Running a successful trucking business is about more than just keeping wheels on the road. Success requires a keen understanding of your financials, operational efficiency, and customer satisfaction metrics. This is where Key Performance Indicators (KPIs) come in—these metrics reveal the areas where your business thrives and where there’s room for improvement.
1. Cost Per Mile (CPM)
Cost Per Mile is a foundational KPI that every trucking business should track. It tells you how much it costs to operate each mile, considering ALL of your expenses such as fuel, maintenance, insurance, administrative costs, and more. Knowing your CPM allows you to set competitive rates confidently while ensuring profitability.
Formula:
Cost Per Mile = Total Expenses/Total Miles Driven
Tracking this regularly gives you a clear view of where costs may be creeping up and where you can make adjustments to improve your bottom line. Our Definitive "All-in-One Trucking Business Spreadsheet has a built-in cost per mile calculator - check it out here!
2. Operating Ratio
Your Operating Ratio is a measure of efficiency that compares your expenses to your revenue. A ratio below 100% means you’re making a profit, while a ratio above 100% indicates losses. This KPI provides a quick snapshot of your business’s overall health.
Formula:
Operating Ratio = (Total Expenses/Total Revenue) x 100
The lower your Operating Ratio, the more profitable your business.
3. Total Revenue & Projected Revenue
Tracking Total Revenue gives insight into how well your trucking business is generating income. It’s also valuable to set and monitor Projected Revenue based on market conditions and internal goals. This KPI helps you align business expectations and see if you're on track.
4. Total Expenses
To understand profitability, you have to know your Total Expenses, which include costs for fuel, maintenance, insurance, permits, etc. This KPI is crucial for determining Cost Per Mile and Operating Ratio and understanding your financial commitment to each haul.
5. Loaded Miles vs. Total Miles Driven
Loaded Miles are the miles you drive your equipment with cargo. Comparing Loaded Miles to Total Miles Driven can highlight how many miles are bringing in revenue versus “empty” or non-revenue-generating miles. Reducing Total Empty Miles (discussed below) can significantly improve efficiency.
6. Revenue Per Mile
Revenue Per Mile (RPM) is another essential financial KPI, giving insight into the amount of revenue earned for each mile driven with a load.
Formula:
Revenue Per Mile = Total Revenue/Total Miles
This KPI allows you to assess whether your pricing aligns with your operating costs and market rates.
7. Profit Per Mile
Profit Per Mile (PPM) is the difference between Revenue Per Mile and Cost Per Mile. This KPI reveals the net earnings per mile driven and helps to evaluate the profitability of each load.
Formula:
Profit Per Mile = Revenue Per Mile – Cost Per Mile
8. Gross Profit Margin
Gross Profit Margin measures how much of your revenue remains after covering direct costs. A healthy profit margin indicates efficient cost management and strong pricing.
Formula:
Gross Profit Margin = ((Total Revenue – Total Expenses)/Total Revenue) x 100
9. Average Miles Per Gallon (MPG)
Fuel efficiency is a major expense for trucking businesses. Tracking Average MPG across your fleet can highlight areas for improvement, especially when fuel costs fluctuate. Improving fuel efficiency can lead to lower Cost Per Mile and, ultimately, a better Operating Ratio.
10. On-Time Delivery Rate
This KPI reflects your reliability and commitment to customers, and it plays a critical role in customer retention. A high On-Time Delivery Rate not only strengthens relationships but also builds a strong reputation. This is a metric you can use as a marketing tool for reaching new potential shippers.
Formula:
On Time Delivery Rate = (Total On-Time Deliveries/Total Scheduled Deliveries) x 100
11. Equipment Utilization Rate
Your Equipment Utilization Rate measures how effectively your assets (trucks, trailers) are being used. Low utilization rates could mean trucks are idle more often than necessary, affecting revenue potential. Increasing utilization often translates to higher revenue per truck.
Formula:
Equipment Utilization Rate = (Total Time Equipment in Use/Total Available Time) x 100
12. Percentage of Empty Miles
Empty Miles (also known as “deadhead miles”) are the non-revenue-generating miles trucks drive without a load. Reducing Empty Miles helps you increase profitability and reduce fuel costs.
Formula:
Percentage of Empty Miles = (Total Empty Miles/Total Miles Driven) x 100
A high Percentage of Empty Miles indicates a need to improve load planning or optimize routes.
Monitoring these Key Performance Indicators for Trucking Business Success can help you make informed decisions that improve profitability and operational efficiency. From financial insights like Operating Ratio and Gross Profit Margin to operational measures like On-Time Delivery and Equipment Utilization, KPIs are essential tools for steering your trucking business toward success. With regular tracking and analysis, you’ll be better equipped to navigate the industry’s challenges.
Remember, KPIs are more than just numbers; they’re insights that guide you to make smarter, more strategic choices.
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Soshaul Logistics LLC and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. It is meant to serve as a guide and information only and Soshaul Logistics, LLC does not assume responsibility for any omissions, errors, or ambiguity contained herein. Contents may not be relied upon as a substitute for the FMCSA's published regulations. You should consult your own tax, legal and accounting advisors before engaging in any transaction or operation.
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