Profit margins have always been slim for freight businesses, but the pandemic brought this issue to a whole new level. As carriers and companies in the trucking industry adapt to challenging economic times and strategize their recovery, cutting expenses has been on the forefront of minds. Below, we’ll go over seven areas freight businesses can squeeze or address to boost profit going forward.
1. Focus on Ground-Gaining Areas
Not surprisingly, the latest ATRI report shows fuel consumption remains one of the greatest expenses for trucking companies.This makes it a great area to address when you’re trying to cut freight costs, but a quick look at the top vehicle-based expenses gives even greater insights on areas of opportunity for providers of freight services.
- Fuel Costs ($0.433 per mile)
- Truck/ Trailer Lease or Purchase Payments ($0.265 per mile)
- Repair & Maintenance ($0.171 per mile)
- Truck Insurance Premiums ($0.084 per mile)
- Permits and Licenses ($0.024 per mile)
- Tires ($0.038 per mile)
Explore methods to reduce expenses in these areas that don’t impact quality of service or your ability to keep your tires on the road.
2. Embrace Technology
Even though this was a year of challenges, the trucking and transportation industry learned just how essential technology is. More specifically, being connected with various platforms that can handle everything from logistics to cash flow management on the fly have ensured truck companies stay afloat and manage their loads better. Now that so many organizations and service providers have tapped into these robust solutions to help them through these times, they’ve seen the benefits firsthand and will continue to leverage them. Anyone who missed out thus far will need to start tapping into tech such as transportation management software to stay competitive.
3. Optimize Speed for Fuel Consumption
Speed optimization is one of the oldest tricks in the book to reduce fuel consumption and keep costs down, but it’s worth revisiting these days with everyone in a hurry to get their loads run and pick up the next. Faster isn’t necessarily better for your bottom line. The general rule of thumb is that each mile you drive over 60mph costs you one-tenth of a mile per gallon.
4. Maintain The Vehicles in Your Trucking Company
Repairs and maintenance are the third-greatest truck-related expense companies face, but they get a whole lot more expensive when preventative measures turn into emergencies. Following the regulatory minimums is not enough either.
Develop preventative maintenance schedules. Each fleet may require something different based on the age of the fleet, conditions of the trucks, and other factors. Take a hard look at yours to determine what kind of schedule is right for you.
Perform regular inspections. In addition to the maintenance schedules, drivers should be checking out specific areas like brakes, tires, fluids, and the electrical system (especially the lights), before hitting the road each time.
5. Plan Trips Well
It probably goes without saying, but there’s little benefit to running an empty truck. Whenever possible, plan your trips around backhaul opportunities. The right tech will make this easier than it sounds.
6. Take Care with Cargo
Drivers are ultimately the ones responsible for the cargo even if they don’t directly load it.
Watch it. Be sure you’re supervising the process to ensure it’s loaded properly, balanced, and secure.
Check it. Include a cargo check as part of your pre-trip inspection too. Be on the lookout for everything from leaks through broken and damaged crates that could cause issues during transit.
Insure it. No matter how diligent you are, issues can still arise. Always have enough insurance to cover the unexpected.
7. Don’t Drive Fatigued
You’ve probably heard the oft-cited statistic from the National Transportation Safety Board that indicates driver fatigue is a principal cause in 31 percent of fatal trucking crashes. The latest from the FMCSA shows that fatigue remains a factor in 13 percent of all trucking accidents today. If you find yourself driving tired, it may be time to bring someone else onboard. Real-time GPS tracking can help you keep tabs on cargo as it moves between destinations and also helps to ensure your drivers are taking time off to rest too.
Get the Cashflow You Need to Run a More Profitable Freight Business
Whether you’ve got your eye on profit-driving tech, need to cover repairs and maintenance, or have other fees and costs creeping up, a steady cashflow is the key to success. However, you probably have customers that take 30, 60, or even 90 days to pay for a load, which can cripple your ability to take on more work and grow. Charter Capital has a simple solution for this—invoice factoring or freight bill factoring. Sell us your unpaid invoices and we’ll pay you for them right way. Learn more about how factoring works or get started with a complimentary consultation and quote.