Even though Indeed lists the average annual owner operator salary at $325,000, it’s important to remember that figure is gross profit. The reality is that most owner operators and trucking companies run on profit margins as low as five percent, which is why understanding your trucking company expenses is vital to the success of your business. From truck or lease payments and fuel expenditures to maintenance and insurance costs, your incoming profits can easily be eaten up by outgoing expenses, especially given recent inflation. The good news is that you can take steps to reduce your trucking company expenses to maximize your small business’ profitability.
Whether you’re a one-truck owner operator or you’re a trucking company owner running multiple trucks, your operating expenses play an outsized role in your small business and its long-term success. Ask veterans of the trucking industry and they’ll tell you that keeping trucking company expenses in check is a major factor in the long-term health of your business. With this in mind, here are four of the biggest operating expenses for owner operators and fleets.
When it comes to the most significant trucking company expenses, fuel is unsurprisingly at the top of the list, as you’re in the business of transporting goods over the road. Owner operators on average spend between $50,000 and $70,000 or more on fuel alone each year. If you’re a motor carrier, you can multiply that expense by the number of commercial trucks you have in your fleet, accounting for approximately 35 percent of operating costs.
Maintenance and Repair
Making sure your truck(s) are serviced regularly and properly maintained makes good business sense because the better you take care of equipment, the longer it is likely to last. You also need to pay for repairs if and when you experience mechanical failures. Maintenance and repairs for a single commercial truck cost on average $7,500 each year, though that amount can fluctuate significantly depending on the age of your truck(s), mileage and other factors.
Insurance is another one of the biggest trucking company expenses you’ll face as an owner operator or fleet owner. You’ll need to meet the mandatory minimum coverages for commercial truck insurance in order to get your MC number and maintain good standing with the FMCSA. This will cost you on average between $3,000 and $5,000 each year. You also may need to account for health insurance costs and cargo insurance expenses, depending on your situation and needs.
In order to deliver those shipments on behalf of your customers, you need trucks, of course. New commercial trucks can cost anywhere between $100,000 and $200,000 each, while a used truck will cost you considerably less. Unless you paid for your truck(s) in cash, that means a hefty truck payment each month. Leasing a truck will lower your monthly payments but will require a three to five-year commitment and may include mileage limits.
Thankfully, there are steps that you can take as an owner operator or fleet owner to minimize your trucking company expenses and maximize your revenue. One of the best (and easiest ways) to reduce operating expenses is to leverage technology to your advantage to run more efficiently.
Use Time and Money-Saving Tech
Technology can help you reduce down time, increase your productivity and maximize your drive time, which is why we recommend using efficiency-boosting technology in your business. Free mobile apps and web-based dispatcher software can reduce manual phone calls between you and brokers and save you valuable time — and that saved time can be used to increase your earnings.
Optimize Your Route for Fuel Efficiency
Although the price of diesel fuel has come back to earth a bit over the last few months, it’s still at historically high levels. That’s why we recommend that you use a routing and fuel optimizer when you/your drivers are on the road. A routing and fuel optimizer will help you find the cheapest stops for fuel all along your route and keep your fuel expenses as low as possible.
Take Advantage of Free, Smart Load Boards
Finding and booking loads for your trucks can often be a time-intensive and inefficient process. To make the process as efficient as possible, consider using a free, real-time smart load board. Unlike traditional load boards, smart load boards are updated in real-time so that you’re never chasing loads that have already been taken by another driver or carrier. While many smart loads require you to pay a monthly fee, there are some smart load boards that remain free for owner operators and carriers.
To reduce your trucking company expenses and increase efficiency, download Trucker Tools’ free driver app or sign up to use our free Carrier Portal for trucking companies.