Quote:
Originally Posted by allnonefrate
The question I have is what made you to decide to go ahead and "pull the trigger NOW" versus April '12 as you suggested above.
You know, you’re the only one who has caught the inconsistency or at least thought it worth asking about.
When I’m formulating a plan of action, I never look at it as being set in concrete. The situation may change because opportunities that were initially available may have evaporated, new options may present themselves or new information may change my assessment of the situation. In addition, I try to get a feel for the natural direction and momentum of things. Have you ever tried to implement a plan a certain way and on a certain time table and it seemed that nothing was working in your favor? Perhaps you started implementing a plan and everything seemed to fall into place even when you weren’t pushing to make anything happen.
I had pretty much made up my mind that I was getting out of the reefer business and buying a stepdeck, but did indeed plan on making the change in the Spring. Rates are down in all segments of trucking during the winter months and I didn’t want to jump into the unknown when revenues were already down. As I began researching step-deck trailers and looking at my options with the reefer I already owned, I discovered a few things.
Good used stepdecks are hard to come by these days. There are very few for sale and when they do hit the market they sell quickly and for much more than you might expect. After some research, partly done on this forum, I had settle on a Reitnouer 53’ step. There were only a very select few used ones listed on truckpaper.com, and they were selling for way more than I had planned on paying for used. One dealer in Louisiana had three 2005s for sale for $35k but said they were already committed to one buyer. Brand new Reitnouers are going for $46,500, but nobody has them in stock. Most of the dealers I called were advertising like they had them on the lot, but when I’d call, they’d admit that they were on order and would ship in one to four months.
Then I looked at what used reefers were selling for and how fast they are depreciating (in large part due to CARB regulations in CA). I called a bunch of dealers discussing what wholesale value would be and even called an “ace in the hole” buyer that was a contact of an equipment dealer friend of mine, and all of them quoted way less than I had hoped.
One day, by chance, I found a Reitnouer dealer who had a buyer lose his funding for his trailer which would be arriving in a week or so. I really hadn’t planned on making the transition this soon but decided to jump on the Reitnouer with the following conclusions:
I currently owned a trailer that was rapidly depreciating. If I bailed out now and bought the Reitnouer, I would protect my equity by moving it to a much more stable asset. Additionally, if I kept running the reefer for a few more months, I would need to replace all eight tires, perform a PM and get a slowly developing problem taken care of. I had already compared historical reefer, flatbed and stepdeck rates and found that in the off months, flatbed rates were close to reefer rates and stepdeck loads, while not as plentiful, were significantly better paying than reefer loads. Assuming that we will make mistakes in the beginning, as far as what loads to take and which ones to pass on (God knows we did it when we first started out with a reefer), it would make sense to err when rates in general have already bottomed. I would rather make a $500 or $1000 mistake now than make a $2k or $3k mistake when rates are at the top of the annual cycle. Also, starting now with a stepdeck will allow us a few months to develop good contacts with that kind of freight so that when the rates are really good, we will have relationships with customers. It worked out pretty good for us doing it that way with our reefer. Lastly, I had been out on the road for longer than usual (nearly six weeks) and was due for a few weeks off, so I wouldn’t need to take any unscheduled home time to affect the change over from reefer truck to open deck truck.