How to Keep Your Trucking Fleet as Profitable as Possible
Trucking is the business lifeline of America. This enormous country of ours depends on moving goods from factories to shops, from producers to consumers, and from shipping to lading. Ships and trains can only go so far, which means that all industries need trucking fleets to remain profitable.
It will come as no surprise to those in the industry that the highest cost for any trucking fleet is fuel. Consequently, no responsible owner can consider profit margins without first looking at ways to reduce fleet fuel costs. Other significant expenses include driver compensation, vehicle maintenance, and insurance.
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Important Facts About Trucking in The United States
As the saying goes, if you bought it, a truck brought it. The following facts show how critical this industry is to all commerce in America:
- Competition in the trucking industry is stiff. There are an estimated 1.2 million companies in the market.
- Driver retention is challenging. Attracting and keeping quality drivers requires competitive salaries. Company owners must compete for a limited supply of drivers.
- Trucking fuels the economy. Trucks move nearly 70% of goods in the US.
- E-commerce has increased demand. The popularity of online shopping vastly increases the need to ship directly from a factory to the consumer.
- Trucking is a heavy business. Truck drivers transported nearly 12 billion tons of freight in 2018.
- Insurance costs are rising. Lawsuits against trucking companies contribute to higher insurance rates industry-wide.
Challenges for 2020
The trucking industry operates on tight margins. There is little room between a profitable company and one unable to break even. And the current mass shutdown of industries across America due to the coronavirus has made things interesting indeed.
Trucks must continue to operate during the crisis, so the “essential workers” classification includes drivers. However, that doesn’t mean that the industry is flourishing during the pandemic.
Drivers face an increased risk of catching the virus. If they become ill, the already-low supply of drivers drops even more. Food and medical supplies are the current priority for shipping, so drivers who move non-essential goods have little to do. Trucking companies who can’t weather this economic storm are at risk of closing.
Many construction projects are now on hold due to COVID-19, effectively shutting down fleets that move building materials. Exports are also at a low, as countries across the world close borders to all but essential goods. And many governments have halted maintenance on bridges, roads, and highways until funding becomes stable again.
But even before the current crisis, trucking fleet owners faced tough times. Increased costs, competition, and the inherent risks to staff and vehicles create a tough playing field. Trucking companies operate with incredibly tight margins. And these margins depend significantly on the cost of fuel.
Companies that can reduce fleet fuel costs stand a better chance of surviving than those who don’t.
How to Reduce Trucking Fleet Fuel Costs
Owners may not be able to control some of their fixed expenses, such as insurance. But with careful driving training and proactive management, they can help lower fuel expenditures. Here are six tips to reduce fleet fuel costs.
- Manage purchase location. Tracking fuel costs in your fleet’s service area allows you to direct drivers to the stations with the best prices.
- Avoid over-idling. Some idling is inevitable, such as when drivers are waiting in traffic. They also may need to heat the truck during a required period out of service. However, idling can consume up to 0.8 gallons of fuel per hour, depending on the size of the vehicle. Whenever possible, drivers should shut off the engine during mandated rest periods, while loading or unloading, or when processing paperwork.
- Watch the speed. Dropping the speed from 75 to 65 miles per hour can reduce fuel consumption by an estimated 27%. Speed reduction also means the truck requires less fuel to accelerate, brake, or take tight corners.
- Practice good vehicle maintenance. Regular servicing and checking of problem areas save you time and money over the life of a vehicle. When trucks fail inspections and must go out of service, you lose money. A fleet in good working order also has a lower risk of accidents, helping to keep insurance rates down.
- Utilize route optimization. Software that tells drivers which routes are open or have minimal traffic flow saves you time and money. Optimizing routes for drivers also makes them more likely to deliver goods on time, creating happy customers. When your clients are content, you can more easily protect your profit.
- Hire careful and vigilant drivers. Drivers who take safety concerns seriously are critical to profitable operations. When they drive safely, without excessive speed, they help control your trucking fleet fuel costs. And drivers who perform excellent pre-trip inspections help you avoid vehicle damage, accidents, and fines. Reward your drivers’ good habits.
What Might the Trucking Industry Look Like in the Future?
With or without the current COVID-19 crisis, the trucking industry is facing a lot of potential changes in the coming years:
Just about every other industry is moving toward full automation. Trucks with AI software in the driver’s seat would be, in theory, highly fuel-efficient. So is there a chance there will be self-driving trucks in the future? Yes, driverless fleets are likely to be an option at some point. But there are many safety and regulatory hurdles to overcome first. Until safety concerns over self-driving trucks go away, there will be jobs for truck drivers.
The trucking industry has moved past its image of using gas guzzlers that spew black smoke into the air. Vehicles with more efficient fuel emissions and route selections help to reduce the truck’s carbon footprint. Eco-friendly fuel options are likely to become a hot topic in the coming years.
Trucking industry workers enjoy a range of apps available to make their jobs easier. From route planning to driver logs to electronic bills of lading, technology is creating a smoother process.
Prosper in a Dynamic World with DTN Solutions
You can rely on DTN for fleet and fuel management products that streamline your operations. Keep your trucking fleet profitable as you utilize our robust software options. Contact a team member today for a free demo.