Carrier or trucking company performance management depends on the ability to collect and apply data to understand the real health of the business. That should sound extremely familiar. Analytics-driven processes are the go-to strategies for all freight management parties that seek to increase profitability. But there can be problems in carrier freight KPIs creation and use. As reported by Mindy Long of Transport Topics, “One of the challenges for fleets collecting a wealth of data is determining what information is actionable.” Face the music; there’s so much freight data that figuring out which trucking data holds the most value is almost impossible for trucking companies focused on just meeting general demands. Here are 18 top carrier benchmarking KPIs that trucking freight carriers should start tracking today.
The owner-operator (OO) to driver ratio is a measure of how many owner-operator drivers a carrier works with compared to the company driver pool. And since owner-operators tend to charge higher freight rates, a lower ratio here amounts to better profitability and revenue opportunities for in-house drivers.
Owner-operator/driver ratio = (total OO count / total driver count) * 100
The truck to driver ratio provides insight into current employment rates for your trucking company. An ideal world would be at least one driver for every truck. However, drivers need time off, vacation and time to rest. And by tracking this ratio, carriers can better manage their drivers.
Truck to driver ratio = truck count / driver count
The driver to non-driver ratio can sound a bit confusing. But it’s simply the ratio of active drivers at the end of the month compared to the number of inactive drivers. In a sense, this is a driver utilization aspect of trucking freight KPIs.
Driver to non-driver ratio = active driver count / non-driver count
With all the pressure discussed over limited capacity, it’s important not to overlook the role of trucker shortages or turnover. Drivers will always look for the most profitable employers. Thus, tracking the percentage of driver turnover is another great way to measure business health.
Percentage of driver turnover = (drivers departed * 12) / [(Driver count at the start of the month + driver count at the end of the month) / 2)] * 100
There’s a perception that tracking fuel prices and the balance of freight between spot versus contracted movements are the most important KPIs. However, proactive management of the freight market by tracking the average length of haul provides insight into the overall profitability per load. After all, more shorter hauls may amount to a higher profitability than more longhauls. It all depends on available equipment and resources, including drivers.
Average length of haul = total haul miles / total number of loads
Carriers must further track their maintenance expenses by mile as well. This is the sum of all maintenance costs divided by the total number of miles driven in a given duration.
Maintenance expense per mile = maintenance expense / total miles
The miles per truck per week is yet another of the carrier freight KPIs that will add value. Obviously, it’s an average of the overall miles per truck per week scores.
Miles per truck per week = (total miles / truck count) / number of weeks in month
The percentage of loaded miles is the complete opposite of the percentage of empty miles. As the percentage of loaded miles increases, it indicates improved carrier profitability and better fleet utilization.
Percentage of loaded miles = (revenue miles / total miles) * 100
Empty miles mean lost money. And trucking carriers should track the percentage of empty miles compared to the overall volume of miles driven.
Percentage of empty miles = [(total miles – revenue miles ) / total miles ] * 100
While not necessarily a piece of the anonymized data from the TCA Profitability Partnership (TPP) within SONAR, the first indicator of real change and profitability improvements for trucking companies must be fuel pricing. Transportation service providers should track the percent change in fuel prices for national and local markets. Period.
Fuel percentage change = (prior price at the close of the time period– pricing at the close of current period) / pricing at the present period) * 100
Trucking carriers also have a strong need to proactively manage the operating ratio. The operating ratio is a measure of expenses to total revenue and reveals carrier profitability.
Operating ratio = total operating costs / operating revenue * 100
The gross fuel expense per mile harkens back to the need to track total fuel costs and identify their per-mile derivative. After all, this is the best way to track and rate freight, by the mile.
Gross fuel expense per mile= (gross fuel purchased + fuel additives + diesel exhaust fluid + taxes) / (odometer miles end of period – odometer miles beginning of period)
Trucking carriers must manage total fuel expenses. And an easy way to achieve that goal is to track the percentage of gross fuel expenses compared to total expenses.
Percentage of gross fuel expense = (gross fuel purchased + fuel additives + diesel exhaust fluid + taxes) / operating revenue * 100
Safety and maintaining business operating requirements are critical factors for trucking companies. One of the effective freight KPIs to track in this space is the percentage of insurance expenses.
Percentage of insurance expense = [insurance expense / (Linehaul revenue + accessorial revenue)] * 100
Effective freight KPIs for carriers also includes tracking the number of loads per truck per week. This is a rudimentary factor to determine how many trips were made by a given truck and will inevitably lead to increased insight into asset utilization.
Load per truck per week = (load count / truck count) / number of weeks in month
The revenue per driver per week is yet another simple and effective freight KPI for carriers. It’s the sum of all revenue divided by the total number of drivers. And it indicates overall productivity of drivers.
Revenue per driver per week = [(linehaul revenue + accessorial revenue) / (driver count)] / (weeks in month)
Regardless of existing business strategy, it may be necessary to outsource some loads to transportation brokerages. For that reason, trucking carriers should track the percentage of brokerage revenue paid or otherwise lost due to shippers booking freight through a brokerage.
Percentage of brokerage revenue = total brokerage revenue / (brokerage + linehaul + accessorial + fuel surcharge revenue) * 100
Net revenue per truck per week (NETREV)
The net revenue per truck per week provides insight into how profitable individual trucks were over a week. And trucking companies can derive additional insights by averaging multiple weeks of data together to identify the net revenue per truck per week by month, quarter or fiscal year.
Net revenue per truck per week = (linehaul revenue + accessorial revenue) / (truck count / weeks in month)
Stronger performance of trucking use and profitability will always revolve around the use of data and avoiding the less lucrative loads. Stop losing money by putting the power of actionable, goal-oriented KPIs to work in your trucking company.
And as a parting thought from eCapital Freight Factoring, “freight KPIs should match your company’s strategy and goals. Make sure to examine as many performance indicators as possible to determine the most appropriate KPIs for your unique operation. Once selected, integrate them throughout your organization and focus employee attention on the importance of maximizing performance.”
Also, while these metrics are great for internal management purposes, their greatest value rests in a side-by-side comparison to other trucking carriers’ performance through benchmarking. Request a FreightWaves SONAR demo to learn more about the possible uses of freight forecasting data to increase profitability, or click the button below to get started.
