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How Small Trucking Companies Survive: Part Two

Last week we introduced part one of our three part series covering how small trucking companies survive. This week we are going to take a look at two more crucial aspects of small-outfit survival in the land of the big guys.

We’ve covered the important topics, from finding a niche and focusing on customer service to finding and retaining top talent. While those are important aspects, they don’t complete the puzzle. The next two pieces are arguably just as important as the first three.

Safety and Compliance

It can be argued that this should have been first on the list. The Federal Motor Carrier Association (FMCSA) has been putting fleets that don’t meet the new safety standards out of service. Look hard enough and you’ll see that most of the fleets getting chopped are small operations.

Some might assume that they aren’t subject to the same regulations large fleets are exposed to, such as drug testing and maintenance programs. Unfortunately for them, this belief is far from the truth.

In some cases smaller fleets just don’t have the personnel they need to maintain a rigorous safety compliance program. For carriers with five to ten trucks, keeping a proper safety headcount presents a serious challenge.

Third-party companies who handle these services on an outsourcing basis are now hitting the scene. For a nominal fee, these companies can handle drug testing, qualifying drivers and keeping truck driver files organized and up-to-date.

As shippers increasingly look to CSA scores and safety records, the threat of loss of business or even lawsuits is all too real. Staying on top of safety and compliance issues is now more important than ever.

It’s also important to remember that safety and compliance are not always the same thing. Small trucking companies maximize safety potential by having the latest and most advanced safety technology, from disc brakes to anti-rollover technology and stability control.

Compliance is met behind the office desk. Small trucking companies may need a fleet of very smart people to help keep up and comply with the ever-changing regulatory environment. By having qualified people in the right places, companies should be able to ride out any regulatory storm that comes their way.

Revenue and Costs

The nature of complex operations makes it easier for medium- to large-companies to better manage cost versus revenue stream. Smaller operations are looking at a smaller cash-flow. Operating margins and expenses seem larger than life when you start removing zeroes from the bottom line.

Small trucking companies need to be treating each truck and driver as an individual profit center. It’s vital to know what the actual costs for each dispatch is. Without this information, it’s difficult to determine what can be done to maximize profit and minimize loss.

Companies should be getting financial statements regularly. If a company is only parsing out the cost on a yearly, quarterly or even monthly basis, they aren’t adjusting fast enough.

Some small carriers participate in buying programs that offer discounts as part of an association membership. Certain state, federal and private trucking organizations can offer discounts on fuel, equipment, supplies and more. And unlike the old days, carriers don’t have to be huge to take advantage of bulk discounts.

The personal nature of small trucking companies also helps in negotiating prices on equipment, from tires and rims to mechanical work on the trucks. Since the overall equipment costs are always rising, having an edge is important to keeping the bottom line in black.

The final aspect of costs relate to maintenance. Smaller companies can manage things like tire programs more effectively. In some cases technicians can even salvage fuses from junkyards because taking the truck to a dealer for fuse problems can be quite expensive.

Now we have a more comprehensive picture of how today’s smaller fleets make it work. Find a niche, focus on the customer, hire and retain top talent, maintain safety and compliance and manage revenue and costs. Next week, in our final part of this three-part series, we will take a look at how smaller fleets can master technology to their advantage, invest in quality equipment, and practice smart growth principles.

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