Semi-truck alone on the highway

Is it a good time to start a trucking business?

Let's build a framework you can use any time to know if now is the right time for you.

Written by bobtail

The best time to start a trucking business can depend on various factors, including overall economic conditions, market demand, and your own personal financial situation. 

Many people have tried to time the trucking market, and predict when rates will go up or down, with little success. In fact, depending on when you read this article, the trucking market could have changed completely. 

So instead of asking whether today (April 14, 2023, the date we’re writing this article) is a good time to start a business, we’re going to build a framework you can use any time to know if the decision is right for you. 

The information in this article will help you answer these questions:

Leer este artículo en español.

Is it a good time for trucking?

Trends, not “trendy”

Believe it or not, the best time to start your company is not necessarily when rates are at their highest nationwide. This is often when you start to see people bragging about their rates per mile on social media. 

But just because you read something on Facebook, doesn’t mean it’s true or that it will be true for you!

Instead, take a more strategic approach: do your own freight market research looking at multiple years of data, taking into consideration what you plan to haul and the geographical areas where you plan to drive.

In a previous article, we looked at the many factors that impact the freight market. We’ll summarize the three main cycles in the trucking industry here:

Seasonality

Generally, January – March is the slowest time of year in trucking. The weather is terrible and the holiday season has ended. 

Things typically start to pick up in April when produce becomes more readily available. August – October is known as peak season.

The market starts to slow down again in November, though there is still plenty of freight for last-minute holiday shoppers and end-of-year orders.

If you’re trying to time the seasonality of the market, generally, it’s a good idea to plan to start hitting the road around April

If you plan to haul a specific seasonal item, your business’s seasonality may look very different. Seasonal cycles may be different depending on your location as well. Again, look at these trends over multiple years to find the right time to enter the market.

Tender rejections

In the trucking industry, the contract market refers to agreements between shippers and carriers for the transportation of goods over a specified period at a set price. 

For more on the difference between the spot and contract markets, read our article on how to find loads for new trucking companies.

Carriers may decide to reject contracted loads for two reasons: they don’t have enough capacity or they found something paying better. When a load gets rejected, it ends up on a load board. 

The tender rejection rate is the proportion of contracted loads that are being rejected by carriers. When this rate is high, it means carriers are finding better rates outside their contracts. When it is low, carriers are holding onto contracted freight in large part because outside rates have fallen. 

Keeping an eye on tender rejections, particularly in your state and region, can help you understand how much carriers have in the way of negotiating power.

Market capacity

When rates are high, more trucking companies enter the market and put more trucks on the road. This increases supply, driving down rates. When rates decrease, trucking companies downsize or leave the market, taking trucks off the road.

To know how many more trucks will be added to the market in the near future, you can keep an eye on trends in truck orders and the number of new operating authorities granted by the FMCSA.

Is it a good time for the economy?

If you think timing the trucking market is hard, predicting what will happen in the overall economy is even harder! But there are some key economic indicators that impact the trucking market significantly:

Looking at these indicators may lead you to believe that you should not start a trucking business in a recession. However, if you have the financial situation to do so, starting your company during a recession can position you to ride the recovery wave back up. 

In fact, truck prices are often at their lowest point in a recession, so can be a strategic time to start.

Is it a good time for you?

Think about your own personal circumstances in four main areas: 

Remember that starting a trucking business is not easy, and timing the market perfectly is impossible. You now have a framework to evaluate if starting a trucking business is the right decision for you. 

By analyzing trends and taking a strategic approach to your research, you can decide if the market, the economy, and your personal circumstances are conducive to starting a trucking business. 

Keep in mind that running a successful trucking business requires dedication, knowledge, and experience in the industry, so take the time to evaluate all factors before jumping in.

Regardless of when you start your trucking business, you’re going to need strong cash flow to keep up with all your expenses: fuel, insurance, maintenance, etc. Factoring is a financial tool that pays your invoices quickly so you can stay on the road.

Contact our team to learn more about our factoring service with no long-term contracts and no hidden fees.

starting-trucking-company-free-trial-cta