The trucking business is a very profitable enterprise, given how essential this service is to the economies of most countries. Research indicates that trucking moves about 71% of America’s total freight, making the country heavily dependent on trucking businesses. However, many cite high costs as a drawback, preventing them from venturing into the industry. Nonetheless, you can use a few tips to lower your trucking business’ costs and increase profits. So, if you’re looking for smart ways to keep your costs low and operate more efficiently, then take a look at these points below.
- Use technology
Several experts agree that technology can be a useful cost reduction tool for trucking businesses if used correctly. It is also common knowledge that using outdated technology in today’s business environment places any business at a significant disadvantage. Consequently, although the initial upgrade might be costly, consider upgrading your business’ technology to save money in the long-term. Technology also reduces your company’s paperwork allowing you to spend less on expensive office supplies. For example, you will have to get rid of obsolete devices like fax machines. These devices have little relevance in today’s world and are costly to maintain as you will have to buy ink, paper, etc. Instead, consider upgrading to cloud-based platforms and mobile apps to eliminate these additional costs.
Finally, technology will enable you to track your trucks, drivers, routes, etc. The information you gain from this tracking can be invaluable to future cost-cutting decisions like finding shorter routes. Therefore prioritize integrating technology as much as possible into your operations to cut down your costs.
- Establish safety protocols
A reported 500,000 trucking accidents occur in America every year, making it vital for trucking businesses to develop solutions that address this menace. Accident costs involving trucking company vehicles are typically more substantial than those of other companies because trucks have a higher potential for damage to life and property. Therefore, you should establish driver safety protocols as a great way of potentially reducing your business costs while keeping your employees and other road users safe. For example, institute a regular driver safety program for your employees to educate them on the most common causes of truck accidents. Your safety program must transcend merely telling drivers to drive safely. You must develop a comprehensive written accident prevention plan to share as manuals to your drivers.
Also, ensure that you test drivers regularly about their knowledge of company safety requirements. Experts further suggest skill testing for all drivers during your hiring, regardless of their expertise level, to prove that they can drive safely. It would also be best to establish mandatory regular safety meetings to review a specific safety topic. Finally, try implementing a safe driver recognition program to reward employees with spotless traffic and accident records. This program will encourage other workers to drive safely and eventually prevent you from spending excessive resources on compensation claims and vehicle repairs.
- Track your budget
The most vital step to cutting down costs is knowing where your money is going. Many successful trucking businesses say that other trucking companies make a crucial mistake by not tracking their budgets judiciously. These companies typically hire accountants to draw up profit or loss statements at the fiscal year’s end to see how they fared during the period.
However, this scenario is far from ideal because you won’t know your actual costs throughout the year and, therefore, can’t make any evidence-based decisions to trim expenses in different areas. As such, financial experts advise that you track every single cost your business incurs and how much money you are making. Ideally, you should know how much you make on each dispatch, delivery, or transport. It would also be best to monitor where your inventory and office supplies go and how employees use them. It is often easier and more practical to boost profit margins by trimming expenses instead of aiming for higher earnings, so track your money to know where to make cuts and save money.
- Manage fuel costs
The most significant expense that several trucking companies report is fuel costs. While you can’t do without fuel for your vehicles, there are still ways you can save some money on fuel. Experts recommend educating your drivers on how to conserve energy through proper driving. Also, it would help to track fuel consumption by vehicle and by the drivers. This detailed tracking will inform you about fuel costs weekly, monthly, quarterly, and yearly. It will also help you quickly notice inefficient trucks that need servicing and drivers that require more training to become better at fuel conservation.
Another fuel cost management strategy is doing businesses with suppliers that give perks and reward programs. Discounts and driver points are often central to such programs, and their cumulative effect can lead to tangible cost reduction over time. Finally, buy quality fuel from less expensive stations. Gas prices vary by location, and several apps and websites track fuel prices in different areas. Therefore, train your drivers always to fill their tanks while in these less expensive areas to save money.
- Encourage healthy living among your drivers
According to the National Institute Of Occupational Health and Safety, seven in ten drivers are obese, putting them at risk of developing diabetes, heart disease, and other conditions. Health issues are especially common with long-haul drivers, given their work’s passive nature and the accompanying poor eating habits. Aside from obesity, drivers can also develop irritability and fatigue, which affects their performance behind the wheel and increases the risk of road accidents. Therefore, encourage your drivers to carry healthy food on journeys since healthy meals are hard to come by during long travels on most rural highways.
Also, stress the importance of proper sleep and rest to your drivers as repeated studies prove that sleep-deprived drivers suffer a greater risk of accidents. Encouraging healthy living among drivers can save you costs on healthcare-related employee benefits, accident repairs, and litigation, so prioritize this.
- Treat and train your drivers like managers
A 2016 HireRight Survey among truck drivers revealed that 17% quit companies due to their dislike of company culture, saying they didn’t fit in with their company. Also, several truck drivers cite respect concerns as vital to their stay or otherwise at their companies. Therefore, it is crucial to treat your truckers right because they are central to your business operations. Drivers make many decisions daily while on the road, most often unintentionally, which can significantly influence your variable costs.
Consequently, it is in your own best interest to treat and train drivers as though they are professional managers of their routes. Make them understand how their daily decisions behind the wheel can impact operational costs. This training will make drivers aware of your concerns and potentially expose you to your truckers’ expense-cutting suggestions. Remember, these truckers are the ones practically out on the road, so their recommendations are invaluable in addressing hidden cost problems you might not know about.
- Maintain your fleet
Vehicle maintenance is vital to any transportation company’s cost reduction schemes, so prioritize maintaining your vehicles to trim costs. Regular maintenance lowers the frequency of breakdowns, and you can quickly detect and address issues that can worsen and hamper your vehicles’ operations. Doing so will keep your trucks more on the road and less time with the mechanics, which is good for business.
Maintenance can also lead to fewer accidents as it reveals and addresses minor issues that are potential accident triggers. This will result in improved driver safety and a lessened risk of accidents and its accompanying legal and medical costs. Common areas many experts suggest checking are your tires, fluids, brakes, and electrical systems. Maintenance will bring you customer satisfaction and increased profits aside from reducing your costs, so maintain your vehicles regularly for the best results.
- Optimize your routes
Planning your fleet routes can significantly reduce your trucking business’ cost, making it worth considering. Route optimizing provides a more efficient means for your drivers to carry out their duties while conserving time and fuel. The saying “time is money” is especially true in trucking businesses, so save time to save money. Finding the best routes will shorten the driving time because your drivers will use the shortest roads to deliver and transport. Also, route optimizing can discover the best avenues for your trucks based on their dimensions.
Trucks getting stuck under bridges and in areas where the law prohibits particular trucks’ movement is more common than you think. So plan for this by always finding the best routes. Planning routes further saves fuel because the shorter the distance, the less energy you expend. Route optimizing can also help you avoid traffic hotspots and reduce your idling time. Idling time is time spent stuck in high traffic with your engine running- a wasteful fuel drainer for all cars, especially commercial trucks. Also, plan your routes to receive the best alternative roads to avoid getting stuck in adverse conditions such as winter. Finally, choose to optimize routes to reduce your toll expenses by limiting the number of toll booths your drivers encounter while on the job.