Tips for Reducing Trucking Costs (Part 1)

trucking costs

Fleet owners in the commercial trucking industry know that overhead expenses are some of the greatest operational risks. Controlling these costs is management’s directive. In this first part of a two-part series, we will explore ways trucking companies can manage their monthly and annual expenses, helping to position them for long-term success.

Common Costs in the Trucking Industry

Operating a trucking company can be expensive. Fleet owners face a wide range of tangible and intangible annual costs, each of which must be covered by revenue. Failure to control these costs can put  the carrier in jeopardy, resulting in significant financial hardships that may be impossible to overcome. Common costs in the trucking industry include:

  • Freight rates as related to evolving market conditions and seasonal peak load periods.
  • Cargo volume of full truck (FTL) and less-than-load (LTL) trips. Deadheading, or returning with empty trailers, can result in excessive fuel and maintenance expenses.
  • Economies of scale in freight loads.
  • Maintenance and repair of trucks and trailers.
  • Fuel costs, perhaps the largest single expense faced by motor carriers.
  • Administrative expenses.
  • Equipment financing or lease payments.
  • Trucking insurance premiums.
  • Fees and road tolls.

Fuel Expenses: A Drain on Profits

As indicated in the above section, fuel expenses remain at the top of annual operational costs for trucking companies. In fact, about 39% of vehicle operating expenses is tied directly to fuel use. A single diesel-powered truck can burn up to 70,000 gallons of fuel each year. Fluctuating fuel pricing, coupled with volatility in cargo volumes and available routes, can drive up these expenses. To control costs associated with fuel, consider:

  • Reducing speeds, thereby boosting miles per gallon by hitting the efficiency “sweet spot” inherent in truck operations.
  • Investing in adaptive vehicle cruise control systems. Unneeded acceleration and braking contribute to wasted fuel; cruise control systems can save between 10 and 40% in fuel use each year.
  • Reducing idle time by using auxiliary power units (APUs) or by shutting off engines during cargo handling activities and at rest stops.
  • Staying on top of vehicle maintenance, including tire condition and pressure, lubrication, and steering alignment, all of which can contribute to wasted fuel if not managed.

Fuel management is an integral part of a more comprehensive risk management strategy, which also includes truck insurance and safety-oriented operational practices. Saving money on fuel frees up funds to make capital investments in the company, potentially unlocking new business opportunity in the future.

Driver Health and Safety: Keys to Operational Success

Top-quality trucking companies know that the vehicles in their fleets are not their most valuable assets. These companies have achieved success by putting drivers first, ensuring their health and safety. After all, a trucking company cannot conduct business without its drivers.

Protecting driver health and safety also helps to manage operating expenses. Drivers who are overworked, have poor diets, or have underlying health conditions can create financial strains on any trucking operation. Think about the expenses associated with drivers such as recruitment, training, and certification. Medical costs are another consideration — costs associated with driver health or injuries are not always covered by workers’ compensation insurance. If drivers are too unhealthy to work, or they become burned out due to less-than-favorable working conditions, these expenses tend to become unsustainable.

To better manage the health and safety of drivers, trucking companies must adopt rigorous operational practices that protect their most valuable assets: the people who operate trucks and trailers. Practices include:

In part two of this series, we will present additional cost-savings tips for fleet owners. Just like truck insurance protects against risks, expense management can position your fleet for continued success well into the future.

About Western Truck Insurance Services

Western Truck Insurance Services is a commercial truck insurance agency with roots dating back to 1954. We have evolved into a highly respected, professionally managed, truck and transportation insurance brokerage. The hallmark of our organization is our desire to provide unparalleled service. We go way beyond what you expect to receive from an insurance brokerage. Equipped with state of the art automation, Western Truck Insurance can provide you with lightning fast truck insurance quotes, customer service, Insurance certificates, and coverage changes. Contact us today at (800) 937-8785 to learn more!