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Bottom Line = Profit Margin…
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Many of today’s small to mid-range fleets are faced with obstacles that impede their progress in maintaining a profit margin. There are many “profit cancers” that erode and keep you from progressing towards your goal of financial success. Daily you are being pulled in many different directions prohibiting you from critically analyzing why your profits aren’t what you expect them to be. Below are a couple of critical areas that impact your profits, but do not show themselves to you daily…
We all know that drivers are the most important assets to any transportation company. Keeping them satisfied is of critical importance. Without them, your customers don’t move their product, your equipment sits, and your profits dwindle. Drivers require daily attention and maintenance just as your equipment does. Turn your attention to other areas of your operation that are not a constant daily time consumer, but so importantly impact your financial progress. One of the most costly is Insurance. Whether it is Worker’s Compensation or your overall fleet coverage, one major incident involving your driver’s health or their operation of your equipment that results in an accident, can impact your premiums. Insurance is a necessity and something that all of us need, but hate to deal with. A lot of fleet owners look at the initial policy writing process and then forget about it until renewal time. Do you realize that one fall or vehicular accident by one of your drivers could result in months of physical therapy? And then, when it comes time to renew, you are now faced with a new mod rate that costs you more money! Whether you are self-insured or operate through a PPO, money is money. How do you go about keeping others from “picking” your pockets? When was the last time that you looked at your injured employee’s back-to-work time? Do you believe that the individuals that manage these areas are looking out for “Your Bottom Line?” Reality check. No!
Here’s another constant profit cancer-Transportation Lane Analysis. Are you trying to be all you can be for your customers? Does your equipment end up in places that you have no customer contacts in because you feel you have to take a load you are being offered from a specific customer to get the lanes you want? This is the reality of transportation. There is always that last minute customer need that you, as the transportation company, have to service. It’s a typical day at 4:45 p.m. and the “red phone” on your desk rings. Do you cringe and answer it, or do you let it ring? Of course, you pick it up. Now you are faced with a service request and under normal circumstances, you feel obligated to accept the shipment. Here comes the struggle. You know that your equipment is going to end up in an area that you have no contacts in. You may surf the net and check out load boards on Comvoy or such. Maybe you make a couple calls to brokers you have used in the past that may know of someone that can help you move your piece of equipment. Or you take the mindset that you’ll deal with it the day the truck empties - out of sight, out of mind. Lane definition is of critical importance to any trucking company. Stick to you guns and do not deviate. Your customer will respect you for being honest, and yes, they’ll use you again. Plus, you don’t end up taking a backhaul just to move your equipment and cover your basic expenses of fuel and driver’s wages. Just accepting a couple odd lane requests a week, can over a short period of time, significantly eats away at your profit margin. Strategic equipment utilization will do nothing more than create higher revenue yields per truck. Just imagine if you took your average length of haul and added 2 - 3% to that figure. Now factor in that you have a dedicated backhaul that has a minimum deadhead mileage from your equipment’s empty point to its new load. Consider that you can consistently maintain that deadhead figure at 7%! What an increase to your Bottom Line!
Scenario three - driver training. This area affects so many others in your profit margin; product claims, equipment performance, equipment maintenance, customer satisfaction, insurance and a host of others. As I said before, we all know that drivers are a necessity, but how you manage, train, and most importantly relate to them is critical. Taking the time to have your safety department properly train your drivers can lower or eliminate costly expenses. Anyone can fill out a D.Q. file and show someone where their truck is. Just a few simple programs can virtually create the best driver your company could possibly have. Here are a few simple examples: make the driver feel “part of your family.” Show him/her the ropes of how your company is operated, instead of letting him/her hang themselves with it. If you don’t educate him/her, then all your expense of getting him/her in the door is lost. Did you know that on average, it costs $2,000 to $3,000 just to recruit a new driver? They are your greatest asset and on the other hand, the most costly to maintain. Do your drivers know how to properly load the products you ship? Has anyone ever shown them how to properly axle-weigh your equipment? Everyone has a different ratio of tractor and trailer weights. The trailer at the school they may have attended was surely empty when this was taught. Even the most seasoned driver can always learn a few new “tricks of the trade.” Knowing how to handle simple on-the-road equipment maintenance such as oil changes, flat tires, etc. cannot only save you time and aggravation, but most importantly money. How are your drivers told to handle face-to-face “confrontations” with your customers? In many cases, they are your only face-to-face contact between you and your customers. What is your policy on accident reporting? Who do they call? When should they call? All of these subjects are critical in maintaining and continually developing your driver workforce.
Now, think about it. Do you bury your head when it comes to dealing with the above issues? Would you like us to help you take control and keep it? You can’t be in the heat of the daily battle and stay focused enough to react to all the variables that affect Your Bottom Line. What you can do is put programs and policies into place that prevent issues from becoming headaches. We have spent over 23 years in the transportation industry. Being on the outside of the daily grind is very different than being in the heat of the daily battle. Individuals like you can begin to realize the profit level that is achievable in this industry. You don’t have to be as big as JB….. or be listed on the NYSE to make the kind of money they do. All you have to do is be proactive in how you develop, maintain and operate your company.
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