But unfortunately, the hard conditions and requirements over the past years brought low profit and led many of these companies to close their business.
According to the National Association of Small Trucking Companies (NASTC), only 15% of newly formed trucking companies will survive in their second year of operation.
Source: www.arkansastrucking.com
The American Transportation Research Institute (ATRI) released the results of 2015 update on the rise of the trucking industry operational cost from 2008 through 2014.
What is the average profit of trucking company
The success of the trucking company depends on the profit that the company will make on the annual base. Companies that operate their trucks for many miles without a load will lose money, which means that there will face drop of the profit and increments of their expenses.
Every company has different profit, but on average base the numbers say it is 6-8 percent profit of the annual income per truck.
If the average profit for a trucking company on annual base is 7% of the gross annual income per truck and we have a total profit of $200,000 than we get
- 93% or $186,000 to cover the expenses
- and 7% or 14,000 average clear profit per truck
Like we said before, we have expenses and we should never forget about them because if we forget we might spend more that we can afford, more that we have and that can be catastrophic for your company.
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What is killing profit in trucking business
The best way to be safe is to be aware of the expenses that kill profit if you mist calculate. Having correct information’s in this field will give you the chance to make the best freight price and to lead your company in the right direction.
- Costs of fuel
- Cost of labor
- Administrative costs
- Expenses for Insurance
- Personal, Business, and Self-employment taxes
- Cost of regular vehicle maintenance
- Truck repairs
- IFTA
- Vehicle Registration
- Trailer Registration
- Permits
- License fees
- Medical Exams
- Monthly truck and trailer payments
- Rental costs for office space
- Cost of deadhead miles …
If your expenses are higher than the income, you and your company are in a dangerous situation. When you make a freight cost strategy you need to make profit, but you also need to have a competitive price on the market. How to do that?
