Business

AUSTIN, Texas — Former U.S. Secretary of Transportation Elaine Chao is joining the board of directors for Hyliion Holdings Corp., the company announced Aug. 24. Hyliion specializes in creating electric powertrains for Class 8 trucks as well as for passenger cars. “Elaine Chao has had an incredibly distinguished career promoting innovation and American excellence, and we are fortunate to have her join our board,” said Thomas Healy, founder and CEO of Hyliion. “She brings a wealth of knowledge and experience from both a transportation and competitiveness viewpoint that will support Hyliion as we continue to move along our path to commercialization and work toward our vision of a global net-carbon-negative commercial trucking industry.” Chao, who served as the nation’s secretary of transportation from January 2017 to January 2021, has also served as president and CEO of United Way of America and as head of the Peace Corps, as well as a banker with Citicorp and Bank of America. She has also served on a number of Fortune 500 public boards, and now serves on the board of Kroger Co.

One trucking truth is that the larger your business grows, the less direct control you’ll have over it. Some truck owners are content to remain one-truck outfits, reasoning that adding that second truck will mean having to depend on the actions of another person for at least half of the success of the business. Growing large enough to require a dispatcher or other support personnel adds even more layers of complexity. Here’s another trucking truth: No matter how much you trust a driver, once the truck leaves your sight, you can never be absolutely sure what’s happening with that vehicle. One solution most of the larger carriers, as well as many of the smaller ones, have turned to is in-cab video cameras. These systems record continuously, saving video segments when incidents are detected or when manually requested by the driver. The simplest of these is the dash camera. Typically, dash cams save video to an SD card in increments ranging from 30 seconds to several minutes. When the card is full, the device records over older video. When an incident is detected, that segment of segment is saved to a separate file that is will not be overwritten. If the driver manually saves a video segment in which an event isn’t detected, that goes to a separate file, too. Many of these cameras also record audio and can reveal unwanted driver behaviors, such as talking on a cellphone or a conversation with an unauthorized passenger. In addition, some cameras are equipped with GPS information that record location, speed and other factors. These cameras offer some protection in the event of an accident, but you’ll have to wait for the truck to return to home base before you can check the video. Depending on how long the driver is out, incidents that did not result in a saved event may be overwritten. Incidents such as tailgating or lane departure may or may not be recorded — and even if they were, you’ll need to watch (and listen to) many hours of video to find out. Another problem with dash cams is that most devices can display the video, allowing the driver to review and delete any video that might not be good for the boss to see. Still, these basic camera systems are better than nothing. Many small carriers, however, want more information about their trucks on the road and they don’t want to wait until the next time the truck is in the yard. Commercial video systems offer a wide variety of options that provide more information. Some systems offer more than one camera. Depending on the service, the owner can choose from forward-facing cameras that show what’s happening in front of the vehicle and add multiple camera systems that show what’s happening alongside and behind the truck, and even inside the cab. Driver-facing cameras are unpopular with many drivers, who consider them an invasion of privacy — but they offer one way of revealing unsafe activity in the cab, such as use of a handheld device. They can also reveal unintended behavior, such as the driver nodding off due to fatigue or other issues. Some systems are even equipped with bio-sensors that measure the driver’s head and eye positioning, issuing an audible warning if the driver is distracted or sleepy. Camera systems offer a variety of access methods, with some offering live access via a computer or smartphone. Some systems must be downloaded when the driver returns. This can be done wirelessly in some cases. Other systems offer online access of any saved events. Many of these systems allow the customer to set the parameters for saving video. For example, incidents of traveling over a set speed can be saved, as well as incidents of hard braking or swerving suddenly. Some of these video systems send alerts to the truck owner or another designated receiver, such as a fleet or safety manager, letting them know a reportable incident has taken place and providing a link to the video. This allows the owner or manager to quickly identify problems and address them with the driver. Many video systems that aren’t owned outright are licensed by subscription, so you’ll pay for the service each month that you use it. Some owners find the extra services provided, such as text or email alerts and video storage, are well worth the monthly expense. Video evidence can be used to provide safety training for drivers you want to keep, making them better, safer drivers. It can also be used to discipline or even discharge drivers who are too great of a safety risk. In the event of an accident, video can be used to exonerate both driver and owner, saving thousands of dollars in potential court awards as well as traffic convictions and increased insurance rates. Your insurance carrier may be able to recommend a video service, and might even offer a discount on your rates if you use one. Check with your carrier before you commit to such a service, as some systems may qualify for a discount while others don’t. Some owners turn to the Internet, a search for “vehicle video systems” brings up pages of options. When you talk with a provider, you’ll want to consider the services offered, what parameters you’ll be able to set, how you’ll access the video and, of course, the cost. You’ll also need to consider the impact on your driver group. If you go with a video system, you’ll need a plan to introduce it to your drivers, clearly explaining what the video will — and won’t — be used for. You’ll also need to put clear rules in place about drivers tampering with or obscuring the camera. It’s possible some drivers will refuse to drive trucks equipped with cameras, so you should be prepared for that scenario. Your growing trucking business is a big investment — and you face an even bigger exposure to risk as your trucks travel the highways. Video systems provide a level of supervision that wasn’t possible a generation ago. There’s nothing like having long-term drivers who have earned your complete trust, but for everyone else, video can be an attractive option.

Freight levels moderated in June, but only by a little, according to reports from several sources. Supply chain issues, like shortages of semiconductors (silicon chips) used in a variety of products and record prices for steel are responsible for some of the slowdown in shipments. The driver shortage is also being blamed. In the meantime, freight rates remained near record levels as the rising cost of diesel fuel raised both operating costs and fuel surcharge rates. The American Trucking Associations reported a 1.5% decrease in truckload volumes reported by its member carriers. Bob Costello, ATA’s chief economist, cited supply chain issues but also talked about the driver shortage in the organization’s monthly release. “Supply chain issues are likely putting some downward pressure on tonnage,” he said. “This index is dominated by contract freight, and the for-hire truckload carriers have seen their tractor counts fall because they are having difficulty finding qualified drivers. It is difficult to move more tonnage with less equipment, which is why we are seeing strong volumes in the spot market as shippers scramble to get loads moved.” The DAT Truckload Volume Index seemed to confirm Costello’s comments regarding the spot market. The country’s largest load board reported a June increase in freight volumes of 11% over May volumes. In June, shippers faced a supply-driven capacity crunch, according to Ken Adamo, chief of analytics at DAT. “While the number of trucks posted to the DAT load board network increased significantly in June, overall demand accelerated at a faster pace,” he said. “The typical seasonal decline in contract and spot rates from now to Thanksgiving looks less likely in 2021.” ACT Research also reported a decline in June freight volumes. “June’s Volume Index reading declined, but continues to represent a still-healthy level,” said Carter Vieth, research associate for ACT. Vieth mentioned “continuing lean U.S. inventories, increasing orders for durable goods and consumers enjoying record wealth and savings” as positives in the current economic cycle. The law of supply and demand is responsible for the positive market conditions faced by the trucking industry. With so many shutdowns and layoffs due to the pandemic, drivers left the industry in droves. As freight levels picked up, many of them returned to work, but not enough to fill all of the trucks needed to move available freight. The resulting capacity crunch helped raise spot freight rates to record levels with contract rates not far behind. Cass Information Systems (cassinfo.com) joined other analysts in reporting a June freight decline, citing a drop of 3.0% from June levels. “Our industry discussions suggest shipment volumes continue to be hindered by supply constraints, which range from driver and trailer shortages in TL (truckload) and LTL (less-than-truckload) to chassis shortages hampering intermodal capacity,” explained Tim Denoyer, senior analyst at ACT Research who writes for Cass. The Cass Index differs from the other sources in that it represents all modes of freight movement, including truck, rail, ship, intermodal, pipeline and air. All of the analysts reported very large freight increases over the corresponding month of June 2020, when the economy was beginning to rebound from the COVID-induced recession. The driver shortage isn’t expected to get better any time soon. The Federal Motor Carrier Safety Administration’s Drug and Alcohol Clearinghouse (FMCSA) has taken a large bite out of the available driver pool. As intended, the Clearinghouse has greatly increased the difficulty of finding another trucking job after testing positive for a controlled substance. Many drivers have simply chosen to leave the industry rather than go through return-to-work protocols. At a time when marijuana is being legalized in a growing number of jurisdictions, the substance continues to be responsible for more than half of all positive DOT drug screenings. There has been increasing support for removing Marijuana from controlled substance testing, but both the government and the trucking industry are against doing so in the absence of adequate field-testing to identify drivers who are under the influence. To help alleviate the driver shortage, the FMCSA is continuing a pilot program testing the safety of 18- to 21-year-old drivers, but results won’t be available for at least two years. Nearly every state issues CDLs to younger drivers. While they aren’t allowed to cross state lines, they have still racked up plenty of miles that can and should be used to evaluate their safety records. Obstacles or no, the trucking industry is losing drivers and is not attracting replacements fast enough. Most of the major carriers have announced driver pay increases, without obvious impact. Another factor that could impact freight rates is the rising cost of diesel fuel. The Energy Information Administration’s weekly national average price for the week of July 19 was $3.34 per gallon, the highest it has been since reaching $3.39 in October 2018. Two years ago, in July 2019, the price was $3.05; a year earlier it was $3.24. Fuel prices fluctuate with economic forces; however, inflationary pressures resulting from an over-stimulated economy could help push pricing higher. The Biden administration’s announced non-renewal of drilling permits on public lands as well as restrictions on fracking could add to long-term price increases. Finally, those supply constraints are likely to continue for at least the next few months. India, the world’s second-largest producer of steel, is still beset by a resurgence of COVID-19. Manufacturing is impacted both by slowdowns and by supplies of oxygen needed by steelmakers being redirected to hospital use for COVID victims. Semiconductor manufacturing is at full capacity and the demand still far outweighs the available supply. New plants are planned, but could take years to come on line. And — as if the world needed another problem — China is again making noises about “unifying” with Taiwan, where 90% of the world’s semiconductors are made. Despite the issues, the trucking market is a great place to be for now, and should remain so for at least the next few months. Rates are still high, and freight, although declining, is plentiful. If supply constraints ease up — and the driver shortage doesn’t — rates could see another positive surge. The good times are still rolling for the trucking industry.

Parts shortages and dwindling inventories are holding back what should be a robust new Class 8 truck market, according to Kenny Vieth, president and senior analyst at ACT Research. “The industry is still having just the hardest time building units,” he told The Trucker. “Inventories are super low. And so sales, at least on a seasonally adjusted basis, have really softened up.” According to ACT, 20,369 new Class 8 trucks were sold in June on the U.S. market. That’s an 8.6% improvement over May sales of 18,761 and a whopping 50.1% better than June 2020 sales of just 13,567. Last year, the market was just beginning to recover from its lowest point of 9,510 trucks moved in May. A better comparison might be the 25,607 Class 8 trucks sold in June 2019, when the backlog of orders was shrinking as assembly lines reached for maximum output. June 2021 sales trailed that figure by 5,238 (20.4%). June is typically a strong sales month for trucks, in part because it’s the final month of the second quarter. When profits are strong, carriers tend to invest in new equipment at the end of each quarter. Investments reduce the amount of profit that must be reported and the taxes that are paid on that profit. Vieth said inventories haven’t been this low in years. “I have to go back to June of 2017 to find a lower inventory number,” he said. Record prices for steel and other materials haven’t helped. Global shortages of plastics, parts and, especially, semiconductors are keeping production levels down, too. “All these supply chain constraints are just making it very difficult for the industry to shift into to another gear for production,” Vieth explained. “Semiconductors is the big one, because semiconductors go into so many different products used on a truck, like door actuators or instrument panel clusters,” he stressed. “There are silicon chips all over the place.” A single vehicle can use more than 100 semiconductor “chips” in parts as small as a turn-signal indicator up to the electronic control modules (ECMs) in engines and transmissions. Modern electronics-based safety equipment, such as collision avoidance, vehicle stabilization and lane departure, also require semiconductors. In a typical recession, some industries are able to amass large inventories of products while sales are down. When the recovery begins, products are available to get the process moving quickly. That didn’t happen with semiconductors during the COVID-19 recession because consumers continued to purchase items that use them while they were at home. Phones, televisions and other appliances that use the chips ate up stockpiled inventory. Estimates for declines in production of automobiles, a huge sector of the U.S. economy, range from a 1.5 million to upwards of 5 million, and truck builders are facing the same problems. If you’re thinking of ordering a new Class 8 truck, as 25,800 others did in June, plan on a long wait until delivery. The current backlog will take a year to build at current production rates. The impact of steel prices is also being felt. Data shows that 5,105 of the Class 8 tractors sold in June (about 25.1% of the total sold) were for the vocational market. The bodies these tractors will be fitted with, whether trash, dump, concrete or other, all require steel for construction. Those who are thinking of turning to the used truck market for relief aren’t likely to find answers. Used Class 8 volumes fell by 6% in June, according to ACT’s latest “State of the Industry, U.S. Classes 3-8 Used Trucks.” More telling is that, despite year-to-date numbers showing that 2021 sales are 23% higher than the same point in 2020, June actually registered a decrease of 12% from June 2020 numbers. While sales numbers were falling, the average price of a used truck rose by 5%. The ACT report states that on a year-to-date basis, average used truck prices are up by a whopping 38% while inventories have fallen drastically. Steve Tam, vice president and analyst at ACT, put it this way: “The simple law of supply and demand has created a scarcity situation, and there is no viable substitute to the venerable Class 8 truck. Hence, prices are through the roof, with no relief in sight.” Circling back to new trucks, Western Star showed the biggest month-over-month sales increase, according to data received from Wards Intelligence. The company sold 601 trucks in June compared to 447 in May for an increase of 34.5%. The biggest sales increase in terms of numbers rather than percentages, however, goes to International, which sold 3,043 new Class 8 trucks in June, an improvement of 766 (33.6%) over May sales of 2,277 and 76% better than sales of 1,729 in June 2020. Freightliner sales improved by 773 trucks to 7,426 for a gain of 11.6%. Kenworth and Peterbilt were the only two OEMs to register declines in sales for June. Kenworth’s 2,743 was down 6% from May sales of 2,919. Peterbilt sales declined by 2.8% to 2,851 from May sales of 2,933. Volvo’s 1,472 trucks sold in June bested May’s 1,413 by 4.2%, while Mack’s 1,704 was 10.3% better than May’s 1,545. For the first six months of 2021, 39% of new Class 8 trucks sold were Freightliners. That’s up from the 36.3% of the market they controlled in 2020. Kenworth’s 14.1% share of sales is down from the 15.3% they enjoyed last year, while Peterbilt’s 15.3% share has improved from last year’s 14.2%. International enjoys 11.7% of the new truck market compared to last year’s 12.6%. Volvo is next with 9.5%, down a little from last year’s 9.7%, and Mack’s 7.9% is down from last year’s 8.3%. Comparisons are difficult, however, considering the COVID-19 recession of last year and the parts shortages holding back production this year. The bottom line for 2021 is that if you want a new truck, you’ll probably have to order it, and the wait will be long. If you want a used truck, it’ll be hard to find, and the price will be high when (and if) you find it.

PHOENIX — On July 5, Knight-Swift Transportation Holdings Inc., acquired 100% of Dothan, Alabama-based AAA Cooper Transportation. AAA Cooper is a less-than-truckload (LTL) carrier that also offers dedicated contract carriage and ancillary services. The enterprise value of the transaction was $1.35 billion. “We have long had interest in the LTL space and admired the success of AAA Cooper,” said Dave Jackson, Knight-Swift CEO. “We feel honored to be stewards of the AAA Cooper brand and, similar to previous acquisitions, AAA Cooper will continue to operate independently, while benefitting from the many synergies we expect through Knight-Swift.” The purchase price consideration consisted of $1.3 billion in cash, $10 million in Knight-Swift shares and approximately $40 million in assumed debt, net of cash. Cash for the transaction was funded from a new $1.2 billion term loan provided by Bank of America to Knight-Swift. The transaction is expected to be immediately accretive to Knight-Swift’s adjusted earnings per share. Reid Dove, CEO of AAA Cooper, has been appointed to the Knight-Swift board of directors and will continue to serve as the CEO of AAA Cooper. “In seeking our first LTL partner, we had three main requirements — the scale for entry with significant market share, the profitability and management depth to operate independently and provide a platform for compelling growth opportunities, and a world class culture. We were excited to have identified AAA Cooper as a partner that meets all three requirements, and I couldn’t be happier to finally find the right time for both of us to create a partnership,” Jackson said. “This transaction firmly positions us as a meaningful player in the LTL space, where we intend to grow both organically and through future acquisitions.” Dove noted that joining the Knight-Swift team is “an exciting combination for the AAA Cooper team members and customers.” “It will allow us to pursue new opportunities and accelerate our growth. We will continue to operate as an independent company, headquartered in Dothan, Alabama, and will do so with the support and partnership of the strongest provider in the full truckload space,” Dove said. “This is the fusion of two excellent companies in their respective sectors of the transportation industry, which makes this a win for our people, our customers, and for the newly expanded Knight-Swift team.”

If there are statistics that best show the weirdness of the U.S. market for Class 8 trucks, it might be these: May sales were down 4.8% from April, but at the same time were up 97.3% from May 2020. The odd occurrence happened because May was the worst sales month of 2020 as the economy bottomed out due to COVID-19 shutdowns. In May, 18,761 new Class 8 trucks were sold in the U.S. market, compared to 19,714 in April — and only 9,510 in May 2020 — according to data received from ACT Research. It could have been more, but shortages of steel, plastic, semiconductors and other supplies meant manufacturers sold fewer trucks from the assembly line and more from existing inventories. The shortage of semiconductors has made the news, but a shortage of plastics, including the commonly used polyethylene, may end up having a bigger impact on builders. Polyethylene is the most widely used plastic product in the world, and 85% of the U.S. supply comes from Texas. “That deep freeze that we had in Texas back in February, I want to say destroyed most of the plastic-producing machinery in the United States,” explained Kenny Vieth, president and senior analyst for ACT. “You’ve got machines with melted plastic running through them. So, when you shut the system down, it’s a very precise process.” That shutdown process wasn’t followed because the machines stopped suddenly when the plants lost power. While they waited for the lights to come on, the melted product solidified in the machines, resulting in a time-consuming cleaning and repair process for parts and tubing that weren’t destroyed. The electricity was out for days but many of the plastic-making machines were out of commission for weeks. Manufacturers of truck parts that require plastics couldn’t get the pellets that feed their machines. Vieth noted that shortages were also reported for items such as wiring harnesses and tires, as well as forged parts such as transmission housings. “You could build a truck with all the parts that you couldn’t get ahold of,” he said. Some of these shortages are just part of the normal economic recovery process. “There’s always that normal constraint when the industry ramps up. It just, takes time to get the process moving,” Vieth explained, adding that better days are coming. “I think it gets better from here. And I think it gets better rapidly,” he predicted. Truck orders fell in May to just 23,100 for the North American market, but not because carriers aren’t interested in buying. “The near-term backlog is filled,” Vieth noted. “And the OEMs haven’t fully opened their 2022 order books.” Simply put, there are no build slots left for 2021 model trucks. The manufacturers typically start taking orders for the following model year in October, but they have started as early as July in the past — and Vieth predicts they will do so again this year. When they do, things will “pop,” according to Vieth. “We’re expecting in the next few months to see that backlog of 250,000 units to rise to 300,000 or more,” he said. The current backlog of a quarter-million orders would take 9.9 months to fill at current build rates — and that’s if no further orders are received. “If you ordered a truck in May, the first quarter of next year is when you could expect delivery,” Vieth said. With the long wait time, very few orders are being canceled. “We had 1,100 cancellations in May, which is nothing,” Vieth said, explaining that a carrier with an order in for a truck with a 15-liter engine, for example, might accept a truck with a 13-liter engine if it’s available without the wait, resulting in a cancellation of the original order. Carriers that are thinking about the used tractor market to improve their fleets may not be happy with what they find, according to a release of ACT’s preliminary “State of the Industry” report. Average prices for used trucks in May increased another 5% over April prices and were a whopping 52% higher than in May 2020, when the market was depressed due to the pandemic. Part of that increase could be attributed to carriers buying newer, recent-model trucks to fill fleet needs, driving the average price higher. “By all indications, demand continues to outpace supply, and for that reason, it should come as no surprise that truck prices continue to increase,” said Steve Tam, vice president of ACT. In any event, those planning to turn to the used tractor market may be disappointed at the selection and the prices, if they can find a truck that meets their needs at all. International was the only OEM to sell more trucks in May than in April, according to data received from Wards Intelligence. International sold 2,277 units, compared with 2,192 a month earlier for a 3% increase. Volvo Truck experienced the largest month-over-month decrease with May sales of 1,413 compared to 1,934 in April, a decline of 26.9%. For the year to date, Volvo has captured 10% of the U.S. Class 8 market compared to 9.4% at the same point of 2020 and 9.7% at the end of that year. Mack sales declined by 6.3%, from 1,649 in April down to 1,545 in May. Freightliner sales of 6,653 in May were down 5.8% from April’s 7,065. Year to date, the company still holds about 39.3% of the U.S. Class 8 market. Kenworth sales of 2,919 were down 2% from April sales of 3,005, while Peterbilt sales declined 1.9% with 2,933 sold in May compared to 2,990 in April. Together, the PACCAR siblings are responsible for 29.6% of U.S. Class 8 sales for the year-to-date. Western Star sold 447 trucks in May, down 11.3% from April sales of 504. So far in 2021, the company has sold 2,259 trucks, behind last year’s 2,430 at the same point for a decline of 7%. As parts become available, the build pace should pick up at the OEMs. For the next six months or more, however, trucks will be hard to find, and prices will be high.

ATLANTA — In May, NBA superstar Kyrie Irving invested $500,000 in Fleeting, a Black-owned, New York-based commercial trucking and fleet management services company. This investment didn’t come out of the blue for Irving, who has been an activist for seven years, and recently started his own consulting firm and venture fund to help support Black- and women-owned businesses. It also wasn’t out of the blue for Fleeting’s founder and CEO, Pierre Laguerre, to support and train formerly incarcerated men and women to the trucking industry. Fleeting is preparing to launch a three-month training program to provide former inmates with the tools needed to obtain a commercial driver’s license (CDL). The program is also designed to address the nationwide truck driver shortage and expand opportunities for formerly incarcerated individuals. “Right now, this transportation industry is on the brink of being short 900,000 drivers,” Laguerre said. “Too often, we live in a world where people think that a trucking industry problem is just a trucking industry problem, and I’m here to tell everyone that’s not true. A trucking industry problem is one that can affect every American citizen in this country.” Laguerre’s goal is also to destigmatize truck driving and employment for formerly incarcerated individuals. By removing bias from Fleeting’s hiring process, it can give employees equal access to more financial freedoms, he said. More distinctly, it’s about destigmatizing female employment. “It’s 2021, and I think you’re supposed to be in a place now where we can provide tools for young women and young men to be able to make better financial decisions,” Laguerre said. “I think as men truckers, we have a moral obligation to make trucking a safe space for women so we can attract more women into the industry. Women face the same challenges as men truckers, if not more.” With current employees, Fleeting provides incentives for women truckers and those with families by providing flexible hours and access to shorter trips. His primary business model is to provide a platform for independent truck owners and small carriers to have large carrier resources. Although Fleeting has the resources, owner-operators and drivers still have the freedom to control earnings and schedules. This also applies to truck drivers who would like to have their own truck but do not have the flexibility or earnings to purchase one. “By taking those existing assets that aren’t being utilized, putting them into our platform, it (allows) drivers in the industry to operate like an owner-operator without the headaches of owning the truck or the entire pain point of going through owning a truck,” he said. While Laguerre was creating his company, he captured the attention of Marcus Glover, co-founder and managing director of Irving’s Lockstep Ventures. When Irving discovered an interest in Black-owned farms and how trucking impacted the agriculture industry, Laguerre’s business seemed a perfect fit. “It just turned out that we both had, for different reasons, this tremendous interest in the venture that Pierre was leading,” Glover said. With the joint KAI 11 Consulting and Lockstep Ventures investment, curriculum and community directors will be added on to the program. Incarcerated individuals will be informed of the program three months before their release. “Prior to their release, we want them to really get the understanding of general knowledge of transportation,” Laguerre said. To do this, participants will be given a CDL handbook to study before eventually being matched to a training school. Once the individuals obtain a CDL, they will be placed with Fleeting’s existing drivers for six months to understand safety, customer interactions and trucking regulations. Laguerre’s inspiration to support others comes from his own background. At age 16, he had dreams of becoming a neurologist, but his normal day-to-day picture of life was watching his peers being locked up for one reason or another. “My fear of becoming a statistic, my fear of becoming a part of that environment … I wanted to escape,” he said. “Trucking was my only escape.” Trucking also turned out to be Laguerre’s fate — in a good way. While his dreams landed him in college, financial hardship led him to become a truck driver. He continued his career and eventually created his own company, but he never forgot the streets that built him. “I felt like I had a moral obligation to build this platform to give drivers the true flexibility and upward mobility that they deserve and give the shippers the transparency and access that they desperately need today,” he said. “With me being a driver, I can relate to drivers. I can show them empathy, and exactly what they need to do to be successful, or just how I was able to be successful myself.” While on that mission, Laguerre has found a way transform the fate he avoided into an opportunity for those who have been incarcerated. The training program to turn inmates into truck drivers will begin later this year.

When it comes to operating your own trucking business, being a great driver isn’t enough. It takes more than driving skill to profitably manage a business. Successful owners know the various tasks necessary to keep the business running. They also know their limitations. For example, some owner-operators perform all the maintenance on their equipment. Everything from oil changes to engine rebuilds become do-it-yourself projects accomplished by the owner’s hand. Others, however, leave the wrenching to the professionals — or they handle the grease and oil but trust any projects requiring more knowledge or equipment to a local shop. When it comes to the cash flow of a trucking business, factors could be considered “money mechanics.” They understand the tasks of billing and collection, and can help truckers stay focused on serving their customers by handling some of the business duties the driver may not be comfortable with or have time to handle. It doesn’t matter how good the shipping service is if the trucker isn’t paid for it. After the delivery, the factor takes care of invoicing the customer and collecting payment. It may seem like an easy task, but owners who are on the road can’t always find time to complete an invoice and send it to the customer. And there’s more. Each open invoice must be tracked to make sure payment is received. After a period of time, another invoice needs to be sent, or the customer called, or both. If the customer still doesn’t pay, collection actions may be necessary. It can be a lot to keep track of while still performing driver duties. Even when the customer pays, it still takes time. Many businesses operate on a 30-day payment cycle, meaning the driver waits a month before payment is received. Others may have a 45- or 60-day cycle, making the wait even longer. Then, there are those that aren’t very good at keeping bills paid. They can lose invoices, forget payments and otherwise cause extra collecting effort. Factors not only keep track of all this; they can help with the waiting, too. That’s because most factors advance the payment to the trucking business. Some pay within hours of delivery, keeping cash flowing through the trucking business. The factor waits for payment, not the trucker. When considering a factoring service, when and how payments are made is an important detail. Options can include direct deposit into the trucker’s bank account, the assignment of funds to a fuel card or a prepaid debit card, or even mailing a check. As for the conditions for making payment, most factors are able to pay upon receipt of a photo of the paperwork. Those that require faxing or mailing of documents are behind the times. If the customer never pays, the trucker may have to pay back the advanced funds, but there’s a choice here, too. Factors often offer “recourse” or “nonrecourse” services. In nonrecourse agreements, the factor takes the loss if the customer doesn’t pay. Fees for factoring services vary among businesses offering the service and are an important consideration when choosing a factor. In most cases, the factor simply keeps a percentage of the invoiced amount, or a flat fee plus a percentage. The fee goes up if the agreement is for nonrecourse billing, because the factor is assuming greater risk. Factors can also help the trucker decide which customers to accept. A great freight rate may look attractive, but if it comes from a shipper with a poor history of paying, the deal might not be so good. Factors can often help identify which shippers have poor payment histories, bad credit records and more. They can advise drivers about which customers to avoid, which take a long time to pay and so on. In cases where a shipper has failed to pay in the past, the factor may simply decline to advance any funds based on the load; this action protects both trucker and the factor. It’s important to ask the factor whether they allow “spot” factoring. Some factors require the trucking business to use their services for all loads they haul. However, some trucking businesses have certain customers that are very good about paying on time. In these cases, the owner may want to deal directly with the customer, avoiding the additional step and expense of involving a factor. They might prefer using the factor for loads from new or occasional shippers they haven’t established a relationship with. Ancillary services are another area to ask a prospective factor about. Most factoring businesses offer additional services, either directly or through partnerships with other businesses. Free credit checks are one such service; fuel cards are another. Some owner-operators carry large amounts of cash for fuel purchases, while others use credit cards that charge high interest rates if the bill isn’t paid off by the due date. Factoring services can offer fuel cards with smaller fees and no interest, saving money and keeping the businesses debt down. In some cases, fuel cards come with discounted pricing on fuel, oil, tires and other items and services. Some factors can assist with emergency cash needs, too. Expensive repairs, such as an engine rebuild, can sideline a trucking business if the owner can’t fund the work. Some drivers turn to predatory lenders who offer quick cash, sometimes in a single day. Often, these lenders charge exorbitant fees along with high interest rates. Some lenders insist on access to the business bank account so they can make withdrawals without the owner’s input. Factors may provide low- or no-interest solutions to help owners get the business back up and running. Others partner with firms that help manage programs to keep the business viable. Anyone doing business with a factor should carefully read the agreement paperwork. Some factors impose fees for certain actions — including a fee to terminate the agreement. It’s best to understand all rates and fees from the beginning of the relationship. Factors can smooth out cash flow for trucking businesses, allowing the owner to concentrate on the business of moving freight. Factors can also help owner-operators make sound business decisions and can help when things go wrong.