How To Run A Profitable Trucking Business Despite Low Truckload Spot Rates
Running a trucking business
With significant dips in truckload spot rates and diesel fuel costs spiking, you likely have questions about what you can do to set your business up for success. When the spot market is cooling down and expenses are higher than average, every dollar counts. Whether you’re new to the industry or have some experience under your belt, the following tips can help you reduce your operating costs, run your business more efficiently, and remain profitable.
Why are truckload spot rates so low?
This month, reefer and dry van spot line haul rates recorded the largest weekly decrease since 2020. According to forecasting experts, this trend is expected to continue as a result of more trucks entering the industry and limited freight to haul. This might seem scary, but with careful planning, you can ensure your business is prepared to navigate these turbulent times.
How can I protect my business when truckload spot rates are low?
Much like purchasing insurance after you’ve already gotten into an accident, you don’t want to wait until you’re in a difficult position to begin preparing for the impact of a market downturn. Get ready now by following these steps:
1. Audit your monthly expenses
Do you have a strong understanding of where your money goes each month? If not, now is the time to take a hard look at your operating expenses to determine where you are spending and see where you can save. This includes the monthly cost of fuel, taxes, tolls, maintenance, and ongoing subscription costs. It can also be beneficial to review your current insurance rates, in addition to your leasing agreement and factoring contract, if applicable.
2. Establish a safety net
Creating a business savings fund is good practice and especially helpful during difficult months. Start small by adding a percentage of your earnings each month that you feel comfortable with, and increase your contributions during particularly good months.
3. Look into discount programs
Operating on your own can be exciting and lucrative, but there’s strength in numbers when it comes to getting the best rates on everything from parts to fuel. “Saving money on fuel can be the difference between running negative and earning profit on a trip,” shares driver and SmartHop customer, Benson Ocan. “Especially for new drivers who are still learning how to manage their expenses.”
4. Think beyond your next load
When navigating the spot market, it can be tricky to determine which loads are the best choice for your business, especially if you are new to the industry. There’s nothing worse than completing a delivery you expect to be profitable only to get stuck in a weak market and waste time and valuable resources dead hauling. That’s why it’s important to plan for the long term instead of on a load-by-load basis.
5. Plan your routes carefully
With fuel prices this high, drivers will need to consider which routes are the most cost-effective. Using GPS software to avoid traffic and take the most direct route can help, but it is also essential to consider where you’ll fuel up in advance to ensure both the best prices and the lowest possible fuel taxes per trip.
6. Consider using a dispatching service
It might seem counterintuitive to add to your expenses during times like these, but the right dispatching service can help you earn more and ultimately pay for itself. Jose Rodriguez of Millennial Mindset Transport LLC experienced exactly that.
“When I started driving, I was self-dispatching, but that’s a lot for one person, so I decided to try SmartHop,” says Jose. “It didn’t take long before I started seeing equal or more revenue, even after their fee. With SmartHop, I’m making more money and saving time — for me, it’s a no-brainer.”
You’ll want to do your research to make sure the service you choose is the right fit for your needs and keep track of your take-home pay during the first few months of use to evaluate whether or not the relationship is successful.
We’re here to help you navigate low truckload spot rates
If you love the freedom of running under your own authority but need some additional support, we can help. Some of the benefits of using SmartHop include:
- Never miss a good load: We process millions of loads each month from 60+ brokers and load boards for the most options in one place.
- Negotiating power: Our dispatchers study market rates and leverage the scale of our network to get you the highest rate per mile.
- Predict hot lanes: We think steps ahead and recommend the right moves to optimize your monthly profit. But don’t worry, we never force dispatch.
- Data-backed strategies: We look at thousands of loads to find the one that best suits you for long-term profitability. It’s why SmartHop customers earn 68% more than the industry average.
- Robust partner network: With SmartHop, you’ll enjoy complete independence while benefiting from the best rates on everything you need to run your business.
- Unparalleled support: Our support team is available to help you 24/7, with everything from driver roadside assistance to finding and booking loads. And, SmartHop’s Stress Free Guarantee program protects you from unexpected pitfalls, including layovers, detention, and TONUs.