Most people are not aware of the vital service provided by the trucking industry to all consumers in this country. The United States Labor Department has estimated that something like 70% of everything worn, eaten, or enjoyed within the household, at school, or on the job, is transported by trucks on the roadways.
In most cases, even the raw materials used to make all those products have been transported by long-distance truckers who move the freight between cities, so it can be manufactured into the finished goods purchased by consumers. It’s fair to say that the trucking industry is the backbone of the retail industry in this country and that without it, retail would come to a screeching halt.
What do trucking companies do?
Trucking companies are obviously a key part of the American economy, since they carry large quantities of raw materials, work in process, and even finished goods from one place to another, and from manufacturing plants to retail outlets in distribution centers. Some trucks are involved with the construction industry, transporting topsoil, fill, and concrete to building locations where their services are needed.
The majority of all freight movement in this country by land is accomplished by truckers, so it’s no overstatement to say that the trucking industry plays a vital role in the American economy. In order to drive a large truck, it is necessary to obtain a commercial driver’s license (CDL) which requires extra training and specific knowledge so that such a large vehicle can be safely managed on the road.
Truckers are obligated to comply with regulations set forth by the Federal Motor Carrier Safety Administration (FMCSA), both for their safety and for the safety of other motorists on the road. Other regulations are set and enforced by the Department of Transportation, which is the parent organization of the FMCSA.
In recent years, several significant improvements have come to the trucking industry, as technology, computers, the Internet, and satellite communication have helped to bring the trucking industry into the 21st century. All these improvements have increased the productivity of trucking operations, made drivers more efficient, and have even provided new forms of entertainment for drivers that spend long hours on the road.
How do trucking companies make money?
The trucking industry can be profitable, but it depends on how you run your business. There are hundreds of individuals who have attempted to break into the trucking business, attracted by the lure of big profits, only to end up failing because they applied poor business principles in running their operations.
Here’s how a well-run trucking company makes profits and become successful over the long haul. First, you have to pick the right market to support, and this is true whether you have a small fleet or a large one. The market that you choose has a huge impact on the kind of equipment you buy, the rates you can charge customers, and the actual freight lanes that your company will service.
Hauling specialized loads and oversize transport is one of the best ways to break into the trucking industry because it avoids markets that the larger carriers are focused on. It’s also extremely important that you charge the right rate per mile because this will determine whether or not you make a profit after paying all your operational costs.
Before you even start negotiating with shippers and making sales, you need to have established your rate charges. You can do this by selecting your desired freight lane and calculating how much it should pay for a round-trip, then add 10% or 15% to come up with your rate. Next, you need to determine your operating costs, these will include truck payments, permits, insurance, etc. Those are all fixed payments, and you also need to factor in your variable costs that will include fuel and other costs along the way.
Your fuel-buying strategy will be the single largest expense for any carrier, and while many carriers are tempted to simply buy fuel at the cheapest pump available, this is generally not the best strategy. The best way to approach fuel purchases is to buy your fuel at the cheapest base price, regardless of what it costs at the pump. The base price consists of the fuel price minus all taxes, this is important because truckers are obligated to pay taxes on fuel as they drive through states, regardless of where that fuel was originally purchased.
Another important element in the way you should run your trucking company is to minimize your use of brokers and load boards, and instead develop a client list that includes mostly direct shippers. This should be enough business to keep you busy and allow you to charge a competitive price at the same time. There is no doubt that load boards and brokers have a place in the trucking industry, especially when you have empty vehicles, but they can also be pretty expensive because of the rates they charge.
Something that is an absolute must is running an efficient back office in your trucking company, even if that means running it out of your home office with a laptop and a printer. You’ll need accounting software to run your business, and that should be specific to the trucking industry so it’s as useful as possible.
One final tip on how to best manage your trucking company is to avoid cash flow problems to the greatest extent possible. Most shippers and brokers pay invoices somewhere between 15 and 30 days, although that can extend to 45 days in some cases. That might cause cash flow problems for your company unless you use a strategy like freight bill factoring. This can solve the cash flow problem by advancing you as much as 95% of the invoice, usually within a day or two from the time you submit the invoice.
5 largest trucking company in the United States?
It can be to your advantage to drive for one of the biggest trucking companies in the country because for one thing, there is virtually no chance that any of the companies in the top five or 10 are going to tank anytime soon. That means you have job security in the industry pretty much for as long as you want it.
There’s also the fact that these trucking companies are so prosperous it allows them to invest considerable resources in new equipment, technology, and on-the-job training. That means you’ll be driving all modern equipment, with top-of-the-line technology installed, and you won’t have to worry about struggling through vehicle inspections.
Instead, you will be able to just focus on driving, which is what you’re paid to do in the first place. Another big advantage of driving for one of the larger trucking companies is that many of them seek out the best drivers, and for that, they’re willing to pay sign-on bonuses, often in the neighborhood of $8000-$10,000.
You might also be awarded safety bonuses, retirement plan options, and a number of other perks that will make it highly advantageous to work for a specific carrier. They go out of their way to find the best drivers and make it worth your while to stay with them, so it can be highly beneficial for you to work with one of the largest trucking companies in the business.
Here are the five biggest trucking companies in this country. If you can land a job working with one of these companies, you can expect to be well compensated for your efforts.
- United Parcel Service – UPS annually delivers millions of packages to millions of customers all over the world. From its humble origins in 1907 when it was founded by two teenagers, it has grown into one of the largest multi-billion-dollar enterprises on the planet.
- FedEx – this is another world-renowned delivery company, with more than a million employees around the globe, and is routinely rated at the top for customer service and customer satisfaction. They are also well known for treating their employees very well.
- J.B. Hunt – another one of the largest transportation and logistics companies in the world, J.B. Hunt delivers freight to hundreds of thousands of customers in North America and has soared into prominence since its 1961 founding.
- Schneider National – one of the largest privately owned trucking and logistics outfits in the country, this company is headquartered in Green Bay and currently operates approximately 50,000 trailers and 17,000 tractors. Partnered with upwards of 6,000 carriers, they have no trouble providing smooth and reliable service to all clients.
- Roadway Express – upwards of 60,000 shipments are made each day using a huge network comprised of more than 30,000 trailers and 8,000 tractors. Roadway Express is known for its lightning service and reliability as a shipper.