How do you know you’ve planned the best load? You must consider several variables in determining the best load selection strategy. Without a good load plan, all other strategies are wasted.

1. Are you maximizing your equipment to its highest capacity?
2. Is your revenue commensurate with the space required?
3. Is revenue in line with the required time and miles needed to complete the load?
4. Have you made sure the revenue is in line with the costs of the specific unit and driver assigned to it?
5. Will the load be handled within the Hours-of-Service regulations?
6. Are you planning ahead?
7. Where’s the cash flow?
8. Is the entire round profitable?

Maximizing your equipment is accomplished through knowing the capacity in both weight and cubic feet of the trailer on which you’re planning the load. It is imperative you utilize the weight capacity of the trailer, the cubic foot capacity, or both to maximize revenue. If a shipment doesn’t use all available weight and/or space, you must find other shipments to fill the available void or invoice the existing shipment at a rate as though it did take up the trailer’s entire capacity if the shipper insists on exclusive use of the trailer.

Revenue to space required is very important in your load planning strategy.  In a standard 53' trailer with a 110" interior height and a 100" rear door opening, you have approximately 4,000 cubic feet of space. This means if your weight capacity is 40,000 lbs., each cubic foot is worth 10 lbs. of space. To be sure you’re receiving all the revenue necessary for shipment you must determine how many cubic feet the items in this shipment require. (This should include the cubic air space above any item or shipment that you’re unable to fill due to unusable space created by the configuration of the item hauled.) Keep in mind it’s possible to have many different shipments make up one complete load. As stated above, where a customer requires the trailer be sealed at origin, that customer should be paying for the entire cubic feet and weight capacity of the trailer.

How many miles will a trucker cover in an hour, a day, a week or a month? These are always unknowns. You can estimate miles in a day, but it is still a guess. There are many variables that affect the miles a driver can cover in a day: weather, construction, accidents, etc.  On the other hand, time is always there, and when the truck stops rolling, time still marches on and on and on... Don’t get caught up in the "Revenue per Mile" game, because at no time will it ever give you a true picture of your revenue needs. Cost per mile is an important factor, but it is only one factor. What you and your driver really need to know is his cost per day and his revenue needs per week. And a day and week are measurements of TIME, not miles! Your rates must reflect this.

To explain further:
When rates are developed, it is an absolute that the Fixed Costs, Cost of Operation, and Load Specific Costs of the individual truck be factored into your break-even point along with the trucking company’s costs. Once you have those numbers, the arithmetic is simple.

You take the total amount of cash you need to grow your company in the next three years, divide it by three then by the  number of trucks you operate and you have your annual profit margin per truck. Now just divide that number by 44 (the average number of weeks a truck operates in a year) and you have your per-truck, per-week profit margin.

One mistake a lot of trucking companies make is to plan loads on a 'one size fits all' strategy. This is flawed, in that the costs of operating a 2000-year model truck are completely different from the costs of operating a brand new 2010 model truck. And every driver operates differently. Since these are factors you are unable to control, the best plan is to develop a formula for each individual truck and driver to plan loads.

The one variable that keeps changing the face of load planning is the Hours of Service regulations. Your strategy must include the restrictions these rules place on your business. You must ensure the driver has the time to comply with these rules, with enough leeway for anticipated and unexpected delays. But even more important, it’s up to the load planner to be sure the trucker is able to operate in a safety window. That window has to provide the necessary time to get the load from origin to destination without jeopardizing the trucker’s health and safety, or the safety of those whose paths he crosses.

Planning ahead doesn’t mean just knowing what you’re going to be doing tomorrow. It’s a strategy for the future. Just as a trucker should be driving beyond his hood, when planning loads you should be looking as far into the future as possible, to the horizon and beyond. This is where the word Dedicated comes into play. Arrange with your customers to have pre-planned, pre-routed loads mapped out well in advance (by the quarter at least). The further out you plan, the easier it is to know your costs, know your projected revenue, and to be able to fill the gaps that invariably are going to occur. By creating a Dedicated Load Strategy, you will be mapping out your financial route to success.

The biggest mistake many Owner/Operators and small trucking fleets make is waiting until the last minute to locate loads. In other words, they’ve delivered the current load and are just now beginning the search for their next load. This type of 'strategy' leaves them at the mercy of the brokers and shippers because these truckers are under the gun to find a load fast. With a Dedicated Load Strategy you will have located your next load prior to having accepting your current load. It is very important that you think in round trips. It’s not the revenue to break-even point on a single leg that counts. It’s what the total income for the round trip and the total revenue is over a month’s time compared to that break-even point. Not every load needs to be profitable, but at the end of each month your income must exceed your expenses.

Before you reach for the road atlas and lay out the route you’re going to traverse, you must determine if there’s going to be profit per-day, per-week or per-month for each truck in the fleet. There is only one reason for taking a load that doesn’t leave money in your pocket when you pull away from the dock, that’s if it’s going to stage you for another load or loads which leaves a profit when you reach the end of the month.  Going on a 'gut' feeling or “I think I made money the last time I hauled a similar load,” just doesn’t make it in today’s trucking environment. It’s having a Dedicated Load Plan that provides the revenue necessary to be in the black at month’s end.

Good loads and safe roads, everyone.

Timothy Brady
©2009