6 Ways To Run A More Profitable Trucking Business
You might have decided to start trucking because you like to set your hours and independently handle the fleets. Your niche market may have innumerable business opportunities as you consider setting up a trucking company.
You may have a good experience as a trucker, but that’s not sufficient. You have to fight tough competition from new and established big companies. So, it needs thorough planning and appropriate strategies to develop your business with a significant market share.
How to make the trucking business profitable? Of course, dedication and hard work is the key to success, but there is more to that. You must be aware of the parameters that impact profitability and how you can utilize those to the best of your advantage.
Securing the fund flow, managing your expenses through efficient operations, and increasing profit margins by high-paying loads are crucial steps you need to take to improve profitability.
You should follow systematic and well-planned strategies to run your trucking business more efficiently and cost-effectively.
In this article, we put together some measures that you should take to improve your trucking company’s profit margin and effectively grow your business in the competitive business environment.
Factors Affecting Profitability
Numerous factors determine the profitability of a business. The most significant is controlling costs to improve the profit margin on the revenue earned. There are two main components of cost as follows:
- How to Increase Profitability In The Trucking Business?
- Matrack Solutions
These costs are already in place, and you have to bear these expenses irrespective of your extent of operations. You are bound to pay, no matter how much you earn. There are different types of fixed costs:
There is a primary liability to insure your vehicle with coverage for physical damage and repairs. You can also add to the basic costs, including cargo, drivers, and rental reimbursement.
License and Permits
You may need to pay for pollution clearance and other permits to get the approval for the truck movements on roads and across territories. These licenses and permits may require regular renewals incurring extra fees.
You must pay your drivers, other employees, and professional fees to consultants, legal advisers, and web developers.
These costs may vary depending on where and how far you are running your fleet. You should make a proper estimate to maintain adequate funds to meet these expenses. These costs are as follows:
Fuel is the highest contributor to your overall operational costs, and its consumption depends on your truck’s movements, downtime, and engine performance. Gas prices vary from city to city and even season to season, influencing the cost.
Vehicle maintenance cost is also a crucial component of variable costs. It can vary widely depending on how much you spend to keep your truck running smoothly. It involves regular preventive maintenance, repairs, and servicing as and when needed.
Your drivers need to pay toll taxes while moving through state borders or some specific locations. The amount may vary widely depending on the roadways you follow and the type of vehicle.
How to Increase Profitability In The Trucking Business?
As the owner of a trucking business, you must have experienced the challenges of competing with larger players for market shares. You need to leverage your capacity and resources most efficiently to ensure profitability and the steady growth of your business. Here are 6 tips to help you improve your earnings, cut costs, and increase profits.
The best way to reduce cost and increase profit margin is to improve the fuel-efficiency or mileage. It will significantly reduce your fuel consumption and cost per mile. You have no control over the price of fuel, but you can decide how much you pay for it. There are a few measures you can take to improve fuel efficiency.
Several companies offer fuel cards for discounts and other benefits at service stations nationwide. You can track fuel purchases and set limits on purchases to avoid unauthorized or unnecessary expenses on fuel.
We have already compiled a list of the best fuel cards for truck owners, including ours, to give you a broader bunch of options from which to choose.
You can plant suitable routes with greater accuracy by getting feedback from GPS-based software that saves time and fuel consumption.
Cut Down Idling Time
Idling vehicles consume a considerable amount of fuel, which is a waste. You can make arrangements to monitor your truck movements and communicate with drivers to minimize idling time and fuel consumption.
Adjust Driving Habits
Driving habits like over-speeding, harsh braking, accelerating, and idling influence fuel economy considerably. A check on driving habits by getting real-time feedback on driving performance can make a big difference in fuel savings.
How to Keep Vehicles In Good Running Condition?
Regular preventative maintenance on your trucks will keep the vehicles in good running condition and improve fuel efficiency. A well-serviced truck, replacement of essential fluids and tires, and checking all systems can improve vehicle performance significantly. It also minimizes the chance of breakdown and costly repairs. Here are a few ways to keep your trucks in good running condition:
Keep track of your cost-per-mile of operations and boost revenue to match your expenses and make profits. You can enhance earnings and profitability by charging premium rates for shipments that are difficult to transport and face less competition. You can also look for customers who want freight movement quickly with better security so that you can charge them higher prices.
You need to build the necessary skill to handle this load and develop your networking to target customers that can bring more revenue. The best way is to take advantage of load boards or brokers to find high-value loads and new customers who are ready to pay more and help to increase your rate per mile.
Develop your direct networking and build a reputation with customers so that you can negotiate favorable rates.
Use Backhaul Trucking
To maximize profits and efficiency, you ensure that your trucks carry loads consistently, so you can recover the cost-per-mile of traveling to and from each destination. A backhaul is a load that a commercial trucker takes on a return trip from the destination point to the source location rather than driving back with an empty truck.
Backhaul trucking is a great way to make money on return trips by moving products to the desired location. You can negotiate with clients for competitive charges but still can make a profit by avoiding movement without loads.
Backhauling can be internal, where the customers engage you to carry their products on your way back, or external, where you need to find a new client that can provide an opportunity to backhaul and earn revenue.
Try matching your routes with shipper demand and be ready to take backhauls to ensure your trailer is full.
Reduce Detention Time
Time is money. The more you keep your trucks detained at locations, you lose the opportunity to serve other customers and earn revenue. It is the time for which you are not getting paid, and there will be a delay in dispatching other consignments, leading to customer dissatisfaction.
A suitable way to reduce detention time is to charge extra fees from customers for detention beyond certain hours during loading and unloading.
You can clearly understand which customers are known for higher waiting times and should plan accordingly to manage your routes and time to compensate for the detention time.
Factoring is a reliable way to improve cash flow for your trucking business. It allows you to get immediate funds from the factoring company without waiting for customers to pay the invoices.
Non-recourse freight factoring is one of the most convenient ways to improve your finances and protect your business against loss from unpaid invoices by customers.
You should promote your business with effective marketing strategies and follow competitive pricing to attract more clients. In the present age of digitization, your presence on online media is a significant factor in driving more clients to your services. It would help make a distinguished profile of your trucking business that can facilitate expanding your customer base.
Advanced technology applications can make your transport business more efficient and profitable. The technology solutions provided by Matrack can help you manage your trucking operations with better efficiency and cost-effectiveness. The various fleet management solutions offered by GPS-enabled tracking systems are as follows:
- Matrack Fuel cards help you keep track of fuel purchases by receiving alerts and allow you to set purchasing limits to avoid unauthorized expenses. It also offers discounts on recommended fueling stations, thus reducing your fuel cost and improving profit margins.
- GPS-based tracking system by Matrack allows real-time monitoring of truck movements, idling time, road conditions, and driving behaviors. You can make immediate decisions to optimize routes and control inefficient driving performance to save time and fuel consumption.
- The Matrack fleet management system provides regular updates on vehicle performance and maintenance needs so that you can take proactive actions to maintain your trucks in good running condition, avoiding costly repairs and breakdowns.
- The Matrack tracking system installed in trucks improves the safety of vehicles and drivers through real-time monitoring, feedback, and control. It helps to reduce your car insurance costs by minimizing the chances of accidents and damages.
The trucking business is not just about moving stuff from one location to another. It is about finding the best way that generates profits by ensuring efficiency and resource optimization. You need to analyze the fixed and variable costs and adjust expenses on fuel and other factors. Planning suitable routes and loads also help increase revenue and ensure profitability.
In this article, we have pointed out the factors affecting revenue and profitability and the strategic steps to be taken to run a more profitable trucking business.
We have provided some valuable inputs through this article to facilitate the growth of your trucking business with better efficiency and profitability.