The first quarter has just come to an end. While it will still take some time for numbers to come in, we can recap on the topics we covered in January.
For your Friday afternoon enjoyment, we have compiled some fascinating stories only truck drivers would experience! We would love to hear your stories from the road!
If there’s one question we hear from our freight broker agents time and again, it’s “how can I get my profits up?” It’s a good question, and we’re here to provide some resources to help out.
Being a freight brokerage business owner means you’re always learning new ways you could run your business. Not to be confused with implementing each and every new entrepreneurial method into your business; there’s not one perfect way to run a business. But there are really good ideas and tricks out there by others who succeeded in the startup phase, who are willing to share those ideas and tricks, and some of those are worth testing. This is one of them.
Mike Michalowicz was recommended to me years ago. You might not recognize the name, but you’ve probably heard of the book The Toilet Paper Entrepreneur. That book has been mentioned by (what feels like) dozens of entrepreneurs as their favorite helpful book on the Entrepreneur on Fire podcast. That book might be Michalowicz’s most popular work, but his most famous piece should be Profit First.
If you’re an established freight broker, skip The Toilet Paper Entrepreneur. If you’re looking to improve the profit margins in your established business, Profit First should be at the top of your reading list. Much like Dave Ramsey is the mastermind behind The Total Money Makeover (also recommended by Michalowicz for personal finance management, and I personally endorse it, too), Mike Michalowicz just gets how to run a financially healthy business.
Mike Michalowicz repeatedly gives this same advice over and over: it’s not about being cheap; it’s about being frugal. Cheap doesn’t get us anywhere—we can make bad purchasing decisions trying to be cheap. Being frugal assures we’re investing our valuable operating expenses exactly where they need to be to benefit the business and your profits.
Want to learn how LDI can help you increase profits today? Let’s talk.
How To Make a Profit…
According to the book, the Generally Accepted Accounting Principles formula for determining a business’s profit is:
Sales – Expenses = Profit
Michalowicz saw (and personally experienced) that this method has the potential to ruin entrepreneurs.
There’s this thing called Parkinson’s Law. It’s technically a book written by C. Northcote Parkinson, but generally speaking, it’s his theory that a demand for a resource will increase to meet the available supply—“work expands so as to fill the time available for its completion”. If we have 2 weeks to do a project, it’ll take 2 weeks. If we have 8 weeks, it’ll take 8. Michalowicz takes this even further: if we have $1,000 to do something, it will cost $1,000. But if we only have $800 to do something, we’ll find a way to get it done with just $800. The best way to accomplish this is to reduce the supply for our demand to require.
…Without Really Trying
The Profit First Formula to determine business profits is:
Sales – Profit = Expenses
While the entire book is worth the investment and read, here’s a breakdown of how your business can bring in profit every month according to the Profit First Method:
Set Up Multiple Bank Accounts
Much like how you’ve set up a personal checking account and personal savings account, do this for your business as well. Have 3 checking accounts, as some banks might penalize you for withdrawing from saving accounts as often as you will need to touch each one of these accounts. The accounts are nicknamed Income, Owner’s Pay, and Operating Expenses (OpEx).
All revenue will be deposited directly into the Income account.
Next, you’ll have to do something you might not have expected. To avoid the temptation of touching some money altogether, Michalowicz recommends opening two savings accounts at a completely different banks. These accounts are nicknamed Profit and Taxes.
Establish Your Target Allocation Percentages (TAPs)
Now to allocate funds to each of those accounts. Rather than choosing based on monetary numbers, which is probably our first instinct, base allocations on percentages. A recommended TAPs chart is available on Michalowicz’s website, and we’ll use those numbers here.
(But your business might not be in any shape to immediately contribute 5% of the total revenue to the Profit account, what then? That’s where the book will come in handy, as he has an entire section with other numbers and examples of businesses who had to take painful baby steps to get to this point.)
For now, we’ll use the publically available recommended TAPs for this example:
As mentioned before, all revenue goes into the Income checking account.
Regardless of how much your firm makes, the recommended allocation for Taxes is 15 percent across the board. Talk to your accountant to make certain you’re square with taxes, just to be certain.
A Word About Taxes
Setting up a Taxes account and regularly allocating funds to it is crucial—particularly for our agents. Since LDI does not withhold taxes when we pay our agents, every freight broker should be setting aside some revenue for the government come tax time. Tax allocation escapes many entrepreneurs and self-employed contractors attention throughout the year, and panic sets in at tax time as there’s sometimes not enough money in the account to pay the government. Implementing this step alone has turned a lot of business owner’s lives around for the better! So, no matter what allocations you follow below, absolutely prioritize the 15 percent (or what your accountant tells you) to a savings account for taxes.
Back to TAPs
For the remaining percentages, say your freight brokerage firm brings in less than $250,000/year. Twice a month, from your Income account, send 50 percent to Owner’s Pay, 30 percent to OpEx, and then 5 percent to the Profit savings account at the other bank.
If your freight company makes between a quarter to half a million in yearly revenue, the TAPs move to 35 percent Owner’s Pay, 40 percent OpEx, and 10 percent Profit.
Regularly hitting between half a million and a million in yearly revenue? Those percentages switch again to 20 percent Owner’s Pay, 50 percent OpEx, and 15 percent Profit.
See what’s happening here? When you see all the revenue come into the Income account and accumulate, you get excited! Look at all that cash! We have an emotional reaction to those numbers.
Then, twice a month (Michalowicz recommends predetermined days practically written in stone), distribute those funds to the other accounts. Twice a month on the exact same days, you’ll send those allocated percentages into your other accounts.
All bills and expenses are going to come out of the OpEx checking account. When an expense comes up that you “need,” look at the OpEx account, not your Income account. The only money moving out of your Income account is going directly into other accounts.
Here Parkinson’s Law goes into play—you’ve shrunk the available funds for operating expenses. There’s not an arbitrary number to play with anymore, there’s only 30 (or 40 or 50) percent of your total revenue to work with. You’ll now find alternative ways to accomplish the ends, or you’ll realize you didn’t need that expense anyways.
Now, this is a severely watered down Reader’s Digest version of how to allocate funds. I’m leaving out a lot. For the actual step-by-step process of how to make these TAPs work for you, check out this Profit First Overview available from Michalowicz’s website. Confused as to how to use it? All the info is in the book.
Also, I’m basing this entire write up on the first edition of the audiobook. A second, new and improved edition has been released since I downloaded it from Audible. The second edition is possibly even better and more helpful, so that could be worth checking out! If you read the second edition and the info is a little different, that’s probably why.
And Now You Have Profits Without Really Trying
Hope this brief overview to Profit First has given you enough information to know if you want to purchase it for yourself! The book is engaging, inspiring, and short. The audiobook is narrated by Mike himself, and he loves to go off on side stories about personal experiences and gives extra examples in the moment (you’ll know when this happens because he’ll finish with, “Ok, back to the book”). It’s almost like a podcast rather than an audiobook, which is fun.
For more pointers on how to effectively run your freight brokerage, and tips to help increase your profits, contact our LDI business developers at 1-800-554-3734.
The New Year is loaded with all kinds of new and shifting developments. It almost feels like a gamble to report the news lest the information is no longer relevant in a few weeks. But for the moment, here’s what we have.
United States – Mexico – Canada Agreement (USMCA)
November 30, 2018 marked the official agreement between the United States, Mexico, and Canada on a new trade policy when leaders of all three countries signed off on it at the G-20 Summit in South America. The renegotiation of the North American Free Trade Agreement (NAFTA) has added a few new chapters addressing digital trade, anti-corruption, and good regulatory practices to protect small and medium-sized enterprises. Since NAFTA originally went into effect in 1994, it was undeniably in desperate need of modernization. Today’s technological advancements and developments have been identified and addressed fairly extensively to protect intellectual property in each country.
As far as transportation goes, there’s unanimous agreement that this new agreement is a good thing. For the most part, it’s very similar to the existing NAFTA, but the updated text aims to streamline transportation standards. Primarily, it’s aiming to implement more technology to expedite shipping and transportation procedures. The expectation is that the USMCA should translate into faster shipping times and relieve some pressure currently placed on logistic companies that cross international borders.
The only major concern associated with this otherwise good news is Section 232 of the Trade Expansion Act of 1962—the 25 percent tariff on steel and the 10 percent tariff on aluminum. The Motor and Equipment Manufacturers Association claims that this piece of the agreement chokes the United States’ ability to invest in more manufacturing and workforce development, which then affects the transportation industry. Many are calling on the Trump administration to include language to exempt Mexico and Canada from Section 232 to keep those channels open and running.
While there’s no other language that concerns supply chain experts, everyone is still well aware that unforeseen issues could arise once USMCA officially goes into effect. That won’t happen until the agreement goes through the Trade Promotion Authority procedures and Congress signs off on the bill.
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China and the United States
As of December 1, 2018, President Trump and President Xi of China came to a verbal agreement that brought cautious relief to those following the situation. Trump and Xi have agreed to try to come to a compromise regarding treatment of intellectual property and technology transfer issues by March 2, 2019. A new compromise will then allow for renegotiation of tariff rates for both countries. Until then, the U.S. has paused the tariff increase for the New Year and will keep the 10 percent rate, and China has promised to begin purchasing from the U.S. agriculture sector. Considering the fact that China was our main export for soybeans in 2017, it is a welcomed relief, but we’ll believe it when the orders come through. We might be able to expect to see China source the US for pork, as outbreaks of African Swine flu are hitting their herds hard. That is still an unknown, but should agricultural exports pick up, that will help relieve serious economic pressures on small farms and rural communities.
Effects of ELD Mandate
Speaking of unknown effects until implementation, the ELD Mandate has been in effect for a year now and we pretty much saw real-life consequences as early as Q1.
Earlier this year the load-to-truck ratios were significantly higher than the previous year. Tie that into the trucker shortage, and it means a lot of freight was sitting around waiting to be moved. This forced shippers to up their rates, which they then passed that cost along to consumers. The last half of this year did see a down-turn from load-to-truck ratios, but consumers shouldn’t expect price decreases.
A few companies who raised prices are familiar names: Amazon increased their Prime membership due to hiked shipping costs. Grocery store name brands like Hormel Foods, General Mills, Tyson Foods, Betty Croker, Haagen-Dazs and PepsiCo have all raised their prices, and others such as Hershey, Procter & Gamble, and Mondelez are slated to raise their prices as well.
The ELD Mandate also messed with paychecks. Drivers aren’t willing to sit around for more than 2 hours to be unloaded while miles are money and their time window is limited. This has created a new culture of drivers/carriers who purposefully avoid specific chains or manufacturers who are notoriously disrespectful drivers’ time. While comfortable lounges are nice, all the free soda and available showers don’t make up for eating into 5 hours of a shift.
The ELD Mandate has had some positive influence. Since the data is now digital, truckers are able to prove beyond doubt that they’ve been kept waiting at warehouses and are now more likely to receive compensation. And about 60 percent of drivers do believe the safety implications the mandate was intended to enable have been reached.
The other 40 percent feel like safety measures are getting worse, with drivers plowing on through bad weather, driving while exhausted for every last available minute, and speeding to cover more miles. ELD actually has reported that following long unloading detainments, drivers do drive an average of 3.5 miles faster. Clearly, some adjustments need to be made.
There has been talk that rather than repeal the ELD Mandate, the Federal Motor Carrier Safety Administration revisit and update the Hours-of-Service (HOS) of Drivers Rule. Ideally, the 30-minute break rule will be nixed, and drivers will be allowed “to use multiple off-duty periods of three hours or longer in lieu of having 10 consecutive hours off-duty.” Since nearly 75 percent of drivers reported they’re detained at a warehouse for longer than 2 hours at least once a week, this should help make that time work as breaks rather than count against drivers allotted driving window. The public call for concerns has closed, and we should have more information about the results of what might happen to HOS later in 2019.
The restrictions the ELD Mandate has placed is overall not so terrible. In fact, the limitations it’s put on shipping goods in a timely manner has brought about the biggest positive of 2018:
Increased Pay for Drivers
The pay for over-the-road drivers has not been great, with the United States averaging about a $40,000 salary. The shortage of drivers and the restrictions of the ELD Mandate has caused some companies to drive up sign-on bonuses as much as $6 grand and increase salaries.
Unfortunately, even with these salary increases, when adjusted for inflation, drivers are still making about 50 percent less than they were in the 1970s. But it looks like we can expect these pay increases to continue as long as the ELD Mandate stays in effect. For those who are going into truck driving, or intend to stay in the game for a few more years, they should experience some better compensation. The US is already short about 60,000 truckers, and ForeignPolicy expects that in less than a decade that number will be about 174,000.
2019 will hopefully provide us with some happier numbers about salaries. Maybe the future of over the road truck drivers will be as attractive as it once was.
Stay Tuned to LDI’s Blog Feed
We’ll be revisiting these topics and surely much more each quarter throughout 2019 to update you on the state of affairs in transportation.
The end of Q1 will undoubtedly have some interesting tariff updates with China and some real-time transportation data about the US/Mexico/Canada border.
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Stay up to date with the world of trucking by tuning into these renowned podcasts.
Podcasts are perfect for over-the-road entertainment. Truckers know this, but podcasts are ideal for anyone with a 20 to 30 minute work commute (brokers and dispatchers, looking at you). Lunch breaks are a good time to catch an episode, or, my favorite, the time it takes to get in a nice cardio work out. I love music, but occasionally, I need to learn something new.
Sometimes the branches of logistics can feel disconnected from each other. Brokers, drivers, and dispatchers all live in very different environments, but podcasts can bring us back together. Learn about something new going on in your truckers’ world, and keep up with what your truckers are talking about right now.
Here’s a list of some of the most popular trucking podcasts out there today. The first few are specifically about trucking, so they tie us all together. Each podcast has a spin that makes it a winner, so read about each one and check out the websites to sample an episode or two. If you’re looking to expand your podcast playlist and want to keep up on what’s important to your drivers, add these podcasts to your Stitcher list:
This podcast works for everyone in logistics. Buck Ballard and his son Don Ballard are both truckers who love talking about trucking, topics truckers find interesting, and offer some trucking business advice. They keep the content pretty fresh with a new episode released each week, so they aren’t scraping the bottom of the barrel for anything to talk about, and forethought is put into each episode. The Trucking Podcast has a website what expands on the details of each episode. Whenever the Ballards publish an episode that resonates with you, you can visit the website and read more about the topic.
Host Todd McCann is a 20-year trucking veteran who talks about his own insights and views on truck driving. He releases one episode a month that lasts about an hour and a half, so these episodes come at you slowly, but they’re fun to listen to. Trucker Dump makes the list on all the best trucker podcasts, and once you listen, you’ll get it. While it’s geared towards truck drivers, it doesn’t hurt for everyone else to be tuned in. Why? McCann gives a trucker’s personal experience about shippers/receivers, customer experiences, and more. This kind of information provides insight on how others are running their businesses, sometimes inefficiently. That can prompt you to do an audit on your own business when he hits on a certain topic that could relate to you. When you find that topic, go to his website, click on the episode, and the content is right there for you to review.
This is a trucking podcast for truck drivers released every Friday morning. This is a trucking culture kind of podcast: the hosts are funny, they talk about the industry, and vent about issues and frustrations truckers face every day. TalkCDL brings current attention to safety issues, emerging technology, and evolving rules and regulations. If you have any kind of question about what’s going on in the life of a trucker, these hosts have covered it.
How to listen: Apple Podcasts
Shifting gears a bit, this serial fiction podcast makes the trucker lists because it blends the world of trucking with the sexy appeal of crime thrillers. Alice Isn’t Dead is a 48-episode podcast about an over-the-road trucker on a journey across the country to search out a wife he long thought dead. Much like Trucker Dump, this podcast is wildly popular among truckers and it spans interest beyond just over-the-road drivers. This podcast is especially attractive to the logistic industry for obvious reasons. Since the series has officially wrapped, you can binge listen to the whole thing now.
Your Turn: What Are You Listening To?
Now we want to hear from you: what podcasts are you listening to? Do you have any other trucker-oriented suggestions? Or do you have something outside of trucking you’re recommending to everyone right now?
Both my dad and my father-in-law are over-the-road truckers, and here are the podcasts they’re quick to recommend:
My dad loves learning about economics, but when it comes to actually recommending a podcast for the general public, he doesn’t hesitate to suggest Freakonomics. Economist Steven Levitt and journalist Stephen Dubner look into all kinds of obscure topics and view them from multiple sides. They interview experts, dig up research, and present it all in an interesting way. The topics these guys cover have prompted some rather memorable conversations around the dinner table.
My father-in-law is the kind of guy who never meets a stranger. He immediately has something interesting and fun to talk about. When someone has that kind of personality, you have to wonder where they’re getting their info. Enter Stuff to Blow Your Mind, a podcast that talks about anything and everything in minuscule detail. Hosts Robert Lamb and Joe McCormick do their due diligence to deliver interesting, researched, and speculated takes on topics from neuroscience to art and everything in between.
What podcasts do you recommend? Share a link in the comments.
Growing your freight broker business can seem daunting. You probably landed your first few clients fairly easily: you had industry connections and were able to negotiate solid contracts. Those first big customers were enough to launch you on your own.
Now that you’re established and have your existing customers solidly managed, you probably want to keep growing your business. This is going to take a bit of ingenuity and creativity on your part, but fear not; we have some proven tactics that you can implement now to help grow your business.
As we all know, generating leads doesn’t just happen. There are a few things required to earn qualified, quality leads.
Know Your Value Proposition
Don’t just tell people what your business does. Tell people why your business is the best at brokering.
Why did your first few customers originally go with you? Probably because you offered something their existing primary freight broker couldn’t. This might have been because:
- You were the most reliable contact to reach by phone.
- Your customer service was exceptional.
- You knew the industry better than anyone else they were dealing with.
- You connected them with a reliable carrier who is always in their area.
You personally provided exceptional value and someone wanted to work with you regularly because of it.
What was that thing (or things) you did so incredibly well? Feel free to even ask your best clients what’s so great about you. In fact, ask them for an answer in an email or by messaging them on LinkedIn. If you have a personal reference or testimonial in writing from satisfied past or existing clients, you have a concrete reference.
Just how important are these testimonials that express your unique value proposition? Here’s some food for thought: according to one Hawkeye study, 71% of B2B buyers in the awareness stage and 77% in the evaluation stage cited them as the most influential types of content.
Tip: Make certain you know exactly what your value proposition is, because it’s going to matter in this next step.
Present Your Value on Your Company Website
Do you have a website?
If the answer is yes, skip these next two paragraphs.
If the answer is no, why? Every single business should have a website, even businesses in logistics. Buck Ballard of The Trucking Podcast puts owning your own website as a high priority in this day and age: “You got a business, you need some real estate.” Websites are the new business card.
It’s easier than ever to have your own website. Services such as GoDaddy and Wix have free website templates to plug your content into. Free websites will have some restrictions, but if a website is acting as a placeholder for your company info, then don’t worry about it. If those restrictions bother you, then there are plenty of web designers out there for hire that will design and maintain a website for a fee. If you don’t have a website, get that sorted out now.
A web presence needs to include your value proposition, contact information, and a lead capture form. Make certain your website is easily accessible: it’s on your LinkedIn Profile, it’s on Facebook, on your Twitter bio; everywhere.
First, you want your value proposition in front of people. Carriers and shippers will work with you because you provide something exceptional. Remember those written references from your best customers? Ask if it’s ok for you to include a quoted testimonial from it on your website.
Second, your contact information needs to be prominently displayed on the website. As mentioned earlier, websites have essentially replaced business cards. Whatever you would have included on a business card, make certain it’s on the website.
Finally, make certain you have a lead capture form to collect a name, company name, email, and phone number. If you want any other information, you can add more fields. Most website templates include contact forms which can work as lead captures for your small business. It serves the purpose, as you’ll receive notifications to your inbox when someone sends you a contact form with their information.
As business owner and CEO, Donald Miller is quick to point out in his book, Building a Story Brand, a person’s email is one of the most private things they could give you. It’s their direct line and they aren’t keen on handing it out for nothing. In order to make leads feel comfortable giving you their contact information, give them good reason with your value proposition on the company’s website.
This takes some leg work, but it’s worth it.
First form of outreach: ask for referrals from your existing clients.
Make it clear that you are expanding your business because your resources have grown, not because you’re going to negate on the excellent service you’re providing. If your client enjoys working with you, ask them to pass along your contact info to others in their network.
This is where the website and lead capture form will come into play. Your clients will forward your website to those in their network and that new potential business will fill out your contact form.
People are incredibly uncomfortable handing out the contact information of others—I won’t hand out any of my friend’s information. However, we’re all quick to send a friend a business’s website. A friend of mine has been seeing a chiropractor for 20 years, so when I said I was looking for one, she messaged me the business website. I checked out the therapies, called to make an appointment, and now I have a chiropractor I’m very happy with. Since she trusted this business, I was willing to trust them too.
Second form of outreach: you may need to cold call. (But do your research first.)
No one likes cold calling, which is why LDI helps you set up your cold call process. Our agents receive a 90-day onboarding guide which includes step-by-step and scenario-by-scenario call scripts to find new prospects. Whatever the situation, you will be coached and prepared with call templates and guidelines to steer the conversation towards securing new customers.
Need More Help?
Start with these three things to improve your lead generation:
Be able to sell yourself: knowing what value you offer to this industry will help you secure customers and partners whose values align with yours.
Display your value proposition clearly: a website that says who you are, what you do, why you’re the best at doing it, how long you’ve been doing it, and how others can contact you will make the right impression. A website says that you mean business and you’re here not only to stay, but to grow.
Reach out: Ask your clients and partners to pass along your contact information to others in the industry. You’re looking to grow your business and want your best customers to pair you up with other fantastic customers. Short of that, pick up the phone and start calling to find other amazing businesses to work with.
Ready to start putting these freight broker lead generation tactics to use? With the help LDI’s savvy, experienced team, our handy onboarding guide, and our industry-leading technology, your freight brokerage will be on its way to becoming a lead generation machine.
Demand for transportation is up, but the margins always seem to be shrinking. How is it possible to make a profit when margins are so thin?
No sweat. There are a few fast ways to increase your company margins during these changing times. We have a list of the 3 best practices to get more out of your small trucking company and even take advantage of the bright future ahead.
1. Leverage Industry Relationships
A surefire way to increase profit margins is to actively engage with those you do business with. Pick up the phone and start a Joint Business Planning discussion. Talk with your closest partners so you both come up with profit goals that align with each other. When one of you achieves, you both achieve.
SMB Business-to-business expert Francesca Nicasio reports that having a discussion with your partners can produce more cost effective outcomes than not. By inviting vendors to think of you as a partner, they’re more likely to help improve your workflow and suggest ways to streamline your business.
Joint Business Planning can benefit you and assure your partners you’re serious about the health of your business. A logistic broker who treats you like a partner is more likely to help increase your business and profit margins. A good broker will keep you updated in the industry, assist in lead generation, and offer their marketing resources to help you succeed. Companies who play the low-cost game and don’t offer these services are feeling the pressure in this market, so it’s important to form strategic partnerships that benefit each other.
Brian Abel, a financial advisor specializing in the trucking industry, recommends evaluating brokers carefully. He says one of the best indicators of a trustworthy firm is to be certain a broker is Transportation Intermediaries Association (TIA) certified. The certified TIA broker is bound to the TIA Code of Ethics to help maintain a community of trustworthy and transparent business partners of brokerages and 3PLs.
Now time to look inwards:
2. Maintain Retention and Reduce Attrition
One of the easiest ways to secure cash flow and predict profits is to work with the same customers over and over again. Your established book of business already has a few favored customers, so let them know you appreciate them. More often than not, regular communication will take this far. David Finkle, co-author of Scale: Seven Proven Principles to Grow Your Business and Get Your Life Back, says that a well-timed call, card, or visit lets the customer know you appreciate them actively purchasing from you.
On the flip side, if your customers aren’t benefiting you, perhaps it’s time to stop benefiting them. Finkle recommends that if your top customers’ margins are covering costs for your bottom customers, it’s better to cut ties and move on.
Don’t just take our word that these strategies are effective. Heartland Express (HTLD) refocused their business strategy for 2018 and experienced drastic results. They cut ties with less profitable lanes and focused solely on their most profitable customers. While HTLD experienced a significant drop in revenue year over year from 2017 to 2018, their operating ratio (OR) dropped by 9% and their adjusted OR dropped by nearly 11%. Because they pushed their OR down so far, HTLD actually increased their net income by over $11 million.
There’s a bright side to Heartland cutting ties with so many customers: their loss is smaller operations gain. Because of these cuts, HTLD haven’t been able to take full advantage of the strong demand for over the road truckers. That means the demand for freight is up and it’s yours for the taking.
Now to grab that low-hanging fruit:
3. Streamline Operations to Reduce Spending
Business optimization can produce game changing results, especially in industries with slim margins. If your office spends an exorbitant amount of time entering the same info into separate software systems, that’s money lost on finding and booking lanes.
Knowing how and where your time and resources are being spent can help optimize your business operations to make the most dollars per hour. The easiest way to do this? Princeton Consultants president and CEO Steve Sashihara says “use efficient technology.”
Transportation Management Software (TMS) is a huge asset for small trucking companies. The better the software, the better streamlined your operational process will be. A good TMS system will have invoicing and collections, dispatch services, legal and compliance, Bid, RFPs, pricing, and customer contracts all in one application. Make certain you choose a software that integrates with load boards, GPS integrated tracking, EDI capabilities, and analytic software to run reports. The fewer the clicks it takes to get between screens, the better.
Sashihara has seen enough good software systems streamline business operations to be a firm believer in investing in it. He specifically cites that the transportation industry has been able to transform struggling operations into profitable companies thanks to optimizing their fleet scheduling. By using real-time data plus historical knowledge, it’s easier for trucking companies to smartly predict price increases and act on them.
The Small Business Advantage
Heartland Express might have shrunk, but that doesn’t mean your small trucking company is going to. In fact, with increase in freight volumes and robust orders, margins are on the rise. Small trucking businesses are in the best position to take advantage of those margins. According to financial research specialist Mary Ellen Biery, “most general freight companies in the US are small businesses with less than 20 employees and […] their size might position them to adjust to market needs.” Hot spot markets and contract rates are expected to grow about 10 to 12 percent year over year. Those rising rates with the fairly stagnant growth of professional truck drivers means those already in the role are in position to benefit from this bright future.
Small trucking operations are in the best position to take advantage of this tight market. Since there is a lot more freight than capacity, act on these three things to make certain you get the best slice of the pie:
- Leverage Industry Relationships: work with partners who want to succeed with you.
- Maintain Retention and Reduce Attrition: work with customers who provide value to you and cut ties with those who cost you.
- Streamline Operations: make the most money per hour by investing in the right transportation management software that will reduce your workload and increase your bookings and invoicing.
If you’re ready to act on these three things and want to learn more about building a successful partnership, contact us at LDI to learn about our carrier program.
One of our business development specialists will be happy to hear about your existing business, your goals for growing, and have a conversation about how we can help you get there.
We’re already well into 2018, and a lot has happened in the logistics and transportation industry. The ELD mandate continues to be a controversial topic, we’re keeping an eye on the current capacity crisis, the industry is soaring to new technological heights with autonomous vehicles, and so much more.
Whether you’re a carrier, trucker, or freight broker, it’s crucial for everyone in the industry to stay up to date on the latest news and trends. As a truck driver or carrier, it’s important to know the latest regulations and news so you know how to keep doing your job efficiently (and legally). For freight brokers, knowing what’s going on in the industry can help you manage your loads, keep positive relationships with your carriers, and continue to provide the best support possible.
To help keep you consistently updated on the logistics and transportation industry, we’ve decided to look back on each quarter and roundup the best resources highlighting the quarter’s most important industry news, trends, and happenings. Below are the highlights we found for the first quarter of 2018.
Remember to check back at the end of June for our second quarterly update.
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1. After effects of Phase 2 of the ELD mandate
At the end of last year, phase two of the ELD mandate officially went into effect. From December 19th, 2017 and on, truckers are now required to log their hours electronically via an electronic logging device, or ELD. Now, we’re just a couple weeks away from another important date — April 1st — which is set to be the start of the enforcement and penalty phases.
With the looming deadline, it’s going to be important to keep an eye on those who have been avoiding complying to the mandate hitherto. A few FMCSA officials held a webinar on the ELD rule recently, and FreightWaves has the full recap you can read here. To summarize, the webinar discussed the rules and exceptions to the rule, including the agricultural exemption, uses of AOBRDs throughout the end of 2019, what happens when an ELD malfunctions, hours of service clarifications, and reminding all of the April 1st deadline.
Here are a few helpful resources to keep up to date on all information regarding the ELD mandate:
- The Federal Motor Carrier Safety Administration
- SupplyChainDive news
- Follow related hashtags on social media like #ELDmandate or #ELD
2. The truck driver shortage
For over the past ten years, the trucking industry has been dealing with the truck driver shortage. Many people believe this is due to age demographics or a difference in generational work ethic. Others claim it’s because the lifestyle of a trucker is often shown as less than ideal — whether it be the long hours, unfair wages, etc. And the recent ELD mandate is not helping the matter.
Whatever the reasons may be, we can all agree that the driver shortage is one of the most critical issues facing the industry. According to the American Truckers Association, “more than 70% of goods consumed in the U.S. are moved by truck, but the industry needs to hire almost 900,000 more drivers to meet rising demand.”
While the shortage has fluctuated over the years, it has yet to come close to a resolution. A recent analysis by DAT Solutions said at the beginning of this year, the available trucks versus the amount of loads was the lowest ratio since 2005. The Chief Economist of ATA said that, “even as the shortage numbers fluctuate, it remains a serious concern for our industry, for the supply chain and for the economy at large.”
So, what is the industry doing to reverse the shortage?
Many companies have to increase the wages of their current drivers to make up for lost hours on the road due to lack of drivers. And by attracting a younger generation of drivers, it might help replace the large number of drivers that are retiring every year.
It’s also been stated that the negative connotations associated with the “life of a trucker” has kept the job in the shadows – and simply increasing the wages and improving the benefits could solve a lot of the problem. In an article in the January 8th, 2018 issue of Transport Topics, Joe Chandler, President of SPI International Transportation, writes, “we have let real wages for drivers decline while paying more to our executives and more for our trucks.”
Plenty of blogs and news outlets consistently report on the ups and downs of the driver shortage. You can find some of them here:
Although the issue remains at a critical level, Supply Chain Dive has high hopes that the current capacity crisis will cause a growing need for drivers. Thus, pushing companies to improve their wages, benefits, etc. to attract more people. Joe Chandler believes since, “drivers are in high demand, [truck] driving should be a natural path forward for many of the nation’s underemployed workers.”
3. The Capacity Crisis
In our post about the crisis from last year, we discussed what it is, what’s causing it, and how businesses can handle the problem. To recap, a capacity crisis occurs when the industry has an abundance of loads, but is lacking the capacity (or trucks) to ship those loads.
Evidence of what’s causing the crisis points to fleet deterioration, loss of truckers with commercial drivers licenses, an increase in government regulations, etc. According to Supply Chain Dive, the ELD mandate and the driver shortage are primarily to blame.
Essentially, the reason there is a low truck supply is heavily due to the lack of drivers available to drive them. And the increased government regulations — such as the ELD mandate — are upsetting many of the already limited number of drivers in the industry. In a recent article by Forbes, it states that, “regulations such as these are…perceived by the drivers as an infringement on personal space [since] many consider their trucks to be a home away from home.”
Read more details on what’s causing the crisis, and how the industry is working to correct it, here:
4. Autonomous vehicles
Recently, there’s been a huge focus on the technology of self-driving, or autonomous, vehicles. It’s particularly popular in the transportation and logistics industries for a variety of reasons. Autonomous trucks can potentially lead to a more environmentally-friendly industry, save money on gas and other truck maintenance, and actually create more jobs — not fewer — for truckers.
Last year, Elon Musk unveiled Tesla’s first electric semi-truck, and Uber Freight recently announced it’s sending a driverless truck on a trip across Arizona. Other companies like Waymo, Starsky, and Embark aren’t far behind.
As technology continues to evolve at a rapid pace, it’s difficult to truly predict how autonomous trucks will impact the industry. We like to stay positive and hope the autonomous vehicle era will bring jobs, help the environment, and improve the way we transport goods. Unfortunately, not everyone agrees with that outlook.
Wired’s article, “What Does Tesla’s Automated Truck Mean for Truckers?” suggests that this new technology could actually worsen the driver shortage, and potentially worsen job conditions (i.e. force 24-hour shifts on employees because the driver would technically be ‘not driving’). It’s also important to mention that Uber is now under fire as one of their self-driving cars hit and killed a pedestrian, marking the first fatality due to an autonomous vehicle. Although this technology has been tested for some time, this is a brutal reminder that it’s still in its infancy.
Ultimately, there isn’t enough research being done yet on the effects of automation, so one prediction is as good as the next. Keep updated on the latest industry technology here:
5. Increasing sustainability within the industry
As previously mentioned, some pros of the autonomous technology would lower the industry’s carbon footprint, use less gas, etc. So, it makes sense that many within the transportation and logistic industries are aiming to implement more sustainable business practices.
The American Truckers Association is committed to establishing a bold sustainability program, and the American Transportation Research Institute shares best practices for sustainable trucking such as driving, vehicle, and public sector practices.
You can keep track of the companies who are making waves in sustainable trucking practices here:
6. President Trump’s New Tax Law
The ELD mandate is not the only way the government is impacting the industry. President Trump’s new tax law (and “trade war”) are more than likely to affect the industry.
The federal Tax Cuts and Jobs Act that was signed on December 22, 2017 will change how carriers account for buying and selling trucks. According to Transport Topics, “how the law will affect trucking businesses depends on business type.” If you’re a C Corporation, the federal tax bill lowers from 35% to 21%, but it’s important to keep in mind that C Corps have double taxation. S Corporations will choose between the lowest calculation of 50% of W-2 wages, 20% of taxable income, and 25% of W-2 wages plus 2.5% of all qualified property. Many businesses may look into restructuring their business, and sole-proprietorships may need to consider becoming an S Corporation.
Additionally, many are worried about the President’s proposed steel and aluminum tariffs will start a trade war.
Some helpful sources for staying on top of these new stories are:
Between government regulations and new technology, 2018 is bringing a lot of changes to the world of logistics and transportation. Whether you’re a truck driver, carrier, freight broker, etc., it’s important to be aware of what’s happening within the industry.
Know of any other important industry news or additional resources that we haven’t listed? Share in the comments – we’d love to check them out, too!
The idea of shipping dates back thousands of years – and today, container shipping is one of the leading means of transporting goods. In fact, it’s responsible for moving an estimated 95% of all manufactured goods around the world.
How did shipping become such an expansive industry?
In 1956, American truck driver Malcom McLean decided to stack 58 metal containers onto a ship going from New Jersey to Texas. The efficiency of transporting goods this way “completely revolutionized the industry,” according to a video from The Wall Street Journal. These containers both protected the cargo and made it drastically easier to unload the shipments. Standard containers allowed the cargo to move from ships onto trucks or trains without being repackaged — a system called “intermodalism,” which saves both time and money.
With the use of intermodalism and other advances such as industry globalization, container shipping continues to dominate the industry. Today, there are billions of tons of cargo being shipped around the world by container ships every year.
Without shipping, we would have far less food and produce in our grocery stores, cars to get us where we need to go, and access to the latest iPhone accessories. For such an wide-ranging industry, it’s surprising how little most people know about it. For example, did you know that over 10,000 shipping containers are lost at sea every year? Or that only 2% of seafarers are women?
Shipping is an expansive industry – and evolving every day – so we understand it might be difficult to always keep up with the latest news. That’s why we decided to share some of the most fascinating shipping facts and statistics we could find. Check out our collection in the infographic below. And if you’ve heard of other surprising facts, be sure to share them in the comments!