Moving Words – Speed

Timothy Brady

“I’ve always found the speed of the boss is the speed of the team.” – Lee Iaccoca

Many in the moving industry are concerned about the future of their current business models as the cost of doing business keeps increasing and rates continue to head south. However, with an ounce or two of tenacity, each moving company, agency and van operator can turn this plight into an opportunity for more revenue and greater profits.

To begin the process, you must have the determination to look at the way you’re currently operating your trucks. It’s imperative you decrease fuel consumption as quickly as possible. An argument can be brought that ‘time is money and miles driven takes time, so the faster my trucks travel the more money I can generate.’ While this sounds good in theory, in real-world application it doesn’t fly. All it will do is put you into the hammer lane to eventual financial failure. This is critical mass, when the energy expended exceeds the energy required to accomplish a particular task.

In physics-speak, this means when the cost per gallon of fuel reaches a certain plateau and above, the fuel required to attain a greater truck speed decreases profit. In other words, “Speed Kills Profits.” Having your van operators and truckers reduce their cruising speeds to between 55-60mph will save you thousands of dollars each year. Note: It’s very important for each driver and you, as the company owner, to know the “sweet spot” on each truck in your operation. The sweet spot is the gear, engine speed (rpms) and road speed which uses the least amount of fuel. It’s possible that a particular truck will get better fuel mileage at 63mph than it would at 58mph. Any good mechanic with a dyno and the specific truck’s specs should be able to tell you the best rpm and gear to minimize your fuel consumption.

Add to this a diligent maintenance program with emphasis on cutting resistance and friction: everything from greasing at proper intervals, correctly scheduled oil changes, overhead service; to correct tire pressure and alignment; and rear axles, transmission, frame, and suspension maintenance. As I stated in Driven 4 Profits ‘An Owner/Operator’s Guide to Keeping More of the Money You Earn’ (Tim Brady and Esta Klatzkin, E.A. Write Up The Road Publishing, 2003):

“This machine (your truck), like all machines, has maintenance requirements that Will Not Be Denied! If they are ignored, there will be a significant price to pay for that arrogance. The owner of the truck is the one who is ultimately accountable for the results of the Preventive Maintenance Schedule Program. The person responsible for ignoring those maintenance requirements is responsible for any subsequent and catastrophic failures that result and the financial consequences.”

This statement is truer today than at any other time in my moving career. And there are other things you can do to improve your bottom line when it comes to reducing fuel consumption:

1. Have your drivers reduce their idling time. The obvious point here is, if the driver’s not in his truck—turn the engine off. Ask them not to run your trucks when the outside temperature is between 50° and 75°. Consider providing a quality arctic sleeping bag, 12v electric blankets, and those charcoal/sawdust based 8-hour warming packets for each driver during colder weather. Look into installing APUs in each tractor unit.
2. Investigate any new fuel-saving technology, but be careful not to be fooled by the people who are attempting to take advantage of unsuspecting truckers and companies with bogus pills and items that connect to fuel lines.
3. Shop for your fuel long before you need it. If possible, you should go up onto the major truck stop internet sites each day before your trucks roll. See what fuel is costing along your route and plan a purchasing strategy for that day. With the wild up and down fluctuations in fuel prices today, this is necessary. You may need to adjust your plan daily.
4. Join a fuel-savings purchasing group that features fuel cards with volume discounts due to its buying power
5. Optimize the routes your trucks take on each load. This isn’t necessarily the shortest route; it’s the shortest with the least number of obstacles that slow you down or stop you along the way (traffic lights, turns, mountains, construction, large cities with near-gridlock, rush hours, etc.).
6. Lead by example, so to convince other truckers to conserve their fuel! The more people who are conserving fuel the lower the price will be, due to the laws of supply and demand. And even if the price doesn’t go down, conservation should at least help to stabilize fuel prices.

In order to do all of this, we’ve got to go back to the basics. You’ve got to know your costs. In addition, you have to know your daily break-even point. If you are unable to substantiate your need for increasing your rates to your customers, they won’t go along with your plan. The only way to do this is by the numbers; your numbers. Your rates must be figured by using your costs, not anyone else’s.  Then the question you need to ask your shippers: Who would you prefer hauling your household goods, special commodities, electronics, or trade-show displays? A mover who has the money to maintain their trucks, pay his drivers a fair wage, and have the cash flow to keep the trucks rolling? Or one who is struggling to stay alive, can’t maintain his equipment, under-pays or can’t pay his drivers, and is constantly short of operating capital?

So you must know what your fixed costs are per day, cost per mile, and shipment (load) specific costs are; and reduce these costs where you can. Know when, where and how much you need to increase your rates to bring in the needed revenue to reach your capitalization point and begin making a profit.