saying NO to cheap freight

I see you still have avoided my question. I merely asked you to explain how you come up with 26.5% profit after expenses in order to be profitable? Rather than answer you decided to levy a personal attack. By the way, I have run trucks and businesses longer than you have been driving. Since I am still around, I must be doing something right. If you don't understand how you came up with 26.5% then fine. Don't come on here and tell me that no one can run or operate a successful trucking business unless you achieve a 26.5% net profit after all expenses. Very few companies will show a true net of that much, especially an industry that is as capital intensive as trucking. You might want to pass that information along to some of the major carriers such as US Xpress or Covenant or any of the other major carriers. That percentage may be your desire, but is not necessary to achieve success in this or any other business.

 

What does that mean? With all due respect you might want to do some research on the various types of profit margins and their values for various businesses.

Are you speaking of gross profit margins, operating profit margins or net profit margins. We need to compare apples to apples.

Gross Profit Margins are after Cost Of Goods and measure how well a company uses labor and supplies to produce income.

Operating Profit Margins are EBIT (Earnings Before Interest and Taxes), include administrative costs and measure how well management performs.

Net profit Margin is of course after all costs including taxes and interest and measures all facets of business performance.

The average (net) profit margin for corporate America over the last 25 years is 8.3%. The airline industry has a (gross) profit margin of 5% and the software industry has a (gross) profit margin of 90%. In the airline industry the average (net) profit margin is 4%. The average (net) profit margin in the trucking industry is 4.8% and the oil industry is 8.2%.

I will concede generally when we, at least I, speak of profit margin we are usually referring to net. Every bit of information I can find on trucking puts the average profit margin between 4% and 6% except for specialized hauling.

 

I did a search to see if I could find anything that listed the average percentage of profit from truckload carriers. I found something that came from Transcore. For those of you who may not be familiar with Transcore, they own several loadboards and if you are a driver you are probably familiar with their DAT board. You can find it at most truck stops. Not all carriers report their financials to Transcore or any other source, but this should give an indication of actual net profit from those who responded to the survey.

One thing that I do that some don't is provide for driver compensation. This is especially true when someone has a single truck operation. I think that when you are doing projections and a profit analysis on your business that you should include driver compensation, whether you are the owner and driver or not. The reason being is that if you can't drive the truck then you will need to pay someone to do the work. There should be enough to pay the driver and still have enough left to pay the owner some profit. Some owners don't separate driver pay from profits from the business. I feel that it demonstrates a more accurate picture of the business when the driver pay is separated from profits, even if the driver is also the owner. If there is no separation or allowance for driver compensation then the net profit will be skewed.





Facts

• The average profit per load is equal to the trucking rate minus costs, which include fixed, operating and other costs. Fixed costs refer to management overhead, insurance, leasing and licensing expenses. Operating costs include fuel and maintenance costs, while other costs cover vehicle depreciation and driver salaries.
  According to transportation services provider TransCore's 2011 industry survey, carriers reported profits of about 15 percent per truckload in 2010. Truckload rates and freight tonnage increased from 2009 to 2010. Asset-based brokers fared better than non-asset-based brokers did over the same period. The main difference between the two is that asset-based brokers own most of the assets required to provide logistics and transportation services.
  
  

Read more: The Average Profit Per Load in Trucking | eHow.com http://www.ehow.com/info_8598605_average-profit-per-load-trucking.html#ixzz1Vj1h31z0



As you can see from this article, the average net profit reported from those surveyed was 15%. There is no rule of thumb of how much profit any business should show in order to be considered successful. There are a number of factors which could skew the numbers. For instance, if someone runs their truck for $4/mile their percentages of costs and profits may be different than someone who runs their trucks for $2/mile. I think that every owner will decide for themselves what percentage of profit they need to consider their business successful. As long as you can continue to show a profit then there is no reason to think that you cannot be successful. The only benefit from looking at a survey, such as this one, is to use it as a benchmark for comparing your percentage of profit with others in the business. Even with the figures of those surveyed, you would need to look closer at the rates and operating costs. The operating costs for a van operation could differ from a flat bed operation. Rates could also be different. I think that the numbers that BigJohn posted are closer to what I have seen previously reported by other carriers.

 

That is an accurate assessment of the way things should be done. IMHO, if you run your truck/s as a business this is the only way to figure your costs. Whether you have one truck or twenty, your driver's wages are part of the cost. Then if you haven't recovered your initial investment, you should receive something for that. Then what's left is profit.

This is the way it is done in all other businesses. I don't know why in trucking so many take such a hap hazzard approach.

In a small, well run trucking operation, profit margins or 5% to 15% should be attainable.

If someone is figuring their wages as part of the profit then I would hope to see what they call profit margin around 25% to 40%. This really isn't any type of defined profit margin though because wages are a cost of goods or production and are the first thing subtracted from gross sales in any business calculation.

 

JB Hunt was supposed to have stated something to the effect that he could make money if he only made $1/day per truck. I have no doubt that he was making considerably more at the time, but when you have 10,000 trucks it can be some serious money.

There are industry averages for profits, but the numbers can differ from one carrier or owner operator to another. A major player in any industry can have economies of scale working for them. For instance an owner operator or single truck operation may need to spend $120,000 or more to buy a new truck. A major carrier such as U.S. Xpress may pay $80,000 or less for the same truck. The small carrier may pay pump price for fuel, whereas with cost plus or discounts a major carrier may receive as much as $0.50/gallon off the pump price for the same fuel. A major corporation could afford to discount their services and still make as much or more profit, as a percentage, as a single truck operation. On the other hand, a small operator can operate more efficiently than a major carrier to minimize operating costs. The small operator may use a bedroom for an office whereas the big carrier will need to have office space to accommodate personnel.

 

Very educating thread, thank you.....

 

Thanks Bigjohn and Gman, very good info!!!

 

You are really clueless about this whole thing. Forget percentages and talk numbers. Because I wouldn't leave the house for your percentages and drive my truck. And if I could get that putting a company driver in a truck I would have 10 trucks on the road right now and working as hard as I could to get the capital to get more.

Too bad you don't understand what you are talking about but decide to post anyways.

 

G-man has always had very helpful & informative advice & opinions. knowing him before Truckers report, I always enjoy reading his posts. he truly cares about helping others make informative decisions.

 

when i started a thread a few months ago i got ripped by blackw900 and redd for including paying myself in driver's cost... but hey i guess everybody got there own way and if you aint doing it there way your clearly don't know what you doing...