Being a business owner is tough. The responsibilities are numerous and the costs to keep the doors open are high. When it comes to owning and operating a trucking business, the financial challenges are even greater. A single truck comes with a steep price tag. Owning a fleet of trucks requires a huge investment.
When you consider ever-changing factors like fuel, maintenance, rates, weather, and the market, it’s no surprise that working in the trucking industry requires sound planning and the ability to adapt on the fly. If you work in the industry and are looking for ways for your trucking business to cut costs, this article highlights 9 options to consider.
1. Implement a Transportation Management System
Investing in a transportation management system (TMS) is a way to run a more efficient office. A TMS allows you to manage loads, automate international fuel tax agreement (IFTA) reporting, simplify payroll, create invoices and bills of lading (BOLs), and have access to detailed business reporting and statistics. Yes, it is a new expense to put a TMS in place. But the money and time you’ll save in the long run due to reduced office tasks makes it worthwhile.
2. Calculate Your Cost Per Mile
What’s the most important number associated with your trucking business? You may be surprised to learn that it’s cost per mile. Owner-operators who take the time to calculate how much they are spending per mile to run a truck have baseline data. When you know how much you’re spending, you are better equipped to identify areas where you can cut costs. If you don’t currently track your trucks’ cost per mile, now is a great time to start.
3. Monitor Your Monthly Budget
When you calculate your cost per mile, you’ll have a record of all income and expenses. Use this information to identify areas where you could potentially make cuts to save money. Common cuts may include subscription services that are no longer used. Make it a point to meet with an accountant each quarter to review a profit and loss (P&L) statement. Look at your spending trends. In many cases, it’s better for your bottom line to cut costs as opposed to looking for ways to increase earnings.
4. Keep Your Cargo Safe & Sound
One of the biggest threats to your trucking company is cargo theft. It’s one of the most expensive crimes in the United States, and thieves are surprisingly creative at finding ways to steal cargo and maybe even the trailers themselves. Education is your friend. Make sure you and your drivers know how to identify threats and take steps to protect your freight.
5. Reduce Fuel Consumption
There are several ways to cut fuel costs. One of the most obvious is to limit the amount of time your truck idles. Other fuel cost-cutting measures include keeping tires at optimum pressure and adding a roof fairing. Do your homework to learn about and implement as many fuel-saving processes as possible, and make sure your drivers do the same.
6. Become a Better Route Planner
An efficient trip is a money-saving trip. Planning a smooth, time-saving route is another way to reduce expenses. Before you or your driver depart, take a look at the proposed route and factor in the weather, road conditions, construction delays, shortcuts, toll booths, truck parking, etc. If there are any red flags, adjust the route for better efficiency. This task does require a little time and research, but it pays off in the end.
7. Monitor Your Insurance Costs
Trucking insurance can be quite expensive. The costs to trucking companies can vary greatly, which can actually work to your benefit. Get quotes from multiple insurance agents to ensure you find the best fit for your company. And don’t be afraid to shop around each year. Maintaining a high credit score, tracking the Federal Motor Carrier Safety Administration’s Safety and Fitness Electronic Records (SAFER) scores, and making sure your drivers all have good driving records will help your company get better insurance rates.
8. Don’t Wait for Problems; Prevent Them
Never underestimate the importance of regular truck maintenance. It’s critical for the truck’s longevity and allows you to identify minor issues before they turn into major (and costly) disasters. Routine maintenance includes checking the oil level, the condition and pressure of tires, and the levels of fluids before departure and while out on the road.
9. Mentor Your Drivers
The first step of cutting costs for your trucking business is to identify and implement good practices, whether you run operations from headquarters or are out on the road yourself. Then, train your drivers to do the same. Setting a good example for employees and encouraging them to be proactive in company cost-cutting will reflect positively on your company’s bottom line as time goes on.