Is the Trucking Business Profitable?
Is the Trucking Business Profitable?
“Is the trucking business profitable?” That’s a question many potential truckers ask our trucking industry experts. The short answer is, yes, trucking is a profitable business. But here’s a longer answer. Since trucking is profitable, it’s a very competitive business to get involved in. Many truckers attempt to get into the business but end up failing. Why? Because most truckers are great at operating trucks. But that doesn’t mean they're great business owners.
Knowing how to grow and run a trucking business takes a lot of training. And that’s where our organization steps in. We assist trucking professionals of all skill levels . Our experts can supply tools and resources to help ensure a business makes money. Written below is crucial information about how to operate a trucking company. If you have any questions, do not hesitate to contact our industry professionals. We can give you more tips about making your business profitable. Check out: Starting a Trucking Company Package.
How Much Does a Trucking Company Owner Make?
The average owner operator in trucking makes about $100,000 to $150,000 per year. An exact average comes out to around $141,000 every year. Of course, how much an owner operator makes gets based on many varying factors.
What Is the Average Profit Margin for a Trucking Company?
Private general freight trucking companies have seen their sales expand in recent years. Let’s use 2017 as an example. Sales expanded for trucking companies by 14.9 percent in 2017. This led to average trucking profit margins expanding by 6 percent. In the previous six years, profit margins expanded by 2.4 to 4 percent. Check out Motor Carrier Authority .
Is a Trucking Company a Good Investment?
Yes, starting a trucking company is a good investment. This applies all across the United States. Owning a trucking business can generate a lot of profit. But you've got to keep in mind how competitive the trucking industry is. It’s easy to get your foot in the industry. But it’s also easy to make some mistake that can cost you your business. Please continue reading so that you learn crucial information about avoiding common mistakes.
What Is the Most Profitable Trucking Business?
When it comes to making a profit in trucking, business after business can generate money. Ice road trucking is one of the most profitable trucking businesses. The average ice road trucker earns $30,000 to $40,000 in only three months. This makes them, on average, the highest paid truckers in the industry. But that doesn’t mean other forms of trucking can’t generate a healthy profit. Tanker hauling, hazmat hauling, and oversized load hauling all create a lot of cash. Then there’s less dangerous types of trucking. They include team driving, luxury car hauling, and owner operator jobs. But keep in mind that owners of private trucking fleets can make a lot of money.
7 Steps To Make Your Trucking Business Profitable
Are you ready to own a successful trucking company? If so, consider following the seven steps listed below. Each step can help you generate more profit for your business in trucking. If you have any questions, you're welcome to pick up the phone and call our organization.
Step 1 for Making a Profit in Trucking: Support the Right Market Niche for Your Business
This is the most crucial step toward working as a successful owner operator. Your trucking business has to support an ideal market niche. Even small fleet owners in trucking have to keep this in mind. Put thought into the market you choose. Why? Because it determines the equipment you buy and what rate you charge. The market even dictates which trucking freight lanes you can service.
An owner operator should focus on markets that big-time carriers avoid. This means that your business should consider hauling specialized loads. It’s difficult for an owner operator to make decent revenue using a dry van. That’s because there’s too much competition from large carriers. Plus, you've got other owner operators attempting to pull “easy loads.” Remember that your business can focus on many trucking markets.
Step 2 for Making a Profit in Trucking: Charge the Best Per Mile Rate
Each owner operator has to figure out the exact rate to charge customers for hauling loads. Make sure that your rates are high enough. Otherwise, your business can't receive an ideal profit. Without a nice profit, a trucking company cannot support all operating costs. The key is to know your rates before you call a shipper and try to make sales.
Keep the following information in mind when calling shippers. Your mission is to stay competitive with what brokers are charging the shippers. This is not a complicated process for any trucking business. Begin by selecting your freight lane and going to a load board. Then, you can find about ten loads that go in one direction. The next step is to call trucking brokers. Ask them how much money they pay. Write down the information so that you can compute the average. Once you calculate the average price, add about 10 or 15 percent to the total. This will give you the exact price that brokers charge trucking shippers. You can then repeat this process on a consistent basis. You now know how much a round trip costs for your business. This refers to hauling loads and bringing loads back. Also visit Drug and Alcohol Program .
Step 3 for Making a Profit in Trucking: Calculate Business Operating Costs
It’s crucial for any business owner to know his or her operating costs. And operating costs for a trucking business are no exception. Otherwise, an owner won’t know if his or her business is even making a profit. Begin by calculating fixed costs. Each fixed cost remains the same no matter the number of miles driven. This refers to truck payments, truck insurance, and more.
Next, calculate the variable costs of your business. These costs relate to the number of miles that you drive. Fuels serves as a great example of a variable cost. The more a trucker drives for a business, the more fuel the business pays for. You now have both the variable costs and fixed costs calculated. This means it’s time to figure out the all-in-cost per mile for your company. This is a crucial figure in the trucking industry. Subtract your all-in-cost per mile from the other rates. That’s how you calculate the profit of your business. The figure refers to the amount of money that you get to take home.
Step 4 for Making a Profit in Trucking: Use the Best Fuel-Buying Strategy for Your Business
Fuel is the biggest expense that owner operators in trucking must endure. Both experienced and new owner operators often buy fuel in an incorrect manner. They assume the cheapest pump price leads to using the cheapest fuel. This concept is wrong. Your business might lose thousands of dollars per year if you do this. So, what’s the solution? Taxes.
Standard US drivers pay fuel taxes. They do so in each state where they buy fuel. When it comes to fuel for truck drivers, they depend on IFTA. Truck drivers pay their taxes based on fuel that gets used driving through states. This applies no matter where a truck driver bought his or her fuel. Due to the IFTA tax policy, you should buy fuel at the cheapest base price. Do so no matter what the pump price is. Remember, base price equals the fuel price minus the tax. Also, please contact our company if you need help with IFTA registration. Our experts can take care of all trucking registration for your business. Also visit Driver Qualification Files .
Step 5 for Making a Profit in Trucking: Work One-on-One With Shippers
Almost any business in trucking depends on brokers and load boards. Using both is crucial when you're operating an empty truck. But keep in mind that load boards and brokers will cost a lot of money. In fact, brokers can keep around 10 to 20 percent of each load price. That’s the standard rate for providing a shipper (your business) with a broker service. Check out BOC-3 .
Try to make sure that your business doesn’t depend too much on load boards and brokers. Focus on creating a list of shippers that you can depend on. Make sure that you charge them a competitive price. The price shouldn’t stray too much from what brokers charge. If you have questions about this, do not hesitate to contact FMCSA Registration LLC . Our trucking professionals can supply you with all sorts of information. From how to find reefer loads to ways to locate better trucking contracts. We can also give you more tips for how to find high-paying freight loads.
Step 6 for Making a Profit in Trucking: Make Sure The Back Office of Your Business Is Efficient
Do you want your business to grow and stay profitable? If so, you must have an efficient back office. This becomes crucial once you begin adding leased truck drivers to your operation. There are a few options when it comes to making a back office at a business efficient. Also visit how to get TEXAS dot number .
The first option for your trucking company is to do it yourself. In fact, you can even run your business out of the cab of a truck. All you need is an Internet connection, printer, and laptop. Of course, you will also need accounting software to operate your business. There are also options on the market. Truckbytes is a popular free entry-level package. You could also outsource a back office to any trucking dispatcher. But keep in mind that this is often expensive. If you work with a dispatcher, make sure the dispatcher’s qualified. Working with a bad dispatcher could destroy your business.
Step 7 for Making a Profit in Trucking: Prevent Cash Flow Problems
very interstate trucking business must secure a USDOT Number . Trucking is a cash flow-focused business. After all, you've got to always buy fuel and make both truck and insurance payments. Without quickpays, brokers and shippers won’t pay their invoices for 15 to 30 days. In fact, many shippers and brokers take 45 days to pay invoices to a business. This delay often leads to a cash flow problem for an owner operator in trucking. Visit DOT Authority Package .
As a business owner in trucking, consider conducting freight bill factoring. Factoring is one of the best strategies for any company to solve cash flow problems. You can advance up to 95 percent of an invoice. This often takes place on the day a business submits an invoice. The remaining 5 percent fee gets rebated after the shipper pays your business. Factoring companies can provide fuel advances, cards, and many other services.
Contact Us To Improve Your Business Operation in Trucking
How to Obtain your MC (Motor Carrier Number) . Do you want to learn more ways to make profit after profit in the trucking industry? If so, please call FMCSA Registration LLC at any time. Our trucking professionals are ready to help you take your business to the next level. We can provide tools and resources that help generate profitable results. No matter the situation your business is in, our trucking experts are here to assist.
Many US carriers must complete Unified Carrier Registration (UCR) registration. Please note that this trucking article is only for information purposes. We do not intend it to provide business or financial advice. If you need business or financial advice, it’s best to consult a professional adviser.