As diesel prices inch even higher, the rising cost are effecting truckers in a bad way. Truckers are trying to make a change. Independent trucking companies are begining to feel a huge strain. Some independent trucking companies are trying to organize a strike.
Independent trucking companies play a large roll in delivering products that many people depend on.
I know what you’re thinking, “I have to get home” or “If I’m parked I’m not making money.” You’re right, and we are all guilty of using those reasons to take loads that we shouldn’t take. But there are other things to consider, the main one being the cost to operate. As an owner/operator or a small trucking company, you must run your business as a business, which starts at turning a profit.
Let me ask a simple question, what does it cost you to run? You should have the answer to that question on the top of your mind each and every day. You should be able to answer that question cold, without thinking, exactly how much it takes to operate. And when I say exactly how much, I don’t mean just for fuel and labor. I mean for insurance, taxes, licensing, maintenance, labor and fuel all bundled together. As a long distance truck, the number might be by the mile. As a more local truck, it might be by the day. Either way, you should know those figures and be able to determine in about 10 seconds if that next load is worth taking. When you see a load posted to a load board, you should be able to do the math and determine the profitability. Profitability = Total Revenue – Total Cost, where Total Revenue is the load pay plus any fees and the fuel surcharge.
So, how much does it take to be profitable? To some degree, that is up to each of us as individuals. However, I would recommend a minimum of 10%, but 15% is a more comfortable zone. Here’s a typical example: If you determine your cost to operate as $1.42/mile (which should include your driver pay, even if that is you in the seat), then to maintain 10% profitability you need $1.58/mile for every mile, loaded or empty (divide 1.42 by .90). You can make adjustments to the math to compensate for empty and loaded miles. If you know that over the course of the year you drive on average 87% loaded and 13% empty, then increase your loaded price by 13% to cover the miles you won’t get paid for.
We all know the phrase “Say no to cheap freight.” But how many of us actually live by it every day? It starts with each of us as individuals. We must operate our businesses in a successful manner in order to survive in this highly competitive industry. Find your cost number, add your profitability, and commit it to memory. And remember, if the load you are looking at doesn’t meet your profitability minimum, then help yourself and the rest of us – don’t take it!
Yep, I said it! DON’T TAKE IT! If you want to see better rates in the trucking industry, then you need to grow a pair and turn down unprofitable jobs. Let’s assume for a minute that you are in business to turn a profit. I hope that’s a safe assumption. Now, if it takes $1.38/mile to run your truck (that’s including your fuel, maintenance, taxes, insurance, and labor even if you’re the driver) and the load you are looking at is paying $1.40/mile after you consider the miles required to go pick it up, then why would you even think about taking it?? That load is only paying you $.02/mile, or $50-60/week?? It doesn’t take an MBA to see that’s just plain stupid!
If you are going to be an owner operator or run a small fleet of trucks, then you better get good at some math and record keeping. And I don’t mean waiting for the end of the month or year only to say “Hey, how come I don’t have much left over?” You should know at the end of every day, how much you made that day. And at the end of the week, how much you made that week. Good days and good weeks turn into good months and good years. But you have to take control now! Figure out exactly how much it costs you to operate and for the sake of you and the rest of us out here – don’t take loads that aren’t profitable!
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