It’s easy to be fooled by the major technological advances that have taken place in trucking. One can be lulled into a sense that trucking companies are as productive as they should be, when this simply is not the case.
When the trucking industry was entering the Great Recession, there was a great deal of urgency in efforts to improve fleet productivity. As a result, in 2008 and 2009, motor carriers invested more in technology and quality than they had in the last 25 years. Then, in 2010 when freight demand began to improve, something happened.
Where the Money Goes
With weaker carriers having been driven out from the market, freight capacity shrinkage and higher rates followed, which allowed motor carriers to reap greater profits and operating rations. Suddenly fleets were resting on their laurels.
Combine that with a risk-aversion baked in from the after effects of the recession and you have fleets that saved their increased profits rather than investing them back into the business. Also, those profits might not be as grand as once thought. Most profit margins came in at 2 – 4% before tax, which is too low for trucking, which is a capital-intensive industry.
Whereas industries like manufacturing saw an appreciable jump in their productivity post-recession, trucking has not done so on a per truck basis. But why not? It would be logical to increase productivity on current assets rather than completely investing in new ones.
What fleets need to focus on are the essentials of operation. The definition of success isn’t about the number of trucks you have or how many truck drivers are in your fleet or the square footage on your warehouse space, it’s about how you manage those assets as a whole.
If you don’t take an accounting of what you can improve on, you won’t know where to make the changes. Whether you are a small or medium size motor carrier, you need to determine what your productivity level should be for making a profit. This information must be broken down to the truck level.
As an example of what data to use or not use, don’t include fuel surcharges when you are creating your productivity numbers. Since the price of fuel fluctuates, you don’t want that kind of information clouding your productivity picture.
Better yet, fleets should use the fuel surcharge as a deduction against expenses. By doing this they can see whether or not the surcharge is even absorbing fuel cost increases.
Are you operating with a transportation management system? Advanced software solutions allow you to track sales, planning and truck driver managers.
Through the use of a transportation management system, you can better organize your assets for optimal productivity. Still, many are held back by the fear of something new, or the desire to hold on to the old way of doing things.
Manage the data correctly and ensure real-time analytics to get a truer picture. You can also use systems to tie in electronic logs and other information, freeing up your drivers to focus on increasing productivity.
It’s All About the Truck
Too few fleets are focusing on the real culprit in the productivity battle: utilization. It’s no secret that the fastest way to improve your bottom line is to ensure parked tractors are put into operation. You must increase the productivity of your trucks on an individual level.
For many, in order to maximize truck productivity, they will need to maintain a higher drive ratio per truck than the simple one-to-one. By running trucks on extra shifts or over a longer period, productivity gains directly impact the bottom line. Fleets could also use extra or part-time drivers who can operate on Saturday or in the late evening hours.
If you can more efficiently slip seat a good tenth of your fleet, you could see tangible productivity gains. So next time you’re trying to figure out how to get the most out of your operation, take a second look at your pro