--- url: 'https://www.fmjlaw.com/trucking-best-practices/' title: 'Trucking Best Practices: The Dos and Don’ts of Successful Trucking Companies' author: name: Georgie Stocks url: 'https://www.fmjlaw.com/author/gstocks/' date: '2021-02-04T13:30:15+00:00' modified: '2021-08-10T16:21:13+00:00' type: post categories: - Article - Thought Leadership image: 'https://www.fmjlaw.com/wp-content/uploads/2021/02/AdobeStock_294365241.jpeg' published: true --- # Trucking Best Practices: The Dos and Don’ts of Successful Trucking Companies What makes a trucking company successful? Trucking can be a great opportunity for those with an entrepreneurial spirit who desire to control their own destiny and seize opportunities for themselves. But it is also often a low-margin, competitive industry where missteps and bad luck can make the difference between thriving and failure. Whether your company is a start-up or established and growing, it is always important to focus on the basics of your business and give yourself a solid basis on which to build your chances for success.  Here are a few basics to consider and practice that can give a trucking company the edge it needs:  ## **DO: KNOW YOUR OPERATING COSTS** A trucking company should know its “all-in-cost per mile” – meaning the calculation of the company’s fixed costs and variables costs. Without calculating your all-in-cost per mile, a company will have no way to accurately predict its profit margin. Fixed costs generally stay the same regardless of the number of miles driven. Examples of fixed costs include payroll, equipment payments, vehicle registrations, insurance premiums, and operating authorities or licenses. Variable costs, on the other hand, will fluctuate up and down based on the number of miles. The primary examples of variable costs include fuel and maintenance. The fixed costs plus the variable costs determine the “all-in-cost per mile.” If you subtract the “all-in-cost per mile” from the rates for shipments, you will know your profit.  ## **DON’T: FORGET ABOUT LONG-TERM EXPENSES** A trucking company is a cash flow-intensive business. The cash expenses to operate are frequent and recurring, so, of course, it is natural to focus on these ever-present payrolls, fuel costs, and insurance premiums. But successful trucking companies also strategize for the long haul. This starts with understanding the company’s operating costs as described above and using the profits to plan and save for new equipment purchases, business expansion, and unexpected maintenance costs. With strategic financing, a company can also reduce its capital costs as a means of freeing up cash for other investments in the business.  ## **DO: STAY UP TO DATE WITH THE RULES & REGULATIONS** Trucking companies need to be aware of laws and rules on both the federal and state levels. Trucking companies need to comply with, among other things, (a) obtaining interstate operating authority (an “MC Number”); (b) obtaining a U.S. Department of Transportation number; and (c) complying with the federal and state fuel use tax and vehicle licensing. A trucking company will also be responsible for certain credentials, such as IRP and IFTA. Even more, there are specific rules and regulations for hauling different kinds of freight. As a result, a full analysis of the applicable federal and state law should be completed by the trucking company to be certain it has all of the necessary operating authorities, the required safety protocols and trainings, and the right equipment to comply with any specific freight hauling rules. ## **DON’T: RELY ON LOAD BOARDS AND BROKERS FOR ALL OF YOUR BUSINESS** Load boards and brokers have their place in your business. Both can be very useful when you have an empty truck. When entering into these relationships it is important to document them properly and understand the terms, rates, responsibilities, and liabilities of each party. However, these relationships can also be very expensive as the broker or load board will keep anywhere from 10%-20% of the load price. In the alternative, it will be wise to develop direct relationships with direct shippers and provide them with competitive rates. Over time, these relationships can provide steady cash flows with better profit margins.  ## **DO: MAKE AN INVESTMENT IN GOOD DRIVERS** Everyone knows that good drivers are hard to find and even harder to keep. Where most trucking companies fail is taking the needs of their drivers for granted. Truck drivers are no different from sales reps, management, and administrators. Truck drivers will move the business forward. A trucking company with successful driver retention asks for driver feedback and then acts on it – whether that is exploring different compensation methods, providing benefits, or creating performance incentives. ## **DON’T: BE CHEAP WITH YOUR EQUIPMENT** In trucking, it is essential to have the right equipment for the type of freight you expect to haul. The type, weight, and size of the equipment will all dictate the type of work you can do. In the beginning, it may be difficult to justify a significant cost for a brand new truck or trailer but blindly investing in cheaper, used equipment with unknown maintenance histories may end up costing you more in the long run. Frequent maintenance can increase your costs and decrease your ability to generate revenue due to the downtime. You should fully examine any new or used piece of equipment, including having the equipment inspected by a qualified mechanic and reviewing its maintenance history. You will also want to avoid taking a “Band-Aid” approach to your equipment since equipment must be maintained in accordance with the Compliance, Safety, and Accountability (CSA) enforcement program of the Federal Motor Carrier Safety Administration (FMCSA). Overall, an owner-operator should focus on reliability and longevity as well as maintenance requirements with respect to equipment. ***If you have questions about these best practices or other questions regarding the trucking industry, FMJ’s [Trucking](https://www.fmjlaw.com/practice-area/transportation-logistics/trucking/) practice group can assist you. We can also assist with other legal questions or concerns you may have related to legal issues in other transportation industries. Please contact [Kevin Johnson](https://www.fmjlaw.com/professional/kevin-j-johnson/) ([kevin.johnson@fmjlaw.com](mailto:kevin.johnson@fmjlaw.com)).*** [](https://www.addtoany.com/add_to/facebook?linkurl=https%3A%2F%2Fwww.fmjlaw.com%2Ftrucking-best-practices%2F&linkname=Trucking%20Best%20Practices%3A%20The%20Dos%20and%20Don%E2%80%99ts%20of%20Successful%20Trucking%20Companies)[](https://www.addtoany.com/add_to/twitter?linkurl=https%3A%2F%2Fwww.fmjlaw.com%2Ftrucking-best-practices%2F&linkname=Trucking%20Best%20Practices%3A%20The%20Dos%20and%20Don%E2%80%99ts%20of%20Successful%20Trucking%20Companies)[](https://www.addtoany.com/add_to/email?linkurl=https%3A%2F%2Fwww.fmjlaw.com%2Ftrucking-best-practices%2F&linkname=Trucking%20Best%20Practices%3A%20The%20Dos%20and%20Don%E2%80%99ts%20of%20Successful%20Trucking%20Companies)[](https://www.addtoany.com/add_to/linkedin?linkurl=https%3A%2F%2Fwww.fmjlaw.com%2Ftrucking-best-practices%2F&linkname=Trucking%20Best%20Practices%3A%20The%20Dos%20and%20Don%E2%80%99ts%20of%20Successful%20Trucking%20Companies)