Is Hotshot Dead? Last year, I started noticing that Hotshot Trucking, Freight and trucking was changing. Loads were getting scarce, rates were getting really bad. I was deadheading much more and much farther. I am of the mindset that I will sweat it out if the loads are not paying enough to make a fair profit. Equipment wears out, tires need replacing, oil and filters need changing, trailers need servicing. Sometimes it feels like I make more by not spending money. So, I take off, and this December I took off a little earlier. I have this Hotshot-USA Resource Network that I have been building, adding new partners and managing our groups.
As I manage these groups, I read a lot of posts, comment on a lot of posts, talk to many drivers, mentor, and coach many. I also talk to many businesses, Manufacturers, Freight brokers, Dispatchers, and many that are instrumental in the business. Not only in Hotshot but trucking and trailer sales, some I call my friends. They tell me that we are in for a reckoning, shrinking of the economy, a backlash.
Covid brought a lot of adjustments. This includes supply chain shortages, delays in manufacturing and raw material shortages. Steel and lumber were constantly being hammered with sharp unannounced price hikes, tariffs, and increased shipping costs. Not only that, but many also lost their jobs and businesses. We started seeing the economy shift from traditional jobs to on demand services like Uber and Doordash. People wanted to start their own jobs to take the plunge and not be dependent on others to tell them how to make a living.
Two markets that exploded were Box Trucks and Hotshot trucking. Everybody had someone they knew that was making a lot of money. Get a Truck and a trailer or a box truck and get Amazon loads… travel the country and make lots of money. You don’t even need a CDL.
Well, they came in droves. Tired of working for others and making chump change. They came, and they came, and they are still coming. I know I wrote an e-book that has sold hundreds of copies, Hotshot-USA How to start a Hotshot business, Make $1200 a day! So, I am guilty of fueling the onslaught. In my defense, my book outlines the pitfalls of the business, the costs, the hours, being away from home, being prepared for breakdowns, and asks the question, are you cut out for this work? Not everyone is. Let’s not get stuck on this narrative right now. I am here to write about – Has Hotshot died? No, but it is on life support.
As a driver, I saw the second half of last year, that I was starting to have to deadhead further. The days of multiple loads on one trailer were becoming a thing of the past. At first I didn’t think too much about it, but I saw that more and more, loads that we did for brokers were changing.
THE ERA OF THE PARTIAL USHERED IN
Let me give you an example, my original partner used to have a shipper that would send out about three times a week. Several loads going to Colorado and Kansas. They paid really well, too. Over $3 a mile AND sometimes they were only 12 foot of deck space. You could load 2-3 loads at a time making some trips worth over $6-$7,000. Then we would get reloaded for the trip back for a nice round trip.
We knew it was too good to be true, and it was. One day, the broker tells us that they are now considering those loads as partial and paying much less. What used to be all considered full loads were now partials, that combined ,were now paying what we used to make on each. We thought we would turn them down and they would be back. We had always given them great service. We thought – No self-respecting driver would take those loads at those rates. I think they are going for even less now.
Then, I started to see a trend. All brokers started responding to less freight and less loads, looking for a way to continue to make healthy profits. They were changing their business model. That they could post any rate and some hotshot would take them. Those same drivers that had gotten in over financed and got in over their heads. Purchased equipment at its peak and now they had to take any loads or go broke. Little did they know they were already going broke.
It is a simple equation. Brokerage does $XX amount of bookings for a month. Let’s say $500,000 at $3 a mile and his profit is at $1 each load mile. So, they make roughly $ 166,666 gross profit. Then say the loads drop fifty cents to $2.50 cpm. They must drop our percentage to produce the same gross profit to pay their employees, agents, and staff. Maybe not as simple math as I said, but they see that they can make up for the loss in revenue.
OVERSATURATION OF HOTSHOT DRIVERS FLOODING CERTAIN MARKETS – IS HOTSHOT DEAD?
When Covid hit, many left their jobs, and started their own businesses. The word got out that any Chuck with a truck could make 7k a week and not even need a CDL or take drug tests. They started buying record numbers of derated utility trailers, maxing out their GVWR, and calling themselves Hotshot Truckers.
Hundreds, if not thousands, hit the roads and continue to hit markets. Markets like Houston that once offered any Hotshot driver his pick or multiple loads. Now you take what you can get. Low rates and all. I used to always find loads in OKC and Tulsa and now they are the same way. As someone who runs a lot of groups, including a Hotshot Beginners Guide, and publishes a How to start a Hotshot business e-book, the interest has not waned one bit. It seems to be stronger than ever, regardless of the worst market in trucking history and record numbers leaving.
The overall effect of this mass influx of new drivers has caused truck and trailer prices to become over inflated due to supply chain problems. Mechanical and bugs in the newer trucks have created a shortage of good trucks and available trucks, causing the prices to go way up. Then throw in the prime interest rates being around 9%.
Brutal payments for equipment and insurance and untrained and over extended owner operators having to cover their overhead has hurt us worse than anything. They end up taking the dreaded cheap freight. The under $2 a mile. BROKERS LEARNED THAT THEY COULD POST ANY RATE AND SOME HOTSHOT DRIVER WILL TAKE IT. They keep pushing the limit and the price keeps dropping. A never-ending vicious cycle. On top of a weak freight market and weakened economic conditions, it only gets worse. Before 2022, I never took a load below $3 a mile. I never dead headed more than 100 miles. Those days are in the review mirror.
Finally, here is the final nail in the coffin. What has turned the freight market into a shambles?
DOUBLE BROKERED LOADS- a real epidemic to our livelihood and industry.
Is hotshot dead? There are several things that contribute to this. First, America is the land of opportunity for people from all over the world. Those in Asia, Pakistan, India, Turkey, and every part of the world realized that they could access and book loads, make money dispatching or brokering loads they booked off load boards. It was the wild west for a while and this opened the door for scams, fraud, and deception.
There have been some attempts to reel it in. However, when there is this much money to be made there will be ways around it. When people realized that they could book $2,000 loads and book them to unsuspecting drivers for half that? And not have to ever touch the load, drive or deliver a load, or bust a nut, it was too easy and has hurt us more than everything else combined.
Second part to this equation, not only did the world figure out how to double broker loads, so did hundreds of other brokers, small operators, individuals, and dispatchers. There are so many of that call themselves load brokers, we have them on our groups, Our Hotshot Trucking LOADS ONLY group is full of them. They find loads on load boards, Facebook groups and anywhere they can, they even work with other brokers.
The freight industry not only ushered in the Hotshot and Box Truck gold rush, maybe even just as fever pitched was the Dispatcher field, every driver’s wife or girlfriend, sister and mother got into dispatching trucks, and it still is growing every day. Just look at all the dispatcher courses, groups and most of all, the posts. We do not allow them because they will overwhelm a group, turn it into a spam fest. Most have never sat a minute behind a wheel, managed their HOS or done a pre-trip inspection, so they do not know the basics of our business, however they know that they can find a few drivers and make a healthy living, or that is what they have heard.
So how does this hurt all of us and is hotshot dead? For every load, good, bad, or ugly, there are now hundreds competing with drivers for every load. Remember what we said about cheap freight? They just want to book a load to get paid. They don’t have to deliver it, just book it and bill it out. Now there are some good dispatchers and my true belief is that a good dispatcher is worth their weight in gold.
In retrospect, I know I sound down on the Hotshot business, call me spoiled and missing the good old days. This business was something when I got in. It never slowed down and saw many of my friends grow and prosper. Now I can name many that have gotten out of the business.
Is hotshot dead? Does that mean that you still can’t make money? Hell no, it doesn’t mean this. There are still plenty of drivers out here killing it. A smart hustler. Someone who finds their lane, makes connections, broker relationships, and makes themselves marketable, gets the right equipment, can still make a good living. It just isn’t as easy and you find yourselves going out further and further. Profit isn’t the same with fuel and depreciation on your equipment. Repairs, tires, and parts prices are way up.
Will it get better? Hopefully. I have heard so many people in this industry say that there was going to be some reckoning, some bloodletting. The weak operators without the financial resources to withstand the bad weeks and breakdowns would fold, leaving only the stronger, better business operators.
Let me make this clear also, Trucking freight in general, is down. Not just Hotshot Trucking. So do not let me paint a sad picture of our industry. Just bringing up my observations. I do know one thing for sure, if the freight market was better, I wouldn’t be here typing away and I would be at some truck stop or hotel tonight.
Thank you for reading another one of my blog articles. And please remember when you need a service, product or company, such as insurance, trailers, factoring, flatbed equipment, eld, load boards and much more, think of my Hotshot Connections. https://hotshot-usa.com/hotshot-connections/
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