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How To Make Sure Your Trucking Business Is A Success

So, you’re thinking about starting a trucking business, but perhaps you aren’t sure how to truly succeed at it. A career as a trucker is both potentially lucrative and rewarding. But at the same time it is incredibly competitive. To be frank, many truckers try to break into the business every year and do not succeed, for whatever reason.

But don’t let that dissuade you. The key differentiating factor is that many can be a good trucker, but not everyone can be a good business owner. The fact of the matter is this: Knowing how to operate a successful trucking business is about more than being able to drive a truck or map out a route.

Today we will cover five essential steps to ensuring your trucking business is successful. First, you have to make sure you acquire the right equipment for the job.

The Right Equipment

Procuring the right equipment will be the most expensive decision you will have to make as you get your business going. What kind of trucking do you plan on doing? Do you want to go regional or national? Furthermore, what part of the country are you operating in? Will you be going over mountain passes and through hilly regions?

Once you have figured out the application, the next decision is whether to buy or lease the equipment. Buying is straightforward. Like any normal vehicle purchase you put a down payment and finance the rest. These are expensive machines, so rarely will one have the cash on hand.

Leasing the equipment is a bit more complicated, though in some cases you may end up with a lower payment. With a lease you pay a monthly fee for the use of the equipment. Other options are structured in such a way where you own the equipment once the last payment has been made. With leases, there are a dizzying array of options.

In the end, there is no final answer. It really depends on the specific situation you and your business is in. Just make sure you don’t wind up making the wrong choice.

Acquiring Customers

Most new truck operators get their shipping customers from a load board. And while load boards should definitely be part of your long term strategy, they certainly shouldn’t be the only component. Even so, they have many benefits.

Once you have settled on a good, quality load board to rely on, you can begin making sales calls and also building a customer list of your own. While building a customer list is hard work, there are advantages to it. Working with a set group of customers provides you with a level of consistency that’s hard to get when you are always working with new customers.

Bid Smart

While your bid must be low enough to be competitive, you’ve still got a profit to make. The only way you can be sure your bid will meet your needs is to know your expenses. Whether it be truck maintenance, repairs, payments fuel or overhead, you need to know the intimate details of your cost structure.

Once you have that information pinned down, you will know exactly what you need when the time comes to put in a bid. Always remember to bid low, but bid smart.

Run an Efficient Back Office

The size of your back office needs depends on the type of business you are running. Obviously, a small fleet will need a more expanded back office than a single owner-operator.

Think about your back office operations from a process and procedure standpoint. From utilizing technology to enhance your business operations to streamlining payments and contracts, how well your back office runs could make or break your business.

Keep the Cash Flowing

Cash flow problems are some of the toughest a trucker can deal with. Many shippers pay on a net-40 or net-60 payment cycle. When you have to wait two months to get paid, you can run into some serious cash flow problems.

There are a few ways to combat this, whether it be through freight factoring or using third-party finance companies, the fact is you need to get your bills paid when they are due.

Looking to start a trucking company? Whether you want to run a small fleet or hit the road as an owner-operator, keep these principles in mind!

How Is The Driver Shortage Affecting Wages and Shipping Rates?

The ongoing driver shortage has been a hot topic lately, as we’ve reported. While everyone from drivers to politicians debate how to handle the numbers problem, the big players are making moves of their own.

Pundits project that in the new year over-the-road trucking capacity is projected to squeeze even further, so how exactly are industry operators going to respond? Furthermore, how will this affect transportation costs moving forward?

Big Moves From Big Players

Swift Transportation is one of the largest truckload carriers in the nation. Just six months ago Richard Stocking, their chief operating officer, said in conference call that they would be implementing a significant pay increase in the last quarter of 2014.

Stocking stated that “if the current driver shortages continued, driver wages may continue to increase, but probably not to the extent of the increase we are giving this year to our drivers.”

Swift Transportation employs almost 15,000 drivers and has almost 20,000 employees. They also contract with over 5,000 owner-operators. Yet even the biggest carriers aren’t immune. Swift went on to report that their inability to put more drivers in trucks limited growth and contributed to a 2 percent year-over-year drop in truckload revenue, and this was during a time when freight demand was strong.

The last time a major trucking company gave its drivers a significant pay increase was in 1997 when J.B. Hunt increased their pay by 33 percent on average. As the internet bubble was inflating, capacity was strained, and the annualized increase in driver salary was huge for the time.

With these moves by Swift, more companies are stepping up. Last year Kevin Knight, chairman and CEO of Knight Transportation, said that in order to remain competitive, carriers would need to raise driver wages by anywhere from 15 to 25 percent over the next few years.

“We are very aggressively taking a large portion of what we’re able to receive in terms of rates and making sure that we give that to our driving associates,” Knight said.

In 2013 the average U.S. tractor-trailer driver annual wage was $40,940, which comes out to 11.8 percent below the national average. When you compare that with 2001, when the gap was only 1 percent, it becomes clear that trucking wages have been increasing at a glacial pace. Perhaps the capacity squeeze is finally resulting in competitive wages for drivers, but how is this affecting shippers?

Big Increases for Shippers

While some of the wage increases can be compensated for by improving truck utilization and efficiency, for the most part carriers are going to be passing the costs on to shippers. By November 2014, line haul index rates had risen 6.7% year over year and are projected to rise even further this year.

The challenge for trucking companies will be to create a compensation structure that retains drivers while still getting shipping rates that justify the wage increases.

These facts point to tough negotiations for all parties involved. Truckload carriers are now at the point where they can pretty much pick and choose which freight they’ll haul. In this new climate they’ll obviously be choosing to go with the shippers that are offering the highest rate of return.

This could potentially mean that the rate increases trickle back to the consumer, as the shippers will be required to dig deeper into their book of business to find companies that will haul their freight without collapsing the bottom line.

When all is said and done, shippers with lean inventories will have to make a choice between higher upfront transportation costs, not delivering the product, or putting it on the shelf until costs level out. And while the relationship between carrier and shipper is one of the new points of debate, the squeeze will ultimately be relieved only when the driver shortage is adequately addressed.

Perhaps it’s for this reason that the discussion should always be turned back to how the industry can attract and retain motivated and qualified drivers. A rising tide of wages and increased driver participation may end up lifting all boats, from the loading dock to the cab. Will these proposed new wage increases do the trick or can we expect to still be having this conversation during this fall’s peak operating season? Only time will tell.

How the internet load board is revolutionizing trucking?

There really is no limit to the number of industries that have been disrupted by the onslaught of a closely connected world. Those industries which have adapted to these changes are thriving while those which tried to resist the change have fallen by the wayside.

The trucking industry has found out that the internet can be a useful tool in making their business infinitely more efficient.

So, what exactly is a trucking load board?

Till not to long back, truckers used to post hand written notes on bulletins at truck stops that would help them find back hauls. These back hauls are essential for the trucker as it reduces empty miles.  On the other hand shippers used to lose out on valuable capacity because they simply did not know where the available trucks were to carry their freight.

This is where the trucking load board has come in. Large shipping companies have their private load boards while the smaller ones rely on public boards; however they function in a similar manner.

These boards are accessible to the shipping company as well as the trucking company who posts online where the available space and preferred kind of freight, is as well as the destination of that truck. The shipping company then matches that with their own requirements and gets their shipments on the way as fast as possible.

The bigger shipping companies usually have a fixed set of trucking companies that they work with and use this board to ensure efficiency and equal distribution of loads among the different companies.

The public boards however are of more use to smaller companies or companies that need extra trucks to find the best rates.

These boards are now expanding in their capabilities by including a social layer to their user interfaces. The various truckers or shippers can form their own trusted network of people/companies who they are comfortable working with so that they can contact them easily if the logistics work out for both of them.
The brokers who used to scour the rest stop bulletins can access information from a single point and can help get the truckers freight to carry.

This system has made it easier for everyone involved as well as cut down on wasted resources to all the parties involved. This is only the beginning for such systems which will soon involve automatic updates via GPS about the various locations of the truck and its intended destination, as well as have automated driver check-ins so the freight can be tracked with ease.

The best thing about these services is that they can add on as a layer on top of existing systems that are being used by transportation companies.

The next step with these systems will also involve a focus on mobile access to all of these services while looking to add still further functionality. Soon all major players in the supply chain sector will have their own apps which will allow access to their networks from any place on the road.

This is a prime example of real world applications of technology that is changing the transportation and logistics industry.

Five Aspects of Trucking Logistics

When it comes to trucking, this specific and sui generis delicate type of business, you can expect that its managing needs are satisfied of the same operations and processes like other business, but shaped through its own prism. One of these essential processes is trucking logistic, which deals with the planning of trucking activity and the research of trucking operations. While the manufacturing businesses expect from their logistics departments to optimize a certain product to perfection and meet all the needs of the customers, the trucking logistics has other responsibilities and features. In short, it is all about analyzing and taking into consideration every single factor that is involved in the transportation of goods so that the process can be improved and optimized to the highest possible level. You can find out more about the main aspects of logistics for trucking companies below.

Routes Planning

The best way to cut on unnecessary expenses and to increase the speed of delivery is to choose the most appropriate routes for a particular task. ‘The most appropriate’, however, does not usually mean the shortest or the fastest. Sometimes the essence of the cargo requires using routes that are slower and longer, but safer. It is important to take into consideration the road conditions, the traffic, the weather etc. when planning the route – it is no use reaching the final destination earlier if the 10,000 wine glasses you are transporting have turned into salt. On the other hand, when there is no risk for the cargo, it is far better taking a route that is 70 miles shorter and saving time and fuel than going the long route just because you haven’t spent some time researching and planning. And yet, if this particular route is dangerous during bad weather and a storm is forming out, better take the long one… Hopefully, these simple examples have given you the idea about the complexity of routes planning and its relation to trucking logistics.

Fuel Selection

Another way to optimize your expenses and improve your company’s productivity is the proper selection of fuels. A company that employs advanced trucking logistics is bound to follow the market trends with regards to fuels and make sure its trucks use the best option. Again, the cheapest does not mean the best, because with fuels there are other factors, too. For example, cheaper fuel may last for less miles, which would make it more expensive in the long run. Moreover, it is a duty of every modern company to employ and promote sustainability and to be ‘green’, which means that sometimes you will want to go for the more expensive fuel that is less dangerous for the environment. Just like with the routes planning, there are various factors to be taken in consideration when choosing the right fuel and cost is only one of them.

Trucks-Cargo Matching

Another aspect of logistics for trucking companies is the ability to select the right trucks for a given task. Choosing appropriately is bound to improve productivity and help company management by lowering fuel expenses, increasing availability and optimizing speed. Of course, a logical solution for a small task would be a small truck, but the case may be different if you find large cargo for the way back – then sending a big truck would be, of course, wiser. Matching the right truck with the cargo can be very tricky because it depends on a lot of variables, but with a really good logistics teams and some luck everything is bound to go well.

Hiring Employees

Of course, the backbone of every trucking company are the drivers, but still, the management, the accountants, the logistics team and the administration are all vital for the success of the business. That’s why a trucking company should pay careful attention when hiring new staffs – both drivers and office employees. Good education, experience and creativity are a must for every trucking business that aims to grow and expand. Sometimes, it may be necessary for a trucking company to start its own trucking school, to train its prospective employees or to organize seminars, workshops and team building session. All this can only contribute to the improved production of the trucking company.

Who Deals with Trucking Logistics?

Usually, there are two options – having your own logistics team or outsourcing this task to third-party logistics companies. The first option – hiring employees that will focus on your trucking company only and will make sure everything is up to the level – is the best idea for big trucking companies that have constant needs of information, analysis, research and optimization. For those who need only basic logistics services, third-party companies would also be a choice. However, make sure you check the terms and conditions before, as you may have to be really patient and allow a couple of days for response, customer services etc. Whichever option you choose, however, make sure you find experienced specialists that are familiar with trucking and the relevant laws – the productivity and efficiency of your trucking company depends pretty much on those who carry out your logistics operations.

To conclude, trucking logistics is not something that should be estimated and done pro forma by the trucking companies. It is a process or a series of processes that will help your business grow and develop, your management to get organised, your trucks schedule to be seamless and your team to always be immaculate. Meanwhile, trucking logistics will help you lower the expenses, thus increasing your revenue. Knowing all this, you would certainly want to have a good logistics team, wouldn’t you?

How Can Someone Start a Trucking Business?

Almost everything you buy has been moved by a truck at some point, whether it’s food, gasoline, clothing or other items. The trucking industry can be very lucrative, but it is also a highly competitive industry. It’s smart to research the industry thoroughly before starting your own company to be sure you understand everything involved with starting a trucking business.

Decide If You’ll Subcontract

One of the first decisions you need to make when starting your trucking company is deciding whether you will hire employees or use subcontractors to drive your trucks. They are positives and negatives to each method and trucking companies have succeeded both ways. There are generally less start-up costs involved when you have sub-contractors instead of employees, but you also have less control over the schedule of the drivers and you may have to pay a higher percentage of the money you make to subcontractors than you would pay to company drivers.

Trucking companies who hire drivers to work for them as employees have more control over the drivers and can set the rates that they will pay the drivers. The downside is that the company has to pay for insurance and equipment costs that would normally be paid by subcontractors.

Starting The Business

In some ways trucking companies are started the same way that other businesses are started. The company owner must register the business with all applicable state, federal and local agencies. You must get a business license and all necessary permits before your company can legally operate. It is essential that you get a Federal Department of Transportation Number. This number must be displayed on all of your trucks. You also need to apply for and receive Federal Motor Carrier hauling authority.

Tax Forms and Registrations

There are several tax forms that must be completed periodically for your trucking business to be operating legally. One of these is a heavy use tax form. You also need to obtain International Registration Plan tags as well as International Fuel Tax Agreement decals from your state department of transportation. A BOC-3 filing is required to operate a trucking company legally in the United States. It’s best to visit a local licensing office or your state department of transportation’s website for specific information you need to legally operate a trucking company in your state. It’s best to talk to an accountant who has experience with the trucking industry when you are forming your trucking company. They will be able to offer business advice and help you manage the company’s finances correctly right from the start.

Trucking Insurance

There are very strict insurance requirements that anyone who owns a trucking business must meet. You must have insurance on your vehicles as well as the company itself. Some of the companies you haul freight for may have even stricter requirements than the federal regulations, so make sure your insurance policy meets their requirements before hauling loads for those companies.

Equipment

If you decide to hire truck drivers and operate your own fleet of commercial vehicles, you need to purchase the vehicles. Most experts in the trucking industry recommend starting with just one or two vehicles and adding to your fleet as time goes on. This gives you the ability to learn the trucking industry without being overwhelmed by the number of drivers and vehicles in your fleet. Think about the type of freight you will be hauling before purchasing trucks and trailers so that you buy the appropriate vehicles. Refrigerated trailers are likely to be more expensive than dry van trailers, but they are necessary if you will be hauling food or other perishables.

About QuickTSI

QuickTSI is your one-stop-shop for everything you need to run your transportation and freight logistics business. Our website allows you to post load or find trucks, post trucks or find loads, look up carrier profiles, view trucking companies, find truck driving jobs, and DOT medical examniers.

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