What's Eating Profitability Among Trucking Companies in the Carrier-Leaning Market?

For many trucking companies and carrier networks today, the greatest struggle they face comes down to maintaining high enough margins of profitability to keep doors open and businesses running. Despite recovering markets and strengthening economies, there is still a mountain of expense and debt that many companies are still trying to dig out from under thanks to shutdowns, capacity crunches, driver shortages, consumer demands, and other disruptions over the last two years. Understanding what is eating away at the profits despite growing revenues at truckng companies is critical for long-term success. Let's take a look at a few key things that need to be considered.

Limited Visibility is Making it Harder for Trucking Companies to Measure Performance

Right off the bat, some companies struggle to recover fully simply because they lack clear end-to-end visibility and real-time tracking measures to monitor progress and gauge overall performance. Freight carriers and truckers need the ability to monitor real-time data and conduct a thorough analysis to find weak points in the supply chain and to see more clearly what is and is not working for current market volatility. Improving visibility in the trucking network should always be the first step in recovery for carriers looking to speed up the recovery process.

Increased Demand for Lower Rates Has Led Some Companies to Maintain Minimal Profitability

Trucking companies also face an uphill battle in some situations simply because of the imbalance between profits and expenses. The imbalance is causing long-time carriers to shut down as they are no longer able to keep operating. A recent FreightWaves article noted that “Waco, Texas-based Central Freight Lines has notified drivers, employees, and customers that the less-than-truckload carrier plans to wind down operations on Monday after 96 years.” The struggle to maintain profitability is hitting a critical breaking point where something has to give and for some, it is, unfortunately, the carriers themselves who finally break.

Companies Are Still Running With Empty Space and Empty Miles

Even with recovering in progress and local and global economies alike slowly rebuilding and getting back to normal, many carriers and freight companies are still running trucks with empty capacity and running routes with empty miles. This can cause a much higher average freight cost per mile overall for the company. With still limited freight capacity and availability at times, beggars can’t be choosers and many carriers are being forced to take partial loads and run different routes than normal. While any load is a good load and having truckers on the road is better than them being stuck with no shipments, the balance between profitable and less-profitable loads is still a tricky tight rope to walk at times.

Inability to Forecast Demand Is Making It Harder to Attract and Retain Drivers

Uncertainty within the carrier network means drivers are uncertain about what trucking companies they want to partner with and get involved with. Many drivers are focusing on spot contracts at the moment to avoid being tied down too much during such volatile times. Attracting drivers and keeping them on board is an increasingly difficult undertaking. Limited data tracking and analysis and weak predictive planning make it harder to attract and retain drivers to build up a reliable network of carriers. Volatility within freight capacity and driver availability makes it more difficult for companies to properly budget and plan for expenses and keep profit margins high.

Trucking Companies Are Also Faced With Mounting Regulations, New Rules That Add to Costs

While the ongoing push for companies to be more sustainable with their practices and business operations is a good thing, it does add considerable expenses to already struggling truck and carrier companies. New federal guidelines, fuel regulation, emissions controls, green energy protocols, carbon credit changes, and the increased risk for fines and additional non-compliance fees only make recovery more challenging for struggling companies. In good times, sustainability is easy and even affordable but on the heels of a global pandemic, managing freight costs is something that companies are struggling to overcome.

Trucking Companies Need to Start Aggregating Freight to Maximize Profitability Per MOVE

Despite recovering markets on both the national and global levels, many companies are still trying to deal with the ongoing impacts of shutdowns, driver shortages, limited capacity, and other disruptions. Understanding what is eating away at carrier profits and why recovering seems sluggish post-COVID, requires a new approach and a new starting point that focuses on freight aggregation and management. Contact newtrul today to learn more and see what it takes to make trucking companies more efficient and profitable in this volatile market.

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