The competition among trucking companies is extremely stiff because of the rapid growth of the trucking business. Trucking companies must have a disciplined strategy in handling the business to survive in the competition.
For most Canadian trucking companies, the trucking business is not that easy as many people think. If it were so, the thousands of trucking companies that lost many of their equipment and went bankrupt would not have experienced the situation.
Factors that influence the trucking industry
- Fuel prices fluctuation
- Unstable production of goods
- Stiff competition
- Regulatory requirements
- Payment delays
For the past few years, the Canadian trucking companies were enjoying their trucking business with good profits, steady cost of fuel, and not many complex regulations. Because of this scenario, many went into the trucking business and enjoyed the positive income.
However, because of the changes in regulatory requirements and the poor economy in the past years, many trucking companies were affected and were forced to close.
The trucking company’s average profit
The profit obtained by a trucking company on a yearly basis determines its success. Every trucking company has different profit rates because each has different business strategies. Research showed that on the average, trucking companies make a 6% to 8% profit annually per truck. To be able to increase the profit, variable expenses must be controlled.
Factors that negatively affect the trucking business
- Fuel costs, Administrative costs, and Labor costs
- Insurance expense, Taxes
- Vehicle maintenance costs, Truck repairs
- Vehicle and trailer registration
- Licenses, permits, medical examinations
- Office rental cost
- Other expenses
Trucking companies must ensure that their expenses must be lower than their income to be profitable. Otherwise, the company is in danger of incurring losses.
How to make trucking business more profitable
To be more profitable in the trucking business, the company must develop a good strategy to increase its income and lower its expenses as well as get more potential clients that could contribute to the company’s increase in the bottom line.
Getting into the trucking business is a challenging attempt. You need to be fully equipped with the knowledge and skills of how to run the business efficiently.