Published on August 17th, 2020 | by Sumit Bhowal0
10 Ways You Can Measure The Efficiency Of Your Trucking Business
Wise business owners and great truckers are the ones who are not concerned more about their profits but the efficiency they can put in for leveraging some extra profit. The trucking industry is both competitive and profitable.
But truckers generally fail because they just know how to increase their fleet of trucks and choose routes. They hardly know anything about how to operate and expand their trucking business.
These ten ways to measure the efficiency of a trucking business will take you on the right track. They will help you in making the transition into a successful and competent business owner.
1. Determine Your Operational Costs
Measuring the cost of operating a business automatically helps in measuring the efficiency of the business. Failing to do so means you will not be having any idea of what profits you are making.
Here, make sure to determine both variable and fixed costs. Fixed costs are the costs that remain the same no matter how many miles the trucks have covered. These include permits, insurance, and payments.
Variable costs will change according to the distance covered. The perfect example of this cost is the fuel that changes with the distance covered. You can use both your variable and fixed costs for determining all-in-cost per mile.
2. Review Your Fuel-Buying Plan
Fuel is one of the largest expenses in the trucking business. Nevertheless, both experienced, as well as new businessmen in this field, commit a blunder when buying fuel. They view that the most affordable pump price offers them fuel at the most reasonable price.
If we consider all factors, this approach is completely wrong. The main problem here is taxes. The wise decision here is to pay the fuel taxes in the state where the fuel was bought. Tax issues can easily be done away with buying fuel within the most affordable range, no matter what the pump rates are.
3. Track Driver Infringement Regularly
With Samsara’s tachograph analysis software, people in the trucking business can have a powerful tool that can help them manage, check, and control the company’s tachograph files.
The software comes in the form of an easy-to-use and convenient cloud platform that helps in understanding whether the company complies with the local regulations. It also helps in understanding whether or not the drivers of a trucking company are at any risk.
4. Figure Out Expenses Per Mile
Getting a clear understanding of your expenditures per mile can help you keep your trucks on the road. You must take some time to figure out these expenses to understand where you can cut the costs.
5. Cargo Protection Is Necessary
Of course, fleet tracking with the right tools can help you measure the efficiency of your trucking business. But at the same time, you must also consider the most expensive crime, and that is fleet or cargo theft.
This is one of the greatest dangers to measuring the efficiency of your business, and thus you need to have this process in place. Thieves are in the constant lookout of brazen and new ways of stealing cargo and trailers.
So, you must educate your employees about the right ways of protecting freight. Also, train them on being aware of the ways thieves use to target truckers.
6. Watch Out For Insurance Expenditures
There is nothing more expensive than trucking insurance. Insurance costs can greatly vary as per operator-owner business operations. So, you need to be careful about this. The best thing to do is to get varied quotes from insurance agencies like Royalty Speed. This will help you in understanding your options and the quote that suits you the most.
There also exist ways to reduce premiums by upgrading the security and monitoring features on your truck so that you are well equipped to track stolen vehicles.
7. On-Time Delivery Adherence Is A Big Thing
This is a basic metric used in measuring the efficiency of a trucking business, but it is quite revealing. It puts forward the batting average of on-time delivery of your fleet against the dates required by the customers.
The process is very important because improper monitoring can have you losing margins if your truck fails to deliver at the right time. You can even expand this metric and know the number of products being delivered on time, how late or early they are, and value of the products.
No matter how you measure this metric, it will help you monitor and control your business so that you can easily shape an efficient supply chain.
8. Monitor Your Back-Office
Make sure your back-office is efficient enough. This is important because it will help your business is growing and staying profitable.
A back-office becomes all the more significant when businesses start adding the services of leased drivers to their operations.
There are several options available here. The best thing that you can do is outsource back-office operations to dispatchers. This can be a bit expensive but will offer results sooner than later.
9. Monitor Truck Utilisation Rate
The truck utilisation rate is the average usage rate of the truck asset. This calculation factors in the average of the used capacity. Typically speaking, a 100% truck utilisation rate is considered the most efficient.
It helps in determining load optimisation issues while making way for improved load planning.
10. Look Into Cash Flow Issues
Now, this is something very important! Not being aware of cash flow issues might get you into a lot of trouble. Trucking is completely a cash flow-based business.
Several payments need to be made. These include making truck payments, insurance payments, and fuel purchases. The payment of invoices in this business can take time, but they must not take more than 45 days.
If the time frame is more, your business might face cash flow issues, and this can be quite disadvantageous, especially for the beginners in the field.
Embracing the metrics mentioned above for measuring the efficiency of your truck business will help you improve your profits and workability. Using them to drilling down operational procedures is one of the smartest practices for truck business owners.