Commercial Financing

Trucking can be an expensive ordeal. This is especially true when you own or lease your own semi instead of driving a company-owned truck. Not only is the upfront cost expensive (hovering around $150,000), but the maintenance and annual expenses also pile up, usually costing around $180,000 to keep a commercial truck in a fleet every year. While many of these costs are unavoidable, there are several things you can be doing to minimize your operating costs to be as low as possible. Here are a few of our suggestions.

Slashing Fuel Costs

Fuel is one of the most expensive parts of semi-truck ownership, making up to 39% of operating costs. Depending on the area of operation, diesel can easily add up to over $70,000 a year alone. If you’re new to the industry, you might be unaware of the extent of this usage. To put it in perspective, the average car uses 500 gallons of fuel per year. In contrast, the average semi-truck uses 20,500 gallons annually, a staggering difference.

To help keep this lofty cost to a minimum, one thing you can do is to maximize your fuel efficiency. Every truck has a “sweet spot” where you’re going fast enough to make all of your appointments on time, but slow enough that you’re not burning unnecessary, excess fuel. To find your sweet spot, try monitoring your current fuel efficiency, and adjust your average speed accordingly.

Another way to cut down on fuel costs is to shop smarter when filling up the tank. As it does with normal automobile gas, diesel prices fluctuate drastically depending on the area. The U.S. national average cost per gallon of diesel hovers around $3.17. This changes by a few cents depending on the exact station and area, but there are a few ways to avoid overpaying. In general, diesel is more expensive on the West Coast. This is mostly due to the famously overpriced California. If you can, try to plan out your route so that you can avoid filling up in this expensive area. Additionally, if you have the resources to do so, alternatives to diesel fuel could potentially help you save on this massive expense.

Getting Affordable Insurance

Insurance is another sizable cost of operating a semi-truck, as there are over 9 different policies to buy and consider. The costs of these policies are usually around 4% of overall operating expenses, which may seem like a small fraction but is really thousands of dollars. While you don’t have a choice in whether or not you purchase these insurance policies, there are a few things that you can do to lower your rates and get the cheapest possible insurance deals.

One of the most important things you can do to lower your insurance rates is to keep your driving record as clean as possible. Drivers without any major infractions are considered less of a financial liability for insurance providers, and this trust translates into lower rates. While adhering to safe and orderly driving practices is important for the wellbeing of the public, it’s also essential for the wellbeing of your pockets.

Avoiding Unnecessary Repairs

Truck repairs can really add up, adding thousands to your annual bill. While it may sound counterintuitive, one of the best things you can do to minimize these costs is to pay more upfront. Being diligent about regular maintenance can actually lower your overall costs by preventing emergency repairs or paying for an accident resulting from faulty equipment. Waiting until equipment malfunctions or breaks down results in having to replace it all together rather than just taking proper care of it to preserve it.

Breakdowns due to poor maintenance can also lead to bigger issues affecting other tuck parts, or they can even leave you vulnerable to accidents that endanger you, the public, and your entire rig. Schedule regular maintenance to keep your semi in pristine working condition.

Schedule Your Routes Carefully

Since most truck drivers are paid by the mile, one of the best ways to optimize your pay per hour is to reduce idling time or time spent sitting in traffic. Any time where the truck isn’t moving is money right out of your pocket. While the conditions might not always be in your control, you can always make your best effort to avoid it.

Try to plan out your routes to avoid heavily congested areas during busy times such as the morning or evening rush. If you have the freedom to do so, take less popular roads during these times to try to skirt around traffic jams. While you might take a slightly longer route mile-wise, it will improve efficiency by allowing you to complete routes faster. Additionally, this can result in safer traveling due to clearer conditions, as traffic jams are often risky in terms of fender benders.

Maximizing Profit

When it comes down to it, driving a semi-truck is your career, and we all want to make a living wage. Keeping operating costs low is the best way to squeeze the most out of your salary. There are several invisible strains on your operation that you might not even realize. For example, truck stops sell more coffee than convenience stores, and the majority of these sales are to big rig drivers. Something as simple as streamlining daily purchases can make a difference in your daily profit margin. While you won’t necessarily be saving thousands by skipping that second cup of joe, making small changes can add up into healthy financial habits that save you big money later on.

For more information about how to get the most out of the trucking industry, check out Mission Financial!

Finding the right insurance can be difficult, as the process can be excessively complex and sometimes confusing. There are many factors to take into consideration when insurance agencies give you a quote; some of them in your control and some of them not. Knowing how your status can affect your rate is key to getting a fair price. Being uninformed can cause you to overpay, so it’s important to research carefully. Here’s what you need to know about semi-truck insurance costs and how to avoid being duped.

Why Do You Need Semi-Truck Insurance?

Commercial trucking insurance is different from ordinary car insurance, as there is a wide range of additional liabilities. In the event of an accident, federal law requires certain insurance policies to ensure the compensation of anyone injured or any property damaged. Failure to fulfill these insurance requirements can result in an assortment of consequences. These can include a variety of expensive fines, extensive and often invasive government inspections, and total financial liability in the event of a collision, fire, or vandalism.

Different Types of Insurance

There is a wide variety of coverage that you will need before getting out on the road. Some protect the public in the event that a driver causes damage or a collision, these policies include:

• Public Liability Insurance (usually between $5000 and $12,000) protects both the truck driver and the public if a truck driver causes an accident.
• Bodily Injury Insurance (cost depends entirely on driving record and company policy, but usually combined with public liability for a few thousand more per year) covers the cost of medical bills if anyone is injured in an accident by fault of the truck driver.
• Property Damage Coverage (requirements vary by state, ranging from $5,000 to $25,000) covers repairs to any property that is damaged as a result of an accident.

Additionally, there is insurance to protect the truck drivers and their cargo:

• Cargo Legal Liability Insurance (usually around $1,000 per year) covers damage or loss of cargo should it occur on your route due to an accident, fire, or vandalism. It’s important for both the carriers and the providers as it protects the driver from legal liability, and it protects the cargo owners from significant profit loss.
• Physical Damage Insurance (usually between $1,000 and $3,000 per year) is for semi-trucks, and it covers the trailer in the event of any body damage.

Average Costs

While it’s difficult to give approximations due to the large range of cost per policy, all of these different types of insurance added together usually range in cost from $12,000 to $18,000, sometimes even going above $30,000 for drivers considered to be higher risk. However, these are merely national averages and may not speak to your unique situation. The prices for each type of insurance drastically vary in different ways, depending on which factors are the most relevant to what the policy is protecting. So for example, Cargo Legal Liability Insurance will vary in cost depending on the value of your cargo. Additionally, if you’ve signed on with a motor carrier, this lowers your personal costs, often all the way down to $2,000 $4,000.

Factors that Affect Your Costs

There are a wide variety of factors that can affect the cost of your quote. Insurance companies evaluate certain aspects of your past and present before determining the price, so make sure you are familiar with each of the following. These factors can include, but are not necessarily limited to:

• The number of years that you’ve been driving a semi; more experience resulting in lower rates
• What type of cargo you haul; the more expensive the cargo, the more expensive the insurance
• How long your routes usually are; the shorter the route, the less risks associated
• Your age, as younger drivers are considered less of a liability than seniors
• Your credit history; as this helps determines how dependable you are at making payments
• What type of payment plan you establish with the provider; the more payments per year, the better
• Driving record/ number of accidents; a poor driving record will cause your rates to skyrocket

How to Lower your Insurance Costs

While many of these factors described above are out of your control, there are many things that you can do to lower your costs, the most being to stay accident-free. A clean driving record is essential to keeping insurance costs down, as pricing for coverage is largely influenced by your probability to cause a collision. Additionally, the more frequent your payments, the better, as it establishes trust between you and your provider. It’s recommended that you pay the whole premium in one lump sum every year, as it is a great way to keep your rates reasonable. This payment is easier said than done, but it’s a great goal to strive towards in your hauling journey.

Finally, to make sure that you’re getting the best possible quote, compare different prices between various providers. Some providers may be more lenient with their conditions, thus leading to a better quote.

The cargo transport industry can be complex and confusing, especially when dealing with insurance costs. That’s why we make semi-truck financing easy with our simple loan application and approval process!