Good Decisions…Bad Decisions & FuelJuly 7, 2014
An owner operator’s settlement statement does not show profit or loss. It shows cash flow week to week. Successful independent contractors not only manage their cash flow but also have an accounting service (such as ATBS) prepare monthly profit and loss statements to manage their profit/loss. They keep their eye on the big picture and review monthly financial statements to identify any areas which need to be improved. We all want to improve top line, your revenue. But to really generate profit, you need to keep an eye on the bottom line. The factor you have the most control over is expenses. If you analyze this carefully, you will learn that you will make more money by controlling expenses than you will by worrying about miles. It’s all about working smarter, not harder.
The biggest expense you incur and the one you have the most control over is fuel. What you do with managing your fuel expense has a bigger impact on your profit and loss than miles. Our trucks are spec’d for good mpg. The greatest factor impacting mpg is the driver, his decisions and habits. I know many drivers who are experts at fuel management. They also get good miles. Their settlements are always outstanding, even in slow weeks. They have a focused discipline running their business.
Assume you are a hard worker and generate 120,000 miles per year, or an average of 10,000 miles per month. If you drive fast to get those miles and get 6 miles per gallon, you purchase in that time 20,000 gallons of fuel. At $4.00 per gallon, you spend $80,000 on fuel per year. No expense, even the cost of the driver, is greater. Let’s assume that you decide to slow down and drive 65 miles per hour and get 7 miles per gallon. On 120,000 miles, you purchased 17,143 gallons of fuel. By saving one mile per gallon, you saved 2,857 gallons of fuel in a year. At $4 per gallon, that is a savings of $11,428, or about a thousand dollars a month! We have some drivers who drive the double nickel…55 miles per hour. They consistently get over 8 miles per gallon. If you drove 120,000 in a year at 8 miles per gallon, you would purchase 15,000 gallons in that year, a savings of 5000 gallons per year over the guy driving 70 miles per hour. At $4 per gallon, these drivers save $20,000 per year!
Let’s discuss our fuel network. Some use it and some don’t. ACT passes 100% of our volume discount to owner operators. So far this year, we have averaged .25 cents per gallon discount off of the Comdata street price. A driver burning 20,000 gallons per year would save $4626 per year by simply using the Fuel Routing software to obtain the best prices in our network. That would buy a lot of showers. The owner operator who decided to slow down to improve mpg from 6 to 8 and used the fuel network would save $24,626 per year, or over $2000 per month. You can quickly see why a company employee driver who is a top performer is worth every penny of 45 cents per mile while one making 36 per mile is costing the company money.
Here are some Trucker Myths – if you find yourself believing them, you are not running your business for profit:
- “My settlements show what I make.” No, it only shows the gross pay and authorized deductions each week.
- “If I drive slowly, I won’t get my miles.” Our information shows that some of the slowest drivers get the best miles.
- “My mpg is low because I get the heavy loads, the ones going over the mountains and the ones heading into the wind.” Guess what? Everyone gets the same freight, including the high mpg drivers.
- “I can’t drive less than 65 mph.” Wrong…you can, you choose not to….and you pay a price for that decision.
- “I get better mpg with Quick Trip Fuel.” Dude, they all buy from the same rack.
Last year I lost a bet on Facebook. I promised all drivers making over 8 mpg a Barbeque lunch. I had lunch with several of them recently. A couple of them have made over $70,000 by August. They’re on a $100,000 per year profit pace. It was a combination of high mpg, attention to business and recruiting bonuses. They use ATBS and call them regularly. Only a handful of owner operators make this kind of money, but it shows that it can be done. It’s completely up to you. There are many other tricks to saving fuel. We are here to help you and we are free so utilize us! Our recruiting department will be happy to teach you how to make money as a driver recruiter also. If you make more money…we all win!
Happy and Safe Trucking! Tom