TL;DR: The most profitable trucking companies aren’t the busiest; they’re the most disciplined. They manage their cost per mile, control cash flow, and make strategic decisions, especially when the market is soft. Savvy owners gain an edge over their competitors when they focus on the details.
Our collection of top tips for newly established or relatively young trucking companies is outlined below:
Fuel is the number one non-driver operating expense, and it cannot be ignored. There are many ways that truck drivers can optimize fuel efficiency. One of the easiest is to simply slow down. It is worth noting that driving at 62-65 mph can save thousands of dollars each year compared to traveling at speeds of 70+. Aerodynamic attachments, such as skirts or fairings, have also been proven to pay for themselves through fuel efficiency. Lastly, consider a fuel card to reduce diesel costs. Conveniently, Keystone offers a fuel card that can save you an average of 40–60 cents per gallon. Check it out and sign up today.
When it comes to fuel efficiency, minor adjustments can lead to significant savings, especially when hauling thousands of miles each month.
Any good investor will tell you that diversity is key, especially in a volatile market. Having investments spread across different assets will protect your investments from variables beyond your control. The same methodology applies to the trucking business and selecting the type of freight to haul. Diversifying your freight mix can protect you and your business from regional, seasonal, and economic issues that could otherwise be detrimental if you are solely reliant on a specific type of freight or a limited number of customers.
All fleet managers and trucking business owners should know their true breakeven rate per mile. Your breakeven rate per mile equals the fixed and variable costs of your business (usually monthly or annually) divided by the total mileage driven (again, either monthly or annually). TheTruckersReport.com has a quick and easy cost per mile calculator that you can utilize for free to determine your benchmark - Cost Per Mile Calculator
Evaluate your revenue per mile by routes, drivers, brokers, or customers, and compare them to your breakeven rate. When you understand your breakeven cost/mile and what you’re paid per mile for each customer, lane, vehicle, etc., you can make educated decisions about which to keep and/or expand.
Insurance is a critical, mandatory, and substantial operating expense for trucking companies and should be scrutinized. The FMCSA requires specific liability coverage for operating authorities, meaning you cannot legally haul without it. Coverage will protect you and your business from accidents, cargo theft, and personal liability for owner-operators. Tactics to think about when it comes to your insurance packages include:
Freight fraud is becoming an increasingly important matter for trucking companies and the federal government. Per trucking.org “thieves targeting freight shipments cost the American economy up to $35B per year” and “strategic theft has risen 1,500% since the first quarter of 2021”. Know that the crisis is real and take the proper precautions to protect you and your business.
Red flags to be wary of when dealing with brokers include email addresses that do not match a broker’s website, pressure to accept quick pay at a steep discount with vague payment terms, brand new or newly reestablished entrants without a reputation.
One of the easiest ways to validate brokers’ legitimacy is to verify their authority on the FMCSA’s Licensing and Insurance Website.
If you think you’ve been a victim of fraud, quickly notify your bank as well as your lender, and file a complaint with the proper authorities:
Your vehicles are the lifeblood of your organization and optimizing uptime is extremely important for smaller fleets and all-important for owner-operators. Learn the basic repairs and take preventative maintenance seriously; it will make an undeniable difference in the long run.
Driver turnover is expensive! Place a concerted emphasis on driver appreciation to boost loyalty and reduce turnover. Less turnover will relieve your business of the added stress of finding new drivers and the wasted profit from the stationary trucks.
Avoid adding trucks too quickly. Each new truck should generate consistent profit for several months before expanding further. Same with hiring too quickly. Hire strategically when timing makes financial sense. Finally, separate business and personal finances, pay yourself consistently, plan for taxes quarterly, and work with an accountant who understands trucking.
A combined emphasis on all the above will pave the way for your fleet's financial success and help safeguard your business from unexpected obstacles.