Brent – 00:00:01:
Welcome to Freight Nation, a trucking podcast where we explore the fascinating world of trucking and freight management. We dive deep into the freight industry and uncover why the trucking industry is more crucial to our country now than ever before. Stay tuned to uncover the driving forces behind successful trucking businesses and hear from the hardworking truckers and leaders who keep the world moving. Let’s hit the road. All right. Well, welcome back, Freight Nation. Appreciate you giving me your time, your energy, and your effort to be a part of our podcast. I’m Brent Hutto with Freight Nation, a podcast by Truckstop, and I’m glad that you could join us today on this really fun edition of Freight Nation. This is one where, if you’re a carrier, I certainly hope you pay special attention. And if you’re a broker, I hope you pay attention to help the carriers that help you move your freight. Today, we’re going to talk about profitability. And yes, and if you haven’t noticed Freight Nation, I’m in a completely different environment. I am in small town Walhalla, South Carolina, visiting some family and my brother-in-law. This is his office, he runs a little small family-run construction business. And it reminded me when I looked around as like, this is what maybe a home office looks like for a trucker. It’s fun to be here because it just reminds me of the hard work that’s put in by the trucking community and by everybody that owns a small business in America. And so today with me on Freight Nation, which we’re going to talk about carrier profitability are two of my oldest friends in the industry. And I know I’ve been around a long time, but I was very lucky in the early part of my career in transportation to become friends with my two guests today. And joining me on Freight Nation to talk about profitability is the one and only Kevin Rutherford from Let’s Truck. You see him all over the place and he is an expert when it comes to carrier profitability. And so, Kevin, thanks for joining us again today.
Kevin – 00:01:47:
Great to be here.
Brent – 00:01:48:
Kevin’s a little different surrounding too. He’s in his homestead. It’s in Washington state. Is that right? Is that where it is?
Kevin – 00:01:53:
Deep in the national forest in Washington state.
Brent – 00:01:56:
So he’s done his show for the morning and he’s taking the time to talk about profitability with us today. Kevin and I talk about this all the time with his Let’s Truck tribe. And then also my second guest today is my dear good friend, one of the Overdrive Truckers of the Year and my good friend. The guy who has taught me more about running a truck from the operation of it than anybody else, and that’s Mr. Henry Albert. Henry, thanks for joining us today.
Henry – 00:02:18:
Great to be here.
Brent – 00:02:19:
Yeah, man. And by the way, Henry is not relaxing in his truck. He’s actually in the middle, en route from Texas back to North Carolina on a run he runs for Freightliner. Probably seen Henry out there. He’s one of the Freightliner, gosh, what’s it called? What’s the group?
Henry – 00:02:33:
Team Run Smart.
Brent – 00:02:34:
Team Run Smart. Thank you so much. My friends at Freightliner are getting mad at me right now. So he’s been part of Team Run Smart for a long time to help them improve the quality of their trucks.
Kevin – 00:02:42:
You might want to make sure to let him know he’s not driving at the moment. No, he’s relaxing in his truck right here at the moment. He’s working today, but he’s not driving right now.
Brent – 00:02:51:
That’s right. If Henry could drive while looking at this permanently, he would be the best truck driver on the planet, in the universe.
Kevin – 00:02:59:
Something else about this I just thought of, and I don’t remember a lot of details on stuff like this, but it’s very possible you introduced me to Henry.
Brent – 00:03:09:
Oh, yeah. I’m sure I did. I believe you
Henry – 00:03:11:
You did.
Brent – 00:03:12:
I’m sure I did.
Kevin – 00:03:13:
Yeah. Too slow, right?
Brent – 00:03:15:
Probably. We had a dinner at the Mid-America Trucking Show or something.
Henry – 00:03:17:
It was over at your event, Kevin, that you had at Mid-America Trucking show
Kevin – 00:03:21:
Yeah, Partners in Business.
Brent – 00:03:23:
Okay.
Henry – 00:03:23:
And I met Brent in a barn.
Brent – 00:03:26:
This is the horse barn in mid-America. That’s right. On a fairly cold and rainy day.
Kevin – 00:03:30:
I used to go to a horse barn one night.
Brent – 00:03:32:
Why am I not surprised? Well, Frey Dacian, you can see that we had a great time. We’re dear friends. We trust each other. We help each other. And that’s really what’s one of the best things about trucking is the friendships that you develop. So, today we’re here to talk about profitability. Your profitability matters. It matters because we at Truckstop and Kevin at Let’s Truck, and Henry from Albert Transportation and Team Run Smart and everything, all about helping you do the things that help you enjoy trucking more. And so I know that Kevin’s always talking about knowing your numbers and I’ll know and watch Henry talk about knowing your numbers and knowing the operation of your truck. So today we’re going to talk about ways, tips, tricks, things and ideas on how to help you with the profitability of your operation. So, Kevin, let’s start off with you. All right, so when you think about profitability for small carriers, we’re talking about a one truck, two truck owner operator. OK, so you’ve been there, Kevin and Henry, you’re still there. What’s the first thing that comes to mind when you think, OK, profitability? What’s the biggest piece of advice that I would give an owner operator?
Kevin – 00:04:35:
Biggest piece of advice I have to give is you have to do this and we’re going to make it as simple as we can possibly make it. And I’ll go back to when you and I first met at the very first Partners in Business. I needed to know who was in the audience, what they knew, what they didn’t know. So I start a lot of my seminars with questions of the audience. And one of my first questions, and I had a whole list of them, and I was nervous, and this was new to me. And I said, “how many of you in the room that own one truck can tell me your cost per mile on your expenses?” And I think in my mind, I probably expected half or more right? And the actual number of vans that went up was about 5%.
Brent – 00:05:17:
Oh, wow.
Kevin – 00:05:18:
And I remember stopping and saying, “no, listen, I want you to answer this question.” I wasn’t just throwing it out there to kill time. I really needed to know this number, and I can’t believe that’s it. And maybe a couple more hands went up. We didn’t get anywhere near 10%. And that would have been, was that 1999?
Brent – 00:05:37:
That would have been ‘99, correct.
Kevin – 00:05:38:
And I said, boy, we got to change this. And I had a mission to make more people do this and understand it and get the benefits. We wrote the software to do it. We still have that software today. And I don’t think I have moved the needle at all. I still believe that one truck owner operator, less than 10% of them know what we’re going to talk about today.
Brent – 00:06:02:
Wow. Well, that’s a bit of a shocking number. So, Henry, you’re out there still operating every single day, and you get to talk to a lot of the audience through the different platforms that you’re on. When Kevin says that about maybe 10% of the audience really understands the cost of their operation, knows their numbers, do you agree or disagree with that number?
Henry – 00:06:18:
I totally agree with that. And you can see that by, my gosh, even just the simplest things with the number of trucks that you see where their fifth wheel pulled back as far as they can so they can have as big a trailer gap as they can. And right away, that tells you they don’t know. And they don’t know how they’re affecting their business. And I was just recently called into a fleet to talk to them about fuel mileage. And I got there in the truck the night before, and I slept there. And they had optimized idle on these trucks. And because they had optimized idle on these trucks, the drivers were turning their air conditioning on all the way to cold and leaving their refrigerators, which were 115-volt refrigerators in the trucks, on, which meant that all these trucks sitting in the parking lot were almost constantly running. And then I walked the lot and every one of the fifth wheels was pulled all the way back. And I’m like, all right, well, just on low hanging fruit. Okay. As a carrier, you’re saying you’re interested in fuel much, but I saw nothing there that showed that. And that’s what I see every day.
Brent – 00:07:21:
And so because fuel is their largest expense and running their operation, you can tell they’re not maximizing their efficiency because of the way they’ve got just the mechanical aerodynamics setup on their truck.
Henry – 00:07:32:
Well, they had aerodynamic trucks. They had the right spec, but they were not using them as intended. You can have the best hammer in the world to knock a nail in, but if you don’t know how to hit the head of the nail, you’re not going to get the nail to go in.
Brent – 00:07:45:
So observationally, you and Kevin both agree. You guys have been in this industry a long time. So Kevin, how many years have you been in transportation?
Kevin – 00:07:52:
Oh, I have to do the math again.
Brent – 00:07:54:
38. Okay, 38. Henry, how long have you been in?
Henry – 00:07:57:
I’m going to say since ‘83. Hey, you want to start figuring out how old I am, you can do the math.
Kevin – 00:08:02:
Must be 41 then, yeah.
Brent – 00:08:04:
Well, here’s the thing. I give that for relevance of not like you’ve been around a long time. You don’t get to y’all’s positions in the industry without being around and doing things the right way for a long time. I give this to say, you guys have perspective. You’ve seen certain deficiency in multiple decades of this industry, and there’s been lots of improvements in the vehicle itself and the consumption, the way it consumes fuel. You guys were talking about fuel mileage as far as this.
Kevin – 00:08:31:
You know me. I got to interrupt you because-
Brent – 00:08:33:
Hey, anytime, man. You’ve got your information better than mine.
Kevin – 00:08:36:
I had this great thought, and I’m hyper competitive.
Brent – 00:08:38:
Yeah.
Kevin – 00:08:39:
And Henry just one-upped me. He’s got me a couple years. So I got to try to even things out here. I have numbers and time and experience. It’s important. I mean, you can’t learn without the experience. A lot of people will spend that many years not learning much though. But I’m big on why. It’s one of my favorite questions. Why do we do what we do? And I’ll go back to my childhood and talk about why I do what I do today, because I watched my father. I’m third generation as an owner-operator, and I didn’t know much about my grandfather other than the basics, but I watched my father struggle as an owner-operator. He loved owning trucks because he loved working on trucks, and he would buy old junk trucks and fix them up and try to make some money with them. But he had a ninth grade education. There wasn’t any business help back then. And he would run until that truck really ran out of money. And then he’d go get a union driving job that he absolutely hated. And he was miserable. And he would save money until he could do it again. And I watched that, and I thought it was so sad that he wasn’t able to make that work. And I think it’s what drives me to do what I do today.
Brent – 00:09:48:
Yeah, that’s fair. Henry, I know that when you got into business, you constructed things a certain way, which is fairly unique. You actually put together a pretty serious business plan and what drove you. So talk a little bit about what drove you to create this.
Henry – 00:10:00:
Same thing with Kevin as a family thing, except for I didn’t have family in the industry and I never had any family that ever tried to work for themselves. And my family’s kind of competitive. We showed jumping horses, race mobiles and all that stuff. And failing just doesn’t work out well. So I spent a good eight years thinking about it and I drove for private care then, which was a great experience. And prior to ever even going to look to buy a truck, I spent two years going to the SBA with the Small Business Administration, which put me through the wringer. They had me put a business plan together. Then he had me put a backup to my business plan together. And then he had me put a backup to my backup plan together, which was good. And a lot of people told me. I couldn’t do it the way I wanted to do it. In my case, I picked two cities and that’s all I ran between because I want to develop relationships. Kevin often talks about relationships. And if I’m going all over the country, how could I develop a relationship with a shipper if I’m not going to see him for six months? It’s just not possible. So then later on had five owner operators on and had built it out that it was bigger. And the network, originally it was just Charlotte, 50 miles radius Charlotte and 50 miles radius of Philadelphia. Everything else was flyover country. But I take one occasionally halfway back. Yeah, because that’s all that was available. But probably the biggest value that hit me with finding my own customers or finding a good broker at the time was after I had that whole business plan together. And it’s funny, I was just going over this with an owner operator that was struggling and having problems at the Truckstop. Just a few hours before this call about this. And that’s why it was at the tip of my tongue. Why would anybody use you? Well, after this man, UJ Cozart at the small business administration put me through all that. And he said, I ran your numbers by your peers and everything else. You didn’t put on Rose car glasses. They all said you couldn’t have that bad of a year. Almost. Have you tried, but yet there was enough profit for me to make it on those plans. He said, so I have a question for you. He says, why would anybody ever use your company to haul their freight. And I stuttered for about half a second and he said, I don’t even want to hear your answer. He says, come back and see me in a week. Well, as it turns out, I went home. Dejected on that. It was after work that I met with him where I was working and I got everything out of the mailbox and it was all the credit card offers, 0% interest, this, that, the other. And oddly enough in that, there was a sample pack of Colgate toothpaste. I just had this conversation with UJ and I’m like, toothpaste? I use… Crest Most people are kind of family, even generational, loyal to a toothpaste. I have no idea why, but, you know, you grew up with Crest, you buy Crest. You grew up with Colgate, you buy Colgate. And they’re the top two. And they had this free sample in there. They not only had the free sample, but they had a coupon. Well, this was fresh on my mind when I went in there and I thought, okay, if you’re new going into a shipper or whatever, most likely the only way you’re going to get in is if you’re cheaper than the others because they’re already moving their freight. Unless you happen to walk in that they’re fed up with their career or they had an expansion of business, most likely that’s going to be your way in, right? So I got to thinking about this, and this is what brought a lot of success, was I’d give them an introductory offer. It might be good for one load, might be good for two loads, might be good for a month. And I’d say, this will give me a chance to see what it takes to do your business. This will give you a chance to see what I’m all about. And I said, okay. And furthermore, when I’d talk to them, I would say, and I knew every customer because I ran an afraid desk where I worked and drove. I said, give me the customer that complains nearly every time you send them a shipment. And then I’d take that shipment. Usually they want you there first thing in the morning. And I’d come walking in with a box of Dunkin’ Donuts or Krispy Kreme Donuts and say, hey, I’m going to be bringing your freight.
Brent – 00:14:12:
Well, how
Henry – 00:14:13:
Could they be upset with me for one, right? This changed the whole tone of the conversation for a simple box of donuts. Next thing you know, this would work out and they’d be calling back to the shipper. Hey, keep sending Henry here. Well, where do you think when we renegotiated where the rate needed to be after this introductory offer was over, when? It gave me the upper hand in the negotiation.
Brent – 00:14:35:
Right. So as you negotiate this in building your business, you start with solving one of their problems and then you build a relationship, which allows you to create a higher margin or rate for your business. You go to them, you have a higher value for your business. And so which allows you to create a better rate for your product. And so you’re able to get that. So you create a better profitability doing that. So Kevin, I know you have an interesting approach too on securing those first loads and getting your business rolling, which is one of the keys to profitability is getting consistent freight going. So Kevin, jump in there on your thoughts on that.
Kevin – 00:15:10:
Yeah, it was really similar. I came across the same strategy. I knew I had to sell myself, but I didn’t know anything about sales and sales made me uncomfortable. And I came up with these hacks and one of them was, look, give me your worst load because I’m a problem solver. I fix things. I’ll figure out how to make this load better. So I took that same approach. Let’s think about where you and I met at the first seminar when I was on the panel and for partners in business, I didn’t get paid for that. Not only did I not get paid to be there, I had to pay all my own expenses to get there. That to me was worth it because nobody knew who I was. I had no credibility and I had to prove myself and prove that I could bring value. And then at some point I got paid very well to do that seminar, but it’s the same thing. And it’s shocking how many times I’ve told that story. And people will look at me and say, you’re just an idiot for doing that. Like you, you just gave stuff away. Why would you do that? I just explained why I would do that. I had no credibility. There was no way I could tell somebody that made sense on why they should bring me to the seminar. Why would you pay me to do this? I have to prove to you that I can bring you value first.
Brent – 00:16:24:
Yeah, no doubt. So Freight Nation, if you’re a beginner owner-operator, you were a company driver for a while, you were a leased owner-operator with Fleet, and you’ve jumped over to the for hire part of the business, and you got your Truckstop subscription, and we’re serving you, and you’re going out there and you’re talking to brokers and you’re struggling. Look at the consistency between Henry’s message and Kevin’s message. The thing you want to take away from this is that they looked at the customer and said, how can I solve a problem that you have? So use me to solve a problem. I’ll take your worst freight. I’ll take your hard-to-move freight. I’ll be the best guy that your people like to work with. I’ll give you an introductory rate. So we’re talking about profitability here. Well, it all starts with getting freight moving. So if you’re a new owner-operator, focus on the things, the problems that you can solve for the carrier. All right, so let’s swap to another topic on profitability. And then I want to talk about the word consistency. So, Henry, I know you talked about running on only certain lanes and really servicing the customers in that. Kevin, you and I have talked about relationships and how that creates consistency, building three or four brokers or potential shippers to work with that you can get good, consistent business from. So let’s talk about how consistency relates to your end of the month or end of the year profitability? And I’ll start with you, Kevin.
Kevin – 00:17:39:
Can I take a step back first?
Brent – 00:17:40:
Yeah, please do.
Kevin – 00:17:41:
I want to go back to the beginning and I want to be really basic here and not assume anybody knows anything. And here’s what I want to say. Let’s define profitability. We were just talking about revenue, and that’s a good place to start. Because, Brent, have you ever heard the phrase the bottom line?
Brent – 00:17:59:
Oh, of course. Who hasn’t, right?
Kevin – 00:18:00:
You cannot say you’ve never heard that. We use it all the time in all kinds of circumstances. Do you know where it comes from?
Brent – 00:18:07:
Please tell me.
Kevin – 00:18:08:
It comes from a profit and loss statement.
Brent – 00:18:10:
Oh, of course. Yeah.
Kevin – 00:18:11:
The bottom line is the line we’re most concerned about. So let’s talk about how we get to the bottom line on a profit and loss statement. We put revenue at the top of the page. Then we start to list out any expense that we incur to produce that revenue. We had to buy a truck. We had to get insurance. We have to pay for fuel. We have to pay for maintenance. We have permits. We could go on and on. There’s a whole list of things we have to spend money on in order to be able to produce that revenue. We start at the top. We put the revenue in. We start listing all the expenses it costs us to produce that revenue. And we subtract those from the revenue, and we now have profit. Isn’t that third-grade math?
Brent – 00:18:50:
Seems pretty straightforward.
Kevin – 00:18:51:
It’s addition and subtraction. Right. That’s it. We learned that in the third grade. This is not difficult or hard to do. And in the beginning, that’s exactly how I did it, on a piece of paper and a pencil. And I wrote all this stuff down. And then I advanced the spreadsheets, and then I wrote the software. But that’s really just all we’re talking about here. And my question to the audience would be, if you own one truck and you don’t know these numbers, please tell me why you don’t know them. Because this is drop-dead simple stuff. It’s not complicated, but it’s powerful. So the consistency here is you need to know these numbers every month. Now, you’ve been involved in businesses where they watch numbers every single day, don’t they?
Brent – 00:19:36:
Oh, absolutely.
Kevin – 00:19:37:
The bigger a business gets, the more often you have to watch this stuff, and it becomes more complicated. With one truck, this is drop-dead simple. It should take you 20 to 30 minutes a month to know your numbers, and that’s consistency. If you would sit down and do this once a month, you would know those numbers. And I ask people all the time when they call me and they have problems, well, let’s talk about your numbers. And the minute I ask them a question, they’ll go, well, I have those numbers, but I don’t know them. And I will look right at them or I’ll say it on the phone and I’ll say, you’re lying. You’re lying to me and you’re lying to yourself. If you did these numbers, you would know them. They’re not that complicated. You’re lying to yourself. So be consistent, do the numbers every month, and it will change your business for the good forever.
Henry – 00:20:26:
Adding into what you said there, Kevin, and I remember way back and there was another major flatbed carrier that everybody blamed their problems on. And this is back when it was a dollar 40 a mile freight was pretty good. This is a number of years ago. And I had people leased on with me then. But the other thing was that everybody always blamed the large carrier and this particular large carrier that was the punching bag at the time, especially in the flatbed arena where I was running. Their average rate per every mile they turned with their trucks was $1.73. But yet they were the ones accused of low-balling everybody. And what was funny was I wasn’t at $1.73 against every mile that I turned. Yes, when you got up into New England, which we were running up into there, you came out cheap because there was more freight in than out. And that became my goal for that next year to surpass that $1.73. And interestingly, on their $1.73 of the evil big car that was my problem, supposedly, they had a 2% profit margin. So that meant they were right on the razor edge. And I was at 20% and below them after paying myself, right? So it set a pretty good goal for me to go after. And part of that, when you talk about tracking it, I kept a little pad of paper next to my seat in the truck where I wrote down each load, how many miles I was on that. And I kept a running tabulation as the week went on, including deadhead and everything of where I was on every mile against what the tires turned for the week. And anything that has any worth, you first have to measure it. They measure gold. They measure diamonds. They measure our fuel. They even measure water today. When you look at how much people will pay for a bottle of water. And anything that has any worth has to be measured. Well, if you don’t think that your income is any worse, then you’re not measuring. It’s just like time. You have to measure it if you think it has any worth. So what Kevin’s saying and to measure it, and that’s what got a lot of my owner operators in trouble, that we’d get really good money going into New England. And they’re like, why am I hauling that cheap freight out of there? And I’m like, well, first you can’t define cheap freight because the freight we were actually getting was pretty good priced freight for out of New England. Because there was a good shot you weren’t going to have any loon. So with the money you made going in, most of the time, what seemed like cheap freight was pure profit.
Kevin – 00:22:57:
Henry, you just reminded me of something, Brent. I just gave everybody the how we do profit loss. It’s pretty darn simple. It’s third grade math. We walk through it in a couple seconds. I think there’s something more powerful, though, than how. We have to know how to do things. I think something much more powerful is why we do things. And if we can give somebody a good why, and when you ask people, this will stump them because they haven’t thought about it. So I try to help them with this. One of the questions I get all the time is, how can I possibly make it with one truck when I have to compete against the big carriers who have so many advantages? They get everything cheaper. Their trucks are cheaper. They have big fuel discounts. They’re on and on. They can run their own shop. And my answer is, you don’t compete with them. The way you succeed in this business is not their model. Because what Henry just said is absolutely true. They’re operating on such razor-thin margins. If you copy what they’re doing, you’re going to go out of business. If you try to compete with them, you will go out of business. The advantage a single truck owner has is one big area. It’s the ability to control our cost to increase our profit. We can do things in 10 minutes that take a fleet a year to accomplish to get it all through their system. Something as simple as paying rates went down. I’m going to slow down. I can do that instantly as an owner operator. And it makes sense to do that and think that way. Try getting a fleet to slow all their drivers and trucks down five miles an hour. It’ll take a year and they’ll lose drivers and it causes all kinds of other problems. So the why to do this is because this is your competitive advantage in this industry.
Brent – 00:24:47:
I love the why. If you can get it. To the why, what tends to take care of itself. So if you’re a first-time owner operator, you’re new to this industry, you’re trying to figure out your profitability, and it’s a down market. We all realize it’s not a down in freight volumes market. Henry talked about that earlier. It is down in pricing. No doubt. We’re having a pricing recession as that thing goes. But to Kevin’s point, and I want Henry to jump in here on this, your special sauce, your ability that you have over any other larger operations that you have the ability to control your cost and change it. To affect your profitability in an hour, in a day quicker than anybody else. And so that gives you a competitive advantage. Henry, jump in there.
Kevin – 00:25:27:
I even like to use the term. I can micromanage my expenses.
Brent – 00:25:31:
Yeah, no doubt.
Henry – 00:25:32:
I’m with you there, Brent, except for being, I try to get as good a fuel mileage as I can all the time. It’s pretty hard to trim it down a whole lot harder than where I have.
Brent – 00:25:41:
Right. But you’re at the top of the spectrum when it comes to performance, when it comes to fuel mileage. You are on record getting an average of 10 miles a gallon. I think everybody would be jumping for joy if they got 10 miles to the gallon.
Henry – 00:25:54:
What I want to answer is a question that was asked to me. I was at an economic summit, and there were three big mega carriers and somebody from Transport Topics on it. And my gosh, I felt like the little fish in a big ocean amongst a bunch of sharks. And they were all getting asked all the questions. And they gave these really long-winded answers that when you listen to it, it’s like they didn’t say anything. They went all the way around the block. And then finally, a question from the audience came for me. And they said, “well, how does a small two-truck operation like you compete with these mega carriers?” Well, one, I don’t want to be in this business so I feel like a victim every day. Because how can you move forward when you’re feeling like a victim? You can take charge of that. So I looked at the person after I paused for about half a second. I said, no, you asked the wrong question. I said, the question should be, how does a mega carrier compete with a carrier like me? I said, I’m running two trucks. I don’t have a terminal to pay for. I don’t have the overhead of management. I say I get better customer service and generally get to get a higher rate because I do better on fuel than they do. I have a fuel discount card that puts me on par with where they are. I said, granted, they get discounts on their trucks and their insurance and some other things because of their size. I say, but do they want to compete with a carrier like me? They need all that.
Brent – 00:27:14:
So you turn the tide on them a little bit.
Henry – 00:27:16:
Yeah, you think about the amount of people that will say like with a mega carrier, oh, well, they can afford to have trucks sitting on the fence. No, they can’t. That management cost they have in that office. That big terminal they have to pay for. I heard one and it was, they always spoke of this one major carrier that said, if I made it, he was running like 5,000 trucks at the time. And he said, if after everything’s done and everybody’s paid, if I have a dollar a day from each truck, I’m really profitable. When the people used to throw that around the Truckstop, whether that person said it or not, doesn’t matter. But my comeback was if you’re operating that close, if one of his trucks has a crash on any given day. He just wiped out most of his profit for the year, if not years.
Brent – 00:28:03:
All right. So speak to that a little bit. So, Kevin, you talked about consistency. I know one of Henry’s principles is running directly with the shippers. And so let’s talk a little bit about one of the things that the largest expense that they have is in fuel mileage. So one of the things we’ve got to market right now, Kevin, you hit on it just a second ago. And Henry, I know you talk about this all the time. Let’s talk about the power of fuel mileage and fuel consumption against your profitability. And so, Kevin, what’s your advice to the carrier, the owner operator about what’s the approach to buying fuel and then the consumption of fuel in their truck?
Kevin – 00:28:35:
So we want to increase our fuel mileage as much as reasonably possible. We want to drive our purchase costs down as much as possible with discounts and understanding fuel tax strategies where you should buy. We’ve got a short period of time. We can’t get into the details, but that’s what we’re looking for. We want to maximize fuel mileage and minimize fuel costs. And drive that cost per mile on fuel as low as we can get it. Here’s the crazy thing. We have fleets running around today at 70, 80 cent per mile fuel cost. And I have single truck owner operators in the low 30s. How can they possibly compete against us when we can put out numbers like that? Now, I’ve been known forever as, oh, that guy’s an idiot. He just tells everybody to slow down all the time. And I do, because if you’re going to have a mindset. About fuel, and I can’t explain everything to you. Slowing down is one of the easiest, most powerful strategies. Even if it’s not maximizing my fuel profit, it still works. But what I really try to help people with is understanding the correlation between the rate, your time, what freight is available, and how fast you’re going to drive. So there are times where I will say, absolutely, if you can drive 55 all day today, you should be driving 55. There are other times, and Henry’s really good at this, and he’s documented it, where he’s going to pull freight that pays well and is time sensitive, and he’s got to run 70 plus. And people think, oh, you got to tell Henry to slow down. Oh, hell no, I’m not going to tell Henry to slow down. Henry knows what he’s doing, and he’s done all of that math, and he knows when it makes sense to drive faster and give up some fuel economy, knowing that the bottom line will be higher in that case. But I have been known to be that guy that’s pounding everybody all the time, slowing down, because even if you don’t get it exactly right, slowing down always works better than trying to drive fast all the time.
Henry – 00:30:42:
And what Kevin’s saying on that with the other thing that most people don’t even look at is the truck that consumes the least fuel usually directly correlates into the truck with the lowest maintenance cost. And where this really struck home for me, and I realized it early on where that went, but I met an engineer with an oil company. And he said he really wishes that instead of doing oil change intervals based on mileage or hours, it would be so much better to base it on gallons of fuel burned. And it’s that way, like on this Freightliner Cascadia I’m running with the Detroit, the oil change interval, if you’re above seven miles of the gallon, is 75,000 miles. You’d be surprised how many people don’t take advantage of that. I mean, that’s what that is. They’ve been putting any kind of special filtration on. And then they’re basing that on fuel mileage, which I’m at 10.1. I keep razzing the engineers there that, well, I should be well over 100 then.
Kevin – 00:31:47:
And the simple explanation for that is all the damage and contamination that occurs in our oil and creates problems comes from the combustion process. So the less we combust fuel, the cleaner our oil stays. So then we could go on and talk about what would be a better way, but the best way is the… The actual condition of the oil by sampling, which is what we’ve been talking about forever, which lowers your cost.
Brent – 00:32:13:
I appreciate y’all talking about how the fuel consumption relates to lowering the maintenance cost, which increases your profitability, right? So less maintenance, the less cost in maintenance, less maintenance, the more uptime and the more the wheels are turning on the product because you’re not repairing the product. So it’s not down. So all that goes into bottom line profitability. That’s fantastic. So I’ve never heard anybody talk about, and also if you think about it, it’s just less stress on an engine, the main component you need to run that truck, right?
Henry – 00:32:42:
On the brakes, on the tires, on the suspension. And furthermore, I’ll say this because last week, the run I was on, Kevin, you’d be proud. I never ran over 62 unless I was coasting all week, which was rare for me. Yeah, I had the time. So it was EO to the 12 in there, which was cool. But… The other part is it wears the driver out less because there’s less stress. So there’s less wear on everything.
Brent – 00:33:10:
Oh, wow. Even the human part. I love that. Less stress on you. So overall, the whole principle of running at a lower speed. Creates the greatest opportunity for profitability of the operation. Is that fair?
Kevin – 00:33:24:
Absolutely. Here’s the other thing. Henry and I and you and I and all three of us will sit down and we’ll talk about strategies. And sometimes we don’t always get to the why of that strategy. Well, here’s what it is. Henry, I doubt that any of us are going to come up with a strategy that the whole why of it is the bottom line profit. It’s all I ever think about. I mean, that’s the whole point of the business. I believe the purpose of a business is to generate profit. Some people will say the purpose of the business is to serve a customer. No, I think the purpose of the business is to generate a profit. I do that by serving a customer well and managing my cost. So every strategy we talk about, whether we get to that point or say it or not, is designed to increase that bottom line number.
Brent – 00:34:08:
Right. Yeah. Fantastic. So we got about five or six minutes left. So I want to talk about these two. As it relates to profitability, because I know you guys both are excellent at understanding and talking about this. I want to talk about planning. And then I want you guys to both talk about planning, but also talk about time as a cost there. So talk about those two things and then we’ll wrap up in a couple of minutes. So just because these are big topics, I think, because I think most truckers don’t ever think about their time. They just think about miles.
Kevin – 00:34:37:
Here’s the best way I might be able to make an example of this right now. Right. Rates inside now, because you live in the middle of the world. Right. So you’re talking about time as a cost. That’s what you do. That’s why you’re on my show, because you can bring us all that data. What’s a rough average for van freight today for a mile?
Brent – 00:34:50:
Van freight today was at $1.91.
Kevin – 00:34:52:
So if you’re an owner operator, Brent, and you’re looking for some freight today, and I say, Brent, this is your lucky day. You just won the lottery. I’ve got a load that pays 10 bucks a mile. You’re going to take it. Depends. Good. That’s a good answer.
Brent – 00:35:07:
The Irish instructor would say, hell yeah.
Kevin – 00:35:09:
Because it’s only a hundred miles and it’s going to take you three and a half days to get the load off.
Brent – 00:35:14:
Right.
Kevin – 00:35:16:
Time is a huge factor here. And part of the reason why Henry and I might not spend as much time on this topic as we’d both like to is we still are trying to convince people to track their numbers because that’s how we figure out whether a load is profitable or not. And you and I worked on that, the load profitability calculator. And time was a big factor. I had a calculator that showed this is the profit per mile. This is the profit per day. And we have to look at both of those factors to decide which load is better. And many times, you and I know this because we ran the numbers over and over. Many times, the highest per mile rate was not the most profitable load.
Brent – 00:36:04:
Many times, it wasn’t. Depends on the operation. Right.
Kevin – 00:36:07:
And if I have to give you another big reason on why you should be tracking your numbers, it’s this. You are taking loads you think are the most profitable load offered to you, and you’re wrong because you don’t have the right information.
Henry – 00:36:21:
Kevin, adding in on the profitability, and this was towards the beginning of my career as an independent owner-operator. And I was outside somewhere out there near the ports in Virginia. And I got out there. And I took a load there because everything was dead. Flatbed, it was the wintertime, and freight was slow. And it wasn’t all the way up to Philadelphia where I would run back out of. And I got there and it was a brokered load. And they said, yeah, we’ll be able to get you out of there. And I got there. And I get to the Truckstop. This is back before all this stuff was online, and everybody’s looking at the load board on the screen in the truck stop with all the pay phones and losing their minds. And I’m talking to these people, and they’ve been there three and four days. Waited around until the afternoon, and I said, I’m not sitting here three or four days, because once that day is gone, that day is gone. You cannot make it back. So. I made a call up to my customer in Philadelphia, which was a pretty good hike out of there, but not a huge hike. And I said, can you get me a load for later tonight to load up to go back to Charlotte? Well, yeah. And this guy that was an old timer at the time, and this is 20 years ago or better, he says to me, you can’t go deadheading up there. You can’t make a living like that. You need to just sit here and be patient till you find a load. I’m like, yeah, OK, whatever. And he was being nice, but I’m like, this ain’t working for me. Hey, I’m not patient enough for this. Boom, I’m out of there. I go up. I pick up my load. I go back to Charlotte. I unload, reload. I got a load back up towards Philadelphia. And I picked up a load at Philadelphia. And I’m on my way back down through. And I stopped at Ruther’s Glen, Virginia at the Flying J there at the time, exit 104. I remember it well. And I pull in. And here’s the same driver at the Fuel Islands. He just then had gotten a load that afternoon. I had three loads at that time. All of your fixed costs don’t go away sitting in this gravel lot over there at Norfolk, Virginia. And he had already been there for four days. He lost almost a whole entire week because he wasn’t going to run there empty. Another example of that, and this was an expediter. There was a hurricane coming in, and they were near where the hurricane was coming, but they didn’t want to leave because nobody was going to pay them to leave. I’m like, you’re going to lose your truck.
Kevin – 00:38:45:
Hey, can I tie that into something I said earlier?
Brent – 00:38:50:
Please do. Yeah, wrap it up and then I’ll close this.
Kevin – 00:38:52:
So we’re talking about calculating profit loss down to the penny, down to every category. If you do that, I can give you the absolute best strategies on every load to be maximally profitable. If we have the numbers, we can do that. Over the years, I’ve had to develop strategies to help people who won’t do that. And I talked about one earlier. If you’re not going to calculate your fuel cost, then the best I can tell you is slow down and it will work out most often. There’s another one here. If you’re not going to calculate profitability per mile and per day in your time, then what I would tell you is just keep the wheels turning with freight on your truck as often as you can. It’s not perfect, but if you’re not going to calculate these numbers, it’s better than sitting. And so many people have that attitude and people will look at me. And when I make that statement, they’ll say, you’re the problem in the industry. You’re the reason why everybody’s pulling cheap freight. No, that’s not true. You’re all pulling cheap freight. You just don’t know it. But the way to be more profitable if you’re not going to do the hard work, and I want to throw something in about why I think people don’t do this.
Brent – 00:39:58:
Okay, yeah.
Kevin – 00:39:59:
I believe truck drivers are very hard workers. This is a job where you work hard. It’s long hours. There’s a lot going on. So I don’t think we can say truck drivers aren’t willing to work hard. Unfortunately, what they don’t understand and what they’re not willing to do is the same thing I say at the end of every show. They’re not willing to do the hard work, which is different from working hard. The hard work is usually, for whatever reason, the thing you don’t want to do because it makes you uncomfortable. They don’t want to calculate their numbers and their profit because they don’t understand it. It makes them uncomfortable, and they ignore it. They’re not lazy. We work hard in this industry, but they work harder than they have to because they won’t do the hard work.
Brent – 00:40:44:
Kevin, thank you so much for your willingness to continue to talk about this and willingness to come on Freight Nation and talk about profitability and give those continued advice on if you’re reluctant to want to do things that have a lot of detail and specificity. And look, here’s the thing, Freight Nation. I’m not great at that either. So that’s just one of those things where I have resources that can help me with that. But in a single truck operation, you are the resource. So I agree with Kevin. Do the hard work if you can. If not, slowing down makes a lot of sense. Keeping the wheel. Turning makes a lot of sense because it’s hard to go out of business if you’re continuing to move forward. And so, Kevin, thank you for those points of view. And so I love this Freight Nation. I love it. So Kevin talked about, like, why wouldn’t you want to do this? Because if you do measure these numbers and you keep these records, you do understand your cost per mile. It helps you to get to do what you love to do, which is to drive a truck and to enjoy the freedom of owning your own business. And so think about those things that we talked about. Measure everything. Understanding that. That by slowing down puts less stress on the engine, which lowers your maintenance costs, and this increases your profitability. But just remember those few things. Set goals with your business. Super important. As Henry talked about, maximizing your day every day. No doubt, you got to absolutely do that. And remember, it’s not just the miles. It’s planning. It’s the time as a cost. Because you can make more miles, but none of us can make more time. So, gentlemen, thank you so much for talking about profitability today. Super important because we love truck drivers, and we want them to enjoy their business the best they can. So I really appreciate both of you coming on today.
Kevin – 00:42:19:
Thanks for having me. I had fun.
Brent – 00:42:21:
All right, Henry, are you still there? You on? I think he’s having some trouble. Well, anyways, Freight Nation, thanks again for joining us. We hope these profitability tips are something that helps you run a better operation, whether you’re new or whether you’ve been doing it for a couple of years or whether you’re an old salty dog and you’ve been doing it for a long time. Know that we’re always here to help. And remember, as we like to say at Freight Nation, don’t forget to work hard, to be kind, and to stay humble. Thanks a lot, Freight Nation. We’ll catch you next time. On behalf of the Truckstop team, thanks for listening to this episode of Freight Nation. To find out more about the show, head to truckstop.com forward slash podcast. If you enjoyed this episode, make sure you hit subscribe so you don’t miss any future episodes. Until then, keep on trucking and exploring the open roads with Freight Nation, a trucking podcast.
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