Truckers know that life on the road is difficult but curbing expenses and spending is a big challenge, too. Traffic, weather, accidents and delivery deadlines come with the job. Working with a lender to fund a new truck purchase or keep a fleet well maintained can be harder to overcome.
Managing a fleet of trucks, whether they be small box trucks or large semis, is very expensive. Budgeting for costs such as maintenance, fuel, insurance and fuel taxes means that trucking expenses can be grueling. Worst of all, as trucking research data from the American Transportation Research Institute (ATRI) shows, truck expenses have increased significantly.
From 2008 to 2014, truck maintenance per mile rose from $0.103 cents a mile to $0.158 cents a mile, an increase of over 53 percent. Truck leasing costs also increased substantially from their lows in 2009 and 2010 to their high pre-2008 levels due to the lack of financing during the Great Recession. Although fuel costs dropped in 2014, this decrease was offset by other rising costs such as insurance, tires and labor.
Keeping up with these prices is not easy. Some trucking companies can partner with a variety of transportation lenders. But having reliable funding in place may not be enough to cover unexpected major expenses and operational costs that are often overlooked, especially by small and mid-sized operators as they try to save money.
Trucking companies should consider using smaller trucks for shorter distance runs. Shippers and receivers alike are always confounded to see a large trailer moving just one or two pallets of goods. According to ATRI research, tractor-trailers are used for most runs that range from 100 to 500 miles. A smaller expeditor or box truck could deliver the same load yet cost less than a tractor trailer. Companies could find savings in fuel, maintenance and labor from simply using a better (or smaller) tool for the job.
Besides smaller trucks, trucking companies should also consider standardizing their fleet. Keeping two of the same type of trucks is a lot cheaper to maintain than having four or five different types. Besides lower maintenance costs, companies could also realize higher productivity and greater safety. Mechanics could standardize parts and maintenance procedures while drivers know what to expect from the driving characteristics of a particular vehicle in the fleet.
In 2010, the Federal Motor Carrier Safety Administration (FMSCA) reported that the average commercial vehicle crash resulted in property damage that cost $18,000, which varied depending on the size of the vehicle. Accidents that resulted in injuries cost an average of $331,000; those that resulted in fatalities cost an average of $7.2 million.
Setting up a benchmark schedule for maintenance and overhauls is also very helpful for keeping costs low. Unfortunately, too many vehicles often overshoot their scheduled maintenance by thousands of miles, which can lead to expensive repairs and, worse, costly downtime when the vehicle is not on the road. Here’s something else to consider: Some manufacturer warranties won’t be honored unless maintenance records are kept.
Trucking companies can employ tracking software or even a simple spreadsheet that logs repairs and maintenance, miles driven and the driving habits of a particular driver. It can also provide ample time to procure a spare vehicle before one breaks down, track any repairs made or even support the amortization schedule of equipment and assets for tax purposes.
Trucking companies already face enough challenges on the road. Conducting a thorough evaluation of current operations could prove as rewarding as seeking further investment, if not more so, since no new debt is incurred. That benefit alone can make for a much smoother ride.