Fluctuations in business are nothing new, and as Expediters, we’ve learned to take the good times with the bad. It’s no secret that 2016 has seen a soft environment for freight. According to the CASS Freight Index report, as of June, freight is down 8.8 percent from June 2015. This situation is causing pressure on lending markets, as well as credit end users. In order to analyze and better understand these market forces, Spotlight News talked to four industry finance specialists to get their take on what’s down the road for finance, credit, and lending. Their answers may surprise you and even motivate some to reevaluate their business goals. But one thing is for certain, you won’t look at credit and lending the same way again — and you will also learn that there is safety in support in any economic environment.
Sarah Jones • District Finance Manager at Daimler Truck Financial for the Indianapolis Territory
SLN: What are you seeing in Finance, Lending and Credit right now?
The financial strength at the moment is not going in the right direction. As we do all of the line renewals for the year, the ratings have gone down, and a lot of our owner operator delinquencies are up. Used truck values have been hurt somewhat and this was a leading indicator for the down tick.
SLN: To what do you attribute the recent downturn in the economy?
I attribute it to a number of things. Everyone stopped replacing units during the previous downturn and waited things out, and during the 2014 – 2015 era, people were replacing all of their equipment. So, your debt service ratios are a little high right now. And on top of this, you have the driver shortage where you have all this new equipment out there in the market. It’s not uncommon right now to see a lot of new equipment just sitting because there are no drivers to put in these trucks. Throw in slow freight on top of all this, and it all has a cumulative effect.
SLN: What do you see happening to finance and the economy from now through next year?
I think we’re leveling off. 2014 & 15 were high and it looks like we’re entering into a period of “normalcy” — it’s a good thing if you ask me. Driver retention is a priority for every fleet and you’re seeing carriers and support companies like Expediter Services introducing new and innovative ways to attract and keep drivers and we’re starting to see the fruits of that labor. I think 2017 is going to be a really good year.
SLN: Do you feel the election is having an effect on the market?
No doubt elections do have an effect because no one knows what is going to happen, but it’s proven that after every election, the economy always bounces right back initially. I’m truly not worried about it and once it’s behind us it will be business as usual.
SLN: Do you have any advice for customers?
I think the best thing you can do whether you’re an owner operator or a fleet is to make sure you’re prepared, organized and you’ve done your homework. As an owner operator, it’s especially important to align yourself with a carrier or a service company like Expediter Services. Having that umbrella of cost savings and support can make all the difference.
David Bibler • Finance Manager Stoops Freightliner Quality Trailer
SLN: What are you seeing in the financial lending market right now?
I see a tightening of credit from the major players at the moment. They’re asking more questions, not necessarily not doing the business, but they are being more cautious and drilling deeper.
SLN: How does the fact that the lenders are drilling deeper effect your business?
With the lenders being more cautious and asking more questions, it slows down the process a little more and makes it more difficult for me and my staff to meet all the stipulations.
SLN: What are lenders looking at when it comes to making loans?
Some lenders will only consider individuals who have had at least five years experience as an owner operator, versus someone who has just been a company driver for a short time period. Many of these lenders were in the business during the previous couple of downturns and haven’t forgotten the affects created by a bad economy.
Also, the first truck and/or trailer are tough for the first time buyer (if not practically impossible). But what’s even tougher is the second and third truck, depending on how quickly the owner wants to grow. For instance, if a buyer were to come back a few months later, having bought a new truck and wants to buy another, that’s probably not going to happen. Whereas, years ago, depending on the financial strength of the individual, they may have had a better opportunity to make that happen. Now, lenders will want to see a couple of years of pay history at least in order to consider the loan.
SLN: What can a first time buyer do to increase his or her odds of getting a successful loan?
It really comes down to the individual. For example, an experienced company driver with five to six years driving experience, who is a home owner, a previous credit history with a car, etc., and is looking to buy a new truck — we might be able to do a deal. But putting a first time buyer in new equipment is slim to none, unless there’s a substantial down payment. This is because lenders have learned that this scenario is one of their biggest risks.
I think the toughest thing for equipment buyers to understand is that buying a truck isn’t like buying a car or a house, where your high credit consists of a few credit cards and a $10,000 car loan. Just because you have a 700 credit score doesn’t mean you’re going to get an approval.
Steps customers can take to show the best credit to lenders are:
• Get experience with a program at a fleet (such as ES)
• Buy used equipment to get established
Lending has come full circle. People used to buy a used truck, get experience as an owner operator, then trade that equipment in order to get a little newer truck, taking steps to build a business, and that’s the scenario where we are at the present; slow and steady growth.
SLN: What do you see for finance in the future?
Well, personally, I can’t wait for the election to be over with. I think this will help somewhat. Also, the economy has been on a slow burn over several years, which isn’t a terrible thing. I think we’re on the downside of this slow burn and I think we’re in for a soft landing, barring some kind of national catastrophe. To sum it up, I think the future is bright.
Steve Kochensparger • Finance Manager Expediter Equipment Finance
SLN: What are you seeing in the economy and finance right now?
The credit market has tightened up. It’s important for people to understand that there’s a big difference between personal credit versus commercial credit. The tightening up I mentioned primarily affects first time buyers because they come into a potential truck purchasing situation, sometimes with unrealistic expectations. They may have just gone down to their local car dealer, purchased a new pickup truck and gotten a 3.9% interest rate. Realistically, I may not be able to get them anything at all based on what their credit score is. It really
comes down to comparable credit.
SLN: What do you mean by comparable credit?
We see a lot of people who just don’t have any depth to their credit report. They’ve had $12,000 car loans and two or three credit cards. They’ve got a pretty decent score, but there’s nothing there for a commercial lender to put their teeth into. This is one of the criteria that lenders are looking at now, what kind of length and depth the customer has in his credit report. Unfortunately, the recession of 2008 — 2010, caused a lot of problems even for experienced drivers, and some of those problems are now cleared up or are getting ready to be cleared. For instance, if you had a slow pay back in ’08, that will be coming off your credit report. But if you had a tax lein or similar, that stays on your record until it’s satisfied. I’ve pulled more poor credit in the past couple of years than I’ve seen in a long time.
SLN: What do you attribute to the recent rash of poor credit you’ve seen?
It’s due to the poor economy, definitely. People just aren’t working like they’d like to be working. There are only so many jobs to go around and if you take a job just to have a job, then you might not be making anywhere close to what you were making before. When it comes to truck drivers, freight has been off for about a year or so, especially in the first and second quarters of this year. This effects the trucking community in a couple of ways. They know they need a new truck, but they don’t have the revenue, so they’re holding their current truck together the best they can and their maintenance goes up. Every year you own a truck, the cost to operate goes up. There’s more maintenance of course, but the big killer is when the truck is down, you’re not making revenue and there’s no way to make it up once you miss that opportunity.
SLN: Is being an Owner Operator for everyone?
A lot of people find out that being an Owner Operator isn’t always the answer unless they have a really good truck and a reserve of cash to see them through daily operating expenses and even some unforeseen maintenance costs.
SLN: Where do you see Finance and the economy going from now until next year?
We are seeing a pick up in the freight. Freight like anything else in the economy goes through cycles and what we’ve been seeing is nothing out of the ordinary. I don’t think people were looking for this last downturn as much as they should have, and I think this has maybe caught some folks unaware. One of the things we’re seeing as a result is that the cash requirement for lenders has gone up, while the available cash for buyers has gone down. This makes putting a deal together somewhat harder. But hopefully, we will continue to see an improvement in freight and this will relieve some of the pressure we’re seeing in the lending markets.
SLN: How can potential owners operators prepare and protect their positions in a down market?
When you buy a truck as an owner operator, you’re not just buying a truck, you’re starting a business and you have to deal with everything that goes along with that. I would recommend anyone wanting to own a truck and start a business, to align themselves with an entity like Expediter Services (which is unique in the market because of what they offer) that can provide support and cost savings like fuel discounts, insurance and even maintenance. I see so many new owners leaving “money on the table” because they don’t take advantage of the programs offered by these type of companies.
Jeff Tacker • Vice President of Operations Expediter Services
SLN: What is your take on Finance, Lending and Credit right now?
Like everyone else, we’re seeing a tightening of the credit markets, putting pressure on lenders and customers of credit. There are a couple of key factors at play here, among them being a soft freight environment, and an acute driver shortage in the market. The first couple of quarters of 2016 were a real low point for freight. These are areas that Expediter Services is keen to bring our resources to bear in order to help the industry, and our community as a whole.
SLN: You mentioned helping the industry and your community. What is Expediter Services doing?
ES is unlike any company in the industry. First of all, we’re a service company. What I mean by that is we are here to provide support to independent contractors, owner operators and fleet owners in the form of programs and value added initiatives to save money on fuel, insurance, and maintenance items, in conjunction with tools to help maximize utilization. We are also in the business to serve and support our carrier’s efforts by being the largest expediting capacity provider in the country.
Through our finance arm, Expediter Equipment Finance, we have access to capital, giving us the ability to make loans for equipment that other lenders in the market simply won’t or can’t do. A good example of this is our PTO (Path to Ownership) that takes into account your work history with Expediter Services when it comes to getting a loan. We feel it’s our support, programs, benefits and options that set us apart in the industry and will be beneficial to anyone looking for opportunities during a good and bad economy.
SLN: How do you see 2016 and 2017 shaping up?
From the data we’ve seen, there is a leveling out of the deep and slow freight trough we experienced earlier in the year. We feel a positive economic trend is on the horizon. We urge anyone who is looking for support and opportunity to contact Expediter Services to learn more about how we can support your efforts through good times and bad.
Readers of Spotlight News are familiar with our continuing online series, “Women in Expediting”, where we shine the light on women who have made successful careers in an industry that’s been traditionally dominated by men.
Expediter Services is proud to promote Women in Expediting, and according to Jason Williams, President of Expediter Services, company efforts are paying off as the percentage of women in the industry utilizing our services is growing. “Expediter Services supports Women in Expediting and offers an equal opportunity for women to enter the business. Our efforts are getting results as the national average of men in the transportation industry at the beginning of 2016 was approximately 95% male. As of today, the percentage in our community, utilizing our services is 70% men to 30% women. ES will continue to offer opportunities for women to become successful in Expediting. We want women to know that there’s no glass ceiling in our trucks.
“As more and more women enter into Expediting, their roles vary depending upon their skill set and business goals. For instance, not all women are drivers or owners. Many gravitate toward other opportunities that support and grow their company business, including recruiting, bookkeeping and freight management, to name a few. It is becoming even more clear that as women move into Expediting, their talents are needed and welcomed in the industry.
It’s also important to know that Expediter Services offers opportunity for anyone looking to enter Expediting without regard to gender, race or creed. We provide opportunity and support programs to help you succeed at your level of choice. It’s what we do every day!
Did you also know that the Expediting industry as a whole has a number of advantages over TL and LTL trucking that helps women integrate quickly in order to create income and a successful career track, including:
– You can enter Expediting with a Class B license and learn on-the-job
– A family member can teach you the ropes
– You can advance your career trajectory by qualifying for credentials, such as such as HazMat, Passport, and DOD certifications, creating career-long enhanced income opportunities
– 99% no touch freight
And that’s not all. Expediting also has definite lifestyle advantages, including:
– All ES straight trucks feature automatic transmissions, meaning less fatigue
– You can park a straight truck practically anywhere, enhancing your safety and lifestyle (malls, restaurants, RV parks, campgrounds and much more) — you don’t have to park at truck stops or places that make you uncomfortable
– Our straight trucks cabins are more ergonomic and comfortable — cabins and switchgear are designed with women’s needs in mind
– You can train and partner with a spouse or whomever you choose — you’re not stuck with someone you don’t know in order to learn the business
– More flexible working hours
– ES has certified diesel mechanics answering the phone 24 hours a day to handle breakdowns
In some respects, the rapid influx of women into trucking has left the industry somewhat unprepared. The exception to this situation is Expediter Services.
ES has in place a tried-and-true support system that allows women to enter into Expediting at their level of choice and become productive and successful almost immediately through our Circle of Success business model. In addition, ES is staffed by an experienced support team that includes a large number of women, as well as men, who understand where you are coming from and who know how to help when and where you need it.
EXPEDITER SERVICES ADVANTAGES
ES supports you with proven support services, including:
– Premium Contract Driver Services
– Path to Ownership
– Owner Operator Program
– Expediter Equipment Finance
– Back Office Support
– Settlement Support
– 24-hour Breakdown Support
– Maintenance Support
– Insurance Services
If you’re interested in our Contract Driver services and opportunities, please contact Kim Smith in Recruiting at 877-349-9303, ext. 121 or email her at [email protected]
If you’re interested in our industry leading Owner Operator services and opportunities, please contact April Holland, our Owner Operator Program Coordinator at 877-349-9303, ext. 106 or email her at [email protected]
Visit our Women in Expediting page to learn about how you can get started today with your new career. Stay tuned for another edition of Women in Expediting in a future issue of Spotlight News!
It seems that everyday, more and more people are discovering the advantages of the Expediting lifestyle. Not only is it a great way to make a living, it’s also a terrific way for a husband and wife team (or anyone for that matter) to spend time together, traveling the country in the comfortable accommodations offered by a quality straight truck. And that’s just what Charles “Chuck” Drobneck and his wife and driving partner Angie decided to do, with a little help from Expediter Equipment Finance and Expediter Truck Sales. “Angie and I got our CDL’s together back in 2012 and started driving tractor trailers for a trucking company. But from day one, we knew that we didn’t just want to drive for other people. We knew that some day we would own our own truck,” said Chuck. “After driving for about a year, we signed on with FedEx as long-haul Expediters, but the more we spoke with people in the business, the more interested we became in trying the smaller, more maneuverable straight trucks.”
The Drobnecks started doing research online and before long, they were in touch with Steve Kochensparger at Expediter Equipment Finance. “We told Steve about our desire to find a good used straight truck. He helped us get pre-qualified, which was nice because we knew just how much truck we could afford. As the financing was being prepared, we found a truck that we liked at the Expediter Truck Sales’ website — a 2014 custom refrigerated Volvo 780. We contacted Danny Vernon, ETS Sales Manager about the consignment truck he had listed for another owner, and in a couple of weeks we had our truck. The process was straight forward and done efficiently,” said Chuck.
Their new Volvo had only 372,000 miles on the odometer. It features a 110″ Loaded ICT Sleeper with a shower/toilet and an eighteen-foot Supreme Refrigerated Box. “We’ve been in the truck since mid-August and absolutely love it,” said Angie. “The shower/toilet really sold us on this truck. We’re looking forward to many years and many miles of service as a white glove qualified team.”
And speaking of their white glove qualifications, Chuck had this to say about the importance of having enhanced credentials. “We’re excited about our new truck. It’s set up great to help us maximize our earning potential. Having enhanced credentials (both driver and truck) is advantageous in this business because we’re able to take a wider range of loads. Even in remote areas, we can often pick up loads that without the credentials, we would have to dead head out. I would recommend enhanced credentials to anyone looking for more opportunity in Expediting. Spotlight also took the opportunity to talk with Angie about being a Women in Expediting. “I’ve found that as a woman, I get a lot of respect as a business owner and as a driver. People are always curious as to how we manage as an Expediting team and as husband and wife. I drive and do the bookkeeping, because that’s my background. We love the travel and get to visit our family around the country. I always tell women who are interested in Expediting to keep an open mind. It’s a good way to make a living and spend time with your spouse.”
As for future plans, Chuck is optimistic. “I can see us adding another truck or two in the future, depending on the economy. But one thing is for sure, Expediter Services will be a part of it.”
Paul Smith and his daughter & driving partner Lindsay
Former NBA coach, Pat Riley famously said, “Look for your choices, pick the best one, then go with it.” Although he was referring to the game of basketball, his advice can easily be applied to the business of Expediting. In this issue of Spotlight News, we look at the Expediting career of Paul Smith, a former Owner Operator who parked his straight truck to become an independent contract driver with Expediter Services. Now signed on with FedEx’s white glove service, he’s a man who has made a number of choices over the years that have enabled him to run his business his way.
Smith began his trucking career in 1985. After years of driving over-the-road, he was ready for something different and chose Expediting as his new focus in 2012. His choice led him to Expediter Services. “I had heard about Expediting by talking to people in the business. I looked into it and contacted FedEx. They reviewed my information and recommended I find a unit to operate…which led me to Expediter Services. I was soon driving for ES as a contract driver, but driving as a contractor turned out to be a short-term proposition.”
His new career as an independent contract driver was soon cut short, however, due to an unusual agreement with a potential “new” driving partner. “Shortly after I began driving for ES as a contractor, my daughter, Lindsay, became quite interested in these small straight trucks and began asking all kinds of questions about them, even mentioning that she may want to drive one some day. I jokingly told her that if she got her CDL, I would buy a truck, and she could be my driving partner (not expecting she’d follow through with it). Before I knew it, she actually got her license. I was surprised and didn’t really know what to do, so I decided to keep my word and went out and bought a truck. Not to put too fine a point on it, but buying that truck turned out to be a mistake!”
The “mistake” Smith refers to was his choice to buy a truck based solely upon price. Consequently, he was also about to make a choice that would greatly benefit his career and future earning potential in the form of acquiring enhanced credentials. “The truck I wound up buying was purchased from a third party and based solely on the fact that it was the cheapest truck I could find. From the get-go there were maintenance issues and in December of 2015, after three years of troubled ownership, I decided to park it rather than spend any more money fixing it up. And since I was already operating under Expediter Management Services, I called my fleet manager, Patrick Bertrand and told him I wanted to become a contract driver once again — but this time I wanted to drive as a white glove operator. He said “no problem” and set me up driving for the surface fleet while I went through the qualification process of earning my enhanced credentials. About a month later, I was white glove qualified. ES placed me in a brand new 2015 Cascadia with a Bolt custom sleeper. It’s a great truck! ”
Smith’s decision to join the white glove service was founded on more than just earning potential. And he would soon discover that gaining enhanced credentials would offer the personal fulfillment he craved, as well as more opportunity. “My choice to be a white glove driver was the result of my desire to do something different. I think it’s important to always do things that challenge you personally and professionally. White glove allows me to do different tasks every day. No two jobs are the same. As a white glove driver, I have to adapt to the situation, as well as the people I deal with. I love the variety! My enhanced credentials have also helped me stay busy, even during recent periods of soft freight. Having white glove qualifications truly opens up opportunities that I simply did not have before. I can honestly say that I’ve made more money as a contract driver than I did as an owner operator. This may not be true for some owner operators, but it certainly was for me due to the fact that I bought the wrong truck from the wrong person. My bad choice of trucks affected my earning potential as an owner.”
“It’s extremely rare to find a company in the trucking business that supports your choices. Whether I’m an owner or a contract driver, ES has given me the support and freedom to pursue my business goals. You really can’t ask for much more than that,” said Smith. As for the future, let’s just say he’s happy doing what he loves. “I’m truly content doing what I’m doing. I don’t have to worry about equipment or maintenance. It’s such a contrast compared to where I was before becoming a contract driver again. Where I am right now suits me just fine. After all, it’s my choice, and with Expediter Services I Never Stand Alone.”
There are times in life when the road ahead is uncertain and circumstances beyond your control converge to steer your career and your income into a ditch. And that’s just where Cody Settles and his wife Brandi found themselves during the Blue Bell ice cream recall of 2015.
“I worked for Blue Bell as a driver when the big product recall hit,” said Cody. “The company was in trouble and we were forced to pick up millions of units of ice cream from stores. No one really knew where the whole thing was going. We just knew that it wasn’t going to be good!”
As a result, Cody found himself between the proverbial rock and a hard place. “Things got so bad, my territorial manager even went out and bought his own truck, and began driving for Panther Expedited Services as a hedge against losing his job; which eventually did happen. And as it turned out, I was the only driver in my territory to get laid off. He kept telling me he thought Blue Bell would hire me back, but I knew in my heart, I had to move on and find something else. That’s when my ex-manager told me his new truck was working out well and Expediting was where I needed to be. Right away, Brandi went to get her CDL and we soon made a call that would start us out on the road to Expediting success.”
Cody didn’t know it at the time, but he and Brandi’s life was about to change for the positive with one phone call to Expediter Services. “Since my manager had such good luck with Panther, I contacted them and explained my situation and future goals. Based on my current needs and future plans (possible truck ownership), they referred me straight away to Expediter Services — that was in March of this year. The first person I spoke to was Kim Smith. She was extremely helpful and got us into a 2014 Cascadia from ES’s fleet — and let me tell you, this truck is nice! We then went through Panther’s orientation and hit the road.”
“Since we started at Expediter Services, signed on with Panther as our carrier, we’re doing very well. The loads are steady, helping us generate a good and stable income,” said Cody. “We’re staying really busy and it motivates us to stay on the road as much as we can. We love it! The amount of support we get from the people at ES is extremely helpful, too. When we have questions, Bobby Gardner is just a phone call away. When you’re new to the Expediting business, it’s great to have someone to answer questions and help you no matter what. I would also like to give a shout out to Sue Robinson and Debbie Acker in back office support who make sure our settlements are always on-time and accurate. When ES says you Never Stand Alone, they really mean it.”
When asked about their plans for the future, Cody and Brandi both agreed that they are in a good place. “Maybe at some point we’ll buy our own truck. But right now, we’re really enjoying where we are right now. We’re grateful for the opportunity to be able to make a good living doing what we love, and Expediter Services plays a big part in our success.”
Fluctuations in business are nothing new, and as Expediters, we’ve learned to take the good times with the bad. It’s no secret that 2016 has seen a soft environment for freight. According to the CASS Freight Index report, as of June, freight is down 8.8 percent from June 2015. This situation is causing pressure on lending markets, as well as credit end users. In order to analyze and better understand these market forces, Spotlight News talked to four industry finance specialists to get their take on what’s down the road for finance, credit, and lending. Their answers may surprise you and even motivate some to reevaluate their business goals. But one thing is for certain, you won’t look at credit and lending the same way again — and you will also learn that there is safety in support in any economic environment.
