Cutting Costs in the Trucking Business Shouldn"t Stop With the Trucks
If you ask anyone close to the trucking industry how to cut costs, the answers will most likely center around the truck itself: fuel, maintenance, insurance, and driving labor.
However, most of these costs have little flexibility, short of changing the provider.
To really cut costs a trucking company must get smart and look at the internal operations of the company.
And usually they don't have to look very far.
Most trucking companies do things old school.
They use phrases like "If it ain't broke, don't fix it", or "We've always done it this way.
" Basically they are best friends with SALT and SALY: Same As Last Time, and Same As Last Year.
That would be fine if the world around them never changed.
But it does.
And every year that goes by those changes get more dramatic.
A trucking company that does things "the old way" forever will soon find itself struggling to stay afloat when they can no longer operate at market prices.
Technology advancements play a major role in today's business environment allowing for greater efficiencies and reducing the costs of operation.
There have been great strides made in technology for trucks to make them more fuel efficient and cost less to maintain.
However these advancements can only be found on newer trucks rolling off the assembly line.
If your fleet is only 3-5 years old it may be another 3-5 years before you can purchase all new trucks to take advantage of the new equipment.
So where else can new technology be installed within your business to reduce costs for the company? The office operations.
What most trucking companies don't see is that with little or no technology in the office, the large quantity of paperwork and dispatching duties must be managed manually which takes people - lots of them.
Technology improvements as minor as color coded folders or an additional phone line can have a large return on workflow efficiency.
The main idea is to provide the office with the proper tools to maximize the amount of work it can comfortably manage.
Take dispatching for instance.
It is often the most critical position within a trucking operation.
Most trucking companies start off with one dispatcher, perhaps its the owner.
Then as they add more trucks, they add a second dispatcher to handle the phone calls to and from customers and drivers managing all of the freight loads.
As the business grows, and the fleet size expands, perhaps a third dispatcher is added.
Nine times out of ten a company follows these steps without stopping to think how many trucks a dispatcher should be able to manage.
And if they don't think about the optimum number of trucks per dispatcher, then they also don't consider a strategy to increase the number of trucks that a single dispatcher can manage.
This simple strategy of analyzing the efficiency of dispatch, the most important role in the company, could save the company tens to hundreds of thousands each year in wasted salaries.
Without analyzing the dispatch procedures the trucking company is throwing money away hand over fist.
The solutions to increase dispatch productivity may be to create improvements to paperwork or communications.
But those improvements rarely produce more than single digit gains.
An even better idea is to consider purchasing good trucking software.
The right trucking software package can provide an efficiency gain of 30% or more to the back office.
You would be hard pressed to find a truck technology improvement with an efficiency gain to match.
In addition to improvements to dispatching, trucking software can simplify tasks such as accounting, maintenance tracking, and log book auditing.
The IFTA report, which is a special fuel tax report that all trucking companies must file with the government, takes several hours to complete manually.
Trucking software can produce that report in a few clicks of the mouse, along with several other trucking business reports nearly impossible to duplicate in any standard accounting software.
I recommend to any trucking company looking to cut costs, to stop looking at the trucks for just a minute, and consider the office operations.
If your office staff is larger than one, I guarantee there are efficiencies to be gained by adding technology to the office operations.
However, most of these costs have little flexibility, short of changing the provider.
To really cut costs a trucking company must get smart and look at the internal operations of the company.
And usually they don't have to look very far.
Most trucking companies do things old school.
They use phrases like "If it ain't broke, don't fix it", or "We've always done it this way.
" Basically they are best friends with SALT and SALY: Same As Last Time, and Same As Last Year.
That would be fine if the world around them never changed.
But it does.
And every year that goes by those changes get more dramatic.
A trucking company that does things "the old way" forever will soon find itself struggling to stay afloat when they can no longer operate at market prices.
Technology advancements play a major role in today's business environment allowing for greater efficiencies and reducing the costs of operation.
There have been great strides made in technology for trucks to make them more fuel efficient and cost less to maintain.
However these advancements can only be found on newer trucks rolling off the assembly line.
If your fleet is only 3-5 years old it may be another 3-5 years before you can purchase all new trucks to take advantage of the new equipment.
So where else can new technology be installed within your business to reduce costs for the company? The office operations.
What most trucking companies don't see is that with little or no technology in the office, the large quantity of paperwork and dispatching duties must be managed manually which takes people - lots of them.
Technology improvements as minor as color coded folders or an additional phone line can have a large return on workflow efficiency.
The main idea is to provide the office with the proper tools to maximize the amount of work it can comfortably manage.
Take dispatching for instance.
It is often the most critical position within a trucking operation.
Most trucking companies start off with one dispatcher, perhaps its the owner.
Then as they add more trucks, they add a second dispatcher to handle the phone calls to and from customers and drivers managing all of the freight loads.
As the business grows, and the fleet size expands, perhaps a third dispatcher is added.
Nine times out of ten a company follows these steps without stopping to think how many trucks a dispatcher should be able to manage.
And if they don't think about the optimum number of trucks per dispatcher, then they also don't consider a strategy to increase the number of trucks that a single dispatcher can manage.
This simple strategy of analyzing the efficiency of dispatch, the most important role in the company, could save the company tens to hundreds of thousands each year in wasted salaries.
Without analyzing the dispatch procedures the trucking company is throwing money away hand over fist.
The solutions to increase dispatch productivity may be to create improvements to paperwork or communications.
But those improvements rarely produce more than single digit gains.
An even better idea is to consider purchasing good trucking software.
The right trucking software package can provide an efficiency gain of 30% or more to the back office.
You would be hard pressed to find a truck technology improvement with an efficiency gain to match.
In addition to improvements to dispatching, trucking software can simplify tasks such as accounting, maintenance tracking, and log book auditing.
The IFTA report, which is a special fuel tax report that all trucking companies must file with the government, takes several hours to complete manually.
Trucking software can produce that report in a few clicks of the mouse, along with several other trucking business reports nearly impossible to duplicate in any standard accounting software.
I recommend to any trucking company looking to cut costs, to stop looking at the trucks for just a minute, and consider the office operations.
If your office staff is larger than one, I guarantee there are efficiencies to be gained by adding technology to the office operations.