There are usually two tried and true methods of improving your financial position: cutting expenses and increasing revenue.
Equipment, labor and general business practices all need to be evaluated. Whether you own just one truck or a small fleet of ten to 25, everything needs to be examined. There is a great book titled “Sacred Cows Make the Best Hamburger.” The trucking industry has many sacred cows.
Cutting expenses is sometimes the easiest way to greater profitability. One of the biggest expenses in any trucking operation today is fuel. The rise of diesel fuel costs from less than one dollar per gallon to more than four dollars per gallon has led to a rise in speed governing on trucks. The days of blazing across the mid-west at 70 miles per hour are pretty much a thing of the past.
Many trucking companies have upgraded their fleets from old long-nose tractors to more aerodynamic trucks. These improved designs are improving fuel efficiency, especially when coupled with the numerous other drag decreasing inventions now on the market. While dual stacks and air filters look sexy, they create drag which cuts into fuel mileage.
Tires play into the fuel economy picture. Recaps and other high rolling resistance tires, while being cheapest to buy up front, will have a negative impact on fuel mileage.
Bypass oil filtration is another technology that stretches oil changes from the traditional 30,000 mile interval to upwards of 250,000 miles. If an oil change costs $250, a 6 month return on investment is not unusual.
Other hardware items to be evaluated include low back pressure exhaust systems, driver-changeable chip systems for the motor, redesigned air filter systems, use of synthetic oils and lubricants to decrease friction resistance and a host of aerodynamic improvements.
Speaking of return on investment, up to date accounting systems are critical. An owner operator with one truck will be intimately aware of fuel mileage. Being able to see cost per mile and revenue per mile on a monthly or even weekly basis will help guide many decisions. There are even accounting systems that will allow input of data through iPads or other smart phones.
Carrying that awareness over to company drivers can be enhanced by having the driver track actual fuel mileage through available on-line tracking systems.
Speaking of company drivers, labor is often the second greatest expense. Getting drivers to buy into changes can be approached in several ways, whether they get dictated to about the changes or getting their buy-in with incentives. Once again, drivers will need to understand the need for change.
Owners will need to demonstrate their support for the drivers. Simply demanding that drivers improve their fuel mileage without doing the requisite maintenance and equipment updating will not get the necessary driver participation.
Surviving the current economy requires a rethinking of all aspects of the trucking industry. What worked in the 1990s will not work today. The need for continuous improvement and constant reevaluation is a big step to success.