Best Niche Industry for Owner-Operators

Selecting the right market niche is the most important decision you will make as an owner-operator. Pick the wrong market and your days as a business owner could be numbered.

This article, written with the help of our friends at Learn to Truck, helps you select the right market. In turn, you will be able to develop a strategy to grow your trucking business.

Worst strategy: dry van

We have nothing against dry van. The equipment is flexible and can be used to support many industries. It also has a low barrier of entry since the equipment is not expensive.

However, dry van has a lot of competition. Big companies (think Schneider) with lots of resources like it. Also, new owner-operators like it because of the low barrier of entry. This means one thing: serious competition.

With that much competition, it’s hard to get good-paying loads. More importantly, it’s hard to secure direct shippers that will become regular customers. You will be stuck working through brokers and load boards that keep 15% to 20% of the money for themselves.

Smart strategy: specialized loads

The smarter strategy is to work in an industry that your competitors avoid. Large carriers prefer to avoid specialized loads because of their complexity. This leaves the specialized load market wide open to owner-operators and small fleets. This situation creates an opportunity for you.

Obviously, the type of specialized loads you can haul depends on your permits, driving skills, and experience. Location also plays an important role for some industries (e.g., cattle, frac fluids, etc.).

However, every market has opportunities for these types of loads.

Consider fresh refrigerated loads (Reefer)

If you are a new owner-operator, consider the following. The fastest and easiest industries to support are the meat and produce industries. These types of loads have many advantages, including:

Consistency

One thing we like about this industry is its consistency. Fresh meat and produce are transported regularly from major metro areas all over the country. Getting regular loads from the same shippers is common.

Shippers are easier to find

Shippers tend to be easier to find. Go to the local produce market and make your equipment available to shippers. Some produce markets include: Hunts Point Produce Market (NY), Chicago International Produce Market (IL), and so on. Another strategy is to approach wholesalers directly. Just call them and let them know that you can provide them reliable transportation.

Resource: How to find reefer loads

Works in recessions

This one is our favorite. Reefer loads are resistant to recessions. This feature makes them very attractive for owner-operators who are looking for revenue stability. You are transporting food, and people still need to eat – regardless of the economy.

Decent pay

Ultimately, the most important thing is the bottom line. It pays well to haul these types of loads, especially if you are working directly for shippers.

Other options for specialized loads

There are other types of specialize loads that are good for new owner-operators. However, some of these require extra permits in your license.

Tankers

Liquid and dry bulk tanker loads are very profitable niches that an owner-operator can focus on. Liquid tankers are divided into two groups: those that transport food-grade liquids and those that transport hazardous materials. However, moving these loads is not easy and requires experience.

Then, there is the cost of equipment. These trailers, especially those for dry bulk, can be very expensive.

Flatbeds

You can focus on flatbed loads because large carriers tend to avoid them. The problem is finding profitable loads for both going out and for the back haul. However, where there is a problem there is also opportunity.

Cattle and livestock

Truckers can also make decent rates pulling cattle and livestock. However, these rates depend on your location. This option could be a good opportunity for an owner-operator who lives in a cattle-producing area (e.g., Texas, Iowa, Minnesota, etc.)

Your rate per mile

Hauling specialized loads is a good strategy for getting good rates and making a decent profit. However, you must know how much to charge per mile. Research the market to determine the going rates per mile, fuel costs, and your cost per mile. This research enables you to determine if your trucking business will be profitable.

Keep the money flowing

As your business grows, you are likely to encounter shippers who are slow payers. While owner-operators like quick pays, most shippers (and brokers) like to pay their invoices in 30 to 60 days. This delay can create cash flow problems for new or growing owner-operators.

You can solve this problem using freight factoring. Factoring provides you with an advance on your slow-paying invoices. Instead of waiting a month to get paid, you can get 95% to 97% shortly after invoicing. The remainder, less a fee, is rebated to you as soon as your client pays on their usual terms.

This article is part of a series on how to make successful trucking companies.

Note: This article is provided for educational purposes only and should not be used to replace professional advice. If you are planning on starting a trucking company, speak to a professional.