The Loan Ranger in the Trucking Industry

Murray Pratt Blog, Business Insights, Life Leave a Comment

‘During my working career I have found that there are 3 types of people – those who can count, and those who can’t.’

Now, for those of you who can’t count (and don’t have a sense of humor), there is a lot of trucking software out there that can produce the reports for you giving the necessary details to run your operation.

For the most part, I have found that the experienced trucking operators have a sense of the value running through their business.

‘I charge this much to deliver a load…and I pay this much to the driver, for fuel, some for my equipment maintenance & upkeep and administrative overhead …and the rest is margin’

The sharp ones are the ones that ensure that this sense of value flows through the company with all staff aware of some of the operating ratios and metrics required to achieve short and long term financial success.

But when it gets bigger – more trucks, more offices, more staff, more customers, more locations, the small 2 to 3 truck operation that once allowed you to track profit daily sees you scrambling at month end to see if you are making a buck on the 30 – 40 trucks you are now running.

It is important when selecting trucking software that you look at the reporting capabilities that come with the system.

With a good trucking software system, you should be able to look at things like:

<span “font-family:symbol;mso-fareast-font-family:symbol;mso-bidi-font-family:=”” symbol”=””>· Revenue, costs and profit on a piece of equipment (different equipment uses fuel differently and needs more or less maintenance resources)

<span “font-family:symbol;mso-fareast-font-family:symbol;mso-bidi-font-family:=”” symbol”=””>· Revenue, costs and profit by Vendor. As a trucking company you want to see your numbers associated with any of the Owner-Operators you use. As a Broker you want to see that same from any Carriers that you are using.

<span “font-family:symbol;mso-fareast-font-family:symbol;mso-bidi-font-family:=”” symbol”=””>· Revenue, costs and profit by Driver. Hopefully this analysis gives you a relatively consistent number across all your drivers but you will likely find some variation as you may have people with different expertise (HAZMAT) and driving patterns (Longer Hauls).

<span “font-family:symbol;mso-fareast-font-family:symbol;mso-bidi-font-family:=”” symbol”=””>· Revenue, cost and profit by Customer. This is an essential analysis for any business. Too often businesses chase revenue without fully understanding their cost structure. Perhaps they find that the business with a particular customer makes sense because it drives some gross margin…….and it’s better to run the trucks rather than having them sit idle if you are covering your variable costs. But over the longer term you need to have a business that covers its fully loaded costs – variable and fixed- in order to be profitable. And not to forget your amortization costs . After all, you are going to need to replace your equipment at some time and not accounting for the decline in the value of your assets could impair the long term viability of your operation.

It was known that Cisco systems, the world’s leading internet infrastructure provider, had such rigorous financial processes in place that after each and every day they could determine the NET PROFIT of that particular day. In my opinion, that is the Golden Goose of any company in the trucking business.

Currently, for almost all companies, it’s a monthly if not an annual analysis that may leave you scratching your head saying…

‘How did we get here after all of this work?’

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