The Road to Expansion: How and Why to Grow Your Trucking Fleet

Sean Hawley

In the the trucking industry, particularly for small business owners, growth is often synonymous with fleet expansion. But expanding your fleet is more than just adding more trucks; it’s a strategic move that can significantly impact your business’s future. For owners of small fleets, understanding when and how to expand is crucial to not only increase revenue but also to diversify freight offerings and stay competitive

Identify the Need

The decision to expand is something we usually ascribe to demand outstripping current capacity; for truckers this would be particularly when you find yourself regularly turning down work, especially from existing customers. This type of situation is something most, if not every trucker in America, would gladly welcome. But- we know this isn’t currently the case for small truckers. In fact, in large swaths of the country the opposite is happening-there is less freight to go around, and rates seem to getting lower all the time.

However, it’s also important to consider diversifying your freight and equipment type. Diversification, much like a diversified investment strategy, spreads risk and improves returns by reducing reliance on a single mode or freight provider. This strategy is especially relevant considering the dynamic nature of the trucking industry, where factors like capacity shortages, driver scarcity, and fluctuating oil prices can impact your operation. Think about this and consider the potential that adding to your fleet might bring.

Imagine if McDonald’s only sold hamburgers. They would have nothing to offer all the hungry people who prefer chicken, fish, salad etc. Instead of losing those customers to Fish Filet and KFC, they expand their menu to include these items. Truckers should think about this and consider adding to their fleet different equipment types to handle different types of freight.

Understanding the Current Market

Currently, the trucking industry faces significant challenges, including high operational costs and fluctuating demand. In such times, relying solely on traditional freight hauling can limit growth and increase vulnerability to market disruptions. Diversification is a strategy akin to spreading investment risk, reducing dependency on a single freight type or client base.

Diverification as a Growth Strategy

Diversification means branching out from standard freight hauling to include different types of services or freight. This could involve more specialized logistics operations, or even last-mile delivery services. By diversifying, you’re not just adding trucks; you’re expanding the kinds of services you offer, reaching new customer segments, and reducing the impact of market fluctuations on your business. This is how the big boys do it, and you can too.

Access to New Markets:. By handling different types of freight, you can cater to a wider range of customers, from local businesses needing quick deliveries to larger companies requiring specialized cargo handling.

Reduced Risk Diversification spreads your operational risks. If one market segment experiences a downturn, your business is not entirely vulnerable because you have other types of freight services to rely on.

Increased Revenue Opportunities: Different freight types can command different rates. For example, specialized or urgent delivery services often have higher rates compared to standard freight services.

Adaptability: Diversifying your services makes your business more adaptable to changing market conditions. You can shift focus between different freight types based on demand, seasonality, and profitability.

Simple Strategies for Diversification

Bank Term loans are term loans meant to be repaid in a shorter amount of time than the 10-year term of a typical SBA loan. This type of loan can be a great way to get the funds you need to successfully build or maintain your business until you are eligible for an SBA loan.

Exploring Local Opportunities Start by exploring opportunities within your existing routes. Are there businesses along your routes that might need different types of delivery services?

Building Relationships with New Clients: Networking with potential clients outside your usual customer base can open doors to new types of freight jobs. Networking with other truckers might lead to finding the perfect partner.

Take Baby Steps. Start off small with one additional truck. Invest in a decent used one that won’t break your bank. Several of BLF’s clients (including our largest) added a few box trucks to their tractor fleet because the entry (and risk) was lower. These clients have been better positioned to handle all the drama from the last few years and are still growing.

Think Outside the Box

The key to successful diversification lies in thinking creatively about how to use your fleet. It’s about assessing your current capabilities and exploring new opportunities that align with your business goals. This approach requires a willingness to adapt and innovate, ensuring you’re not just conducting business as usual but actively seeking growth opportunities.

Take a look at the following chart to see new ways to use just your existing equipment for other purposes:

Current Trucking Type	Additional Freight Types	Description
Flatbed	Car Transport	Using flatbeds to transport vehicles such as cars, often requiring additional securing equipment.
Reefer	Dry Goods Transport	Utilizing reefers for dry goods when not transporting temperature-sensitive cargo, offering flexibility.
Box Truck	Moving Services	Leveraging box trucks for local moving services, catering to residential and small business needs
Tanker	Liquid and Dry Bulk Transport	Using tankers for both liquid and dry bulk materials, suitable for a variety of industries.
Dump Truck	Construction Material Transport	Expanding services to include transport of construction materials, leveraging the dump truck’s capabilities.
Hauler	Heavy Equipment Transport	Utilizing haulers for transporting heavy equipment like construction machinery, requiring proper rigging and securing.

Conclusion

For small trucking companies, fleet expansion coupled with diversification is not just about growth in size but also about strategic positioning in the market. It’s a proactive approach to adapt to the changing dynamics of the trucking industry, ensuring long-term sustainability and success.

One last thing to think about-there are a lot of truckers (especially owner operators) who are tired of the grind and with all the recent uncertainty and financial stress of the last few years. Many of these truckers, especially boomers and even some older gen xers are leaving the industry. This is a sad fact of our current times. But this also means that when the markets correct (and they will) there were be more opportunities for less truckers. This fact might be persuasive enough to consider hanging in there as long as possible.