Trucking companies make all the money, right?

One primary concern when it comes to starting a business is how much revenue that business can rake in. This is why many people consider knowing how much trucking businesses make an excellent yardstick to measure if the business is a great investment or not.

To know how much trucking businesses make, it is essential to pay attention to several factors and variables. To help you, here is all you need to know about how much a trucking business makes.

Different makes and colors of big rigs semi trucks

The Trucking Business: All You Need To Know

A trucking business is a company that ships goods or possessions by truck. Trucking businesses usually transport large quantities of raw materials, goods in the middle of the production process, and finished goods. Trucking businesses are not just businesses.

They play integral roles in serving the economy by offering transport services essential to distributing goods and services. These trucking companies serve as a distribution center for other businesses in various sectors, such as construction, for example.

Trucking companies can be a one-person and one-truck company, or one made up of thousands of trucks. Their trucks usually have licensed and designated drivers who are paid to drive these trucks on the company’s behalf. A business that offers shipping services, especially over long distances, trucking companies play an integral role in the success of many other businesses in various sectors.

From transporting raw materials to taking finished goods from one location to the other, trucking companies are essential in the supply chain of goods and services in a specific location. Considering this, it is easy to think trucking companies make a lot of money.

The trucking industry earned $875.5 billion in revenue in 2021. In 2020, the trucking market was worth $732.3 billion. In the same year, there were more than 902,000 truck drivers employed in the United States of America. With these numbers, it is not difficult to see that the trucking industry is a highly successful one, gathering billions of dollars in revenue yearly.

This leaves many people questioning how much trucking companies make. While trucking companies, like any other type of business, can be successful, gauging the amount of money trucking businesses can make requires truly understanding the business.

Transportation has been a vital part of society, even before the invention of automobiles. Before trucks became a thing, freight was usually moved using trains and horse-drawn vehicles. However, as more roads were constructed and technology birthed automobile vehicles, trucking as a mode of transportation became even more popular.

As the years passed, different types of trucks were used in the trucking industry. Some were tractors, and others were bobtails, dry vans, flatbeds, hotshots, panel vans, and refrigerated containers. Each vehicle had their specific uses and purpose they can serve. 

Although some trucking companies choose to focus on using one type of vehicle in their service, others may choose to employ the use of two or more vehicles to favor diversity. Today, many of these vehicles have been tweaked to enable special features such as satellite communication features, automatic transmissions, and internet WiFi.

However, having trucks wasn’t the only thing that created trucking companies. For a trucking company to exist, it has to abide by several rules and regulations. Most of these rules are regulated by the Federal Motor Carrier Safety Administration or FMCSA. 

A division of the U.S. Department of Transportation, the FMCSA issues many of the regulations directed at ensuring the safety of truckers and trucking companies in the nation. This is important, especially because trucking can quickly become an extremely dangerous business that puts lives at risk. 

The Bureau of Labor Statistics statistical survey reported about 843 trucker deaths in 2019. This was an increase from the 831 deaths from the previous year. In fact, the National Highway Traffic Safety Administration found that truck driver deaths represent 2.4% of all traffic fatalities.

The dangerous elements that surround the trucking industry are undoubtedly one of the reasons there is a scarcity of truck drivers in the United States. Truck drivers in the trucking industry are exiting the industry in search of green pastures and jobs with better working conditions. 

Couple this problem with other problems in the industry, such as truck parking, insurance, hours of service, and economic volatility, and it is easy to see that the roads to success in the trucking industry are not exactly smooth. Regardless, the economic impact of trucking companies on the economy cannot be denied.

From working with retail stores to gas stations, hospitals, garbage disposal, and even banks and trucking companies. Trucking companies distribute cargo, make migration possible, and help products reach shelves. Knowing how trucking businesses are vital to the economy’s growth, it is unsurprising how many people consider starting their own trucking company.

Right now, there are an estimated 1.2 million companies in the US trucking industry. Although there are different reasons why people startup trucking companies, one of the most common is to make a profit. However, many people go in blindly without truly knowing how much trucking businesses make today.

So, how much money do trucking businesses make?

How Much Money Do Trucking Businesses Make?

The United Parcel Service, known as UPS, is the most successful trucking business today. Raking in almost $72 billion in annual revenue, United Parcel Service offers transportation, distribution and contract logistics services. Undoubtedly the world leader in package delivery, UPS sits comfortably at the top of the trucking companies offering global supply chain management solutions.

UPS is closely followed by FedEx, XPO Logistics, J. B. Hunt, Knight-Swift, and other global high-earning trucking companies. Although many of these companies earn billions annually, is their revenue a benchmark for how all trucking companies make money?

No.

Although trucking businesses can be highly profitable, the amount of revenue these businesses make relies on different factors that are unique to each company. These factors can be the type of vehicle you choose to invest in and the business sector you choose to serve.

As with any other industry, the trucking industry is fraught with challenges that can make making a good profit tricky. The trucking business is a cut-throat business, and competition is at an all-time high. This plays a role in reducing the profit margin against competitive trucking businesses. 

A trucking company’s shipping velocity determines how much money it will make. Basically, the more freight the trucking company can transport successfully per unit of time, the more money the business can make. Still, it isn’t that simple, as the tracking business must also learn how to keep costs down while maximizing profit.

The trucking business is riddled with various factors that determine how much it can take in as revenue. Some of these factors are:

  • Mileage
  • Driver efficiency
  • Market conditions
  • Seasonal conditions
  • Truck repair and maintenance
  • Number and frequency of inactive days or days not spent transporting freight
  • Trucking operation type. This includes the type of vehicle used as the vehicle chosen affects the kind of transport operation the trucking business does and, essentially, the niche it operates in.

Some of these factors can be measured using metrics such as:

  • How many miles a driver drives per week
  • Driver payment per week as a percentage of the establishment’s revenue
  • How much revenue customer service representatives generate by soliciting freight from prospective customers
  • Revenue per hour per customer
  • Revenue per scheduled transit time organized by load planners (to maximize the driver’s miles and minimize stop time in transit)
  • Estimated arrival time.

Regardless, the amount of time and miles dedicated to your business play integral roles in determining how much your trucking company makes. A trucking company known as Cargo Transport Alliance has an average gross per truck of about $5,000 to $7,000+.

In that company, An owner-operator may take home around $2000-$5000+ weekly, while an investor can make a profit of $500-$2000+ per truck weekly. Using these estimates, it is easy to see that at Cargo Transport Alliance, investors make between $26,000-$100,000+ annually while owner-operators may make $100,000-$260,000+ annually.

This gross is estimated by multiplying mileage by the average rate per mile. However, it is subject to varying factors that may affect profitability positively or adversely. On average, a full-time owner-operator trucking business’s industry-standard turnover figure will be around $100,000 and $140,000.

Needless to say, a side-hustle job will make way less than a full-time trucking business will. One factor that is integral to how much your trucking company will make is if you plan on doing long-haul or short-haul drops. Do you plan to cross borders? Or are you operating within a locality?

Long-haul gigs generally offer better potential benefits, although they may require higher running costs to be successful. Short-haul transportation, on the other hand, makes way less but is possible at lower running costs. You also have to consider your costs.

Low profits compared to the costs will generally result in smaller revenues. These costs include the ever-changing and spiking fuel prices and other essential fees like maintenance and repair costs. To ensure the costs are worth it, it is important to put a lot of mileage into goods transport.

Every trucking company’s profit margin is different, but the average is 6 to 8 percent profit of the annual income per truck.

What Is Cutting Trucking Business Profit?

Expense is the biggest culprit that eats into a trucking business’s profit. These expenses are unavoidable, and the best way to minimize them to maximize profit is to manage them efficiently. These expenses are also reasons trucking company owners look to business loans for trucking companies as a means to give their businesses a boost.

While managing your expenses will in no way cause these expenses to disappear, it is a great way to make the best profit in the competitive trucking business. Some of the expenses cutting into trucking business profit include the following:

  • Changing fuel costs
  • Labor costs
  • Insurance expenses
  • Personal, Business, and Self-employment taxes
  • Regular vehicle maintenance costs
  • Necessary truck repairs
  • License fees
  • Permits
  • Cost of deadhead miles
  • Office space rental costs (if space is rented, not bought)
  • Medical exams for drivers
  • Regular monthly truck and trailer payments

Overall, the costs can be fixed in segments. These include:

1. Fixed Costs

Fixed costs are necessary expenses, whether your trucks have been on the road and offering services or not. They are unavoidable and persistent. Some of these costs include:

  • Permits
  • Insurance
  • Property lease
  • Truck or trailer registration
  • Truck payment
  • Health insurance

2. Variable Costs

Unlike fixed costs, variable costs are not a fixed amount. They are not recurrent, either. Some variable costs in trucking businesses are:

  • Fuel
  • Tires
  • Maintenance fees
  • Repairs

3. Salary

Another essential expense you need to factor into your financial plans when you run a trucking business is salary. Most times, the salary you pay drivers varies with their working hours. The more hours they spend on the road, the more you are required to pay.

This is not entirely bad news because spending hours on the road transporting goods from one place to the other means you are in business.

Economic profit. Wooden figure, arrow and toy truck with banknotes on light grey background

How To Make More Money In Your Trucking Business

Successful trucking companies have found their foothold in the industry by adopting practices that make it easier for them to make more money and maximize their revenue. Although there are different types of trucking businesses, each business can find practices that work best for them.

Some tips to help your trucking business make more money include:

1. Find a niche

Finding the right niche for your market is a great way to carve out your own market. It plays a significant role in building the ultimate trucking business plan and helping you figure out your costs. There are different types of trucking businesses today with varying degrees of competition.

Some trucking companies offer generalized transportation services, while some have more specific duties. For example, some trucking companies work only with construction companies, while some handle household items. Finding the right niche for your trucking company helps you focus on reaching your target customers.

By narrowing your overview to focus on the clients that matter, you have a better chance of getting the right types of clients.

2. Have the right price tag

The amount you charge your clients determines how much you will make. Overcharging your customers will drive them to your competition, while not setting enough will cause you to run at a loss. Weigh your options against other costs and strike a balance with a price that offers a good profit margin.

3. Manage running costs

As previously mentioned, mismanaging your trucking business’s operating costs will eat away at your profit, creating less revenue than you should have. Implement practices and invest in solutions that will minimize operating costs and give your business a better chance at making a profit.

4. Sustain a healthy client-business relationship

We cannot reiterate enough how competitive the trucking industry is. Trucking businesses everywhere are fighting to get a better share of the customer base, and in turn, make more money. Although making new customers is a great way to profit, the best bet in a trucking business- or any business at all- is to create a long-lasting relationship with your clients.

Repeat business generates revenue. To enjoy this, it is essential to foster a trusting relationship to retain old customers. Be credible, transparent, and consistent, and your clients will willingly stick with your instead of moving on to other trucking businesses.

5. Invest in good equipment

Investing in efficient vehicles is a great way to offer quality services while minimizing costs. Efficient vehicles are less prone to expensive repairs, are fuel-efficient, will protect your freight, and will help you serve your clients better.

Maximizing Profit In The Trucking Business

No formula promises maximum revenue and minimal costs in any trucking business. Although there are many trucking businesses today that make a lot of money, there are those that equally struggle to keep their head above water. The difference is usually in the mode of operation and priorities in the business.

You can make a lot of money from a trucking business when you operate the right way. While starting a successful trucking business requires a great plan, it also requires the right financial back-up. Because getting the trucks are the bulk of a trucking business owner’s worries, many trucking business owners look to heavy equipment financing options to kickstart a successful and profitable trucking business.

However, sometimes, a successful trucking business requires more than heavy equipment loans. This is why at Coastal Kapital, we are committed to offering the best financing solutions to help you get all the profit you can in your trucking business. Our financing aid programs vary from equipment financing to working capital and SBA loans.

Regardless of what your business goals are, we offer financing programs you can trust to help you maximize profit in your business. To get started, call us at 8666707483 or send us an email at info@coastalkapital.com to begin your loan application process!