Trucking Business Expenses (Watch Out For Money Pits)
Leave a CommentTrucking business expenses can sneak up on you faster than a flat tire on a rainy day. You have your obvious costs: fuel, maintenance, payroll, and the like. But it’s the hidden expenses that can really put a dent in your profits. And if you’re not paying attention, you could easily find yourself way in over your head.
In this article, let’s talk about those sneaky costs you might be overlooking as a trucking business owner. More importantly, we’re covering how to track them down and keep them in check.
Deadhead Miles: More Than Just an Empty Truck
Let’s talk about deadhead miles. We all know that it means your truck is hauling nothing but air because your driver just dropped off a load and needs to head somewhere else to pick up another one. That empty trip? It’s not bringing in any revenue, but it still costs you time, fuel, and wear and tear on your truck. Not exactly a fun way to rack up expenses.
But the reality is that deadhead miles aren’t always avoidable. In some cases, you have to move empty trailers from one place to another. Maybe you have a fleet of trailers sitting at a distribution center waiting to be loaded, or you have to bring an empty back to the main terminal. These dispatch scenarios happen, and they often involve deadhead miles as just one of the trucking business expenses that can sneak up on you if you’re not careful.
The trick as a trucking business owner is knowing when the miles are worth it. That’s where understanding your profit margins on lanes can really save your bacon. Not all deadhead miles are created equal. Sometimes, the cost of those empty miles is worth it when you’re getting a good load on the other side. But if you’re just running empty for a low-paying load, that’s where you have to be more careful.
EXAMPLE
One of your trucks is frequently running empty from Tucson to Phoenix before picking up a load. Since the deadhead trip and the loaded trip are in your trucking software, you can see exactly how much it’s costing you. You may find out that the 115 empty miles are burning through more cash than the load is worth. The key is knowing your numbers, and the right trucking business software makes that easy.
WHAT YOU CAN DO
Track your profit margins based on to & from lanes and see where you can or should reduce those empty runs. Even cutting a few miles here and there can make a big difference over time. With the right trucking business software, you can quickly spot when your strategy needs to change and stay ahead of the costs before they eat into your profits.
Tolls, Permits, and Fees: The Silent Profit Killers
Nobody likes to pay a fee. They can sometimes feel like tiny surprises that chip away at your bottom line one trip at a time. And unlike the costs you normally think about like fuel and maintenance, these kinds of trucking business expenses are easy to overlook. Until you realize how much they’re actually costing you.
Some states are worse than others. If your routes run through places like Illinois, New York, or Pennsylvania, you already know what we’re talking about. Tolls and permits in these areas aren’t just a few bucks. They can hit $50, $100, or even more for a single trip. And that’s just for one truck. Multiply that by every truck in your fleet, every day, and suddenly, these kinds of fees become a serious expense.
There are dozens of other little fees that sneak up on you. Things like weigh station bypass programs, bridge tolls, weight/distance taxes, fuel card fees, and congestion fees. One or two might not break the bank, but when they keep stacking up, they can take a real bite out of your profits.
EXAMPLE
Let’s say your truck is running a regular lane from Chicago to Indianapolis. Taking the toll road costs $50 but shaves off 30 minutes. If your driver is still well within Hours of Service limits, fuel consumption is the same, and the delivery can be made on time, avoiding that toll could save your trucking business $200+ a month per truck. That’s money you could be putting toward maintenance, payroll, or just keeping more cash in your pocket.
WHAT YOU CAN DO
First, track all of your expenses in real-time. You need to see exactly how much you’re spending and whether it makes sense to adjust your routes or services. The key here is to pay attention to these costs before they eat into your profits. This is where software comes in handy. Instead of guessing where your money is going, you can track these trucking business expenses in real-time and see exactly how they’re affecting your bottom line. Pairing this with a solid income statement helps you make smarter decisions and keep more of your hard earned cash.
Insurance: The Trucking Business Expense That Keeps Climbing
If you’ve been in trucking for more than five minutes, you already know that insurance isn’t cheap. In fact, if you’ve lived in the United States for more than five minutes, you already know this! Year over year, insurance rates are skyrocketing with no end in sight. Whether it’s liability, cargo, or physical damage coverage, these costs keep creeping up, eating into your bottom line.
The reality is that insurance is a must-have trucking business expense, but that doesn’t mean you have to overpay. Premiums are based on a mix of factors, like your safety record, claims history, and even the lanes you run or the goods you haul. If you’re not keeping an eye on these, you might be paying more than you need to.
EXAMPLE
Let’s say your premium jumps by 15% at renewal. That’s a big hit, but if you dig into your policy, you might find that switching to a higher deductible or adjusting coverage limits saves you a chunk of that increase.
WHAT YOU CAN DO
Some insurance carriers offer discounts for installing dash cams or telematics devices, proving that your drivers are low risk. Proper trucking business software helps you stay ahead of the game when it comes to insurance premiums. By tracking safety records, incident reports, and maintenance schedules, you can build a case for lower rates when it’s time to renew. Maintaining detailed safety expiration dates that you can report on regularly and loop into dispatch operations means you’re not sending a driver or carrier out with a load when they’re expired on something.
Fuel Surcharges: Friend or Foe?
Fuel is one of your biggest trucking business expenses, but at least fuel surcharges help soften the blow… sometimes. The problem? They don’t always keep up with real-world fuel costs, and if you’re not careful, you might end up covering more of the difference than you’d like.
Shippers and brokers set fuel surcharges based on national averages, but we all know fuel prices can swing wildly depending on where you’re filling up. One week, you’re breaking even. The next, you’re wondering why your fuel surcharge barely covers half the increase at the pump. If you’re running lanes where fuel costs are consistently higher than the national average, you could be losing money without even realizing it.
EXAMPLE
Let’s say your trucks mostly run in California, where diesel prices are always higher than the national average. If your surcharge is based on a lower fuel cost, you’re eating the difference every single trip. But if you track this over time and use trucking accounting software to compare surcharge payments to actual fuel expenses, you’ll know when it’s time to adjust rates or shift lanes to something more profitable.
WHAT YOU CAN DO
Keep an eye on how much your fuel surcharges actually cover compared to what you’re spending at the pump. A software system that lets you put fuel surcharge and fuel expense into two separate accounts will easily show you the comparison. If there’s a gap, it might be time to renegotiate rates, adjust routes, or tweak your fuel buying strategy. This is where trucking business software like Frontline Q7 makes life easier. Instead of sorting through receipts and rate sheets manually, you can import fuel transactions for quick reporting, compare surcharges, and even automate the shipper’s rate defined by the DOE Index. That means no more manual work. As fuel prices change, the rate adjusts, which means you’re charging accurately and not leaving money on the table.
Maintenance: The Cost of Keeping the Wheels Turning
Trucks are tough, but they’re not invincible. And when something breaks, it’s never cheap. Whether it’s a simple tire replacement or a major engine overhaul, repairs and maintenance can drain your profits fast if you’re not staying ahead of them.
Some costs are predictable: oil changes, tire rotations, brake replacements. But others? Not so much. A blown turbo, a transmission failure, or even a small issue left unchecked can turn into a five figure repair before you know it. And let’s not even talk about downtime. Every day your truck is in the shop is a day it’s not making money.
The best way to control these costs? Prevent them from getting out of hand in the first place. Regular maintenance isn’t just a box to check. It’s the difference between a small repair bill now and a massive one later.
EXAMPLE
Replacing a set of brakes on time might cost you $1,500, but waiting too long could mean damaged rotors, extra labor, and a final bill north of $4,000. Multiply that by several trucks, and you can see how small decisions make a big difference.
WHAT YOU CAN DO
Stay ahead of maintenance before it turns into a budget-busting repair. Set up a maintenance schedule and track every service, big or small. That way, you’re not caught off guard when a truck needs work. In addition, you’re not sending trucks that are due for repairs out on trips and risking an even bigger issue. With the right software, you can log maintenance records, track repair costs, and even spot trends that show when a truck is costing you more to fix than it’s worth. Pairing this with your profit reports helps you decide when it’s time to repair, replace, or reroute.
Compliance: The Trucking Business Expense You Can’t Ignore
Nobody gets into trucking for the paperwork, but compliance is one of those trucking business expenses that you have to stay on top of. If you don’t, the fines and penalties can add up fast. Whether it’s IFTA, DOT inspections, or Hours of Service logs, missing deadlines or making errors can cost you thousands. Not to mention the headache of dealing with audits.
Keeping up with compliance isn’t just about avoiding fines. It also keeps your trucks on the road. A surprise DOT audit or missing paperwork can lead to unnecessary delays, and downtime means lost revenue, so you may as well look at it like an expense. From keeping up with permits and registrations to making sure your drivers’ logs are accurate, small compliance missteps can turn into big headaches if they’re not handled properly.
EXAMPLE
If you’re still tracking IFTA manually, you might be overpaying (or underpaying) taxes without realizing it. A few missed miles or gallons here and there can throw off your fleet’s average mile per gallon, which throws off the entire calculation. This can lead to fines or unexpected bills later, or worse, an audit.
WHAT YOU CAN DO
Instead of scrambling to pull together receipts and logs, automate IFTA reporting by tracking fuel purchases and mileage in real-time. Trucking business expenses don’t need to be a headache or a surprise. Keeping track of documentation within your trucking business software is just one more step you can take.
At the end of the day, trucking business expenses are something every owner has to tackle. But that doesn’t mean they have to be a constant source of stress.
And remember, you don’t have to do it all on your own. The right trucking software can help you track costs, streamline your processes, and give you the data you need to make smarter decisions. At Frontline Q7, we’re all about simplifying and shedding the dead weight. Reach out to us today so we can talk about how Q7 trucking accounting software can help you wrap your arms around your trucking business’ finances.