Few businesses can bring more profit faster than the trucking business. But it’s an expertise heavy industry that can leave you upside down if you don’t know what you’re doing.
Is the trucking business profitable? Yes, but only if you’re logistics savvy.
Take a look at this guide to understanding how to be successful in the trucking industry.
Is the Trucking Business Profitable?
The trucking business isn’t going anywhere anytime soon. It’s a staple in American transportation much like trains or airplanes.
We need shipments quickly and it’s not usually practical to send everything by train or plane. Trucking solves the short term transportation problem while providing cheap long term shipping solutions.
This sounds like the trucking business should be ripe with demand and it is. Trucking companies will find opportunities to haul products from just about every industry.
Truckers have their pick of loads that pay high rates if they know where to find them. But this part is usually easier said than done.
The trucking business is extremely profitable after you’ve done a few key things.
Finding a Broker
The first step to finding these extremely profitable loads is sales. Many small trucking companies use freight brokers to locate loads.
This is a low-cost method of getting new clientele because it doesn’t cost you any money upfront. Brokers are paid once you deliver the load.
They’re paid a percentage for each transaction. Usually, the customer pays the broker directly and other times you’ll pay out of your fee.
The broker is the middle man. You can cut out the middle man as your company gets bigger and you have your own client relationships.
Keep in mind that this requires a dedicated team in your trucking business to handle account management. This is the team of people that keep the customers happy.
These people are essential because they can make or break your revenue stream. Shippers have their pick of trucking companies so you want to be on top of their needs at all times to keep them from switching to a load board where pricing can get very competitive.
Load boards are an option for finding new freight but you’ll find the rates much lower than if you used a broker or find clients yourself.
Someone on your team needs to be responsible for dispatching. It’s risky to rely on brokers to do your dispatching because they don’t have skin in the game.
Dispatchers communicate information to the driver about the load. They’re the liaison between the driver and the client.
They’ll share details like the load number, pick up times, and place of delivery. If there are special stipulations about accessing the delivery point, the dispatcher handles this so the process is seamless for the driver.
This responsibility is problematic for brokers to handle. Why?
Because brokers aren’t exclusive to your trucking business. They could be working with a dozen drivers at a time.
They work on volume which means information can easily slip through the cracks delaying your driver unnecessarily. Time is money in trucking and your driver missing a delivery appointment can mean having to wait days until the next appointment is available.
Designate someone on your team to take over dispatching once the broker confirms a load for your business. Your dispatcher is someone who can work 24/7 as loads deliver round the clock every day of the week.
The dispatcher also needs to be a problem solver to quickly negotiate mix-ups so your drivers can quickly get in and out of a delivery location. Many brokers aren’t willing to give your drivers this kind of time unless they’re making a large commission.
Many people focus on the money coming in when they think ‘is the trucking business profitable?’ And it is possible to make millions with just a small fleet of trucks at your disposal.
These are the trucks that run teams long distance for maximum profitability. Just keep in mind that these high-dollar, long-distance runs mean more maintenance for your trucks.
Maintenance and repairs are what eat up your profits in trucking. A truck breaking down costs you in two ways.
First, you aren’t able to use the truck to earn money because it isn’t in operation which slows your income. Second, the repair costs are drastically high.
It’s not uncommon to have a $10,000 repair needed on a truck that runs long distances. New trucks are a good bet because they come with service warranties, but don’t expect every repair you need to be covered.
Another important overhead consideration is insurance. With all your trucking equipment running across state lines, insurance is bound to be high.
You’ll pay tens of thousands of dollars in annual premium fees to keep your equipment insured. This is a starting, lump-sum figure for most trucking businesses with less than a dozen trucks.
Get quotes on business trucking insurance to see what you can afford starting out.
The Department of Transportation (DOT) is a federal agency that regulates interstate commerce. Since trucks drive across state lines, they are subject to the rules of DOT.
Your drivers can be stopped for random inspections to make sure they’re following federal laws. If you’re caught in violation of the many DOT regulations, you’ll receive a fine.
Worst case scenario DOT can shut your truck down right away and you’ll have to tow it home. This happens mainly when drivers aren’t paying attention to local regulations.
For example, hauling products into states that are forbidden. Train your team properly to ensure you can profit on each load.
Getting into the Trucking Business
Is the trucking business profitable? Absolutely.
In fact, earning money in trucking is one of the easiest things you can do. Where you’ll have trouble is minimizing the cost of repairs and staying out of trouble with the DOT.
You have no say as to when and where your trucks break down. Your driver could be in the middle of nowhere where mechanic’s fees are hiked for extra profit.
Still, you’re responsible for delivering the load so you’re at the mercy of the mechanic to pay what you weigh. For more information and tips, visit our blog for updates.