Profitability Report

Introduction

New this quarter

This Profitability Report includes data on lane profitability and fuel prices from Q1 2024.

We intend to improve this report over time. If you have any requests for information you’d like to see in this report or feedback on how you’d like to see it evolve, please contact profitabilityreport@smarthop.co.

If you’ve read a previous edition of our Profitability Report, you can skip the rest of the introduction (it’s redundant) and jump directly to the Q1 2024 Profitability Report section. If you missed our last edition, you can read the Q4 2023 Profitability Report here.

Why is profitability so important?

When evaluating which loads to book, many dispatchers and fleet managers look for the highest RPM they can find. However, the most successful dispatchers know that optimizing for RPM can be shortsighted. If you’ve been in this industry for some time, you know the pain of booking a high RPM load, only to find that the destination market is “cold,” with few, or only low-paying outbound loads.

At SmartHop, we believe that profit potential should be the deciding factor when planning routes and booking loads, not RPM. This means doing two things differently:

1. Instead of just focusing on how much revenue you could earn by looking at RPM, we encourage our customers to focus on profit, by taking the total trip rate and their costs into consideration. This gives dispatchers and fleet owners an understanding of the loads they could book and still make money, even if they don’t have the highest RPM.
2. Instead of choosing loads by finding the highest RPM, we believe the key to sustainable profitability is to plan routes that drop your trucks in markets with a high potential to book another high-RPM load. This could mean passing over the highest RPM load for something that is still profitable but also ends in a market that allows you to book another profitable load. Stringing together loads in this way is what we mean by optimizing for profit potential. 

If you’re a SmartHop customer, you get real-time profitable load recommendations built into our load board, considering your costs.

About SmartHop’s Profitability Report

Our profitability report analyzes millions of reefer, dry van, and flatbed spot market loads from 70 US markets to highlight the most profitable lanes and markets across the country. In this quarter’s report, you’ll find an overview of Q1 2024’s Hot Markets and Profitable Lanes for dry vans, reefers, and flatbeds. You’ll also see how lane profitability has changed over the past 3 months.

To calculate profit, we input a standard cost structure that is representative of the average truck on the SmartHop platform.

You’ll also find an overview of how fuel prices have changed over the last 6 months and an overview of fuel prices by US region.

This report is a resource for small fleets looking to make smarter decisions that impact their profitability, with the goal of driving business growth. Independent dispatchers can leverage this information to improve their load-booking strategies for their customers.

About SmartHop

SmartHop helps small fleets and independent dispatchers grow their businesses. We were built by truckers, for truckers, and have built the solution we wish we had, a single platform that combines the functionality of multiple-point solutions. 

With SmartHop, you can accomplish the tasks that previously required a separate load board, TMS, factoring company, and fuel card provider. Plus, our added layer of market intelligence helps users make better decisions faster. The result for our customers is time savings, increased profitability, happier drivers, and improved cash flow.

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Q4 2023 Profitability Report

Hot Markets

In this section, you’ll see the markets where it was easiest to pick up a profitable dry van, reefer, or flatbed load from the spot market in Q1 2024. 

To come up with our list of Hot Markets, we use SmartHop’s Market Profitability Index (MPI) to compare 70 US markets. The markets that we consider “Hot” have to have an MPI of 85 or above, meaning that the profitability of that market is much higher than the US average, which would be a market with an MPI of 50.

Dry Van:

Reefer:

*While Chicago was the 3rd hottest reefer market in January, it had an MPI under 82, so it didn’t meet our Hot Market criteria.

Flatbed:

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In Q1, Hot Markets increased for dry vans each month, with seven in January, 14 in February, and 16 in March. 

Chicago remained the most profitable market, as it has been since September 2024, with other Midwestern markets taking positions two and three throughout the quarter.

Carriers looking for reefer loads were faced with a decrease in Hot Markets in Q1, with only two markets meeting the Hot Market Criteria in January, three in February, and nine in December, down from 10 in December. The Northwest and Midwest were home to the top three reefer markets in January and February, but things started to shift in March, with Tucson and Los Angeles occupying the top two Hot Market positions.

The number of Hot Markets for flatbeds remained relatively consistent quarter-over-quarters, with eight in October, seven in November, nine in December, six in January, 10 in February, and nine in March. Q1’s top markets for flatbeds remained primarily in the Midwest.

Profitable Lanes

We evaluated the inbound and outbound freight for thousands of US lanes to determine where it was possible to make a profit on one load while positioning yourself to pick up another profitable load in your destination market. This is what we saw in Q4 for van, reefer, and flatbed lanes:

Q4 Lane Profitability

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Three Month Trend

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Lane Categories

Profitable Lane to a Profitable Market: These are the best lanes available. A carrier can expect to earn a profit on the delivery and easily pick up another profitable load in that market. Identifying and booking these lanes isn’t easy, but it is the best way to keep your trucks on the money path in a very difficult market. Request a demo to see how the SmartHop platform highlights these lanes to make them easier to find and book. 

Profitable Lane to Neutral Market:  You’re likely to break even on loads coming out of neutral markets. In this scenario. While big profits are unlikely, these loads can be used strategically to keep your balanced profit above $0.

Profitable Lane to Unprofitable Market: The cost of taking a load from the destination market could cancel out profits from the initial profitable load, leaving you with a negative combined profit. 

Unprofitable Lane to Profitable Market: This is the best possible option when deciding between unprofitable lanes. In this scenario, you’d end up in a market where it’s more likely to pick up a profitable load, which could be enough to offset the loss you took on the initial load.

Unprofitable Lane to Neutral Market: In this scenario, while you’ll lose money on the initial load, you’ll break even on the load coming out of the neutral market. While you’re not continuing to lose more money by taking a load here, you’re still netting negatively on your trip so far.

Unprofitable Lane to Unprofitable Market: This is the worst scenario you could be in, hauling bad loads to markets where it’s also difficult to pick up a good load. Carriers can anticipate losing money on the delivery and only unprofitable options for reloads. 

Q1 Analysis

Looking at Q1 data, the largest percentage of lanes for all three equipment types fell into the unprofitable lane to an unprofitable market category, reflecting the challenging freight market we’re still experiencing. 61.79% of dry van lanes, 54.77% of reefer lanes, and 42.00% of flatbed lanes fall into that category. The dry van and reefer markets saw monthly increases in the percentage of unprofitable lanes to unprofitable markets throughout Q1, with the percentage increasing by 39.59% for dry vans and 44.99% for reefers from January to March. The flatbed market saw a slight monthly decrease throughout the quarter and an overall quarterly drop in unprofitable lanes to unprofitable markets of 3.90%.

The next largest lane category across equipment types was profitable lanes to unprofitable markets, with 19.70% of dry van lanes, 22.45% of reefer lanes, and 18.04% of flatbed lanes falling into that category. Carriers should be careful with these lanes because although the initial load will be profitable, it will be difficult to impossible to get a profitable load going out of the destination market.

To stay on a profitable path, carriers should aim to create trips using profitable lanes ending in profitable and neutral markets, which made up 6.81% of dry van lanes, 11.52% of reefer lanes, and 20.75% of flatbed lanes in Q1. There were significant quarter-over-quarter increases in these lanes for all three equipment types, 5.16% for dry vans, 4.54% for reefers, and 12.01% for flatbeds from Q4 2023 to Q1 2024.

In this market, running profitably can still feel like a big challenge. To help small fleets and dispatchers more confidently book loads that keep their business running profitably, SmartHop’s platform has automated load recommendations and a background load search feature that finds loads that meet your criteria, even while you’re not actively searching. See a demo of how it works.

Fuel Costs

In this section, we’ll share data from the U.S. Energy Information Administration to show how diesel fuel prices have changed over the past 6 months. We’ll also share fuel prices by region.

Fuel is one of the largest costs factored into the profitability of a fleet operation. As diesel prices increase, we expect to see fewer profitable lanes across the spot market.

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Diesel fuel costs continued the decline that began in September until January, at which point they reached a low of $3.854 per gallon. Since January, prices have increased by 4.93% to a high of $4.044 per gallon in February. The West Coast remained the most expensive fuel region, reaching a Q1 high of $4.672 per gallon in February. The Gulf Coast continues to have the most affordable diesel, and with a Q1 low of $3.583 per gallon in January.

Fuel is a major cost that carriers should take into consideration when calculating profitability. When fuel costs are high, carriers must focus even more on finding high-paying loads and cutting costs across their business to run profitably. At SmartHop, one of the ways we help our customers cut costs is with a fuel card program that offers an average discount of $0.50 per gallon at over 2,500 major fuel stations nationwide.

Conclusion

With fuel prices rising from the January low, finding and booking profitable loads continues to be difficult, and increasingly important. The majority of lanes across all equipment types are still in the category of unprofitable lane to unprofitable market, but we remain optimistic about empowering carriers to run profitably by being critical about which markets and lanes to target.

In Q1, the Midwest continued to be the hottest region for dry vans and flatbeds. located in that region. For reefers, Hot Markets were more distributed across the country, including the Midwest, Northwest, and West Coast.

While the spot market remains challenging and competitive, our biggest recommendation is to evaluate a load’s profitability (as well as the profitability of the destination market) not just its RPM. To make it easier, we’ve built this functionality seamlessly into our platform in the form of load recommendations, with the option to enable auto-booking. We’re excited to provide the industry with a snapshot of what our platform can do in this quarterly report.