Each approach has its proponents; what’s best for your competitors might not be riight for you.
With apologies to Shakespeare’s Hamlet:To own or not to own: that is the question: Whether ’tis nobler in the mind for a contractor to suffer
The expense of owning trailers to haul heavy equipment from job site to job site,
Or to endure the fees and delays that professional haulers are heir to?
Those who rent heavy-equipment trailers or use professional hauling companies say they’re saving money by not having capital tied up by owning trailers they couldn’t fully utilize, and by having someone else maintain them and handle the complexities of permitting and routing.
Those who own such trailers say they like being able to move their equipment on their own schedule, even though they may pay more for the privilege. To recoup at least part of these costs, some owner-operator contractors haul for others when the trailers aren’t needed to move their own equipment.
This article presents the rationale for each approach, based on interviews with owner-operators and haulers in various parts of the United States.
How Heavy Is Heavy?
A trailer that can carry a load weighing 20,000 pounds or more qualifies as a heavy-equipment trailer, according to Brian Weseman, president of Towmaster Trailers Inc. in Litchfield, MN. That universe encompasses stars of varying magnitude. “From 20,000 pounds to 70,000 pounds, contractors own by far the bulk of these trailers,” he says. “Hauling companies will own the very large ones—70,000 pounds and up. This is strictly because of the cost. Most contractors can’t afford to have a trailer and equipment to haul the heavy stuff that they don’t move as often.”
Towmaster makes trailers ranging in capacity from 2,000 pounds to 110,000 pounds and sells its entire output through dealers. The rental market accounts for 8% of Towmaster’s end-user clientele, government another 2%, and contractors the remaining 90%.
Harley Murray Inc. in Stockton, CA, which does business as Murray Trailers and Murray Trucking, began as a trucking firm that built its own trailers. Now it also sells them, in payload ranges from 48,000 pounds to 183,000 pounds. Douglas G. Murray, president, says 16% of his firm’s output goes to dealers and 84% directly to end users, of which 33.7% are professional haulers, 27.4% are contractors, and 12.6% are rental companies. The remaining 10.3% is split between agriculture and government.
Prices paid by Towmaster end users range from $9,000 to $60,000—under $0.50 a pound. Murray’s price range is $50,000 to $300,000.
Super-large trailers (which Murray and Towmaster don’t make) may haul payloads from 150,000 pounds to more than 500,000 pounds. Buyers of these super-large trailers typically pay $1 or more a pound. “The price goes up substantially because the manufacturer doesn’t build enough of them, so he’s building prototypes,” Weseman explains. “They take more engineering than a smaller trailer, and there’s a lot bigger liability. When you’re hauling a 500,000-pound load, it’s a very expensive piece of machinery.”
Murray says he doesn’t ask prospective customers what trailer they want. “We ask what they want to haul. A lot of people overbuy. They’ll spend an extra $50,000 or $60,000 on a trailer they don’t need. I can sell them a smaller trailer to do 95% of their moving. Rather than spend an additional $200,000, they can hire out the other 5% that takes a bigger trailer and a more experienced driver.”
Use a Specialist
One contracting firm that hires professional haulers to move all of its heavy equipment is DSS Co., also in Stockton.
DSS specializes in grading, paving, and storm-sewer installation. Its largest piece of equipment, an excavator, weighs 170,000 pounds. DSS also operates four excavators that weigh 100,000 pounds, six excavators that weigh 70,000 pounds, and 10 large scrapers—six Caterpillar 633s and four Caterpillar 623s. “We’d have to own too many different kinds of trailers to move the various pieces of equipment we own. We just think it’s less expensive to use a specialist,” a spokesman says.
DSS hires several local hauling companies. Selection criteria include service, price, and the nature of the job. “Certain pieces of equipment only one guy can haul,” the spokesman says. “We know his hourly rate, and we develop a relationship.”
Depending on the size of the rig and the load, DSS may pay $75 to $150 an hour to transport a piece of equipment. Often the hauler will work at night, moving heavy equipment from one job site to another, where it will be ready for work the following morning.
“Sometimes we have problems hauling stuff at night in cities with noise ordinances,” he says. “That’s an industry problem, but it becomes the hauler’s problem when the police arrive. The truck’s a little noisy, and the hauler has to disconnect the trailer, start up the piece of equipment, and drop it on the ground. You have the noise of a diesel engine, steel tracks on steel ramps, squeaking, back-up horns. Everybody should have known about that. Nobody knows the first time. After the first time, everybody knows.”
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Photo: Towmaster |
A Specialist’s Travails
Small contractors keep Marco Rentals Inc. of Santa Ana, CA, busy moving equipment from one job site to the next—sometimes as frequently as three times in one week. “They don’t want to fool with moving heavy equipment because of local and state laws, and insurance. It’s too much for them to keep track of,” says Marco’s owner, Bob McVay.
“You would have to be a very large contractor to keep one truck busy all the time, and you can’t do it with just one trailer. You need different types of trailers for different types of heavy equipment. And if you get to a job where you’ll be for eight or nine months, you won’t need the truck or driver.”
Marco has 17 trucks and 32 low-bed Murray trailers. “There isn’t anybody in the US who has as many Murray trailers as we do,” McVay says. He explains that their relatively light weight lets him haul heavier equipment without exceeding permitted limits. His firm can fulfill only about a third of the requests it receives. “We haul what we can,” he says. “If we aren’t available, the customer will find somebody else. We don’t subcontract our hauling services.”
Marco charges its clients by the hour, from $70 to $85 (depending on the weight and size of the equipment being hauled) for a five-axle trailer, to $155 to $160 for a steerable nine-axle trailer with a jeep. With a maximum load of about 180,000 pounds, the largest rig approaches a quarter-million pounds in total weight.
“A lot of this work is bid,” McVay says. “You have to give a bit. I’m not the only guy in town. It’s very competitive.” In Los Angeles and Orange counties, he’s competing for the largest loads against five other firms. “If you do it better,” he says, “a lot of times they’ll call you and give you your price.”
The care and feeding of his behemoths costs McVay about $940 a day per tractor-trailer rig, including $500 in fixed expenses (monthly payments on the equipment, rent on business premises, insurance, his salary, and administrative overhead.) Drivers earn about $200 for an average 10-hour day, and fuel runs about $240 (100 gallons at $2.40 a gallon).
McVay typically carries about $800,000 in receivables. “It takes quite a bit of cash to run a company the size of ours,” he says. “We’re doing $350,000 worth of business a month, laying out fuel and wages, and we don’t get paid for 75 days on average. Sometimes a medium-sized dirt contractor bids a job and does it wrong. The next thing you know, he owes you $40,000 for moving his equipment and he doesn’t have any money, so you’ve got to wait. He’ll be good for it eventually, but sometimes it has taken two years to collect $40,000. If you demand cash on delivery, he’ll say, ‘I’ll get somebody else.’ ”
One challenge McVay faces is moving equipment in new subdivisions where the streets already are in place. “You’ve got to be careful you don’t make marks in the pavement or break a curb,” he says. “It’s tricky to unload. We haul a lot of plywood and used tires out to such places in a separate truck. We run the machine on that stuff to get it up into the job site.”
Another challenge is weight creep—the tendency of a piece of construction equipment to get heavier the longer it’s in service. “The manufacturer’s book says a big scraper weighs a certain amount that may be very close to the limit,” he explains. “After a few years of added dirt and welding on half-inch plates of steel, that scraper could weigh 8,000 pounds more and you get nailed at the scales. Eighty percent of the time the machine doesn’t weigh what we think it weighs, and there’s no place here (35 miles south of downtown Los Angeles in Orange County) to weigh the load before getting on the freeway.”
Contractors Buy for Convenience
For contractors who purchase their own heavy-equipment trailers, convenience is the primary motivation, even though it comes with added costs, permitting and routing hassles, noise complaints, responsibility for maintenance and insurance, and managing the drivers and other personnel involved in transporting equipment.
“Having your own low-bed trailer is a huge convenience,” says Warren Gomes Jr., vice president of Warren E. Gomes Excavating Inc. in Rio Vista, CA. His company started out building pads for natural gas wells, but now concentrates on digging trenches and laying storm-sewer and water pipes for housing developments.
“Having to hire somebody to move the bigger equipment, you’re kind of at their mercy,” Gomes says. “I may need someone at 8 a.m., but he can’t get there until 10 a.m.. With our own trailer, the driver might come in at noon and work until 10 a.m., or he may be on a split shift so he’ll come in early, go home for a while, then come back in the late afternoon or evening. Also, we can move stuff on the weekends.”
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Photo: Towmaster |
Gomes Excavating has two low-bed trailers, one from Murray Trailers, the other made by Kalyn Siebert of Gatesville, TX, a subsidiary of Heil Trailer International. Two Kenworth trucks pull the trailers. The firm’s heavy equipment includes four excavators, four large bulldozers, two backhoes, four loaders, and an assortment of rollers, compactors, and graders. The biggest piece of equipment, a 75,000-pound excavator, is too heavy to move legally on the eight-tire Seibert. The Murray trailer has 16 tires.
The Seibert trailer loads from the front. The driver unhooks the gooseneck and drives the piece of equipment to be hauled onto the trailer. The Murray trailer is designed to load over the back. “That was hard for us to get used to,” Gomes says, “but we have much more speed in loading and unloading. We put ramps on or just drive the equipment onto the back of the trailer. We don’t have to detach the truck.”
Hauling Gomes Excavating’s own equipment accounts for about 85% of the firm’s trailer utilization. The other 15% involves moving skid-mounted compressor engines and other heavy machinery for select customers.
“Our outside hauling will pay for our truck and trailer,” Gomes says. “We do enough to make our payments, but nothing could convince me not to have my own low-bed, even if we didn’t have outside work. I would have it sit in the yard just for the convenience of having it. We’ve got the low-bed to move our equipment to the next job to make the profit that would pay for having it.”
Choosing Wisely
Lou Giannattasio, operations manager of the transportation division of Fowler Contracting in Cary, NC, says “production efficiency” causes his Fowler to do its own hauling. “We don’t like being dependent on an outside source to be on time to move,” he explains. “Often, due to weather, we may have to relocate a big machine to another job just to get a day’s work in. We may move at 4 p.m. to be onsite at another job at 7 a.m.”
As a turnkey site contractor for developers of residential subdivisions, Fowler handles all aspects of site work, including clearing, grading, utilities, stone base, curb, paving, and seeding.
Fowler has seven trailers: five from Trail King Industries in Mitchell, SD, a subsidiary of Carlisle Companies Inc., and two from Talbert Manufacturing Inc. of Rensselaer, IN. Nine Kenworth tractors pull the large equipment trailers and other, smaller dump trailers.
Fowler’s heaviest pieces of equipment—a 101,000-pound Caterpillar 345 excavator and a 103,000-pound tub grinder that reduces tree stumps and limbs to mulch—approach the 110,000-pound capacity of its largest trailer, a Trail King.
Giannattasio estimates his average hauling costs at $150 an hour, including labor, equipment, maintenance, and operating expenses. Professional haulers in his region charge $250 to $500 per haul, depending on distance and weight. For short hauls, owning is most economical; for long hauls, Fowler could hire a professional for less. “But then you have the time constraints and lose control of the scheduling,” Giannattasio says. “You have to balance out what’s going to be more cost-effective, which involves evaluating the fastest way to get the machine to the job. This enables the crew to start work with a minimum of downtime. What the machine makes is going to outweigh by far the cost Fowler incurs to move it.”
Giannattasio advises contractors considering the purchase of a heavy-equipment trailer to “compare the competition before you buy. Check out the structural integrity of the trailer—the main rail diameter, the number and size of the cross-members, and their center-to-center width. Also check their handling characteristics, whether they pull very straight behind the truck, and the simplicity of operating features such as the ease of hooking up the gooseneck to the trailer deck.”
A Cost Center
“It’s a cost center to have your own tractors and trailers, but you do it anyway,” says Raul Gonzalez, president of H&R Paving Inc. in Miami. “The cost of having our own trailers is sometimes more than having someone move it for us, but it’s something the business requires. You can call someone to move your piece of equipment and then sit for three hours. With your own trailer, you know what time the trailer is going to be there.”
Most of the time, the firm hauls heavy equipment on its four low-bed trailers. On occasion, though, it will “farm out” equipment transportation. “The going rate is about $150 per load to move equipment locally anywhere in Miami-Dade county,” Gonzalez says.
H&R owns some 80 pieces of heavy equipment—bulldozers, milling machines, pavers, and rollers. Its largest piece of machinery, a 25-ton milling machine, front-loads onto a low-bed trailer with a detachable gooseneck. Pavers and rollers typically load via ramps onto the rear of a trailer.
With the convenience of ownership comes responsibility for trailer upkeep. Although H&R has a regular maintenance schedule for its trailers, Gonzalez complains that the Florida Department of Transportation’s cruising inspectors often spot-check rigs on the road and write violation tickets even for well-maintained trailers.
“They can pull you over anywhere and make an inspection right there,” he laments. “If an inspector finds something and gives you a ticket, and you get everything fixed and go on the road again, another inspector may find something totally different the next day or next week. You never win.”
H&R instructs its drivers to limit their speed for safety reasons and to reduce brake wear. On South Florida’s expressways, that strategy sometimes runs afoul of minimum-speed laws even though the minimum speed—typically 40 mph—may be excessive for a particular load. “I’d rather have a ticket for going too slow than for going too fast,” Gonzalez says.
Tried Both Ways
Before buying a heavy-equipment trailer, Arcon Construction Co. Inc. in Harris, MN, hired a professional hauler to move its largest pieces of construction equipment. “If you don’t own your own trailer, you have to hire someone to come and move it, and sometimes we couldn’t find someone when we were ready to move,” says Scott Armstrong, maintenance supervisor.
Arcon does underground sewer and water work in Minnesota and Wisconsin with nine sewer and water crews and a small grading crew. Its new trailer, made by Trail King, is a TK140HDG with a three-axle jeep in front of the trailer, three axles on the trailer itself, and a two-axle pivoting hydraulic booster behind the trailer. It is 110 feet long and 9 feet wide, weighs about 65,000 pounds, carries a payload of up to 140,000 pounds, and cost $190,000 in the spring of 2003.
Arcon also owns a Trail King TK110HDG. It has three axles on the trailer and a single-axle pivoting booster on the back. It is 85 feet long and 8.5 feet wide, weighs about 25,000 pounds, carries a payload of up to 110,000 pounds, and cost $65,000 in 1999.
“The biggest piece we haul is a Caterpillar 245 backhoe that weighs 128,000 pounds,” Armstrong says. “When we put it on the TK140, the trailer, truck, and load together weigh about 203,000 pounds.”
Arcon has an even larger piece of equipment, a Caterpillar 245B backhoe that weighs 145,000 pounds. It must be partially dismantled to reduce its height and weight for hauling. The extra pieces travel in a separate truck.
The firm also has seven other Caterpillar backhoes that weigh 115,000 pounds or more apiece.
Arcon doesn’t do outside hauling. Armstrong hasn’t calculated current per-hour hauling expenses, but believes the company pays a premium for the convenience of having its own heavy-equipment trailer. “When we were using a professional hauler in 2002, it cost us $210 an hour,” he says.
Coping With Red Tape
As an owner-operator, Armstrong says, Arcon’s biggest problem is permitting. “We need permits for being empty and loaded,” he explains. “If we’re going to haul a backhoe from Minnesota to Wisconsin, we need an empty permit to go pick up the backhoe in Minnesota, a loaded permit to drive it in Minnesota, a loaded permit for Wisconsin, an empty permit for Wisconsin to come back, and another empty permit to get back into Minnesota. Then if we go on county roads, we have to go through the whole process again. Some counties have separate loaded and empty permit requirements.”
States, counties, and municipalities also have width and length restrictions for highways under construction and for bridges with limited load-bearing capacity. Sometimes, Armstrong says, routing restrictions can add 40 miles or more to the length of a haul—and to the price of a permit.
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Photo: Landoll |
Minnesota charges a flat $15 for an empty permit, but a loaded permit is priced on a per-mile basis. His big rig is licensed for 220,000 pounds in Minnesota, but just 80,000 pounds in Wisconsin. A Wisconsin empty permit is free, but a loaded permit carries a per-mile cost. When loads exceed the 80,000-pound limit, there’s also a per-pound surcharge.
Width can be a permitting issue, too. “On these roads, 8.5 feet wide is legal, but 9 feet wide takes a special annual permit,” Armstrong says. “Nine feet wide is becoming the standard for a lot of people, and some are going to 10 feet wide, which involves yet a different rule book.”
More on Red Tape
Like Scott Armstrong in the Midwest, Doug Murray laments the morass of red tape that ensnarls his trucking business. In California, he must have a permit from the state and from each county and city through which a load will move, as well as the US Forest Service and certain private landowners, such as electric utility companies.
“It’s a nightmare,” Murray says. “Several years ago I was approached by a California state assemblyman who wanted to move a piece of machinery from one ranch to another. The move involved a state permit and two counties.
“I said, ‘I’ll move this load for free if you personally go get all the permits required to move it,’” Murray says. “It took him the better part of a day to get the permits. He realized what difficulty we go through every day. I made a friend you wouldn’t believe.”
Another wrinkle in California is the California Highway Patrol’s involvement in moving the largest loads. “If a load exceeds 16 feet in width or 17 feet in height, they go along and manage the load. They charge $56.31 an hour for the services of an off-duty officer, plus 59 cents a mile. You pay an estimated amount in advance. Then they issue a refund or charge you more depending on what the trip actually cost. On occasion I’ve bid a load, and been billed more for the CHP than I made from the load.”