Success stories purchasing a freight company?

searcher profile

October 11, 2022

by a searcher from Northeastern University in Miami, FL, USA

Interested in essential or recession-proof services in my search, found an opportunity and it sure seems the logistics industry fits both categories.


Wondering if anyone had any success (or horror) stories getting into the freight business.

Do need to do some due diligence, but it includes 5 tractor trailers and 7 trailers (5 are refrigerated), allowed to move any type of freight nationwide. Furthermore, it's a motivated seller that can do 40-50% seller financing and is willing to stay for an 8% equity.

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commentor profile
Reply by an investor
from University of Texas at Austin in Austin, TX, USA
Asset-based freight companies are really tough businesses. Hard to get contracted rates, so you mostly depend on spot rates that are highly volatile. And then you have high fixed costs for the equipment. On top of that, when rates spot freight rates plummet, it's common for small carriers to go under and then you have a flood of trucks on the market depressing the value of the equipment. Lastly, driver turnover is often 100%+ per year so really tricky on that side too. Put it all together and I would say asset-based carriers are pretty much the opposite of a recession proof business in my opinion and an industry that I would stay away from as a searcher.
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Reply by a searcher
from The University of Chicago in De Pere, WI, USA
I would agree with Alexander's comment above. Is this nationwide full truckload shipping, less than truckload, drayage, or some other shipping? Generally this industry can be very cyclical and we have just have been through a period of strong rates (to put it mildly) with some rates rolling over. Also, hiring truck driver's can be a challenge. This leaves a lot of moving parts around the profit equation and makes me think it would be difficult to ascertain exactly how much you'd be willing to pay for the assets.
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