Strategies to Increase Revenue in Truck Services – Valueshipr

Truck Efficiency

Trucks have played a very important role in helping connect and transport goods across countries and aids geographies develop and become prosperous. One cannot deny that this movement has helped habitation, regional development and distribution of income and resources and possibly bridge the divide between urban and rural.

Road and rail transport carries, over more than 70% of inland freight volume. For example in India over 52% shipments happen by road and 34% by rail. Over 7000btkm ( billon tonne kilometer) of goods are transported each year by road in the EU, USA, CIS, China and Japan alone.

Road freight transport directly creates a lot of jobs – 6.5 million in the EU and nearly 9 million in
the USA and over 20 million in India. This does not include jobs in truck-related industries, such as vehicle manufacturing, repairs, retail, leasing, or insurance, nor the millions of other jobs that depend on trucks to supply and distribute goods.

What needs to be noted is the optimal efficiency for trucking companies, is not how many trucks you have, not how many drivers you employ or branches you have, not how much warehouse space you have, but how effectively you are using those assets.

Often in long haul movement, truck owners have a sort of thumb rule earning for the month number, say Rs.85K or Rs.115K a month for example, while this may be broadly an assumption in the right direction, however this approach may be flawed in hindsight due to several components of cost not being acknowledged in the consideration, besides it doesn’t stand the test of scale as well.

Here are some basic steps, how trucking companies / fleets can increase productivity.

  1. Measure, measure, measure !

    As we all know, objectives are delivered only when Key performance indicators are measured. “Most small and medium size transporters don’t have the ability to determine what the productivity number is for break-even or for making a certain profit, and how that relates to a specific truck and what its contribution needs to be.

    Therefore it is important that Truckers and transport companies derive a total revenue number based on – Infrastructure and resource employed cost + cost of interest (finance)+ operational running cost + insurance cost + asset wear and tear (depreciation) . Post determining this revenue number, this number could be apportioned on the asset and a per day revenue objective could be obtained.

    Don’t include fuel surcharges in your productivity numbers. That changes as the price of fuel fluctuates and has nothing to do with your productivity. Fleet owners should use the fuel surcharge as a deduction against their fuel expenses, so they can get a better feel for whether the surcharge is doing its job of absorbing increases in fuel costs.

  2. Register with a TMS or a Marketplace Aggregation cum execution platform

    In order to properly track and measure, you need a good transportation management system. Maybe VALUESHIPR is one place you could check out. It offers its simple and user friendly transportation management platform almost ‘free’. The most important thing is efficiently using whatever the features and the capabilities that these systems offer. Ensure there there is no resistance from the users in your organization, in adoption.

    ValueShipr organises three basic areas: Sales, planning, and driver management. Fundamentally most transport companies do not have an active Sales team and depends on their relationship and broker agent network to garner business. This method at times impedes growth and a platform such as ValueShipr helps overcome this deficiency by getting visibility to newer customers and better Sales control to enhance business. We have observed that users who have adopted and used the ValueShipr platform have reported enhanced productivity in revenues and business from each of their trucks and trailers registered with the platform.

    In addition the data used for decision making is current, live and real-time, with electronic logs and other information coming directly from the truck.

  3. Focus on per-truck productivity

    TThe fastest way to improve your bottom line or profitability, is to either put parked trucks into operation or increase the productivity of individual trucks. The average monthly utilisation (revenue earned) of trucks or trailers is about 13-14 days.

    This is chiefly attributed due to lack of business visibility,shortage of drivers, empty return loads etc.

    Trucks need to be run extra shifts, round the clock or more days though the use of extra drivers or part-time drivers.

    While that may not be possible for a small- to mid-size company in an line haul operation, companies that operate in a 250- to 500 km radius could have other drivers operating some of their trucks on Saturdays or at night.

  4. Drive change from the top down
    The revenue objectives set out by the company needs to percolate to people in the operations department and the drivers need to understand what the number is that’s expected for each truck in order to make a certain level of profit. This communication will help make them realise the importance of their role.

    It has been observed often employees are trained to be customer sensitive, however the organisational objectives like revenue expectation are seldom shared.

    Having productivity-based incentives for both operations and drivers but with customer sensitivity can create the much needed impact in increasing productivity.

  5. Make sure you have the right people in the right positions

    Once you have a measurement system in place, it is important that you choose the right people in the right position with adequate attention to skill sets and soft skills.

  6. Driver – Pilot Management

    This resource is the most vital cog in your business model, the person who makes it happen for you. Post identifying this resource ensure the following is imparted: right training, customer handling, important of rest, safety and compliance, regular health check ups.

    This aspect of your business has to be dealt with utmost maturity and professionally to ensure that you get the right output. Among other items viz; adequate compensation, resting places, health checkups, incentives and other welfare measures need to be offered.

    Therefore it is apt to say that transport owners need to start with the recognition, that it’s a culture change and it only happens from the top down. Everyone has to understand what’s expected of them, and you have to measure results and establish rewards and accountability.”

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