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KSM Blog | Katz, Sapper & Miller CPA

How Trucking Companies Can Profit from Time

Posted 5:00 AM by



Time is directly connected to money in the trucking industry. This may seem obvious because so many metrics refer to various time frames. We are constantly monitoring numbers that demonstrate how revenue, loads, miles and more stack up over time (per day, week, month, quarter and year). From those perspectives, we are thinking about time at every turn.

What may not be so obvious is that trucking companies can profit from paying more attention to time. For most managers, efforts to increase profitability primarily focus on finding methods to increase rates and decrease costs, but there is another powerful angle to consider – decreasing time.

By decreasing time, I mean get loads delivered in less time. If you are able to decrease the amount of time spent hauling the load, you can increase your velocity. This would result in an increased capacity to handle additional loads, which can boost revenue and profit per day, week and so on.

At KSM Transport Advisors, our trucking consultants measure the profitability of a given piece of business using a yield calculation. Yield is defined in terms of an equation that includes revenue, cost and time as they apply to a company’s entire freight network. Although the details of the equation can be complex, one result is simple: when time decreases, yield increases.

By working solely on managing time more effectively, a carrier can improve its yield and the profitability of the freight in its network. If you are able to find ways to deliver loads faster, there is potential to make more money. Time is a perishable commodity; you cannot make up the profit you do not earn today.

Will ELDs Help or Hinder?

There is a common assumption that the impending mandate to move from paper logs to electronic logging devices (ELDs) will steal time from carriers. Paper logs have a reputation for allowing drivers to squeeze in a few more minutes here and there so they can get more done before taking a break. The use of ELDs will eliminate a driver’s ability to alter their time. Conventional wisdom suggests that carriers will encounter more headaches around getting freight delivered on time.

Although this is certainly true in many situations, and many fleets have documented reduced capacity with ELDs, there is a flip side. When each driver’s hours of service can be managed electronically, dispatchers have an opportunity to optimize driver availability.

Having visibility into driver hours means that it is possible to devise a more efficient plan and avoid aggravating delays that occur when a driver unexpectedly runs out of hours. This visibility allows you to see which driver has the hours required for each load and assign the loads accordingly.

Instead of impeding the flow of operations, ELDs could increase productivity among the carriers who strategically use this technology. And, when productivity goes up, profit follows. It is all about time.

About the Author
David Roush is president of KSM Transport Advisors, LLC, part of the Katz, Sapper & Miller Network. With 30-plus years of experience, David’s focus includes freight networks, financial management, operational metrics and optimization strategies. Connect with him on LinkedIn.

 

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