It all depends on how you run your business.
Owning a trucking business means that your operational costs as well as your profits come from how many miles are spent out on the road. According to the American Transportation Research Institute (ATRI), the 2015 average cost per mile was $1.59. The total costs, when combined with the average miles driven, was $128,580.12. When there is a set number of costs associated with operating a trucking company and future profits are unknown, it begs the question, is trucking profitable?
The answer is, it could be. It all depends on how you run your business.
Starting and managing your own trucking business is hard. In an industry where only 15% of newly formed trucking companies make it to their second year of operation, according to the National Association of Small Trucking Companies, running a profitable trucking company can seem impossible. But the truth is that the rate of small business failures has been decreasing steadily for 30 years and that there are a ton of tools out there to help you run your trucking company and make money while doing it.
Knowing your Biggest Expenses
For the first time since 2011, ATRI reported that the biggest operational cost of trucking is truck driver wages and not fuel. Yes that is, of course, in part associated with the lower fuel costs during that time period, however the shift in truck driver wages has continuously trended upwards for years. Paying higher wages to truck drivers isn’t a bad thing. It actually reinforces one very important tip to help you getting more loads; provide good service to your customers and retain your best drivers. Freight rates and competition can sometimes be an uncontrollable force that can hurt your trucking business, but providing excellent service to your customers with great drivers can make all the difference in creating quality relationships that help you grow.
Tools for Fuel Costs
Fuel costs account for about 25% of all your business expenses. Apart from the lower cost per gallon, one reason that fuel expenses have decreased might be from the help of fuel cards. Fuel cards provide substantial discounts on fuel for trucking companies. The Apex Fuel Card gives our clients significant discounts on fuel, but also offers fuel management tools like the Apex Fuel Finder to help you find the best discounts while your drivers are on the road. A fuel card, like the Apex Fuel Card, can also help with discounts on tires and other truck maintenance necessities.
Cash Flow is Crucial
As the workforce continues to become more educated on how to make money in the trucking industry there are a lot of resources out there that help with a company’s cash flow. Cash flow can make or break a trucking business. Factoring your freight bills is one easy way to manage expected and unexpected expenses of running a trucking company. When you can get paid for a load that was hauled that same day, taking on extra loads and finding more customers for your business is possible. At Apex we do more than just purchase freight bills, we audit and collect on your freight bills, provide free credit checks to help you decide what customers you want to haul for, and provide you with our Account Management Portal to help you create reports so that you can easily see how your business is doing.
Additional Resources to Start Your Trucking Company
Now that you have an idea of how to make money in the trucking industry, read 7 Steps to Starting a Successful Trucking Company to make sure you’re staying on the right track. You can even get trucking company name ideas by reading, How to Name Your Trucking Company.