Find Better Paying Truck Loads Through Forecasting

Find Better Paying Truck Loads Through ForecastingThis week we’re talking about forecasting, load boards and making more money in your trucking business. If you’re an independent owner operator, you already know about load boards. And who doesn’t want to make more money? Want a 24% raise? Keep reading.

What Is Forecasting?

Before we dig into forecasting, let’s look at budgeting so we can understand the distinction. Dictionary.com defines a budget as ”an estimate,  often itemized, of a given period in the future.” Pay attention to the last three words, in the future. Many people track their income and expenses and call it a budget. Although tracking both income and expenses as they happen is a fantastic habit to have, it’s not a budget. 

Your budget in business is just like your budget at home. You budget for a given future period in order to tell your money where it’s going before you’ve received it, and to make sure all your expenses are covered. The baseline of a good budget is a recorded income and spending log you’ve created. If you haven’t logged your income and expenses yet, start now. It’s a baseline for your financial success.

Forecasting goes beyond better paying truck loads. Forecasting is all about cash flow. It’s more of a decision making and action plan to help with future growth. Both income and spending can be targeted in forecasting. The bulk of the articles you’ll read on forecasting will refer to the next year, or even 5 years. Those are geared for larger companies and often responding to debt management, loan securement and answering to shareholders.

For the independent owner operator, we’re more concerned with forecasting for the next week, month and quarter. Forecasting is a great way to predict future cash flow, and to look for where and how to make positive gains. You can also use the same method for future savings in your budgeted spending. Why not improve your income and reduce spending to improve cash flow?

Let’s take a closer look at the two types of forecasting and how you can use them to work in your favor. These aren’t written out in the order you will approach them, but you really need to understand both, then apply one to the other.

Judgement Forecasting

This type of forecasting is based on your experience and intuition. Nobody knows your talents and strengths like you. You know what you’re made of, and what you’re capable of. It may be a passive activity or a conscious effort, but we all do our share of judgement forecasting. The down side of the judgement element is we all tend to slip into a trend, pattern or comfort zone. Our judgement got us off the ground and running, it even made us profitable. But it’s quite possibly limiting us to little or no growth beyond market forces. In our conversation with Dan, we called this “fat and happy.”

Wrap your head around that fat and happy comment. It will help you to separate the two types of forecasting. I listed judgement first, but it’s something you apply towards the end of the process.

Although judgement forecasting has it’s limitations, it will play a part as we move into the a more serious look at our own future. You’ll have to decide that you’re willing to go where the next step takes you.

Quantitative Forecasting

Quantitative forecasting is data driven. Using trends and patterns in recent history, you look for areas to maximize. For the independent trucker, you’re looking at rates, lanes, seasonal hot spots and all the data to determine how you’re maximizing your assets. Those assets are you and your truck.

Using a tool like Trucker’s Edge Pro, you can spend time studying where you run, and what you can do to improve. This isn’t the time to cop out and tell yourself you’re just going to look for better paying freight. This is the time to make an actionable plan.

Dan makes the case that forecasting requires initiation, meaning YOU have to initiate some kind of change. You may find several that are possible. That doesn’t mean you’re going to act on every one, but you’re knowing what you passed on. Maybe you don’t want to run NYC, or the northeast in general, that’s your choice. Let’s look at what you could change, based on the data you have available.

The magic in quantitative forecasting is in exactly how dynamic it is. Using the data available, you can actually forecast three or four plans running different freight, lanes and equipment. Then you can apply your logic and reasoning to decide which forecast to follow.

The expenses will also change with each forecast. Fuel cost and tolls vary from state to state. Even your fuel economy will fluctuate with moving from flat land to hills and mountains. The milage element is one of the areas judgement will come in.

Here are a few things to look at on the income side of the forecast.

  • Find where you can make small adjustments in the lanes you normally run.
  • Find better brokers based on lane averages, days to pay, credit history, etc.
  • Research tri-hauls, especially the ones that don’t add too many more miles.
  • If you don’t mind running them, search for multi-stop loads. My research tells me the brokers have a lot of wiggle room on these runs.
  • Study the heat map available in Trucker’s Edge Pro.
  • Search for areas where you’d like to find your own freight.
  • Maximize your service schedule to limit your down time.
  • Look for lanes and rate histories that match the kind of home time you’d like to have.

On The Expense Side, you should know what maintenance and services you’ll need. Breakdowns excluded, forecast and plan your service around slow times, or times you’ve planned to be off anyway.

Do you have employees? What tasks are you doing that could be delegated? What will you do to maximize the extra time this has given you?

Shop well ahead for things like tires, bulk fluids, additives and things you regularly buy. Your research may allow you to forecast lower costs on these than you’ve spent in the past. That’s money in your pocket.

Fuel is another area where you may be able to forecast some savings. Are there better fuel cards, truck stop chains or stops on the lanes you run that can offer savings?

Now, Set Your Goals

Here’s where we really see the difference between a forecast and goal setting. Based on the forecasts you’ve drawn up, you can make your choices and take action. Your goals will be based on both quantitative data and your own judgement. Your first goal is to make the forecast, but you should set a few real goals from that plan.

Focus those goals on increasing your earnings, cutting expenses and searching out your own customer base. It’s easy to forecast a month on paper, but even when the numbers work, the thought of putting that plan into action can be overwhelming. Break it down into actionable steps and set just a couple of goals for next week. As Dan says, it requires initiation on your part. Looking at both income and expense goals, start with one or two of each.

Your goals for next week could look something  like this:

  • Buy more of  my fuel where I’ve determined it’s less than my average now.
  • Start calling and shopping for the new drive tires I need before winter.
  • Search and book one load in the lane I chose that pays at least 20 CPM more than my average loaded mile.
  • Find a replacement for that cheap backhaul that gets me home on Friday.
  • Make it home Wednesday night without taking a pay cut.
  • Start collecting the information I need to bid freight direct to customers. Have it ready in 2 weeks.

According to this article at Freightwaves.com small fleets with 5 to 15 trucks book 63% of their freight direct from the shipper. Of the remaining freight, only 14% is from load boards and 23% is booked directly with brokers.

They say “The riches are in the niches.” This is true in many businesses, but it’s especially true for the independent owner operator. What’s your niche? Is there an element of your business or skill set that is unique and marketable? If so, use it to your advantage. It could be anything from enjoying LTL or multi-stop loads. Maybe you have an exceptionally light truck and trailer. Hotshotters can focus on last mile delivery. Whatever it is, find it, and hone that skill.

Do The Math On Finding Your Own Freight

Right now you may be finding all your loads on the load boards. Now, run the numbers. Acting on a realistic forecast, can you increase your average loaded mile pay by 15 percent? If you’re able to book half your freight direct with the shipper, That direct freight should be an additional 15 percent higher than the brokered rate. I’ve done the math twice.  That’s a 24% increase in revenue to the truck. Now add the savings you were able to achieve in the expense side.

Picture Yourself A Year From Now

What would your life look like if you’ve increased your income by nearly 25% and only had to go to the load boards a couple times a month? Is it going to happen overnight? NOPE! But if you use the tools available, and forecast every month with actionable steps, you can easily grow at 2% a month or more. As the old adage goes, “How do you eat an elephant? One bite at a time.”

Dan has some great advice when it comes to watching your income rise. As a guy who’s done tens of thousands of tax returns over the years, our favorite taxman can tell you exactly where most go wrong with their newfound cash flow. Heed his warnings. He really knows what he’s talking about.

Where Can You Find The Data?

If you’re going to make a commitment to seriously focus on that bottom line, you need data. You can collect what you need on the freight side by using Trucker’s Edge® Pro. And here’s the best part, you can try it free for 30 days. Here you’ll find the tools and data to forecast your next week, month and quarter, based on real numbers. Some of the best forecasting features include;

  • Mileage and routing optimization.
  • Broker credit scores and days to pay.
  • Broker-to-carrier spot market rates based on a 15 day average.
  • Automatic tri-haul suggestions – spend time playing with this one,it could be a gold mine.
  • Regional heat mapping, not just hot market states.
  • All the features in the Enhanced plan.

Full Disclosure here, The Trucking Podcast has an affiliate relationship with DAT®, a relationship I’m quite proud of. We get a small commission, you get a great service and everybody wins.

Continuing Education

Try to be neat and organized with your written forecasts. Not only to put into action, but to collect. If you work through this process every 6 to 8 weeks, you’ll be able to see longer term trends that will help you dial things in as you improve.

In a post titled 7 Tools For Finding Higher Paying Truck Loads I recommended 2 books. Both will help you grow as a business person and improve your sales skills. I chose these books because they’re a couple of my favorites. The sales book works quite well for anyone looking to make quick transactions by phone. Both are easy reads.

Stay on top of your forecast and goals, and identify what you need to learn, study or plan. Listen to this episode a couple of times and learn from Dan’s experience. Dan is a born entrepreneur who’s spent years honing his skills. Sometime in early 2019, I’ll drive the 240 mile trip to Drake Tax Service, sit down with Dan and he’ll prepare our 2018 taxes. He’s done ours for years. Should you have any questions, give him a shout. If he’s not in, he’s great at returning calls. See Truckingpodcast.com/Dan for contact information.

Other Show Notes

Don, Kris and I also host Tom And Kris Camping, a camping and RVing podcast. It’s rare that I use the same story on both shows, but this one’s quite the warning for flatbed truckers and hotshotters. We felt we owed it to both audiences to share this one. If you use ratchet straps, it’s good advice. This comes from RVLife.com and is worth the read.

Also, a football player retires – at half time. Right in the middle of the game.