Grow your fleet or increase your margins?

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If I was to ask any trucking company this simple question I would expect to get the same answer from all of them, or I would hope that I would anyway. If In the next twelve months you have only two options available to you, first you can expend capital and increase debt to grow your fleet by 10%, or you can concentrate all your efforts on ensuring that you are maximizing your operating ratio to its fullest, which will require next to no expenditure other tan your time and effort, which of these options would you choose?

Some might say that they do both on an ongoing basis, which to a large degree, most would believe is close to the truth. But how do you know that, what is your benchmark, to what standard do you compare to ensure your doing the right things right and getting the best in class available results?

Now enter TCAinGauge, by now most of the industry has heard, or is aware of this fairly new offering that is available, which is an online benchmarking management tool. It might look like a time consuming highly technical platform that has application to those carriers with a high-level expertise, and people to gain familiarity with the service, again the big carriers have an advantage, right? And to be honest, to capitalize on the offering to its fullest extent, one would need to spend resources of people’s time that might already be taxed to the limit. But having said that, allocating or even hiring extra staff pails in comparison to investing in additional rolling stock when your not confident that your operating margin is where it should be.

What if in an hour of your time you could know how you compare to carriers based in your geographical area, in your sector, and your size with expense related to, fuel cost, insurance cost, maintenance cost, driver expense and the whale of them all operating ratio? If you were find out that you were not best in class on all or any of these comparable, let alone the other sixty that are available to carriers subscribing to TCAInGauge, wouldn’t you have to put your growth plans on hold until you were?

If this offering were available when I ran a motor carrier, a couple questions would come to mind for me, first, am I threatening the future of my company by putting hard won capital, and or available credit, in harms way when I know there is competition out there who are making better returns than I am, in my own backyard? Second is, exactly how much money am I leaving on the table because I am out of market on any of the items listed above, should I concentrate on getting my house in order before I concentrate on growth. In other words am I just spinning my wheels here? Third might be, how long before the carriers with higher margins start focusing on my customer base?

So here is as simple as it can be to know where you stand, simply do these calculations and submit them

Fuel cost,

Formula: (Fuel Expense Total) / (Freight Revenue Linehaul Total + Accessorial Revenue Total)

Insurance cost,

Formula: ((Insurance Expense Total) / (Freight Revenue Linehaul Total + Accessorial Revenue Total)

Maintenance expense,

Formula: (Maintenance Expense Total)/(Freight Revenue Linehaul Total + Accessorial Revenue Total)

Driver Expense,

Formula: (Salaries, Waged & Benefits Total) / (Total Miles Driven Total)

Operating ratio,

Formula: (Freight Revenue Linehaul Total + Accessorial Revenue Total – Operating Profit Total) / (Freight Revenue Linehaul Total + Accessorial Revenue Total)

There are sixty others you can compare yourself to, you can see them at I’ll give you one for free that many carriers are interested in, the average aged accounts receivable for the InGauge subscriber carrier base across the board is 42 days, how do you compare?

So would you spend a couple hundred a month to know exactly where you stack up to the competition, to gain the confidence that would come from knowing exactly how efficient you are in the marketplace. To also gain access to the latest management tools, education, strategy and goal setting platform specific to truckload, quarter load segment. Now investing in growth makes much more sense because I know I am not lagging behind those carriers that would love to grab my customers.

The one that would excite me is knowing exactly what my competitions average cost of insurance is compared to mine. What great information to have when entering negotiations with your provider and agent. What about your fuel expense, are you in market, is your supplier giving you the right discount or are you missing the boat on some other item related to fuel expense. In the knowledge library there is a section solely dedicated to fuel management.

But I ramble, at the crutch of the is the simple basic principle of comparing ones cost to the market and focusing ones efforts where the greatest return can be garnered for the effort given. Another simple fact is the people gravitate to what their good at and that they’re comfortable with. This might leave a lot of margin floating in the wind; it is also reasonable to think that many business owners work so hard on their business that working on the business becomes secondary.

Almost every other sector of business uses benchmarking to give them guidance of their major business decisions and to enhance their bottom line, and which for the majority results in exceeding larger operating ratios than trucking has experienced over the years.

Now here is trucking, which might be a little late to the game, but here we are, your chance to experience what most other business sectors rely on to ensure success is now available to you, don’t be left behind!

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Mr. Ray Haight has enjoyed a successful career in transportation starting as a company driver and Owner Operator logging over one million accident free miles prior to starting his own company. After stepping down from a successful career managing one of Canada’s 50 largest trucking companies, Ray focused on industry involvement including terms as Chairman of each of the following, the Truckload Carriers Association, Professional Truck Drivers Institute, North American Training and Management Institute and the Ministry of Training Colleges and Universities voluntary apprenticeship of Tractor Trailer Commercial Driver, along with many other business interests, he enjoys a successful consulting business, also sitting on various Boards of both industry associations a private motor carriers. He is also Co-Founder of StakUp O/A TCAinGauge an online bench marking service designed to assist trucking companies throughout North America focus on efficiency and profitability within their operations.

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