Dakota Coffman (00:00)
for the adventurous, for the backbone of America. For those who rise early and rest not for the weary traveler. Welcome to the Squatch Grist Truckin' podcast, where we dive into the world of truckin', whether you're just starting or a seasoned vet. Join us on this adventure. We're journeyin' into the heart of truckin', where legends are born and the asphalt stretches into the unknown. This is where bravery and freedom collide.

Where truckers aren't just truckers, but explorers of the vast untamed highways. So strap in and buckle up because you're about to get squashed. Hey guys, welcome back to another episode of the Squatress Trucking podcast. I'm your host, Dakota Kaufman. And today's episode, we are talking about how to increase your profit margins. As a small carrier, big carrier, doesn't really matter. Everybody wants to make more profit and increase the profit margin.

So today's episode, we're gonna talk about some stuff that you can do to increase your profit margin for your trucking business. All right, well, let's just dive right in here. So we're gonna go over some detailed strategies for being able to reduce some costs. Now, one of your biggest expenses is gonna be your fuel. So let's talk about fuel management. How can we make fuel efficiency? How can we do that? We can train drivers on fuel efficient driving techniques, such as maintaining steady speeds, using cruise control, and avoiding excessive idling.

You know, so stuff like that, you know, resistance, low resistance tires can also help save significant amounts of fuel over time. Another thing that you can do to reduce your fuel costs is optimize your routing. So you can use advanced GPS tracking and routing software to find the most fuel efficient routes and to avoid traffic, traffic heavy areas. So according to the U .S. Department of Energy, idling a heavy truck consumes about 0 .8 gallons of fuel per hour.

Typically a long haul truck idles about 1800 hours per year using about 1500 gallons of diesel. Auxiliary power units are a great alternative to this. They provide NCAP climate control and a power source for your appliances as well. And then some are even diesel powered and burn 0 .25 gallons an hour consuming about 450 gallons a year. So the estimated savings at $3 per gallon is around $3 ,150 each year. So that can save you,

a chunk right there just on fuel costs. In addition, idling a truck also increases engine wear as well. And so that's going to cut into your profits for truck maintenance and stuff like that. Another thing that you can do is utilize fuel cards. There are several companies that offer fuel cards, whether it's a load board or DAT, someplace like that, right? But get a fuel card that can give you discounts and other benefits at truck stops nationwide.

When comparing the different fuel car programs, you want to consider the coverage, the savings and benefits for your small or your trucking company, whatever size it may be. Okay, another thing that you can do is maintenance optimization. So the first thing that you can do is have preventative maintenance, regular maintenance according to manufacturer's guidelines. They can prevent costly breakdowns and extend the lifespan of a truck. Proactive upkeep using technology to monitor

Vehicle health can predict and address maintenance issues before they become serious and that can avoid downtime and expensive repairs as well. Okay, cost effective purchasing, supplies, your insurance, all that stuff, shop your insurance around regular review and compare your prices for truck supplies and your insurance to ensure that you're getting the best deals. You can consider bundling different insurance policies to take advantage of available discounts.

Membership benefits, joining industry associations. You know, there's different trucking associations that you can join that offer access to discounted rates on things, you know, and so there's stuff that you can do in that way and in services, right? Driver management, efficient driving practices, monitor driving habits using ELDs and provide regular feedback and training to drivers on ways to drive more efficiently.

which can reduce costs related to fuel and maintenance and also can prevent accidents which can raise your insurance rates. Reduce turnover. High driver turnover can be super expensive. It costs a lot of money to lose drivers and hire somebody else, right? So how can you do that? Implement some competitive compensation, consistent home times and strong communication can help retain drivers and reduce hiring and training costs. Another thing to look at is do you know your cost per mile? Do you know how much it costs you?

per mile to operate. It's essential to increasing your revenue is to know your cost per mile. If you don't know how much it costs you to operate per mile, you can turn down loads because you can say, that's not gonna make me enough money because it cost me $2 a mile to operate or a dollar a mile, whatever it is, right? So if you get a load that's $1 .75 a mile, which sounds bizarre to me, but if you get somebody that's offering a load for $1 .75 a mile, then you know at that point, hey, that's not gonna be profitable.

You know and so knowing your cost per mile is a huge thing that you can do it allows you to budget everything Make sure you're taking the right loads that type of stuff And the way you calculate your cost per mile is your fixed cost So that would be like your insurance and your truck payments and that type of stuff plus your variable costs Which is fuel and you know different things like that So you take your fixed cost plus your variable cost and you divide that by total miles traveled Okay, so fixed costs are monthly expenses that your trucking company must pay each and every month

whether you're hauling a load or not. These include insurance, property leases, permits, salaries, and other services, right? Maybe you have some software subscriptions or for invoicing that type of stuff. So what are your variable costs? Variable costs are the monthly expense that your trucking company incurs to operate your trucks. So fuel, maintenance, repairs, tolls, meals, lodging, those expenses that are incurred while you're over the road, but they're not always set, right?

Okay, so you know your cost per mile. You've calculated that, you know what that is. And so now you know what you need to be profitable on a load. If you're going a thousand miles, calculate your cost per mile and you say, I need X amount of money to be profitable on this load. And really you should do that for every single load. You know your cost per mile. And so anything over that, okay, I can be profitable. Or maybe you have a threshold or percentage, like I got to make 15 % profit. And so just calculate that type of stuff in your head. And those are the loads that you take and you don't take the.

the cheap loads that aren't gonna pay for your cost per mile. Another thing that you can do is freight factoring. So cashflow is a huge issue when it comes to running your trucking business. Brokers and take a lot of times, they take a long time to pay, whether it's 90 days, 60 days, 120 days, whatever it is, they take a while to pay out for the load that you delivered. So factoring allows you to, allows you the ability to get paid maybe the next day or the day after. You don't have a cashflow issue. When that money, when you get done with the load, you can get paid.

so you can generate that cashflow immediately. Another thing that you can do, let's go over some detailed strategies for increasing revenue. We've talked about how to lower your costs, but let's talk about now, increasing your actual revenue. The money that you're making, let's talk about how we can actually increase that. So maximize load efficiency. So number one thing you can do for that is load planning. So use software, right, to plan your loads, whether that's a load board or whatever it is, but have something there that you can efficiently route your drivers or your driving.

to minimize empty miles, engaging in backhaul opportunities can also maximize revenue for each trip. And so that's just something to think about whenever you're planning your routes. Another thing you can do use is freight matching services. So you can utilize digital freight matching platforms to quickly find loads and reduce time vehicles spend idle. Another thing that you can do is have direct shipper relationships, build a strong network of direct shippers and take care of those customers.

and that moves away from your reliance on brokers and can increase your profit margins because you don't have a middleman taking some of that money away from you. Contract negotiations. Once you have those relationships established, you can negotiate with your direct shippers to get some better rates and long -term contracts. Another thing that you can do is service diversification. So you can specialize in a niche. Maybe it's hazmat or reefer goods or whatever it is, but a lot of those services command higher rates than just general freight. And so,

find you a niche that you can get into and make a little bit more per mile. Another thing that you can do is invest in your equipment. So buy diverse trailers and have, you know, maybe a flatbed or a reefer, have just different types of trailers. That way you can handle a large variety of loads that you may find, you know, and you don't have to worry about leasing a trailer that may incur additional costs that are more expensive than actually owning a trailer.

Another thing that you need to do or you can do is strategic fleet expansion. Now you have to grow the right way and you have to expand the right way to scale your operations. So look at it. Look at the feasibility of expanding your fleet. More vehicles on the road can mean more revenue, but it's crucial to scale wisely based on demand and financial projections and what you can handle. And then at that point, continuously upgrade your fleet with newer technology, maybe.

a truck that gets better gas mileage, that type of stuff, trucks that get better fuel economy, less maintenance, and the ability to meet current environmental standards so you don't get tagged for fines and stuff like that. Telematics is also another cool way that you can leverage some technology to increase your profits, managing your fleet and making sure drivers are driving safely, that type of stuff. So increasing profit margins in the trucking industry involves a lot. It takes a lot to grow.

You have to optimize your operations and look at all your costs and see how you can scale that stuff. But embrace some technology, do some stuff like that to maybe be on the cutting edge and start kind of leading the pack in that way. And maybe right now you're just one or two units and you're thinking, I don't have a whole lot of money to invest in technology and that's okay. But it can help you in the long run to acquire better talent if you have better technology and you streamline your operations. And you have a little bit of a leg up if you are a smaller.

carrier because somebody may want to come drive for you because they don't have to deal with the corporate rigmarole, right? And so you have some advantages that way, but implement some technology, control the costs you can, like your insurance and stuff like that, save where you can, and then create cashflow where you can, whether that's with a factoring company or just saving money, but create cashflow. And when you have cashflow, then you can begin to scale and you can begin to grow in the right way. That's all I got for you today on this episode.

We hope that this video can help you optimize your operations and help grow your trucking and increase your bottom line and profitability. But we'll catch you on the next episode guys. We appreciate you for tuning in. Thank you for listening. See ya.