If you're running a trucking company, it's essential to keep track of key performance indicators (KPIs) to measure the performance of your fleet and identify areas for improvement. Especially, in this market where spot and contract rates have been decreasing for a number of consecutive times. Here are the top 10 metrics to look at your trucking company:
1. Revenue: Revenue is the most crucial metric for any business, and trucking companies are no exception. It's essential to track revenue generated by each truck, route, and customer to understand profitability. Even more important is to track Accounts receivable and aging invoice reports based on your revenue. As you might not, Revenue is not the cash at all.
2. Cost per mile (CPM) : Cost per mile is a crucial metric that measures the cost of operating each truck per mile. It includes fuel, maintenance, insurance, and other expenses. Lowering cost per mile can help increase profitability. Recent article by DAT Freight & Analytics mentioned that right now average cost per mile for long haul truck companies is around $1.78/mile to run with diesel at $4.08/gal, including fuel.
3. Average revenue per mile (RPM) : This metric measures the average revenue earned per mile driven by each truck. It's essential to analyze this metric by route, customer, and truck to identify the most profitable areas and see against the total market RPM.
4. Deadhead miles (Empty miles) : Deadhead miles are the miles driven by trucks without any cargo. These miles can be a significant cost to your business and reduce profitability. It's essential to minimize deadhead miles and optimize routes. It is common for deadhead miles to amount to 15% to 30% of your rolling miles annually per truck
5. On-time delivery (OTD) : On-time delivery is a critical metric for customer satisfaction and retention. It measures the percentage of shipments delivered on time and helps identify areas for improvement in operations. Anything below 95% could jeopardize your relationship with your shipping partners.
6. Driver turnover rate: Driver turnover rate measures the percentage of drivers leaving the company. High turnover rates can be costly and impact operations. It's essential to identify the root cause of turnover and take action to reduce it. The turnover rate is often cited to be over 90% within the trucking industry and if your rate is at there, you might be spending too much time hiring and rehiring drivers.
7. Safety: Safety is a critical metric for any trucking company. It measures the number of accidents, injuries, and fatalities. It's essential to establish safety protocols and training programs to ensure the safety of your drivers and cargo.
8. Asset utilization: Asset utilization measures the percentage of time that each truck is in operation. It's essential to maximize asset utilization to increase revenue and profitability. Ideal asset utilization should stay above 70%. Anything lower, and the impact on unit cost is too high and can make a business uncompetitive in the market.
9. Maintenance costs: Maintenance costs are a significant expense for any trucking company. It's essential to track maintenance costs per mile and per truck to identify areas for improvement.
10. Customer satisfaction: Customer satisfaction is a crucial metric for any business. It's essential to measure customer satisfaction through surveys and feedback to identify areas for improvement in operations and customer service. It also helps to keep your relationships with your brokerages and shippers at check.
In conclusion, tracking these key performance indicators can help you make data-driven decisions and improve the performance of your trucking company. It's essential to analyze these metrics regularly and take action to optimize operations, reduce costs, and increase profitability. By focusing on these metrics, you can ensure the long-term success of your business and maintain a competitive edge in the trucking industry.
Which KPIs do you follow and which ones you do not. Please let us know so that we can help you with those KPIs. We have a data analyst as a service consultant at Datatrack to help small to medium truck companies manage their daily operations.
This article is written as of 05/07/2023.