The trucking industry is taking it on the chin right now. You don’t have to be a fleet manager to know that inflation is up and trucking rates are down, down, down. We hear stories about independent owner operators hanging up their keys. They won’t drive at a loss. No one should. If your trucking business – fleet or single owner operator – is in trouble right now, here are the top five things we at TruckingOffice think you can do to ride this out instead of sit it out.
1. Know Your Trucker Stats
What does it take for your business to make money? Trucking businesses have to make a profit to stay in business. So what makes you money? What costs you too much?
Sure, we can say “good loads at $10 a mile make us money” and “Fuel costs too much.” Those are not the only factors in making money.
If your trucking business is in trouble, you need to know precisely what is happening on a financial level.
- What is your revenue per mile?
- What are your expenses per trip?
- What is your profit per week?
Understanding finances not in a big picture idea but actual numbers sounds like a lot of work. But truckers get paid per mile, not by the hour. Trips are as expensive, but how expensive is one trip over another? Are you making a profit every week (here’s that “watch the pennies and the dollars take care of themselves” idea) or do you maybe take a load at the end of the month that might pay the bills, but also might dig the hole deeper?
Trucker Stats by TruckingOffice PRO give you the nitty gritty details without any extra data entry from you or a staff member. When your trucking business is in trouble, you need data now and you don’t want to spend more money getting it – so TruckingOffice PRO does it for you. Using the dispatch, invoicing, and expenses per per trip that you enter one time, your trucking stats show up at the push of a button. No extra time, no extra work. Just pure data in seconds to tell you the truth about your company.
Once you know your stats, what should you do?
2. Don’t Take Loads at a Loss
Do you know how much it costs to drive your truck and run your trucking business?
It’s not just fuel and food and parking fees. Your trucking business expenses should include
- loan payments
- insurance costs
- maintenance expenses
- business costs, such as rent, mortgage, professional support bills
- staff and driver pay (including the required taxes, deductions, and benefits your trucking business offers.)
That’s not a complete list, of course. You have to include paying yourself!
If you’re taking loads at a loss, you’re hurting yourself.
So how do you know your value?
Trucker stats will tell you how much you need per mile to break even and how much you need to make a profit.
Decide now that you’re going to say no to those trips. Maybe you’re LTL and one trip alone is not going to pay the bills, but in LTL, you combine loads to make more money. Figure out which of loads costs you more to deliver than goes into your pocket and turn them down.
That may mean firing a customer. That will hurt when your trucking business is in trouble. But it may be necessary.
3. Run Shorter Loads to Increase Profit
This may be controversial. Long distance truckers and large trucking firms exist to move freight across our country. And we are grateful every time we sit down to eat strawberries from California and steaks from Texas. But if your trucking business is in trouble, cutting the long distance loads may be a smart choice. It could be as simple as choosing a region to drive in to reduce overnight expenses. Or choosing to stay in state and reduce your IFTA. Are four one-day trips more profitable than taking a one trip across the country? You have to know your numbers – trucker stats – to decide.
Those decisions may lead to some harder decisions.
4. Reduce Fixed Expenses
If the idea of firing an unprofitable client hurts, this one may hurt more.
Sell the equipment you don’t need. Some small trucking businesses may have a spare trailer, for those cases when a load comes in and needs a specific rig. When you don’t need the flatbed regularly, sell it. Not moving your refrigerator trailer?
Deciding to niche down can be a smart move when your trucking business is in trouble. When equipment that you might need in the future increases your expenses now, it may be time to sell it.
You can buy it again in the future if the need rises, but when your trucking business is struggling, finding a niche that you know will make you money is a wise choice.
We know those are hard decisions to make for trucking businesses. Aren’t you shutting out the potential of a customer who will require that rig? Maybe. But potential is not money in the pocket. When you’re in trouble, it’s about truth and reality, not hopes in a customer who hasn’t shown up yet.
5. Lease On to a Carrier
We know how much it costs to get your own authority. Surrendering that might feel like you’re giving up. But leasing on to a carrier during a long, hard stretch in the trucking industry can protect you.
You know who to avoid. Don’t sign on with them.
You know who treats their drivers well. Who pays well and on time.
Those aren’t secrets. Truckers know who to work for. In an industry that often tops 90% turnover rate, it sounds like people are leaving trucking as fast as they come in. What’s really happening is that truckers won’t stay in a company that treats them badly. (People quit bosses, not jobs.) They don’t stop being truckers, they just go work for someone else.
Leasing on is not a sign of failure. It’s not a retreat. If it’s the right business decision that keeps you going during a rough patch, then do it. Ride this time out and when trucking as an industry gets back to reasonable rates that support a trucker, go get your authority again.
Is Your Trucking Business Is In Trouble?
TruckingOffice PRO might look like a luxury when your trucking business is in trouble.
Is a tire iron a luxury when you have a flat tire? Is a gallon of fuel a luxury when you’re stuck on the side of the road?
You need a tool to help you when your trucking business needs it. TruckingOffice PRO has the tools you need to get back on the road. Instead of worrying about making the wrong decision, you can rest easy, knowing you’ve made the best decisions.
TruckingOffice PRO trials are free. Use it for a month and discover what you don’t know about your trucking business and how to stay on the road.