Navigating Success: A Guide to Managing a Thriving Trucking Company
The trucking industry is not so much about the trucks or the technology—it is about the people—the drivers, their managers, back office staff, the shippers who entrust valuable cargo to carriers, and the trucking entrepreneurs who shoulder the immense responsibility of moving the majority of our country’s goods.
But the industry is changing fast—and it is being reshaped by evolving supply chain models, increasingly demanding customers, and the expectation of a superior customer experience.
While the spectacular growth in transportation offers a wealth of opportunities for carriers, it also presents unique challenges.
How do you steer a trucking business toward growth and profitability in this day and age?
In this article, we explore every mile of this journey, understanding the pulse of the trucking industry, its needs and challenges and discuss the key aspects of how to manage a trucking business.
Finally, we end with summarizing the role of a TMS in the trucking sector and how Toro TMS is helping mid-size trucking companies across America.
Understanding the Trucking Industry
The trucking industry in North America is vast. The numbers tell the story. A story of how the sheer 'weight' of the trucking sector has played a significant role in driving the U.S. economy.
To put this in perspective, the U.S. trucking industry accounted for 80.7% of the nation’s entire freight spending in 2022.
It's a sector that employed over 8.4 million people in trucking-related jobs in 2022 (up 405,000 from the previous year), of which 3.54 million were professional truck drivers.
The Trucking Industry: A Brief Overview
Shippers (who may be goods manufacturers, distributors or retailers) enlist trucking companies or carriers to carry truckloads of goods to various destinations. Some larger shippers or manufacturers may have their in-house truck fleets—but for this discussion, we'll consider only carriers or commercial trucking companies.
The majority of trucking companies in North America are relatively small, with a fleet of 10 trucks or fewer.
Trucks operating across multiple states, provinces or international borders are called Over-the-Road or OTR trucks. OTR trucking companies moved 61.9% of the value of surface trade between the U.S. and Canada in 2022.
The trucking business is undoubtedly lucrative, and there is a constant need for agile and adaptable carriers who can react and respond rapidly to shifting demands. But it is by no means an easy business!
Carriers face several challenges—from driver shortages and a high cost of driver wages, rising fuel prices, and ever-changing compliance requirements such as filing fuel tax returns, driver safety protocols, and vehicle emission norms.
To thrive in such a dynamic and competitive market, trucking companies must concentrate on building operational efficiencies and focus on optimizing resource allocation.
One of the promising trends in the sector is the use of digital technologies, such as real-time tracking systems and route optimization software, which enhance efficiency, reduce operational costs, and improve customer satisfaction.
Cloud-based technology platforms known as Trucking Management Systems (TMS) can help trucking companies streamline and optimize various aspects of their business, from fleet management, route planning, and load optimization to real-time tracking and financial management.
Toro TMS is one such trucking management platform that's built specifically for midsized OTR carriers.
Key Aspects of Managing a Successful Trucking Company
Let's delve deeper into what it takes to thrive in an industry that's not just about hauling cargo – it's about delivering promises, supporting livelihoods, and transforming trade across borders.
Strategic Planning
The foundation for a successful business is to draw a roadmap to get where you want to go! In other words, set clear and achievable goals and then plan specific strategies.
Trucking is no different. You must do your homework (read: market research!). What part of the business do you want to target and why? What are your strengths, and how well are they aligned with your goals? Are you aware of the latest trends in the market, and do you have a roadmap of how you will ride these trends to reach your goals?
Once you have clarity on your high-level goals, you can then proceed to develop tactical strategies, which may include how to develop and maintain contracts with shippers, decisions about the number of trucks you need, what capacity you want to run them at, and what investments you want to make into tools and technologies to run operations efficiently.
Operations Management
Running operations cost-effectively is a mantra that all business owners live by. However, how efficiently you can run your day-to-day operations often determines business success when it comes to trucking. Operational efficiency goes straight to your bottom line.
For trucking companies and fleet owners, this means streamlining the all-important dispatch activities, ensuring consistent and clear communication between customers, dispatchers, and drivers and optimizing back-office processes to reduce time to collect.
This is a place where the right tools can have a major impact on your business. A Trucking Management System is an essential investment for carriers to improve communication with customers and drivers, automate time-consuming, low-value tasks, improve compliance, and get paid faster.
Financial Management
Carriers must walk a tightrope between operational efficiency and investing in technology and compliance requirements. With increasing fuel costs and a burden of administrative processes and taxation, managing finances is one of the biggest headaches for the ownerss of trucking companies.
Cash flow is particularly important in trucking. In the trucking industry, customers often clear payment for carrying loads about 30 to 90 days after invoices are sent. This means you cannot rely on receiving payment before settling driver payments, fuel costs, or paying out staff salaries. Plus, you cannot delay essential business expenses such as vehicle repairs, taxes, and subscription fees for software such as your bookkeeping or accounting system.
A TMS provides a reliable and convenient way to track driver and fuel expenses, automatically generate invoices, and seamlessly settle driver payments on time. From a cashflow perspective, a TMS can also play a crucial role in reducing your time to invoice, and in turn reducing your time to getting paid.
Compliance
The trucking industry requires carriers to meet various federal, state, and local regulations relating to commercial drivers' licenses (CDL), fuel taxes, driver safety, vehicle emission norms, and Hours-of-Service. The list can sometimes feel endless and its easy to become overwhelmed by all the requirements to run a trucking business.
The Federal Motor Carrier Safety Administration (FMCSA) and the Department of Transportation (US DoT) have clearly defined Hours-of-Service rules for drivers of commercial motor vehicles. For example, drivers must rest for 30 minutes during an eight-hour shift and limit driving time to 11 hours per day with a cap of 14 hours.
Non-compliance can have potentially disastrous consequences—debilitating financial penalties, interest charges on unpaid taxes, not to mention the reputational damage and loss of new business.
That's why complying with these regulations is non-negotiable if you want your trucking business to grow and thrive. Modern tools such as an ELD and a TMS can help ease the burden of complying with these regulations. For example, if your TMS and your ELD can integrate, then you can easily tell whic drivers have the necessary HoS to complete a load.
Workforce Management
If you want your trucking business to thrive, it's essential to focus on hiring and retaining skilled and reliable drivers—they're not easy to come by—so once you've found them, make sure you provide them with satisfactory compensation, including perks such as bonuses for accident-free driving and safe driving conditions.
The same is also true for your in-office staff. The right team can make the difference between a thriving trucking company and one that goes out of business within a year. The best dispatchers are responsible for making sound business decisions and providing great customer service to shippers. While the best back office staff ensures invoices get out quickly and the drivers are paid accurately and on time. At the end of the day, trucking is like any other successful business: it requires having the right people in the right seats.
Customer Service
In a highly competitive industry, if you want to differentiate yourself from other carriers, you must focus on providing an exceptional customer experience. Reliable and timely deliveries, and good communications throughout are the cornerstones of a reputable trucking company.
A TMS can help you with real-time vehicle tracking capabilities help dispatchers to keep customers informed of ETAs.
It also enables instant communication between dispatchers and drivers so that changes in routes or special instructions can be communicated to avoid any potential problems.
Customer expectations can be managed proactively with this customer-centric approach, helping you clock repeat business, get valuable referrals, and maintain strong long-term relationships with customers.
The Role of Technology in Trucking Management
As discussed above, adopting digitization and technology solutions is a move those small and midsized carriers must make to transform their company into a successful trucking business.
Truckers are no longer at the mercy of pen-and-paper schedules, trip books, or manual mileage calculations. Today, sophisticated GPS-powered devices and ELDs provide accurate and automatic mileage tracking and fuel consumption records. Powerful algorithms find the best routes, considering many variables like traffic patterns, road closures, and weather conditions—which would be difficult, if not impossible, to achieve without automation.
Automated invoicing based on data from load management and dispatch modules of the TMS is a boon for administrative staff. Seamless integration with accounting software and ELDs ensures a smooth flow of information across your entire operations.
Easy fuel tax filing (using system-generated IFTA reports) and hassle-free compliance with safety protocols are benefits you simply can't ignore.
All-in-all, technology is reshaping how the trucking sector operates and helping trucking companies achieve growth and profitability.
Toro TMS Can Streamline Your Operations
Toro TMS is a cloud-based Trucking Management System that facilitates strategic planning and operations management and eases your administrative burden when it comes to accounting and finance, regulatory compliance, workforce management, and customer service.
Adopting Toro TMS can bring profound and transformative changes to how you run your trucking operations. You'll experience new levels of productivity, resource optimization, and efficient communication.
Reach out to us, and we'll arrange a demo for you to experience the power and simplicity of Toro TMS and steer your trucking business into a new era of growth and profitability.
