through semi truck leases. Your drivers will be in newer equipment, which means fewer repairs and less costly maintenance. By the time the drivers have put 300,000 miles on the trucks, it’ll be the perfect time to return the leased rig for a newer model. Newer, more efficient trucks are better on fuel use, as well, for an overall cost saving maneuver.
Plan For Electric
While still in it’s infancy, the electrification of freight hauling has made strides in the last decade, with everyone from International and Volvo to newcomers Nikola and Tesla among others joining the ranks, offering range from 200 to more than 400 miles per charge. As legislation moves more and more toward green transportation equipment, ENGS will be here to help finance the transition for transportation companies.
If you’re looking for opportunities to be more efficient and improve your business’ profitability, contact us today to learn how ENGS can finance your equipment acquisition, as we Move Business Forward.