Is the Trucking Business Profitable? Challenges and Opportunities (2022)

The truck driving business looks poised to rebound in 2021 after a year of disruption. But is the trucking business profitable?

We’ll look at the industry’s short-term and long-term outlook. We also will review how trucking companies make money and what profit margins are like in the business. Moreover, we’ll share 10 tips on how to succeed in today’s trucking industry.

Is the Trucking Business Profitable in 2021? Trends Affecting the Trade

As with most industries, trucking struggled during the early phase of the pandemic, but things were looking up for trucking companies in the first quarter of 2021, according to the latest Trucking Conditions Index (TCI) data from transportation intelligence provider FTR. The TCI, which combines 5 major metrics representing trucking industry performance, dropped to a low of -28.66 in April 2020.

Following the third-quarter bounce, however, the index had climbed to a record 16.17 by October 2020. After dropping slightly, it hit another record of 16.27 in March 2021, an increase of 5 points from the previous month. These rises reflected improvements in freight volumes, rates and capacity usage.

Avery Vise, FTR’s vice president of trucking, said he expects to see a full recovery of the trucking industry from the pandemic by the third quarter of 2021, leading to strong performance in 2022, according to an FTR virtual session reported on industry news provider American Trucker. Full recovery is being delayed partly by a shortage of drivers, which is limiting capacity. Social distancing has contributed to the driver shortage.

Outlook Uncertain But Optimistic

Meanwhile, increased consumer demand has made it difficult for companies to keep up with shipping schedules and to purchase enough equipment to handle shipping volume. Although this has placed a strain on trucking companies, if demand holds, it could mean a boom for the industry in 2022.

However, FTR Chief Executive Eric Starks said predictions at this point are risky given how the pandemic has transformed the market and introduced uncertainty. Industry watchers aren’t even sure what normal is anymore, he said.

Based on past trends, experts expect long-term growth for the trucking industry. After adjustments for the pandemic, market research company Research and Markets projects that the global freight trucking market will increase to $5.5 trillion in 2027 from $4.2 trillion in 2020, a compound annual growth rate of 4%.

How Trucking Companies Make Money

Profit margin in transport business operations centers around shipping velocity, explains logistics expert Damon Langley, co-owner and managing director of Velocity Transportation Solutions, speaking to trucking news site Commercial Carrier Journal. The more freight you can deliver per unit of time while keeping your costs down, the more money you can make.

You can express this idea mathematically by using key performance indicators (KPIs) which measure key velocities driving your revenue, such as:

  • Miles per driver per week
  • Pay per driver per week as a percentage of company revenue
  • Revenue per hour generated by customer service representatives soliciting freight
  • Revenue per total planned transit time organized by load planners, who are responsible for maximizing driver miles and minimizing time spent driving without freight (deadhead time) or stopped (dwell time)
  • Estimated arrival time and projected time available organized by driver managers, who link customers to drivers and provide information to load planners
  • Revenue per hour per customer

Planning how you will manage these types of key metrics to increase your revenue and lower your costs is key to maintaining a strong trucking company profit margin. To help you monitor and manage these KPIs, you can use software designed for the trucking industry, known as transportation management solutions (TMS), such as Trimble Reveal.

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Related: 12 Top Trucking Technologies That Can Give You a Competitive Edge

Is the Trucking Business Profitable? Challenges and Opportunities (1)

How Much Do Trucking Companies Make?

According to trucking company Cargo Transport Alliance, the average gross per truck is between $4,000 and $10,000 per week. An owner-operator who owns a company and manages operations can earn a take-home pay of $2,000 to $5,000 a week. An investor can earn a profit of $500 to $2,000 per truck per week.

These figures are subject to variables, such as:

  • Type of trucking operation, such as dry vans (which are enclosed and carry loose freight, pallets and boxes) versus flatbeds (which aren’t enclosed and can carry oversized or wide-load items) versus refrigerated vans (reefers)
  • Mileage
  • Frequency of days not delivering
  • Driver efficiency
  • Vehicle maintenance costs
  • Seasonal conditions
  • Market conditions

According to American Trucker, profit margins for trucking companies varied between 2.4% and 6% between 2011 and 2017, increasing to a high at the end of that period.

Is Trucking a Good Business to Start?

Never mind whether if trucking is a profitable business: It can be a difficult business to start.But it can be rewarding if you manage your operation well.

Even before the pandemic, trucking company failure rates tripled between 2018 and 2019, despite the economy thriving, according to numbers supplied by data firm Broughton Capital to Fox Business. Part of the problem in recent years has been that while prices have dropped, driver pay has remained high, cutting into profit margins. The shortage of drivers in the wake of the pandemic aggravates this issue.

On the other hand, if FTR’s anticipation of a third-quarter recovery in 2021 holds true, the shortage of drivers may become less of a barrier. For companies that can develop a solid financial plan, this may leave room to capitalize on the anticipated growth of the trucking industry. So, there is risk for trucking startups, but there may be opportunity.

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10 Tips to Succeed in Trucking

If you take on the challenge of running a trucking company, you need a solid business plan to help you overcome the obstacles you will face. Financial planning plays a key role in creating a profitable business plan. Here are 10 tips to help you steer a course toward profitability.

(Video) Can You Still Run A Profitable Trucking Company With These Fuel Prices? Income/Expenses Revealed

1. Select a Profitable Market Niche

When you’re starting out as a small trucking business, you stand the best chance of turning a profit if you choose a specialized market niche where you’re not competing directly with large, established companies. Choosing your niche also forms a critical financial planning step because it will determine what services you offer, what equipment you buy and what rates you charge.

The dry van market can be more competitive because of the number of large companies and owner-operators who already have shares in this space. On the other hand, hauling fresh produce and meat can be a profitable niche because there is less competition, less seasonal fluctuation in demand and less risk of economic disruptions to the market, as people always need food.

2. Estimate Operating Costs Accurately

Before you can develop a profitable financial plan, you need to know what your expenses will be so that you know how much revenue you need to generate to turn a profit and how high you need to set your prices. Your expenses divide into fixed costs and variable costs. Fixed costs include items which don’t fluctuate significantly over time, such as:

  • Payments on vehicles
  • Vehicle registration fees
  • Trailer registration fees
  • Property payments
  • Vehicle insurance payments
  • Permit fees
  • Driver salaries
  • Health insurance

Variable fees can change based on your shipping volume and other factors. They include:

  • Driver wages for drivers who are paid by the mile
  • Fuel
  • Tolls
  • Vehicle maintenance and repairs
  • Lodging
  • Meals

As a rule of thumb, driver compensation and fuel will be your highest costs. A good financing strategy should seek to minimize fuel expenses while maximizing the number of revenue drivers generate per mile and per week. This calls for a smart fueling strategy combined with operational efficiency and careful financial planning.

3. Cut Costs with a Smart Fueling Strategy

To cut your fueling costs, you need to consider the total cost of fuel after taxes are factored in. Taxes on fuel in the trucking industry in the lower 48 states and Canadian provinces is governed by the International Fuel Tax Agreement (IFTA), which Alaska and Canadian territories have also chosen to participate in without being legally required to do so.

IFTA simplifies fuel tax reporting for trucks that operate in multiple jurisdictions rather than requiring you to report separately for each jurisdiction. Each vehicle fleet must apply for an IFTA license with what is known as your base jurisdiction. Your base jurisdiction is where you have:

  • Your qualified vehicles registered
  • Some travel
  • Your operational control and records maintained (or where they can be made available)

As you buy fuel, your taxes go toward an account. Each quarter, you must file a report with your base jurisdiction totaling all the miles you traveled and all the fuel you purchased in all participating jurisdictions. This is used to calculate the tax you owe each jurisdiction. Any tax you owe or refunds you are owed are then paid to the base jurisdiction, which then handles distributing money to or collecting money from other jurisdictions.

What this means for fuel pricing is that your taxes aren’t determined by pump prices in the state where you bought fuel, but on your base fuel cost, which is the price of your fuel at the pump minus your per-gallon state tax. As often as possible, try to refuel in states and at pumps where prices are lowest. While prices may not vary much between states and pumps, over thousands of miles, little differences add up.

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Owner-operator trucking software provider Rigbooks offers a state-by-state guide to buying fuel.

Is the Trucking Business Profitable? Challenges and Opportunities (2)

4. Develop Direct Relations with Shippers

Difficulty finding shipping loads can cause a trucking company to go out of business, so a good strategy for finding shippers needs to be part of your business plan. Trucking companies often find shippers indirectly by going through middlemen called freight brokers or by using online postings called load boards. While these services are useful, they also charge a fee, cutting into your profits.

To maximize your profit margin, develop your own direct relations with shippers. You can pocket the markup fee you would normally pay a broker, or use the difference to offer more competitive prices and promote repeat business.

5. Use an Efficient Dispatching System

Dispatching services offer another way to find loads. Dispatching services also can help you assign loads to drivers, manage drivers, manage issues with shippers and customers, handle billing and maintain compliance. If you don’t use a dispatching service for these tasks, you’ll need to develop a system for handling them through your own office.

An efficient dispatching system can allow you to handle more loads at a lower cost, while a poor one can kill your business quickly. If you decide to hire a dispatching service, do due diligence by asking for recommendations, studying reviews and reviewing details of contracts so that you understand all services and pricing involved. If you do your own dispatching, you can increase your efficiency by using TMS software with dispatching capability, such as ITS Dispatch.

6. Check Customer Credit

Whether you’re dealing with shippers or brokers, it’s prudent to select customers who have a good credit rating so that you reduce your risk of not getting paid. Use a credit check service to review prospective customer business credit scores before committing to a new client.

7. Automate Your Billing Procedures

Automating your billing process can save you time and money on labor while reducing the risk of your fees not getting collected on time. Some TMS systems such as TruckLogics include automated billing features. You can get standalone invoicing software or use accounting software that includes invoicing features or add-ons.

8. Use Automated Compliance Software

Compliance is another area where automation can increase your efficiency. Regulatory fines for truckers can be expensive, but keeping up with all the paperwork you need to file can be a chore. Use a TMS solution that includes compliance features, or invest in a compliance management solution such as Compliance Safety Manager.

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9. Price Your Services Profitably

As to whether trucking is a profitable business, well, this part is key.

After you’ve considered expenses such as fuel, driver compensation, broker arrangements and software, you’re in a better position to estimate how high you need to price your services in order to turn a profit. To develop a competitive yet profitable price, you need to find out what other carriers are charging.

To do this, select a freight lane to use for comparing prices. Visit load boards and call brokers to find out average prices for shipping in one direction. Add a markup of 10% to 15% of what brokers charge. Use the same process to determine fees for the other direction.

10. Plan Your Cash Flow to Sustain Your Profits

Keeping your trucking operations running requires careful cash-flow planning. Payments from shippers and brokers are typically delayed for 15, 30 or 45 days. You need a cash-flow management strategy to ensure that you have enough financing available to keep operations running as you’re waiting for payments to come in.

One strategy you can employ is to use your unpaid invoices as collateral to obtain a loan or line of credit, a financing method known as invoice financing. Another useful financing method is equipment financing, which allows you to use equipment you purchase or lease as collateral. These and other methods of small business financing can help you sustain the cash flow you need to keep your trucking business running.

Is the Trucking Business Profitable? It Can Be.

So, is the trucking business profitable? After struggling through the pandemic downturn, the trucking industry rolled into 2021 with momentum. Data suggests it is setting a course for strong growth in the coming years. However, succeeding in the trucking business can still prove challenging. Issues such as driver shortages, fuel costs and high contract rates present potential obstacles to success.

Running a profitable trucking company requires careful planning centered around sound financial management. Niche selection, cost-cutting strategies, pricing and cash-flow planning all play an important role in maintaining a profitable trucking business.

If you require financing to fuel your trucking business, take a few minutes to fill out our online application and see your loan options in minutes.

FAQs

Is Trucking a profitable business? ›

Trucking is a profitable industry. Trucks deliver about 70% of products across the U.S. worth about $700 billion. This opens opportunities for driving revenue and profits to your trucking business, whether you're an owner or owner-operator.

Is trucking still a good business? ›

Yes, you can make money from trucking, if you get it right. The average net profit margin of a trucking company averages between 2.5% and 6%. That means it can be a profitable business and an industry that you can make a decent living from, provided you get into the trucking business with your eyes wide open.

What is the most profitable trucking business? ›

Trucking can be a lucrative career.
...
Here are nine of the highest-paying jobs in trucking you may consider.
  • Ice road trucking. ...
  • Hazmat hauling. ...
  • Tanker hauling. ...
  • Oversized load hauling. ...
  • Luxury car hauling. ...
  • Team driving. ...
  • Owner-operator jobs. ...
  • Private fleets.
Feb 11, 2020

Are trucking companies profitable in 2022? ›

In 2022, a 24 percent increase in freight tonnage is likely, according to the American Trucking Association. As a result, revenue is predicted to increase by 67 percent in the trucking industry.

What's the most profitable business? ›

What's the Most Profitable Business to Start in 2022?
  1. 22 Profitable Businesses to Start in 2022. ...
  2. Ecommerce Business. ...
  3. Dropshipping Business. ...
  4. Vacation or Home Rental. ...
  5. Online Courses. ...
  6. Bookkeeping or Accounting Services. ...
  7. Graphic Design Business. ...
  8. Digital Agency.
Aug 15, 2022

How do trucking companies make profit? ›

How to increase profitability as a trucking business
  1. Lower your cost-per-mile. ...
  2. Increase your rate-per-mile. ...
  3. Find high-paying truck loads. ...
  4. Increase “loaded” mileage. ...
  5. Reduce “detention” time. ...
  6. Use factoring to get paid faster.
Jul 9, 2021

How is the trucking industry doing right now? ›

As a result, the trucking industry hauled 72.2% of all freight transported in the United States in 2021, equating to 10.93 billion tons. The trucking industry was a $875.5 billion industry in that same year, representing 80.8% of the nation's freight bill. Learn more here.

What is the biggest problem in the trucking industry? ›

Driver Shortage

For six years in a row, drivers' shortages ranked at the top of the concerns. In the last few years, the U.S. and most countries' economies were rocked by covid 19, causing an economic impact similar to the Great Depression and making trucking companies suffer a record deficit of 80,000 drivers.

What is the future of the trucking industry? ›

With 70% of all goods in the US are moved by the trucking industry – which is an USD$800m+ economic value – we're going to need more trucks and truckers on the road. The struggle is that in 2022 there is an estimated 80,500+ shortfall in drivers needed in 2022 and this figure is forecast to reach 162,000 by 2030.

How can I improve my trucking business? ›

Increase Revenue
  1. Know your cost per mile (CPM) Knowing your CPM is essential to increasing your revenue. ...
  2. Find new customers through load boards and brokers. Utilize load boards and brokers to find loads. ...
  3. Make your customers happy. ...
  4. Negotiate directly with shippers. ...
  5. Increase your freight rates. ...
  6. Spread the word.
Jun 20, 2022

How do I start a successful trucking business? ›

How to Make a Successful Trucking Company: 7 Steps
  1. Support the right market niche. ...
  2. Charge the right rate (per mile) ...
  3. Determine your operating costs. ...
  4. Use the right fuel-buying strategy. ...
  5. Work directly with shippers. ...
  6. Run an efficient back office. ...
  7. Avoid cash flow problems.

Is 2022 a good year to start a trucking business? ›

With rates hitting historic highs in 2021 and capacity tighter than ever, it's certainly a good time to be in the trucking business. Most experts are predicting that capacity will continue to be scarce in 2022 and that rates will remain elevated for most if not all of this year.

Will the trucking industry grow? ›

With a rising demand for shipping goods and food delivery, the trucking industry looks to experience substantial, ongoing growth. And with this growth comes both opportunity and challenges. Trucking businesses will have ample ability to expand their services.

How is the trucking industry doing in 2022? ›

According to the American Trucking Association's U.S. Freight Transportation Forecast to 2022, freight tonnage will spike 24 percent in 2022, resulting in a 66 percent revenue increase in the industry. A large portion of the rise for 2022, and even for the next decade, is dominated by the trucking segment.

How can a business be profitable? ›

How to make a profit in business
  1. Understand financials.
  2. Create a business map.
  3. Set realistic goals.
  4. Identify what's holding you back.
  5. Add real value for your customers.
  6. Focus on strategic innovation.
  7. Leverage your connections.
  8. Customize your customer engagement strategies.

What does a profitable business mean? ›

The moment where your total business income is greater than your total business costs is when it is considered profitable.

How do trucking companies save money? ›

9 Ways for Your Trucking Business to Cut Costs
  1. Implement a Transportation Management System. ...
  2. Calculate Your Cost Per Mile. ...
  3. Monitor Your Monthly Budget. ...
  4. Keep Your Cargo Safe & Sound. ...
  5. Reduce Fuel Consumption. ...
  6. Become a Better Route Planner. ...
  7. Monitor Your Insurance Costs. ...
  8. Don't Wait for Problems; Prevent Them.

How much can you make with a trucking business? ›

AVERAGE EARNINGS? The average gross most of our trucks are making is between $5,000-$7,000+. An owner operator may take home around $2000-$5000+ weekly, while an investor can make a profit of $500-$2000+ per truck weekly. However, there are many factors that affect profitability.

What are the goals of a trucking company? ›

The goal should be that every product will be delivered to the final destination without any damage or loss of value. An additional transportation goal is the timely delivery of goods. A common goal that transportation companies share is that freight will be delivered on time, every time. .

How much can I make owning a trucking company? ›

AVERAGE EARNINGS? The average gross most of our trucks are making is between $5,000-$7,000+. An owner operator may take home around $2000-$5000+ weekly, while an investor can make a profit of $500-$2000+ per truck weekly. However, there are many factors that affect profitability.

Is owning a 18 wheeler profitable? ›

Truckers who own their trucks are called owner-operators, and they typically take home between $2,000 and $5,000 per week. That amount could be enough to make anyone want to get their Commercial Driver's License (CDL) and get behind the wheel of an 18-wheeler.

How much money do you need to start a trucking company? ›

New trucking company owners can invest somewhere between $10,000 and $20,000 to start a small trucking company with one or two trucks.

How is the trucking industry doing in 2022? ›

According to the American Trucking Association's U.S. Freight Transportation Forecast to 2022, freight tonnage will spike 24 percent in 2022, resulting in a 66 percent revenue increase in the industry. A large portion of the rise for 2022, and even for the next decade, is dominated by the trucking segment.

How can I improve my trucking business? ›

Increase Revenue
  1. Know your cost per mile (CPM) Knowing your CPM is essential to increasing your revenue. ...
  2. Find new customers through load boards and brokers. Utilize load boards and brokers to find loads. ...
  3. Make your customers happy. ...
  4. Negotiate directly with shippers. ...
  5. Increase your freight rates. ...
  6. Spread the word.
Jun 20, 2022

How do I start a successful trucking business? ›

How to Make a Successful Trucking Company: 7 Steps
  1. Support the right market niche. ...
  2. Charge the right rate (per mile) ...
  3. Determine your operating costs. ...
  4. Use the right fuel-buying strategy. ...
  5. Work directly with shippers. ...
  6. Run an efficient back office. ...
  7. Avoid cash flow problems.

How can truck drivers make the most money? ›

Choose the highest-paying freight types

With the right equipment, right endorsements, and right experience, you can capitalize on specialized cargos that offer the highest-paying rates. For example, ice road truckers can make as much as $250,000 in just 4-5 months of work.

Is buying a semi-truck a good investment? ›

Is owning a semi-truck profitable? Like all big purchases, buying an 18-wheeler can be a good investment as long as you put in the work ahead of time to make sure you're making the best financial decision for your business.

How can I invest in trucking business without driving? ›

7 Steps for Starting a Trucking Company Without Driving
  1. Step 1: Prepare Your Business Plan. ...
  2. Step 2: Understand the Requirements to Register a Trucking Company. ...
  3. Step 3: Financing Your First Truck. ...
  4. Step 4: Get Insurance. ...
  5. Step 5: Hire CDL Drivers. ...
  6. Step 6: Find Loads. ...
  7. Step 7: Manage Your Fleet, Customers & Finances.
Dec 5, 2021

Is being an owner operator worth it? ›

Owner-operators can generally make more money than company drivers. Exactly how much you'll make depends on many factors, including what types of freight you carry and which certifications you hold. But remember, you'll also have far greater responsibilities than a company driver.

How do I start a trucking business with one truck? ›

Five Steps to Start a Trucking Business with One Truck
  1. Write up a business plan.
  2. Decide what kind of entity you want to be.
  3. Decide what carrier you want to drive for.
  4. Get your own truck.
  5. Hire a business services provider to help start your trucking business.
Oct 7, 2022

How much do trucks cost? ›

How Much Does a Semi Truck Cost?
NewUsed
High-end$200,000+$180.000+
Average cost$150,000$100,000
Low-end$99,000$35,000
Sep 5, 2021

How much do truck drivers make? ›

Salary: $45,000 to $60,000

Depending on the company and with a safe driving record spanning several years, a driver can potentially earn upward of $70,000 or more. Drivers willing to train for extra endorsements and accept increased risk or time spent in remote areas can push their earnings much higher than average.

What are the top challenges driving a truck? ›

Most truckers also enjoy life on the road, but that does not mean that life as a truck driver is easy. In fact, the life of a truck driver is filled with challenges that are unique to this profession.
...
5 Challenges in the Life of A Truck Driver
  • Irregular Schedules. ...
  • Lack of Home Time. ...
  • Irregular Pay. ...
  • Health. ...
  • Regulations.

Is the trucking industry struggling? ›

The American Trucking Association estimates that the 2021 driver shortage capped at 80,000 drivers. According to experts, if this current trend continues, the trucking industry could need more than 160,000 drivers by 2030.

What is the future of the trucking industry? ›

With 70% of all goods in the US are moved by the trucking industry – which is an USD$800m+ economic value – we're going to need more trucks and truckers on the road. The struggle is that in 2022 there is an estimated 80,500+ shortfall in drivers needed in 2022 and this figure is forecast to reach 162,000 by 2030.

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