We returned a struggling over-the-road, temperature-controlled motor carrier to profitability through increased productivity by filling empty trucks with drivers, reducing overhead and managing their technology.
The Problem They Were Dealing With
- They were operating 32 temperature-controlled trucks prior to contacting Trincon Group. They were originally a brokerage company that decided to move into operating their own trucks as well. They used 8 owner-operators and had 24 trucks of their own.
- But they were in trouble – they were losing money and they weren’t sure why.
- They were once a very profitable company but as they expanded they started to lose money and they hadn’t been able to bring their business right-side up again.
The Cause Of Their Problem
Trincon Group conducted a thorough fact-finding exercise to understand the ins and outs of their operation. This is what we discovered:
- This company’s productivity was suffering as a result of not separating their two business units – separating brokerage operation from their trucking operation.
- Running a brokerage operation and owning your own fleet are two different types of businesses.
- The overhead costs associated with operating your own fleet have to be carefully managed. There is a minimum amount of work that each truck must be involved in for a company to remain profitable. Because they were historically a brokerage firm they were prioritizing the good routes for the owner-operators and brokerage contract carriers, ultimately affecting the productivity of their own fleet resulting in parked trucks.
- Truck maintenance was not completed proactively and the associated costs were crippling
- Broken down trucks were costing the business time, customer dissatisfaction and larger repair bills than regularly maintaining their fleet.
- Driver turnover was too high for both company drivers and Owner Operators
- Drivers want more than just a paying job. They want a career they can control and an employer that trusts and respects them.
- Under utilized trucks were inflating fixed costs
- Holding onto unused equipment provides no benefit to the business. In fact it costs the business a lot of money.
The Trincon Approach That Worked
- Build a cost modeling tool to manage the operations in a profitable way
- By understanding their costs operations was able to concentrate on profitable activity and eliminate wasteful activities.
- Implement a driver recruiting and retention program to maintain more consistency in staff
- One of the best features of this program was a salary based on tenure and experience, and productivity bonuses so drivers could hold themselves accountable to their own success and rewards. This resulted in reduced driver turnover and consistency for the business.
- Shed excess equipment and implement a regular maintenance program to lower overhead costs and reduce operational effort
- Reducing costs and over the road breakdowns created a more profitable operation and offered the capacity to tend to other areas of the business
- Leverage technology and tools more effectively to gain more insights about their business
- By learning to use their technology more effectively they counteracted the costs of these tools to deliver more information to make the business increasingly more profitable