The trucking industry is full of competition and carrier businesses come in all different sizes. However, by managing key company staff and resources, carriers may impact how much growth they experience.
Get Organized. There’s a lot more to running a successful trucking business than driving. Therefore, a range of different numbers should be considered when trying to increase revenue and profitability.
These numbers include maintenance and operational costs, fuel discounts, and safe driving measures. Knowing and understanding these numbers will increase the likelihood your trucking business will be a success.
It’s essential for carriers to have a reasonable grasp of the operational costs relating to their business. It’s critical to break these figures down further to optimize their operation and maximize profits.
Maintenance/Mile. This is the cost of maintenance per mile traveled. Keeping a record of this figure will help identify trucks with higher-than-average costs. According to an American Transportation Research Institute (ATRI) report, the average cost of fleet maintenance per mile as of 2019, was $0.143/mile.
Understanding why one truck may have higher costs compared to another will identify changes that could be made to lower costs, such as less grueling routes, which will help improve profit margins.
Operational Costs/Mile. Per ATRI figures for 2019, the average operational cost per mile was $1.652. The cost per mile helps to identify areas where a business may be able to decrease costs. When calculating this figure, it is important to ensure that fuel discounts and tire discounts are being taken into account. Once the cost per mile is calculated, it can be applied to different routes to ensure the routes drivers take minimize costs as much as possible. Analyzing routes for characteristics such as multiple steep hills can help carriers find routes that maximize fuel and minimize mechanical wear on their fleet.
Deadhead Miles. Deadhead miles cut into profits. They are the miles that a truck is required to travel between dropping off cargo to where it picks up its next load. The truck will still incur operating costs for this travel, but those costs are not offset by revenue, meaning it is essential these miles are minimized through efficient and proper analysis and planning. According to ATRI, 20.1% of all trucking miles in 2019 were deadhead miles, compared with 16.6% in 2018.
Driver Hours and Downtime. It’s a balancing act. Carrier companies must manage driver safety compliance with time management. Driver hours should be allotted so that drivers aren’t left sitting around, burning up key driving hours.
Specifically, using this time and personnel management strategy, routes and drivers need to be matched; then drivers are on the road when they have available hours. The right recipe for this strategy can be found by calculating route times and driver availability based on required downtime. Done correctly, this type of strategy will maximize available driver time.
Results. When carriers properly manage the above-discussed performance data associated with their business, they can expect: decreased operational costs increased revenue and an improvement in overall profit margins.
It’s a competitive industry, but the strategic effort pays off. Those carriers who dig deep to maximize their personnel and financial resources can expect to continue to grow their business and retain their staff.
The England Carrier Services (ECS) division offers a variety of services for carriers ranging from maintenance to support. As ECS members, carriers have access to nationwide discounts on fuel and tires from dedicated team members who are committed to finding the best price. ECS also provides factoring services with benefits such as same-day funding to a bank account or fuel card. These options allow carriers the freedom to focus on growing their business while saving time and money.