Outsourcing Gone Bad

I recently had a very frustrating experience with Riverstone Logistics, Lowe’s, State Farm Insurance and the Department of Transportation. It all started when I applied to subcontract appliance deliveries for Lowe’s through their new outsourcing firm – Riverstone Logistics. The process started out reasonable and realistic, but soon changed drastically to an unfair list of policies and procedures forcing me to bail out of the process entirely and lose several thousand dollars.

Major problems occurred when Riverstone Logistics required me to obtain several filings with the DOT which included a DOT number and a MCS-150. Another form had to be filed was in the middle of the fiscal year and I still had to pay the full price even though half the year had already expired. I was also charged $325 for some other DOT fee that is non-refundable like all of the other fees for licenses and permits before a company is even granted permission to do the deliveries. But undoubtedly, the worst scenario of all was the fact that the DOT requires any business going through this process to give out their phone number and contact information. Once my number was given out, I received and still continue to receive hundreds of calls from outside agencies related to the DOT trying to sell me everything under the sun which included 99% of stuff that I really don’t need.

What was mindboggling was the fact that as soon as I hit the submit button, the calls started coming as if these agencies have a direct tie-in to the DOT’s customer database for any company trying to get established in the trucking industry. This happened so often, that these calls started interfering with my regular customer calls and I lost a ton of business as a result. But undoubtedly the worst part of the entire experience came from State Farm Insurance. My agent from State Farm dropped the ball and couldn’t submit the necessary insurance requirement. This particular agent promised me the world to get all of my insurance, but when it was time to submit the insurance requirement to process the MCS-150 on the FMCSA website to obtain this delivery contract from Riverstone, she failed miserably and didn’t tell me in enough time for me to get a quote from another agent who was more familiar with this process.

Once I finally figured out that this first agent couldn’t adhere to the strict submittal guidelines required by FMSCA and DOT, it was too late for me to acquire the insurance because I had already spent a ton of money securing a 26-foot box truck from Enterprise Rental. In fact, this is what made the process so unfair. Riverstone Logistics has a very difficult subcontractor process that potential subcontractors have to go through. They required me to go through the ICM Portal and upload up to 10 different forms just to be able to get approved to do the deliveries. They also required me to change and submit all my paperwork under my LLC instead of my sole proprietorship. This caused us to lose about a month of time during the process. I eventually secured the truck while State Farm and Enterprise required the insurance on that truck to be based on a 26-foot box truck priced around $100K.

I actually made it happen. I secured the truck from Enterprise, got binder coverage on the truck from State Farm, and showed up at Riverstone Logistics with my crew ready to delivery appliances. But, the delivery manager said that the guy in compliance told him that my agent from State Farm didn’t upload the necessary paperwork and insurance coverage to the FMSCA website and that I would not be able to start delivering appliances that day. So, I took the truck back flabbergasted as to why the insurance that I had was good enough to drive it off the lot from Enterprise, but that particular coverage was not enough to start delivering for Riverstone.

When I did the numbers, I saw that renting, refueling, acquiring and paying insurance for a 26-foot box truck priced at $100,000, was unrealistic, so this forced me to look at other alternatives. I saw some of the former contractors delivering appliances in older trucks form Lowe’s original fleet that I confirmed the pricing to be in the $40K-$60K range. I thought it would be in my best interests to secure and finance a 26-foot box truck and I found one priced at $50,000. So obviously, the insurance charges would go down some and I could purchase that truck instead of renting a $100,000 truck from Enterprise.

So when I asked the delivery manager if I could just purchase a truck instead if they would allow me to deliver the appliances in an older truck that I financed and owned instead of one that I had to lease through Enterprise, all communication broke down from that point. In fact, he recommended that I lease the truck instead of purchasing one just in case I decided that I didn’t like delivering appliances for this company. I assured the delivery manager, that if I purchased a truck, I could find some use for it in other capacities since I am already in the moving business.

But after working with the Delivery Manager at Riverstone and getting nowhere after working for at least two months to get through their process and start delivering appliances, he stopped communicating with me to the point where the only person talking to me was a guy in their Compliance Department. Riverstone Logistics recently took over this contract from another company that had being doing it for years ever since they started outsourcing their deliveries. I even saw a lot of the old trucks with the Lowe’s logo on them still being used by guys who had made the very first transition to outsourcing, from when Lowe’s was doing their own deliveries. These trucks, some of them looked to be around 12-15 years old, were worth nowhere near the $100,000 box truck that Riverstone required me to come in with.

And the guys driving these trucks used to work directly for Lowe’s delivering appliance, so I know these trucks are adequate. I can also assure you that anyone working for them previously, didn’t have to go through the same process as I did, so this makes it totally unfair. The said part about this whole ordeal, is that small companies like mine often get lost in this big collection of paperwork and DOT requirement shuffle, only to have our companies financially destroyed trying to qualify to do deliveries for companies like Riverstone Logistics. It’s pitiful, but I know of absolutely no one to talk to that could look into this situation and find out if I have been treated unfairly or unethically during this process. Meanwhile I continue to get calls from DOT related agencies telling me that I have to have this and that for this and that when I didn’t even get the delivery contract from Riverstone Logistics after my company contact information was given to these agencies.

The commercial auto liability insurance and cargo insurance for the $100K box truck that they required was $4,000.00 down, and $1,900.00 per month. I finally found an agent who was familiar with the FMSCA process and could get the necessary insurance requirement and file the necessary forms on the FMSCA website, but it was too late at this point because the Delivery Manager and Compliance Manager was not communicating with me to the level that I could finally get through this process and start delivering appliances. I had also gone through my budget to the point where I had to stop losing money wishing for a contract that these agencies weren’t allowing me to have.

It’s really sad now how big companies like Lowe’s are outsourcing their deliveries to companies like Riverstone that create these nearly impossible requirements for the subcontractor. If anyone reads this and knows and agency that I could have look into this situation, please don’t hesitate to refer them to me.