In the fast-paced realm of trucking and logistics, small fleets often encounter significant challenges when competing against industry giants. However, success is not exclusively reserved for mega-carriers. With the right strategies and partnerships, small fleets can not only survive but also thrive in today's fiercely competitive landscape.
Small fleets (sub-100 trucks) boast a range of unique advantages over larger carriers, including agility, flexibility, and the ability to provide personalized customer service. Nevertheless, they also face certain challenges, such as limited resources and the difficulty of competing on price.
In this blog post, we will explore key strategies to help small fleets remain competitive, even in demanding trucking markets like the current one.
Build strong relationships with brokers and shippers.
The cornerstone of any successful trucking business lies in building and maintaining strong relationships with customers, specifically brokers and shippers. This entails taking the time to understand their needs and delivering excellent service. When brokers and shippers know they can rely on you, they are more likely to entrust you with their business, creating a foundation for predictable and recurring revenue.
Your network is your net worth in this industry. Forge genuine connections, consistently deliver on your promises, and provide excellent service. A positive reputation can open doors to more profitable opportunities.
Focus on profitability (not just RPM).
Small fleets should aim for partnerships that allow them to leverage economies of scale. While large carriers can negotiate preferential rates on items like fuel and factoring, smaller operators often contend with higher off-the-shelf rates and products. Solution providers sometimes view small trucking companies as "too risky," resulting in prohibited rates. Thus, selecting the right vendor is crucial for cost reduction, including fuel costs, which typically constitute about 26% of a fleet’s cost structure. Finding the right factoring partner is also critical, as trucking companies incur expenses even before starting a job, accelerating cash flow essential.
It is crucial to shift your focus from merely increasing revenue per mile to overall profitability. While RPM (rate per mile) is important, it does not tell the whole story. Accurately calculating your true operating costs, including maintenance, fuel, driver wages, and overhead, and identifying areas for improvement will ultimately boost your bottom line. When making decisions about freight, ensure that you consider all of these factors.
Build a robust tech stack.
In today's technology-driven world, having the right tools can level the playing field for small fleets. There are several tools available that can help automate tasks, improve efficiency, and enable better business decisions. When investing in technology, focus on tools that will help you work smarter, not harder.
When evaluating technology solutions, consider tools that offer the following benefits:
- Hours back: Technology can automate many of the time-consuming tasks involved in running a fleet, such as dispatching, load tracking, and accounting. This can free up your team to focus on more important tasks, such as building relationships with customers and finding new freight.
- Increased profitability: Technology can assist in making informed decisions about freight, pricing, and routing, leading to higher earnings for your business. Some tech offerings can also help you reduce costs by consolidating expenses and securing preferred rates for items like fuel and factoring. Concentrating on solutions that help you earn more while spending less will lead to increased profitability for your fleet.
- Happier drivers: Technology can enhance the driver experience by providing tools such as mobile apps, digital broker updates, and faster payments. This can lead to happier drivers and reduced turnover rates.
- Improved cash flow: Technology can help improve your cash flow by providing insights into your finances and facilitating payment automation.
Small fleet owners have the potential not only to survive but also to thrive in the competitive trucking market by building strong relationships, prioritizing profitability, embracing technology, optimizing driver hours, and focusing on driver satisfaction. By partnering and leveraging industry expertise, fleets can access the tools and resources needed to compete with industry giants. With unwavering determination and the right strategies, small fleet owners can pave their way to success in the world of trucking and logistics.
SmartHop was launched in 2020 to help small fleets and independent dispatchers grow their businesses. The company was built by truckers, for truckers, and has a single platform that combines the functionality of multiple point solutions. With SmartHop, operators can accomplish and automate the manual tasks that used to require a separate load board, TMS, factoring company, and fuel card provider. SmartHop’s added layer of market intelligence helps users make better decisions faster. The result for customers is increased profitability, hours back in their day, happier drivers, and improved cash flow.
For more information, visit: smarthop.com
In 2021, Ryder invested in SmartHop through its capital venture fund RyderVentures.