Every business has its own unique opportunities for cutting costs, and freight companies are no different. In an economy that seems to get tighter every day, making the best of the bottom line in the freight business is more important all the time. Effective changes to operations can reduce waste, improve revenues, and stabilize income streams so that management can plan for the long haul – literally and figuratively.
1- Improve Load Procurement
A full truckload is simple, cost-effective, and efficient. However, there is still plenty of shipping work available for smaller loads that won’t fill an entire trailer alone. For firms involved in LTL (less than truckload) shipping, the key to profitability is to get trailers as full as possible for every trip. Optimizing the use of each trailer will maximize revenue, covering the per-unit fixed costs as well as the variable costs that cover overhead like insurance.
There are countless online resources and networks for securing loads that can help companies find enough cargo to top off the trailer without going miles out of the way or exceeding maximum weights. The less work needed to fill a load, the more profitable each run will become.
2- Implement Code Classification
Not all freight is created equal. If a freight company bills strictly by weight, it will not be profitable to haul bulky items that weigh less. If the company bills by volume, the load can easily become overweight before it’s profitable. The extra care required by fragile shipments increases handling time. The list goes on and on.
An ideal solution to this problem is to utilize a code classification system. It provides a standardized framework for freight companies to classify shipments according to density, handling, stowability, and liability so that the charges for each part of an LTL shipment capture its actual cost, rather than averaging it out across the entire shipment.
3- Look into Freight Factoring
Sometimes it’s not getting the load or reaching the destination that’s most challenging. It’s getting paid for the accurate and timely delivery of the shipment. Unpaid invoices are a top reason why companies fail because these delinquent accounts create a strain on getting the company’s bills paid that can eat into reserves and credit faster than incoming revenues can replenish them.
An effective option for working around this is to use freight factoring. The trucking company simply sells its invoices to the factoring company for a percentage of their face value. The factoring company then pursues payment from the customer. The trucking company gets paid faster and with less collection effort, enabling them to stay current on their own bills.
Everything from fleet maintenance to driver skill feeds into the profitability of freight companies, but it takes more than just attention to detail in these areas to stay ahead on the bottom line. Companies that find strategies for improving their operations through other methods can better weather the economic storms that always blow into town, keeping them in operation while they await better days while they await better operations.