American Trucker Magazine
bot nov 2018

Working within the current freight market

How to profit regardless of changing conditions

It’s an election year; in fact, by the time you read this, the Novem­ber 6 election results will be history. And the economy keeps moving along, and trucking keeps picking up and delivering the freight that drives the economy. The vast majority of micro- and small carriers rely on all or some spot market freight to generate the loads they haul, hence the revenue they produce. It’s important to understand how to best utilize spot market freight and load boards to your carrier’s greatest benefit.

Trucking is cyclic. Some segments have seasonal cycles, in which freight availability ebbs and flows within certain months of the year. The laws of supply and demand also impact all hauling segments and are affected by weather, economic conditions, and political environment. But one thing is certain, i.e., 80% of all American communities receive 100% of their products through trucking regardless of these conditions, which means if trucking stops, America halts too. However, that doesn’t mean any single carrier is indispensable. This business is competitive, and it takes grit, a constant gamble, and a load of knowledge to succeed.

Keep in mind we can’t jump to the top in a giant leap; we must take it one step at a time. Here are some steps to improve your current hauling situation:

1. Think lean. Pare down the fat. Dispose of equipment that is not being utilized to produce revenue but still draining money away in insurance, maintenance and storage costs.

2. Think efficiency. Look at your overall operation and figure ways to accomplish the day-to-day tasks with fewer wasted movements. Using your load board tools, develop specific profitable lanes. Use the spot freight market to be sure your trucks roll with good-paying freight. Include LTL and partial loads in your load planning mix to fill those inevitable holes.

3. Become more nimble. Be prepared to act at a moment’s notice on any expected or unexpected situations customers toss in your direction. The further out you plan your loads, the more nimble you become; the more consistent your loads, the more consistent your revenue.

4. Improve communications. Do this not just in your office or with your drivers, but also with customers and suppliers. Times are tough for everyone and for most companies. Try to develop solutions that will bring success to all.

5. Develop the ‘Team’. This includes working with your customers, brokers, load boards, drivers, and employees by concentrating on common goals which benefit everyone.

Spot freight market rates have improved over the last couple of years. This has mostly been driven by an improving economy and the loss of truck capacity by the onset of ELDs and changes in hours of service regulations affecting the majority of trucks hauling freight. This means there are more hauling opportunities with better rates.

Here are additional steps to take advantage of these opportunities:

6. Develop that special niche. Become the expert in the hauling niche you select. You need to be the “go to” company for anyone who wants the best and most cost-effective means to haul within your niche. A niche can be a product, a lane or a region. Study the trends of the market you serve carefully, then adjust to them as necessary.

7. Constantly mine for new brokers and customers. With the current regulatory challenge and loss of capacity, a lot of trucking companies are either falling by the wayside or lack the necessary trucks to haul the available freight. This presents an opening for your company to develop new hauling accounts.

8. Constantly add value. As you’re out mining for new customers, so is your competition. Your best protection from rate-gouging, bottom-feeding trucking companies, and even from the other value-driven transportation haulers is to constantly add value to the hauling services you provide your current customers. There will always be some trucking company willing to cut rates to the quick to steal your best shippers. The only way to stem this effort is by creating value in your services which exceeds your price.

9. Know your break-even point. Don’t ever agree to haul for less than what it costs you to operate. Once you start down the “but it creates cash flow” spiral, it’s nearly impossible to reverse it. Pushing a boulder downhill is easy. Trying to get it back to the top is very difficult. The same is true with hauling rates.

10. Use education and knowledge. The best time to catch up with new and innovative ways to do business is when times are difficult and tonnage is slow. Success comes from knowledge; knowledge comes from education.

In trucking, we know when times get tough, the tough get going. This is true no matter if it concerns the weather, the economic environment, politics or just the nature of competition within the industry.

We’ll always have the challenges of government regulation, attacks from organizations that don’t have a clue as to what trucking involves, trucking companies that don’t know what it costs to do business, or companies that will cut rates to steal business. For the foreseeable future, fuel prices will continue their upward trend, and other trucking-related costs will follow.

The trucking business isn’t for the faint of heart. It’s a very high-cost, low-profit margin business, but it is addictive. Once the diesel has gotten into your blood, there is no cure. To be successful in trucking requires a ‘tough love’ approachDo not cross bottom-line boundaries.

  1. Do not cross bottom-line boundaries.
  2. Know what’s fair and equitable in your hauling rates.
  3. Treat employees, drivers and customers with the same level of respect.
  4. Make sure your customers are not overpaying.
  5. Make sure you’re not underpaying your drivers or employees.
  6. Ensure you’re making a decent salary for your efforts, and your company is earning the needed profit for growth.

In short, trucking will always be filled with challenges. It will always be needed to deliver goods to the public. It is a noble industry worth our best efforts. It’s not time to toss in the towel and give it all up.

Look very closely at your trucking operation, and apply the tough-love steps where required.

TAGS: News Drivers
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