Own vs contract means to transport?

[JDeereman]

More of my novice's curiosity regarding ownership of large commercial construction equipment like bulldozers, backhoes, excavators, etc. for rental or contracting purposes.

what rough percentage of smalltime equipment owners would you say own their own means of transport vs contract with a heavy equipment mover? can someone still make decent money owning and renting out large pieces of construction equipment if they choose not to own the means to transport but contract it out instead?

asked a different way - at what equipment size or weight level does it make economic sense to give up on owning your own transport means and start contracting with an equipment transport company?

any thoughts or personal experience on this would be most appreciated. thanx.

Theo

 

[AlanB]

I sure don't have the answer, but can tell you in our landscaping business it is a constant debate.

The CDL breakpoint (not to start another long winded debate about that) is where I keep hanging, and the insurance costs vs. the usage of that vehicle.

I do not think there is a specific point in the sand when it makes sense one way or another.

I have an older hoe (Ford 555C) which is bigger then I really have truck or trailer too pull. I would hire out moving it if the job was big enough to warrant it, but often we will just rent a little Almand or such and pull it with our trailers.

 

[crashz]

For most small excavating and construction companies, equipment that can be transported on a 20 ton tag trailer behind a dumptruck is the limit. After that, they need a dedicated tractor/trailer for moving equipment.

My father owns a small excavating company and over the years bought the equipment he needed to do utility work, site work and residential excavation. In his glory days, he had two medium sized wheel loaders, a backhoe, three dozers, and two excavators. He bought a Kenworth tractor and lowboy trailer to move the equipment, and his driver was busy everyday. He even hired out his truck and trailer to other outfits. But he scaled down his business after some health concerns and the truck and trailer only moved equipment a couple dozen times a year. It became much more expensive to keep it registered and insured, so he took it off the road. Now he transports the small stuff on a tag trailer on his single axle dump, sold the loaders, and transports the excavators with a hired company.

So yes, you could make a good living and still hire out the moving of equipment. In fact I believe it could be an advantage as less overhead.

 

[JDeereman]

For most small excavating and construction companies, equipment that can be transported on a 20 ton tag trailer behind a dumptruck is the limit. After that, they need a dedicated tractor/trailer for moving equipment.

My father owns a small excavating company and over the years bought the equipment he needed to do utility work, site work and residential excavation. In his glory days, he had two medium sized wheel loaders, a backhoe, three dozers, and two excavators. He bought a Kenworth tractor and lowboy trailer to move the equipment, and his driver was busy everyday. He even hired out his truck and trailer to other outfits. But he scaled down his business after some health concerns and the truck and trailer only moved equipment a couple dozen times a year. It became much more expensive to keep it registered and insured, so he took it off the road. Now he transports the small stuff on a tag trailer on his single axle dump, sold the loaders, and transports the remaining excavator with a hired company. The time, mainteance and fuel are a noticable savings, but the real impact is the insurance and registration. Just to break even on those I figured it would take 18 moves per year.

Thankx crashz. that's the kind of input i was hoping for. given the weight range of the equipment we are looking at, a cdl is essential. no way to avoid that and not really a problem. but i don't see us buying an expensive tractor-trailer setup either. so the question becomes whether to limit ourselves to equipment that can be transported behind an upgraded dump truck (whatever weight and size that might be based on dump and trailer ratings) or give up on that idea completely, forget limitations on equipment weight and size and rely on an equipment transporter to the detriment of that higher incremental deployment cost and possible scheduling delay.

Theo

 

[cbturf]

What you need to do is find your break even point of hiring out your moving or owning your own rig. This number is a moving target though so you will most likely need to analyze or forcast a five year or so number.

The reason that I say it is a moving target is because some jobs you may set up and work in the lame location for months at a time so you will have $0 moving expenses if you contract your moving, but you will have $X moving expenses if you own your own truck even if you are not using it. Or you may be moving twice a week during some times where contracting may seem to be eating you alive and owning looks pretty cheap. So you need to calculate these expenses over a pretty long time period to make the best decision.

After figuring what is cheapest on a straight line method, unless it is a no brainer either way, you need to decide what is best from a production standpoint. Delays cost money and may hurt your reputation, if a customer is expecting you there on Monday and you can not get a truck under your equipment until Wednesday you will have some slack time that will cost you.

Just in case you do not have enough to worry about you also need to consider allocation of your assets. A truck and trailer will be quite expensive to own and operate and will either tie up some credit or cash that could be used to get more money making equipment.

For me a truck is an expense only it does not make me a dime so I do not own one. But what works for me is most likely not what works best for anyone else.

Hope this helps!

 

[JDeereman]

What you need to do is find your break even point of hiring out your moving or owning your own rig. This number is a moving target though so you will most likely need to analyze or forcast a five year or so number.

The reason that I say it is a moving target is because some jobs you may set up and work in the lame location for months at a time so you will have $0 moving expenses if you contract your moving, but you will have $X moving expenses if you own your own truck even if you are not using it. Or you may be moving twice a week during some times where contracting may seem to be eating you alive and owning looks pretty cheap. So you need to calculate these expenses over a pretty long time period to make the best decision.

After figuring what is cheapest on a straight line method, unless it is a no brainer either way, you need to decide what is best from a production standpoint. Delays cost money and may hurt your reputation, if a customer is expecting you there on Monday and you can not get a truck under your equipment until Wednesday you will have some slack time that will cost you.

Just in case you do not have enough to worry about you also need to consider allocation of your assets. A truck and trailer will be quite expensive to own and operate and will either tie up some credit or cash that could be used to get more money making equipment.

For me a truck is an expense only it does not make me a dime so I do not own one. But what works for me is most likely not what works best for anyone else.

Hope this helps!

Obviously, we are just looking at feasibility right now and trying to figure out what are the issues and what makes sense. until this awful economy starts to improve, who knows if there would be any rental income at all? on the plus side, used construction equipment prices are down and my more experienced partner and i both have pending projects on which we could use some serious equipment ourselves. we certainly have the storage space and tax issues do seem to favor such an investment this year. but the transport issue is nagging at us and at me in particular. you can make a case either way. if only i had a crystal ball.

Theo

 

[TMTS]

one factor about owning your own means of transport is the "convience" factor. You are not a slave to someone else's schedule...but does my truck sit a lot? yes- but not lately...just ask quickdraw...

 

[JDeereman]

one factor about owning your own means of transport is the "convience" factor. You are not a slave to someone else's schedule...but does my truck sit a lot? yes- but not lately...just ask quickdraw...

I should have mentioned that we do not see this business as a daily rental kind of thing. in fact, we've been doing our own little brand of market research and it looks like these larger construction machines (dozers and excavators) have an average job life of 1 to 2 weeks or greater. we also notice that machines in this category tend to go from one jobsite to the next jobsite rather than back to their storage home in between jobs. this minimizes movement costs but also means that a machine may sit at a jobsite after use for up to many weeks until the next job comes along. again, this kind of thing complicates any sort of cost analysis of owning transport equipment vs contracting.

Theo

 

[LoneCowboy]

Since you need a CDL anyway...

Tractor trailers (used anyway) aren't truly outrageous, esp given what a new big pickup costs.

You can find a decent day cab tractor for 25-45k dollars with 400-500k miles on it. figure a few thousand to bring it up to spec (trust me on this) and you're in it for basically what a new pickup costs, but your long term maint costs (per mile) should be much lower.

A good gooseneck equipment trailer costs 10 to 15k dollars.
a used hydraulic tail (40', 48') costs about 25 to 30k dollars. If you can do it with a drop deck with ramps, it's closer to 15 to 20k dollars.

Since you aren't driving it all the time, you won't put on the miles you would if you were OTR.

Insurance is about the same as a pickup (really)
Plates, plates are bleeping outrageous. If you don't leave the state, they go way down, but it's still outrageous.


You will never worry about being overweight, brakes actually work, etc.

Our rig, It won't get 15,000 miles this year, but it still pays for itself. And keeps the wear and tear off the pickups, which really can't handle long term that kind of weight all the time.

 

[JDeereman]

Since you need a CDL anyway...

Tractor trailers (used anyway) aren't truly outrageous, esp given what a new big pickup costs.

You can find a decent day cab tractor for 25-45k dollars with 400-500k miles on it. figure a few thousand to bring it up to spec (trust me on this) and you're in it for basically what a new pickup costs, but your long term maint costs (per mile) should be much lower.

A good gooseneck equipment trailer costs 10 to 15k dollars.
a used hydraulic tail (40', 48') costs about 25 to 30k dollars. If you can do it with a drop deck with ramps, it's closer to 15 to 20k dollars.

Since you aren't driving it all the time, you won't put on the miles you would if you were OTR.

Insurance is about the same as a pickup (really)
Plates, plates are bleeping outrageous. If you don't leave the state, they go way down, but it's still outrageous.


You will never worry about being overweight, brakes actually work, etc.

Our rig, It won't get 15,000 miles this year, but it still pays for itself. And keeps the wear and tear off the pickups, which really can't handle long term that kind of weight all the time.

Looks like a really super setup very similar to what the big equipment rental places and professional equipment movers use around here but i'll bet anything that you move your equipment around a lot more often than 2 or 3 times a month. i think that's what we're looking at here at least for feasibility and planning purposes. seems that upgrading my dump truck (something i've been looking to do anyway) could make good sense or same for contracting out but buying a whole new rig like that would be tough to justify unless i got into the equipment moving business myself (not likely).

Theo