Out of all the criteria for measuring success, the team here at Thunder Funding have whittled the list down to two things: Freight capacities and rates. Because, it’s not about how many trucks you have, how much warehouse space you own, or how many drivers you employ -- it’s about how effectively you’re using these assets. Trucking companies that are successfully utilizing their assets at maximum capacity are able to generate better profits and operating ratios.
Here are some basic tips for how fleets can increase truck productivity:
We’re sure you’ve all heard this broken record: You can’t manage what you don’t measure. Depreciation, fuel, regular maintenance, the cost of accidents -- these are all examples of things you want to measure. Your goal is to determine what your productivity number is for achieving a break-even and for making a profit. Knowing how much each truck is generating and at what cost is critical for determining overall productivity and bottom line contributions.
2. Install A Reliable TMS
A good transportation management system (TMS) helps you properly track and measure your progress. Two pieces of advice for you if you decide to go with a TMS:
a) Try adapting your operating procedures to the TMS instead of adapting the TMS to the current status quo. You may run into resistance when it gets into the hands of IT or operations, but stand firm as getting yourself organized into a solid set of management processes will benefit you immensely in the long term.
b) Consider tying your TMS into electronic logs that will continuously feed live data directly from your trucks. This kind of real-time information is priceless -- trust us.
And, remember: Your TMS can also help you take advantage of fuel discounts by routing trucks to areas with the best fuel prices. For example, instead of fueling up at a truckstop in California along the Arizona border, a driver can head a mere 10 miles into Arizona where fuel could cost a driver up to $.30 per gallon LESS.
3. Understand EACH Truck’s Productivity
One of the quickest ways to improve your bottom line is to increase the productivity of each of your trucks. Consider running each truck on extra shifts or on more days by using extra or part-time drivers. Why? Because when you run a truck on a second shift, all of the fixed cost have already been absorbed by that truck in the first shift.
While running a truck on another shift or having more than one driver share the same vehicle isn’t always practical, carriers should still look for other opportunities to maximize revenue. (Check out our free Freight Factoring 101 ebook to learn more about other revenue generating options.)
From a tax perspective, this option could prove useful for two reasons:
a) Every dollar of gross margin earned after your variable expenses like gas, maintenance, repairs, and driver pay, goes straight to the bottom line.
b) If you can successfully operate each truck efficiently over three years and trade it in after you’ve taken the depreciation on it, the truck makes more in after-tax profit.