In our last blog we left Nicky as stuffed as his chile relleños and heading west. Juan Griego was left looking for a missing leg…. a missing freight leg. And calculating the fixed cost of each of the nine trucks he runs at his trucking company, Number Juan Trucking. His challenge is a profit-draining total of six days per round in which his trucks are sitting and not producing revenue. Nicky promised to return in a week to assist Juan in filling that huge revenue hole. We rejoin Nicky as he’s rolling through the Arizona desert and getting ready to make the climb to Flagstaff.
My phone chimed out the music from the Grateful Dead’s ‘Truckin’’ so I tapped my headset. “Hammerlane here.”
The voice on the other end of the line said, “Juan Griego, Nicky. My sister and I just finished calculating the fixed costs on all my trucks. Just like you said, each one’s a little different than the other. They range from $290 per day for our oldest truck to $340 for the newer ones. But I also noticed the operational cost is higher on the older trucks, so in a way it’s a wash. I came out with an average of around $325 per day for that fixed cost.”
I answered, “Great; that gives us a good starting point. Let’s see, it’s about 4pm Mountain Time right now and I’ve got a couple more hours driving today. Probably stop in Flag and have a Navajo taco for dinner, then get my 10-hour rest. That should put me in Albuquerque in the early afternoon tomorrow. You want to meet at the same truck stop on Menaul?”
“That’d be great,” Juan replied.
“I’ll call you when I pass the Casino Exit for Acoma Pueblo.”
“Be safe out there, Nicky. See you mañana,” responded Juan.
“Hasta luego.” I arrived in Flagstaff on schedule and pulled into the Little America truckstop, home for the night.
Next day I called Juan just as I passed the Acoma Casino on I-40. “Hey, Juan, Nicky Hammerlane here, about an hour out. We still set to meet at the truckstop?”
“I’ll be there. Guess I still owe you that cheesecake from Dee’s Cheesecake Factory, right?”
“Tell you what,” I signaled another trucker into my lane with my lights. “Let’s put that cheesecake on a rain check. Can we go to your office where we’ll have minimal interruptions? I need access to your freight, customer and broker information.”
“We can do that. My office is just north of the truckstop in a small industrial area.”
“That’s fine. One other question - do you work with any particular load board?”
“We’ve got a couple of subscriptions. Don’t use them all that much for loads; mainly keep tabs on what’s going on in the areas where we haul,” Juan clarified.
“The one I use most is Getloaded; seems the most relevant for a carrier our size. We also subscribe to DAT. My dad used them way back in the 1970’s and early ‘80s when he ran as an independent. Both have good information, but I prefer Getloaded.”
“All right. I’m familiar with both and they’ve got some great tools beyond just the load board. Actually, Getloaded’s got a service that’ll help resolve your issue. See you in a few - I think I’m losing signal…” and our conversation faded into thin air between Acoma and Laguna Pueblos.
When I arrived at the truckstop Juan met me in his red dually pick-up out front. Within minutes we walked in the office door of ‘Number Juan Trucking,’ where an attractive mid-30’s young lady greeted us.
Juan introduced us. “Maria, this is Nicky Hammerlane. Nicky, this is my sister, Maria Griego y Gallegos. I told you the other day she’s the company accountant and also the financial brains behind this operation.”
Maria held out her hand, “Am I glad to meet you, Mr. Hammerlane. I’ve been trying to tell Juan ever since he started this haul to LA and back we needed more revenue. And he kept saying, “But we’re making nearly $2.50 per mile!” I couldn’t get him to see the light. Then last Tuesday after having dinner with you, he explained the example you used and told me we needed to know the fixed cost on each truck- something I’ve tried to explain a hundred times. Thank you.”
“I’m very glad to meet you, Maria.” I said. “Glad I helped a little already. By the way, my father and his father were Mr. Hammerlane; me, I’m just Nicky.”
“Two things, Mr. Hammerlane,” Maria said sternly. “First, you’re old enough to be my farther, and I was taught that elders are always Mister or Señor. Second, that means you’re shown the respect you’re due. You’re a Godsend for us.”
I thought, This is one assertive lady. In trucking, that’s a very good thing. “Well, thank you – but do I call you Ms. Griego y Gallegos then?”
She laughed. “No, ‘Maria’ will be just fine.”
With that, we walked into an office with a large computer desk and an even longer return. Maria sat down in front of the monitor and motioned me to the chair beside her at the return. Juan sat across from us.
She brought up a spreadsheet on the screen that listed all nine trucks and trailers, along with each driver’s name. It showed the current daily fixed cost for each rig and its current operational cost per mile. “I put this spreadsheet together based on what you’d described to Juan and what he wrote down on that napkin. Please look this over, Mr. Hammerlane, and see if this is what you had in mind.”
I spent the next 15 or so minutes studying the details and costs of each truck. She showed me where she’d set up a cost page for each truck which, when fuel prices changed or if there was a repair, would update the main spreadsheet. The same was true with the fixed cost. “Impressive,” I finally said. “Very usable and easily updated. This will be your main tool when determining the quality of any load you bid on.”
“So what’s next?” asked Juan, grinning at his sister across the top of the monitor.
“Finding revenue-producing loads to take up the three days your trucks are sitting in LA before returning to Las Cruces and Albuquerque for the next round.”
“What’s first?” Juan asked.
“First determine how far out and back we can allow that truck to go without jeopardizing the pick-up going to Las Cruces,” I responded. “I did a little research while I was in California. There seems to be a consistent flow of loads going to Phoenix and Yuma, both under 400 miles, which gives you one spare day for any delays. There are also some intra-California loads going to the Sacramento and San José areas that fit into this 400-mile radius.”
“You mentioned Getloaded as a resource for solving this,” Juan reminded me. “They’re great for determining truck-to-load ratios, and especially with finding a last-minute load, but how will they help here?”
“Start by looking at their Lane App and do a city radius search from LA. Then do a radius-to-radius search. What you’re looking for is freight going out from LA on the days your trucks will be sitting and freight that’ll bring that truck right back to LA.”
“How do we know what rate we’ll need to charge?” Maria asked.
I answered, “That’s why you did the spreadsheet. Look at truck Number Seven. $320 per day fixed cost, 80 cents per mile operational cost and 50 cents to cover driver pay. So you need to generate a minimum of $960 plus $1.30 per odometer mile to cover all costs, including your driver’s pay and all fuel over that three-day period.”
Maria frowned. “So if we go out 400 miles and return to LA doing that same 400 miles, we need to generate a minimum of $2,000 or around $2.50 per running mile?”
“Seems like we’re beat before we’ve even started,” Juan groaned.
“Not entirely, Juan. Remember, any revenue produced during those three days will help reduce your revenue deficit. You need to maximize it to the best of your ability. The challenge is that you’ve got a set schedule within which the extra load needs to be completed. The good news is the shorter loads do typically pay more, but we’ve got to find the ones that will be consistent. So let’s go into your Getloaded account and see what LA outbound lanes we can bid on.”
Maria brought up the Getloaded site, clicked on Lane/City Radius Search and put in Los Angeles California; sort by Destination. Then she clicked on “Find Available Lanes.” Up popped a load out of Compton to Yuma with a return to the Los Angeles Produce Market, and it was available twice a week. Maria selected “Submit Bid.” We then studied the load details, made sure the load and delivery dates corresponded to the days Juan would have trucks in LA and submitted a bid, based on the two trucks’ fixed and operational costs.
“Wow, that wasn’t as difficult as I thought,” Juan said, relieved. “What’s next?”
“While we’re waiting for their response, since we only found two loads per week, you still have seven trucks needing loads for their three days in LA. So let’s do a Radius-to-Radius Lane Search, but this time show LA as the destination and we’ll look at places within our drive radius of 400 miles to see what’s coming into LA. Many times you can’t find the outbound, so look for good-paying inbound to where you need to be. It might require a bit of deadheading, but if the revenue works and pays for it, that’s what counts.”
Maria entered several cities within that 400-mile radius of Los Angeles with no results, so she took out LA as a destination and put in Long Beach, California. Bingo! Five loads a week from Phoenix to Long Beach. She turned to Juan. “Didn’t our customer in Long Beach call the other day, wanting us to run loads to Phoenix for them, but since we had nothing coming back to Albuquerque from Phoenix and the revenue couldn’t compete with the Las Cruces loads we had to say ‘no’? Get him on the phone and find out the days they’d be available.”
Juan picked up the phone and called. He explained how he needed to have his trucks hauling loads for the three days his trucks waited for loads to Las Cruces.
When Juan hung up, he said, “We can have the loads to Phoenix – and he said if we don’t land those other loads, to call him and he’ll help us find returns. He said in the worst case scenario he’s got empty shipping bins that need to come back to Long Beach from both Phoenix and Las Cruces all the time. And he said he’ll work with us on the rate.”
He took a deep breath and let a smile spread across his formerly-worried face. “He also said he’s never had a problem with any of our drivers and he’s willing to do what it takes, within reason, to keep us rolling.”
So the Case of the Missing Leg was solved.
The story you just read is true; names, locations and amounts have been changed to protect the identities of the parties involved.
Postscript: Juan used a combination of the search and load development tools offered by Getloaded and kept his customers in the loop as to his load needs. He and Maria have been getting regular paychecks now for over a year without interruption. And his company’s profit has increased to the point that now he’s running 15 trucks. Cuidando Los Niños (CLNKids, http://www.clnkids.org/) received a very nice donation and the annual support of Number Juan Trucking.