Tires. Fuel. Tolls. Equipment. These are some major costs incurred in running a trucking business. These costs are always on the rise, but the rates aren’t!
So, instead of going after more revenues and more loads, you better take care of the costs involved and the ways in which you can minimise the same.
One good way of significantly impacting your company’s profitability is cutting costs instead of generating more revenues.
Experts are of the view that if a trucking company’s profit margin is 8%, it means for each dollar spent, the firm needs to make $8 as revenue for making up the expenses.
Of course, you need to focus on your largest expenditures, like fuel, drivers, and equipment purchasing. But there are many scopes of making good savings in the other areas of the business as well.
How To Minimise Costs In Trucking Business
These seven ways will help you reduce the expenses for trucking business if you follow them aptly.
1) Tracking And Budgeting
Before even trying to minimise costs, you must understand where the money is going. In other words, you must have the perfect budget in place. Make sure you have an idea of your debt ratio and your operating ratio.
It does not matter whether you have 100 trucks or 1000 trucks. What matters is your profit and loss ratio that needs to be in place every month. Tracking all your expenses and setting up the right budget can help you in eliminating needless expenditures.
Keep in mind that your employees should get everything they require and not the things they desire. Here, inventory tracking is of prime importance. Inventory tracking is not just about tracking parts.
2) Using A Fleet Management System
The perfect fleet management software or system can help you manage loads, automate reporting, and simplify payroll. The software you get from Samsara can also help you create invoices and get detailed statistics and reports of your business.
A fleet management system will help by cutting down the time that goes into handling office tasks. This, in turn, will help you make good savings.
Although it may appear counter-intuitive to make good savings by putting money in fleet management software, studies reveal, the process can help trucking businesses make more profit.
3) Using Automated Truck Loading And Unloading Systems
The effective use of an automated truck loading and unloading system can help in bringing down labour costs. Also, this helps in avoiding product damages and in saving big on production. There are no major impacts on the transportation procedure with the use of automated systems.
Nowadays, every business is working on cutting costs. They are looking for different ways to reduce labour expenses. Here, labour management systems can also prove to be beneficial.
Apart from this, employee incentive programs can also be created for reducing overhead expenses. It also helps in increasing the overall productivity of an individual employee. And yes, there is less equipment and less staff required.
4) Why Not Use Fuel-Cutting Measures?
There’s no use lazing around and wasting your time. Instead, you must think about different ways in which you can minimise fuel expenditures. Concentrate on the expenses you might not be aware of.
From adding roof fairing to keeping the tires at perfect pressure, make sure to use strategies for minimising fuel expenditures. At the same time, you must also educate the drivers, so they follow the same fuel cutting practices.
5) Work In Close Coordination With Drivers
Apart from the driver’s wages, they can greatly add to your business’ operational costs with their behaviours and actions.
So, you need to ensure they drive efficiently to bring down fuel expenses. You can train them on running the trucks at fuel-efficient engine speed.
Yet another point you need to be particular about is ensuring you are setting the right kind of objectives for your drivers.
Educating them in the right manner and making them accountable will help your business in the long run, both financially and physically.
Also, driver managers, dispatchers, and fleet management officials should be trained on the different methods they can use to bring down the operational expenditures.
6) Limiting Fleet Size And Fleet Tracking Can Also Help
Fleet tracking is not one of the most viable options for all the trucking companies considering the prices involved. But, the method helps in bringing down operational costs in the long run.
The average cost of owning a light-duty truck generally ranges between $5000 and $8000 annually. So, it helps to reduce the number of trucks owned. Of course, this will increase the amount you invest in the maintenance of the remaining trucks.
This is mainly because the limited number of trucks will have to do extra work. That being said, the majority of the trucking companies find it easier to manage smaller fleets. And yes, this is more cost-effective as well.
7) Do Not Wait For An Issue To Take Centre Stage
Problems likely to appear with the wide-scale usage of trucks need to be dealt with first hand and even before they take centre stage. If you keep maintaining the trucks on a regular basis, they will hardly show signs of wear and tear.
Plus, it can help you in identifying small fixes even before then transform into expensive disasters. This involves checking the fuel before each assignment; ensuring that the tires are in perfect condition, and watching the radiator.
Making proactive maintenance your priority will help you save big on running your trucking business.
Using the right strategies and spending more time on useful things can make the desired difference in a trucking business.
Of course, it is not easy to run a medium or large-sized trucking company. But with the right spending techniques, you can content with varied challenges easily.
These clever ways of reducing the costs of your trucking business will help you not just in saving money but even in gaining more customers!