In the trucking industry, especially for small fleets and owner operators, watching the bottom line of your company is the normal course of action. Right now, there’s no room for error. We have to know details. What exactly is your cost of trucking business operation? Can you control it? What tools do you need?
Cost of Trucking Business Operation
How much does it cost to keep your trucking business on the road?
For the first time, the costs for the average trucking per mile has topped $2.00. When the load boards and brokers are offering the lowest rates in years, it’s a wonder anyone is still hauling freight. While the spot market is so low, it can be critical to track those pennies to make sure you’re making a profit.
We cannot haul freight at a loss. It’s like we’re paying them for the privilege of moving their goods.
What’s your cost of trucking business operation?
Simply put, your cost of operation is the total amount you need to stay in business. In trucking, that’s usually expressed in a “per mile” number. But all businesses have a cost of operation – even if it’s just what’s going on in an office. We need to keep that in mind.
Total up all of your expenses, even those off the road. You pay an accountant? That’s an expense that is a part of your cost of operation. Some things are pretty easy to think about: insurances, bonds, IFTA, IRP, medical insurance, benefits for drivers, even maintenance like tires. But there are some that we struggle to remember, like the annual ELD package, or the bottles of window washer cleaner we picked up on the road in January.
If you’re using a computer accounting package and enter all the expenses, you’ll have a number that might be the cost of operation. You can break that down per mile and there’s your cost per mile. (Too bad that the biggest accounting programs available don’t have that figure for you. But they don’t compute per mile prices.)
Why is this so important? It’s the difference between life and death to your trucking business.
We have to know our value. Without truckers, this country would starve. It’s just that simple. If shippers don’t regard the work we do as valuable, then they’ll continue to underpay us. When we know the bare minimum we can take, we’re not going to take loads that cost us to haul them.
When we are offered a load by a broker for pennies when we should get dollars, when we know our cost of trucking business operation, we’ll know when to say no. That’s as important as knowing when to say yes.
For the small fleet, that’s a hard thing to say. No loads? No business. It looks that simple.
That’s when it’s time to take a long hard look at expenses to see what and where cuts can be made. Taking a look at the details will tell us where the problems lie – and then where we can solve those problems.
Can We Control Our Cost of Trucking Business Operation?
When we look at the American Transportation Research Institute report on trucking expenses, it may look like there are expenses we can cut – if we’re willing to cut experienced truckers and hire newbies at rock bottom prices. Or cut driver benefits. Or cut office staff.
Those are not good decisions for the long run. We certainly would NOT recommend those.
Let’s say (without getting political) that there are some policies that are hurting the trucking industry. We don’t have a lot of say in those (write your congressional representatives!) but we can look in house to see what options we have.
- Find a lower insurance rates.
- Practice preventative maintenance.
- Manage the cash flow to reduce paying for factoring services.
- Track your worst shippers and don’t haul for them again.
- Know where you’ll get a load for the trip home – and where you won’t.
- Expenses per mile up or down?
What do we need to know? How about revenue per load? How about expenses per truck? How about profit per month? TruckingOffice PRO will provide you with these numbers and many others. Our Company Overview Report puts all the data out in a couple of seconds for you to study. You won’t find that report in QuickBooks or in a Google spreadsheet. It’s a complicated formula that depends of numbers that QuickBooks doesn’t track (miles per state.)
The Right Tools
Control your cost of your trucking business operations to stay in business by using the right tools to track your expenses and the cost of operation for your transportation company.
A lot of truckers are cutting costs by reducing their software expenses and using free spreadsheets like Google Sheets to manage their accounting. We think this is saving pennies when you will lose dollars! It’s going to take hours to program a spreadsheet to manage invoices. At the same time, tracking maintenance records and schedules, customer databases, IFTA and IRP? It’s a full-time job just writing the software. That’s time you’re not on the road, making money.
Investing in a complete trucking management software that handles all of those tasks is worth every penny.
We here at TruckingOffice have truckers call us and say that we’ve saved them a year’s worth of the cost of our software in the first month. Keeping track of slow pay or no pay invoices requires that accounting know-how. If you’re using TruckingOffice PRO, a report of unpaid invoices is only seconds away. IFTA and IRP are computed without a minute of extra data entry. Driver pay and maintenance records are always at your fingertips to give you the keys to controlling your cost of operations.
Free Trial Today!
Try out TruckingOffice PRO today with a free trial. You’ll find that controlling the cost of operation can be done with the right tool. You don’t have to be afraid of this economy when you’re prepared. TruckingOffice PRO is the tool you need. Give it a try today!