October 17, 2019
Written by Aaron Parr
Aaron Parr is the Director of Operations at Freight X. He oversees the entire fleet of trucks, the mechanics, the dispatch team, the safety team, and more.
If you run a small fleet – say less than 10 trucks – odds are you’re feeling the hit of high operating costs right now.
According to Transport Topics, the cost of operating a truck has gone up 6% to $1.69 per mile, and that was as of October 2018. That same month, the trucking industry entered into a recession (Barron’s).
While the freight market has started to come back up (about 6.1% year-over-year), it’s still really expensive to run freight. Essentially, for the past year, you’ve been paying more to make less. Ouch!
Insurance rates are hitting us hard, software and trucking tech can set you back upwards of half a million dollars, fuel discounts are only available based on massive volume… can you catch a break?
Well, yes – yes, you can. To bring your operating costs way down – and get tons of extra benefits that you and your drivers will love – consider partnering with a larger trucking company as a freight agent.
Trucking Industry Insurance Premiums Are Crazy High
If you run a small fleet of trucks, you’re likely scratching your head right now at the sky-high insurance rates we’re all facing. It’s not just you.
According to the American Transportation Research Institute (ATRI), the cost of insurance is the single largest operating cost increase in trucking. In fact, insurance costs have been jumping double-digits since 2013, and today, the costs are debilitating.
Last year at Freight X, we were paying less than $7,000 per truck, and this year, it’s over $11,000 per truck. We attended McLeod’s Annual User Conference and talked to another gentleman who reported that last year, he was paying $8,000 per truck, and this year it’s upwards of $15,000 per truck.
The worst report we got was from another owner-operator who found us and shared he was paying $10,000 for his truck last year. This year? Nearly $26,000. That’s enough to make you question whether or not you can continue in this profession.
If you’re in Florida, you’re experiencing the highest insurance rate hits in the country.
Why Are Insurance Premiums So Expensive?
California started the trend of very high settlements a few years back, and Texas soon followed. Insurance companies started raising rates hard in these states, and Florida has now followed suit. Lawsuit, that is.
If you live in Florida, you’ve likely noticed this personally. It seems like every other commercial out there is asking, “Were you hurt by a trucking company?” or “Have you or someone you loved been hit by a truck?”
Contrary to popular beliefs about more expensive tractor-trailer rigs, the real reason trucking insurance rates have gone up so high is because of lawsuits.
Insurance carriers have explained to us that they’re paying out more than they’re collecting in premiums. Liability is the most expensive part of the insurance – totaling your tractor doesn’t really matter in the grand scheme of things.
An insurance company could care less about a $50,000 truck when they’re awarding $2 million here, there, and everywhere because someone hurt their back in a trucking accident.
People aren’t being hurt more than they were 10 years ago – it’s a trend right now of outrageous settlements, and it’s not slowing down.
To lower your insurance costs per truck, consider becoming a freight agent. The more trucks you have, the lower your insurance rates can generally be. Insurance companies like bigger pools of trucks, because it spreads out the risk, but if you only have a few trucks, you’re not getting that benefit.
By becoming an agent for a trucking company, you instantly get access to their lower insurance premiums.
If you’re paying more than $11,000 per truck, I’d encourage you to consider becoming an agent for us at Freight X. There are a lot more benefits that we’ll explain as we continue, but we’d love to share our insurance rates with smaller fleets.
Truck Maintenance Costs Are Rising
In general, truck maintenance is costing more than ever – from the cost of the truck equipment itself to the cost of maintaining it.
Back in the day of the Detroit Series 60s, anyone with good diesel experience could work on it. There was no computer, no after treatment systems, no high-tech things on tractors.
Today’s after treatment systems and sensors cost a lot more to fix than they used to. Beyond just the parts, you have to have specialized knowledge – basic diesel experience isn’t enough anymore, and that labor is more expensive.
A lot of companies won’t sign on older equipment, so it forces drivers into newer, more expensive units. Not that this is a bad thing – it’s just the reality. If you want new tractors, all the technology that goes into that is simply going to cost more to fix.
For owner ops and agents here at Freight X, we do our best to soften the blow of rising maintenance costs by using our own mechanics in our shop.
Our in-house mechanics are available at a discounted rate. We’re nothing like an outside shop.
Our mechanics don’t get paid based on how much they bill. Their goal is to get you serviced, repaired, and back on the road as quickly as possible.
Trucking Software and Tech Is Really Expensive
If you run a small fleet, there’s no way you’re going to be able to implement expensive trucking software systems.
It’s just too costly unless you’ve scaled up enough to warrant the massive expense. The problem is that you can’t run a trucking company on paper anymore. You need state of the art technology. We offer McLeod Software – you just can’t get any better than that.
There are cheaper systems out there, but you get what you pay for.
In addition to operations software solutions to manage the business, you have trucking tech expenses like:
- Electronic Logging Devices (ELDs)
- Billing software
- Electronic Data Interchange (EDI)
As you know, ELDs are now mandated to replace paper logs, so you can’t hide from that expense. In addition, most customers require EDI nowadays.
The costs add up quickly, and because we have all of this software and tech in place at Freight X, we’re actually able to attract and maintain bigger customers because of it.
By becoming an agent for a trucking company that has all of this trucking software and technology in place, you’ll not only save hundreds of thousands of dollars – or more, but you’ll be able to finally access those better-paying, more reliable, and larger customers.
Our agents here at Freight X have that luxury.
Fuel Discounts Are Essential
When looking at ways to save money in trucking, all eyes turn to fuel. The overall fuel economy of a new truck model is about 6.5 MPG (American Transportation Research Institute).
Reported fuel economy of survey respondents compared to typical operating weight
According to extensive research completed by the American Transportation Research Institute, fuel costs about $14.50 per hour, or just under 40 cents per mile. Besides driver wages, fuel is the most expensive part of running freight.
Fuel alone accounts for 22% of a carrier’s costs as of 2017, so if we can get the cost of fuel down – even by a few cents per gallon – you’re going to see a massive change in profits and losses.
Share of total average marginal costs between 2009-2017
The problem is that fuel discounts are based on volume.
If you pay retail at the pump, or even retail minus a few cents, you will love our incredible fuel discount! We have a great deal with Pilot/Flying J, and we’re able to secure the deep discounts we have based on how much fuel we buy – and that’s around 2,500 gallons per day!
Small companies don’t do that kind of volume in a week, let alone in a day, and thus they can’t get the discounts we can get. That’s why it can pay off to become an agent for a company that does more fuel volume.
Fueling Location Optimization
Another thing to consider when it comes to fuel costs is where the fuel is actually the cheapest. Here at Freight X, we do something called fueling location optimization, which is based on routes.
In a nutshell, this just means that the price at the pump doesn’t tell the whole story! Just because you see the cheapest price at the pump doesn’t actually mean it’s going to be the cheapest.
There’s a lot that goes into it, but being able to choose the cheapest fuel is more complicated than it seems, and becoming an agent for a company that takes this into account is going to be a huge cost savings!
Become An Agent to Save on High Trucking Operating Costs
If you run a few trucks, you already know how expensive operational costs can be. From high insurance premiums to software to fuel to maintenance costs, it’s very costly to run a small fleet.
By becoming an agent for a larger company, you’re giving you and your drivers access to better prices and opportunities. Here at Freight X, we can save you money in all areas of your business because of the infrastructure we’ve built.
Beyond cost savings, it really pays to become an agent!
Here are some of the extra benefits that we offer for becoming an agent at Freight X – check with the company you’re talking with to see if they offer these perks as well:
- More drop and hook opportunities
- Greater trailer pools
- Bigger customers
- Direct deposit of weekly commission
- Quick pay options available
- Access to database of over 1,000 customers
- Free subscription to DAT and Truckstop (load posting and matching boards)
- National recognition
- Financial strength and excellent credit rating
- Accounts receivable and payable processing
- Computer and technical support including company computers
- Mobile access to our TMS
- Factoring agreement
- McLeod software – complimentary
- Positive cashflow – we’re a growing company!
- Maintenance mechanics
- Maintenance software
- Dispatch and load planning services with decades of experience
- Fueling location optimization based on routes
- We’ll file your IFTA
- ELD is provided
- ELD monitoring to ensure safe driving habits
- Tips and tactics given to drivers to avoid unsafe situations
- Quarterly safety meetings
We do a lot, because our agents do a lot!
As an agent, safety is a huge concern – you want to make sure your drivers are driving safely so that they can make it back to their families safely. Ideally, you want the company you partner with to coach your drivers on how to be safe and to monitor their driving habits.
At Freight X, we see the current risks and the environment that drivers have to drive in, so we provide what they need to make sure they avoid risks and stay safe. We provide tips and tactics to drivers to avoid unsafe situations.
We’re all a family at Freight X, and our goal is to get all of drivers home safe at the end of their run.
Becoming a freight agent at Freight X allows you to do what you do best, RUNNING YOUR TRUCKS!
Become an Agent with Freight X
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