Partnership programs are defined as a relationship with a trucking or logistics company to improve profitability. These programs were specifically designed for carriers that are experiencing insurance, cash flow, capital, backhaul, equipment, personnel or operational problems. The programs are designed for companies looking to build their company, while improving their cash flow, reducing their operating expenses, and in many instances, building their trucking company or Brokerage Division or creating a new operating entity.
Many of Ahern's clients have spent years developing programs to increase their operating footprint. A well-designed partnership program allows a trucking or logistics company to;
- Streamline its Operations;
- Increase its cash flow, and decrease its operating costs.
In the trucking industry, “cash flow is king”. It's no secret that the trucking industry has numerous challenges with CSA Compliance, Hours of Service, insurance and regulatory requirements, and the fluctuation of fuel cost. Now, the industry is faced with an escalating driver shortage. To complicate matters;
- Some shippers are not paying carriers on a timely basis; and
- That impacts a carrier’s ability to service their debt.
Many of these challenges can be overcome by entering into a well-designed partnership program. A well-designed program may provide;
- Auto liability insurance;
- Cargo legal liability insurance;
- In some instances, workers’ compensation insurance;
- Fuel cards;
- Receivable financing;
- Trailer pools;
- DOT log audits;
- Additional truck capacity or trailer capacity to service clients; and
- Access to better freight and back hauls.
However, these programs also offer challenges. With the advent of the Internal Revenue Service reclassifying independent contractors to employees, partnership programs have to be analyzed by a third-party lawyer, to make sure that the programs are operating in compliance. The 20-point test for determining who is and who is not an independent contractor has been cast aside. There have been many recent decisions that have adversely affected transportation companies. There have also been some recent decisions that have been reversed, supporting the independent contractor model.
The point is, as you are reviewing a partnership program, it is important that you also have their contract reviewed by a transportation attorney, well-versed in transportation, so that you make sure that your exposures are identified and resolved before you enter into a contract.
People often ask Ahern, how does a partnership program improve cash flow?¬† If a carrier is allowed to access automobile liability and cargo legal liability insurance from the partnership, there is no insurance deposit requirement, nor do you have to negotiate this insurance on a yearly basis. It's all provided by the partner.
In many instances, an insurance provider requires a trucking or logistics company to place a 25% to 30% insurance deposit for their insurance coverages. In some instances, the Carrier may have a rolling deposit, but that's cash that can be utilized in the business.
Additionally, many partnership programs provide;
- Discounts on fuel;
- Fuel payment cards, which improves cash flow; and
- They offer settlement programs where fuel costs can be taken out of settlements at the end of each week.
Depending upon what partnership program is chosen;
- When a truck is dispatched; and
- A proof of delivery is sent to the partner;
- In many instances, the partner will provide funds necessary to cash flow the business, and they will wait to be paid by the client.
In closing, partnership programs are not for everyone, but it is a way to;
- Improve cash flow;
- Obtain access to better paying freight;
- Obtain opportunities to improve truck utilization; and
- Have access to the expertise of a larger transportation company that is able to provide creative solutions to problems.
In many instances;
- The partner provides the direction of DOT;
- They will assist with logs and audits; and
- All of that is included in their servicing fee.
In essence, a well-structured partnership program allows a Carrier or a Freight Broker to:
- Focus on their business;
- Reduce their operating expenses and increase their cash flow.
Arkansas Transit Home, Inc. (ATH) was founded in 1958 by my late father, Wendell Chandler. In fact, to Illustrate how long that is got most trucking companies, our DOT number only has five numbers.
I would like to thank you Andy for making this very important and life changing event possible. It was a great experience.
Arkansas Transit Homes, Inc.
We have worked with you and your colleagues at Ahern Associates for some time now. We find your expertise in the area of logistics (be it in consulting or based on being hired for acquisition analysis) to be out standing. We value the relationship and are very happy to give you this letter of reference..
You should feel free to have any party call us to discuss our experience.
Benesch Attorneys at Law
England has been formally associated with Andy Ahern and his colleagues for approximately the past three years primarily in the area of acquisitions. During that period, we have experienced a professionalism that is refreshing. Andy offers in-depth expertise as well as industry knowledge born from extensive experience, a combination which adds material value well beyond a normal business relationship.
We anticipate a long Ė term, mutually beneficial association. It was a great experience.
Very truly yours,
Keith c. Wallace,Jr.
Senior Vice President / Chief Financial Officer
C.R. England, Ind
Century Carriers, Inc. and its subsidiaries are family owned businesses that was started 1998. When the Transportation business was booming, times were great but, like other family owned businesses we didnít prepare for the economy the past year. My wife and I lost many hours sleep and made many calls to attorneys, banks, and whom ever would listen to our story trying to figure out how we were going to save our business for our future and our children.
Andy and his team has given us hope that there is light at the end of the tunnel and we are making progress, thanks again.
Kevin Henderson, President/CEO
Century Carriers Inc. / Century Expedited Inc.
Originally, I met Andy at a Truckload Carrier`s Conference during a round table discussion on the transition of family business. Andy was very knowledgeable about the topic and expressed many ideas that we hadn`t thought of. During the down turn of our industry in 2001, We called upon Andy, as a consultant, to help us understand how to turn our business around. We hired Ahern and Associates to come in and do businesses review. By giving us a road map to success with their intial audit, they helped turn our business around within thirty days.
Andy Ahern and Ahern & Associates have always delivered exactly what they have promised.
Don Christenson, President
Christenson Transportation, Inc.
We have thought about selling our business one day, but we really didnít know much about how to go about it. Your company contacted us a few months ago about a client of yours that was looking to buy businesses like ours. Now just a few months later, the sale is complete. Everything went very smoothly, Ahern was there to guide us through the beginning of the process. We are very happy with our whole experience with Ahern, especially Andy and Brian. They gave us personal attention any time we had questions or concerns.
John & Jennifer Rainney
I wanted to thank you for your guidance, leadership and support. The professionalism and dedication of you and your staff is outstanding. The knowledge you posses of the transportation industry and its inner workings was been a huge asset to us in our time of transition. With your assistance we have been able to make significant changes within our company to improve structure and productivity. Aherns onsite visit and detailed evaluation of our company has been a very valuable tool. The outside look at how we do business and the suggestions you've made to improve our overall performance have been very valuable. All of your advice and direction has been thoughtful and caring, I feel that you truly care about our business and success. You've done everything you said you would do and then some, working with you and your dedicated staff has been a pleasure and will improve the productivity of our company. I look forward to a long relationship with Ahern and Associates.
Specialized Business Solutions. INC