Carriers know they should be more efficient and work smarter
not harder. But sometimes they confuse increasing revenues with maximizing
profits. Want to maximize profits instead of just increase revenues? Any carrier,
of any size, can using these six steps.
Step one: Get smart.
Utilize technology to give your business an edge. The right
equipment will provide cash and movement reports so you can stay on top of your
business, as well as real-time updates on maintenance issues and driver
performance. Technology is the one area where you do not want to save a buck.
Months from now, you’ll hardly remember if you spent a little more than
necessary, but you’ll kick yourself many times if you didn’t spend enough – especially
if your competitors have capabilities you don’t.
Step two: Get tough.
Institute a fuel program, and then monitor it. Are you
relying on your local or regional fuel salesperson to give you the best deal?
How do you know what the best deals are? Cost plus? Retail minus? Better of? Bob Joiner of StrategEZ Fuel Network
Solutions says carriers should contact fuel vendors regularly and negotiate
the best prices possible. Deals shouldn’t stay in place year after year. Then
carriers should track transactions to measure the results and make sure drivers
are fueling at stops that are in the network. Many smaller carriers can’t
afford a full-time fuel manager and assign this responsibility to another staff
member, often the safety director. Safety directors have too important a job to
ask them to take on this extra duty.
Step three: Get lean.
Make sure you aren’t wasting miles or keeping equipment you
don’t need. Review your rates and your lanes in detail so you know where your
trucks are going and so your customer service reps know what you need to turn a
profit. When your customer asks you to
do more, ask yourself if that request would force you outside your standard
routes. Maybe you should consider passing on the business.
Jimmy Starr, owner of
Arkansas-based Woodfield Trucking, reduced his company’s
fleets by 20 units about a year ago and now has 102 units. It was just too
expensive to pay for trucks he wasn’t using and too hard to find qualified
drivers to keep them moving. If the right business comes along, he’ll grow the
fleet again, but he’s comfortable where he is.
Another place to look when trimming your company is excess
staff. We’ve found that a carrier needs one non-driving employee, including
owners, for every seven drivers. If your
company is way over the mark, review your processes and make sure you are not
paying people just to shuffle paper around.
In reviewing the operations of a particular company, we found that very
few loads were being booked during the morning hours, and then right before the
end of the day, several loads miraculously would be entered into the
system. We concluded the company had too
many dispatchers. The company removed
two and never missed a beat.
Step four: Get green –
and by green, I mean more fuel-efficient.
Gabe Stephens at CC
Jones Trucking said his owner-operators spend up to $1,500 more a month on
fuel using their older trucks than his company spends with newer trucks. One
owner-operator got rid of his gas guzzler and is paying for his new rig with
the difference in fuel costs alone.
To really save money, move the speedometer back to 62 miles
per hour. A carrier driving 12 million miles a year that improves its fuel
mileage from five to six miles per gallon would save, at $4 a gallon, $1.6
million a year. Stephens said, “I told somebody the other day, ‘When’s the last
time you were on the interstate driving 65 to 70 miles an hour, and you had a
truck pass you?’ he said. “If you think about it, it just doesn’t hardly happen
anymore.”
Worried that you’ll lose drivers by doing that? Share some of
those fuel savings with them. Bulkley
Trucking out of Sulphur Springs, Texas, gives drivers incentives to improve
their mileage. The company’s driver of the year averaged 9.1 miles per gallon
and was awarded a Ford F-150 pickup truck in response. Thanks in part to its
fuel efficiencies, the company’s profits and fleet size are increasing.
Step five: Get better
maintenance processes.
Don’t skimp on maintenance – at all. Little things can cause
big problems and review your utilization per shop personnel. This sometimes is
a black hole where money goes in but nothing comes out. Accountability is the
only way to stop the flow. Implement a repair order system, and if you already
have one, make sure it is working as intended. Get shop reports weekly on
equipment that needs to be repaired or is up for preventive maintenance, and
have a person in management approve all repair and maintenance before it is
performed. Check your production on your shifts, especially if you are running
two of them. It could be that you need only one.
Step six: Get a second
opinion.
CPAs who really know the trucking industry can do more than
balance your books and file your tax returns. They can help you save on all
kinds of expenses. They also can provide projections whether you want to expand
your business, cut back, or trade equipment. If leasing or purchasing is a
question, let your CPA help you figure out the best approach based on your
current tax and cash flow situation. Work with your CPA to make sure you are
presenting your financial statements to your creditors in the best possible
light.
http://www.arkansasbusiness.com/article/92212/six-steps-to-maximize-transport-profits-jeff-lovelady-commentary
