[INFOGRAPHIC] The four factors that impact freight trucking revenue and profitability

Jason VanoverFreight Market Blog

(Graphics created by Emily Ricks)

Successful freight trucking depends on the joining of profitable loads with timely delivery. And knowing what’s happening to market volatility and trucking carriers across the country is critical to maximizing carrier revenue and margins. Of course, measuring revenue through the growing demands for both contract and spot freight transportation is never simple addition and subtraction. For that reason, freight brokerages and carriers need to know the top four factors that impact freight trucking revenue and profitability and a few specific metrics that go into each. 

1. Market activity

The first factor in measuring and understanding trucking revenue and profitability is market activity. Market activity describes the nationwide and granular trends affecting available capacity, timeliness of transit and on-time, in-full deliveries. Without clear insight into current activity, carriers cannot price loads effectively and will see declines in overall profitability. 

Leading metrics for tracking overall and market-specific activity include:

  • Trucks in the market operational or out of service, such as SONAR’s quarterly total trucking failures index (EXIT).

2. Detention or dwell time

Detention and dwell are additional factors affecting trucking profitability. Unfortunately, they are somewhat subjective and can be a nightmare to manage. Of course, tracking overall detention across a carrier’s network can seem overwhelming. Thus, it’s best to track detention and dwell time as compared to other specifics within the market, including:

  • Detention or dwell time per market (WAIT.USA).
  • Detention or dwell time for all major ports, airports and railheads, based on the .IDENTIFIER in the index.

3. Carrier metrics

There are many ways to manage and track a carrier’s performance. According to Trucks.com, “But reducing the number of miles that carriers drive empty – also known as deadhead miles – has proven to be a more elusive challenge. Following the push to make freight more efficient after the global oil crisis of the early 1970s, the share of total miles that truckers drive empty has been consistently stuck around 35% since at least the late 1990s.” But while tracking deadhead miles is one core carrier metric, the most critical metrics are broad measures of how well a carrier can stay afloat. These major KPIs include:

  • Accessorial cost percentage.
  • Detention cost percentage.
  • Operating ratio and company margins (OPRAT).

4. Fuel

Then, there’s one other factor to consider  – fuel costs. Since transportation is literally a fuel-consuming industry, knowing the fuel changes and trends will go a long way to improve trucking profitability. Of course, it helps to know how the trends are shaping up over days, weeks and even months. And additional insights can be found by going beyond national or market changes to the base price. As an example, freight trucking companies should also track a few granular fuel factors, including:

  • Forecasted Overnight Change in ULSD Rack Price (FULSDO).

However, that metric can then be analyzed by internal teams and algorithms to create additional metrics, including:

  • Broken down to the length of haul.
  • Broken down to reefer, dry van and flatbed.

Boost freight trucking revenue by always considering this factor quadrant

Freight trucking revenue and profitability are critical measures of brokerages and asset-based carriers’ health. And advanced freight trucking analytics and KPIs should always track back to the four factors affecting volatility and success. Increase your company’s ability to manage profitability and strategy by implementing an advanced freight forecasting platform to navigate freight market volatility like SONAR. Request a FreightWaves SONAR demo by clicking the button below today.