Use This Summer Heyday as a Great Time to Plan Ahead Rates are high this summer, so plan now to survive those guaranteed lean times on the horizon By Jennifer Lickteig Freight rates have been really good for a while now. That’s great news for truckers, especially after the economic hardships early last year. Lane rates are high, the economy is opening up again, and this summer is projected to be robust for the transportation industry. But when times are good, it’s easy to forget that what goes up will ALWAYS come down, especially in our notoriously cyclical trucking industry. This fat summer isn’t sustainable long-term, so it’s important to recognize that a financial winter is coming. It always does. Let’s take it back. History has shown that when freight rates are high, many drivers will leave their carrier and try to make it on their own. Unfortunately, many of these start-ups will fail the first time freight rates fall. Why? Falling behind on truck payments, not being able to afford insurance, and incurring other unplanned expenses are some of the main reasons why small companies or
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new owner-operators have to close up shop. The solution to keeping those big rig wheels turning is to make and execute a business plan that helps you prepare for lean times, so you won’t have to make desperate choices under pressure. That advice may sound strange coming from someone like me, whose company makes money helping truckers who are in a cash crunch, but I believe the trucking industry is a family. The only way for us all to survive and thrive is to look out for each other. It’s time to make your money while the sun shines and have a business plan ready for the lean winter months ahead. It’s not as hard as it sounds, so let’s get started.
Step #1: Determine Your Rate Per Mile Cost per mile is the total cost of what it takes to keep your trucking operation going for every mile you drive, not just the miles you get paid for. You need to know your cost per mile so you can determine
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how much money you need to charge for those miles you DO get paid for to break even and make a profit. There are a lot of factors to consider, but it comes down to a simple equation: total expenses (fixed plus variable) plus desired profit/salary divided by total miles driven (both paid and unpaid). Time to break that down.
Determine how many miles you will drive in one year If you’re not sure how many miles you’ll drive, a good estimate to use is 100,000 miles per year. Using a more accurate number is better, so do your best to anticipate how much you’ll be driving. Also, keep in mind that your estimates should include total miles, including deadheads (unpaid miles with an empty trailer).
Calculate your fixed expenses Fixed expenses are all the things you must pay for no matter how many miles you drive: things like insurance, licensing fees, permit fees, truck loan payments, and
