by Tim Brady
, Business Editor
A driver sitting with an empty, idle truck is a lost revenue opportunity
What’s your focus when dispatching and developing freight lanes for your trucks? It seems a lot of carriers focus on getting their trucks back to the company’s yard or getting that truck “home,” which appears to make good business sense. After all, if your truckers don’t get home on a continued and regular basis, driver turnover occurs and it makes it very difficult to cover the needs of your shipping customers.
But it’s the driver who needs home time, not the truck. A truck that is empty and not rolling is nothing but a financial ball and chain that stifles revenue production and interrupts your company’s cash flow. How do you separate the truck from the driver so an apparent conflict in objectives becomes a smooth-flowing, revenue-producing machine for both your carrier and your truckers?
Getting that truck and trailer back within a reasonable distance of your office is a good goal; however, having good-paying tonnage aboard that brings money ‘home’ is an even better goal. Let’s look at some different ways to accomplish ‘bringing home the money’ that achieves your other goals of driver retention and keeping revenue flow where it needs to be.
Develop specific freight lanes for each of your trucks and drivers. A freight lane, by definition, is a combination of loads that run in succession geographically.
Let’s say you’re located in Kansas City, MO, and you have a local customer who ships to multiple locations: north to Chicago, east to Nashville, south to New Orleans, and west to Albuquerque. These loads are consistent every week. You own four trucks. Take each of these outbound destinations and they become the first leg of a freight lane for each truck. Then develop other profitable legs for each truck, which return it to Kansas City in time to load the next outbound load.
We’ll use the Chicago freight leg to demonstrate in more detail how to develop a profitable lane. The objective of any freight lane is to generate the required revenue goal by the end of each month for each truck and trailer. For most general freight or refrigerated truckload carriers, that figure is typically around $20,000 per truck, depending on cost factors.
In this example, that becomes our monthly goal. By creating a monthly revenue goal for each truck and driver rather than looking at how much a truck earns per mile, you’ve moved from trying to play basketball on a regulation court with a Solo cup and a ping-pong ball to playing the game with a regulation basket and ball. Skill is still required, but it’s a much easier target to hit.
Say the Chicago load pays $1,100. The next load you broker from Chicago to Madison, WI, pays $270. From there, your next load is scheduled to Little Rock for $1,200. Then the next load in this lane picks up in North Little Rock and goes back to Naperville, IL, for $1,300. From there, the driver loads in Chicago and runs to Indianapolis for $300. The last load is from Indy to Olathe, KS, for $860.
Add that up and the total revenue for the truck for the week is $5,030. And, over a four-week period, that would exceed the $20,000 revenue target.
However, it’s not realistic to anticipate you’d find identical, consistent loads like this from week to week. While in our example the Kansas City to Chicago load would be consistent, it’s possible (and likely) you’d have to find other loads for some of the legs from week to week to meet your revenue goal.
Typically, many shippers have products shipped to specific destinations on regular schedules. Some ship daily, some weekly, some are biweekly, every other week or even monthly.
The challenge and goal in developing your legs and completing your lane for each truck is to become an expert in knowing the freight and who, when and where it’s shipped for each freight lane in which you run a truck. This means you’re ready for the unexpected, i.e., the load that is cancelled or delayed, weather or traffic delays, or the customer who changes the shipping schedule. It’s important to have a consistent freight lane that meets your weekly and monthly revenue goals.
One thing most micro- and small carriers don’t consider when developing their business plans is the location of their drivers. Again using the Chicago freight lane, you (the owner) would need to look at that lane and determine where the longest delay will be for the trucker or truckers who run it.
Anywhere in that lane where an overnight stay is consistently required before loading or unloading occurs is from where you need to hire your truckers. The reason for this is it’s far better for the driver to be home with family, even for a 10-hour break, than cooling his heels at a truck stop. This could be anywhere along the lane listed above.
Let’s say the driver lives in Kansas City but has to lay over in Naperville every week. When he rolls into Olathe to deliver, if you have him loading right back out to Chicago he’s not going to be a happy driver for very long—especially if he has to stay in the truck near Naperville. If he lived in Naperville or an area nearby, however, he could spend that night at home, and every time he delivers to Olathe, he’d be ready to get out of Kansas City because he would be heading back home. A trucker with home time is always happier.
The bottom line? Work on the specific freight lanes allotted to each truck for more efficiency. Not only will this keep the revenue flowing, but you will improve driver retention—bringing more money home for both your carrier and your truckers.
Contact Tim Brady at email@example.com or call 731-749-8567. Join Brady in the Trucking Business Community at www.truckersu.com