Logistics

Complete Guide to LTL Freight

Whether you’re a small-scale owner-operator or run a large trucking fleet, there are many different ways that you can plan freight deliveries. LTL freight is a popular option to keep in mind.

In many cases, shipments don’t require an entire truckload. Instead of wasting empty space and driving empty miles, LTL freight is an option to help trucking businesses operate more efficiently.

In this guide, we’ll explore exactly what LTL freight is, how it works, and when trucking operators should consider this approach.

What is LTL Freight?

LTL Freight stands for “Less-Than-Truckload” freight. It’s a shipping method used when the amount of goods a business needs to transport doesn’t require a full truck.

Instead of renting an entire truck, multiple shippers share the same truck space. Each shipper pays only for the portion of the truck they use, which makes it more cost-effective for smaller shipments and more optimized loads.

LTL Freight typically involves shipments larger than parcel deliveries but smaller than what would fill a full truck. It’s ideal for businesses with shipments that weigh between 150 and 15,000 pounds.

Benefits of LTL Freight

For the right kind of shipments, LTL freight offers some clear advantages.

LTL Cost Efficiency

The most obvious benefit of LTL freight is that it’s a far more cost-efficient shipping method than using an entire truck that isn’t full.

Both truck drivers and trucking businesses can experience these cost savings.

For Small to Medium Businesses

LTL freight can help small and medium businesses save money if they don’t have enough products to fill an entire truck.

In traditional shipping, businesses might have to pay for an entire truck’s capacity, even if their goods only take up a fraction of the space. LTL freight allows them to share the truck space with other shippers, meaning they only pay for the portion they use.

Beyond this, being able to ship smaller loads more frequently helps businesses manage inventory levels better and respond more quickly to customer demands. All this without having the high costs of full truckload shipping.

For Truck Drivers

Instead of dedicating a truck to a single shipment, drivers can combine several smaller shipments from different customers into one trip. This maximizes the truck’s capacity, reducing the number of empty miles driven.

Fewer empty miles mean lower fuel costs and less wear and tear on the vehicle, which translates into higher overall efficiency and profitability for drivers.

LTL freight also allows carriers to offer more frequent routes and services, which can attract more customers and fill up more trucks.

Reduced Environmental Impact

LTL freight plays an important role in reducing the environmental impact of the trucking industry.

When multiple shipments are consolidated into a single truck, there is a reduced need for trucks to transport goods. This means lower fuel consumption, which decreases greenhouse gas emissions.

Consolidating truckloads also minimizes the overall miles driven by trucks, which is important as the industry looks for ways to become more sustainable.

Increased Flexibility and Accessibility

LTL freight offers a high level of flexibility and accessibility that can be particularly useful for businesses with varying shipping needs.

Because LTL carriers handle shipments from multiple customers, they often have a broader network of routes and services compared to full truckload carriers. These extensive networks allow businesses to reach more destinations, including remote or less-frequented areas, with no need to fill an entire truck.

LTL carriers also offer a wider range of service options, such as expedited shipping, time-specific deliveries, and residential pickups and drop-offs.

Having flexibility like this enables businesses to meet specific delivery requirements, such as tight deadlines or special handling needs. These specifics aren’t always possible with full truckload shipping.

Improved Inventory Management

LTL freight means businesses can ship smaller quantities more frequently, which is a great way to improve inventory management.

Instead of waiting to accumulate enough products to fill a truck, businesses can ship goods as they’re ready. This reduces storage costs and the risk of overstocking or under-stocking.

Improved Service Options

LTL carriers often provide extra services that can be tailored to the specific needs of businesses. These services might include things like liftgate service, inside delivery, freeze protection for temperature-sensitive goods, or specialized handling for fragile items.

These options make LTL freight a versatile solution that can accommodate a wide range of shipping requirements.

Risk Mitigation

With LTL freight, businesses can spread out their shipments rather than relying on a single large load.

This diversification reduces the risk associated with potential shipping delays, damage, or loss. If one shipment faces an issue, it only affects a small portion of the total goods being transported, which would minimize the impact on the business.

Access to a Broad Carrier Network

LTL freight providers often operate within a network of terminals and hubs, similar to airlines.

This hub-and-spoke model allows for more efficient routing and delivery, even to multiple destinations. Businesses benefit from this extensive network, as it increases the chances of finding timely and cost-effective shipping solutions.

LTL Drawbacks

While LTL freight is a smart model for certain trucking requirements, it also comes with some disadvantages.

Longer Transit Times

One of the main drawbacks of LTL freight is that it typically involves longer transit times compared to full truckload (FTL) shipping.

Since LTL shipments are consolidated with other loads, the truck will probably make more stops along the way to pick up or drop off goods at different locations. Each extra stop adds time to the overall delivery process.

LTL shipments also often pass through several distribution terminals or hubs before reaching their final destination, which can also cause delays.

More Planning

LTL freight requires more planning and coordination than full truckload shipping. Because shipments are combined with those from other shippers, it’s important to plan the timing and logistics of the pickup and delivery meticulously to ensure everything runs smoothly.

Businesses need to provide accurate weight and dimension measurements for their shipments, as well as clearly label their goods to avoid confusion or delays while everything is consolidated.

Businesses may also need to coordinate with LTL carriers regarding specific delivery windows, special handling requirements, or other considerations. This creates an extra level of planning, which can be time-consuming and require plenty of extra attention to detail.

Increased Damage Risk

Since LTL shipments involve handling and transferring goods multiple times, such as when loading and unloading at various terminals, there’s a higher chance that items could be damaged in the process.

The more a shipment is handled, the greater the risk of it being dropped, mishandled, or exposed to bad conditions. And because LTL shipments share space with other goods, there’s a possibility that items could be stacked or placed in ways that aren’t ideal for their protection.

When Should You Choose LTL Over FTL?

Choosing between LTL and Full Truckload shipping should come down to a couple of factors, such as the size of your shipment, your budget, and your delivery requirements.

Here are some scenarios where LTL is the better choice.

Smaller Shipments

If your cargo is relatively small – typically weighing between 150 and 15,000 pounds and taking up less than 12 feet of trailer space. LTL is more cost-effective for small shipments.

Cost Efficiency

If keeping shipping costs low is a priority, LTL is often the better choice. In LTL shipping, you can ship more frequently without incurring the higher costs associated with FTL.

No Urgent Delivery Deadlines

LTL shipping is best when your delivery isn’t time-sensitive.

Because LTL shipments are combined with others and may make several stops along the way, they generally take longer to reach their destination compared to FTL. If your delivery schedule is flexible and you can afford a longer transit time, LTL is a more economical choice.

Flexible Shipping Needs

LTL offers more flexibility when it comes to shipping options. If your shipment has specific needs, like liftgate service, residential delivery, or inside delivery, LTL carriers often provide these additional services.

FTL shipping is more straightforward, moving a full load from point A to point B without the additional customization that LTL can offer.

Lower Risk Cargo

If your shipment isn’t highly valuable or fragile, LTL is a good option.

Since LTL involves multiple stops and transfers, there’s a higher risk of damage compared to FTL. However, if your goods are durable or not particularly time-sensitive, this may not be a major concern, which makes LTL a practical choice.

Multiple Destinations

LTL is a great option if your shipment needs to go to multiple destinations.

With LTL, you can send smaller quantities to various locations without paying for a separate truck for each destination. This can be a highly efficient and cost-effective way to manage distribution to different sites.

Final Thoughts

Implementing LTL freight can be an excellent way for businesses to ship smaller goods more efficiently. If you run a trucking business, then offering LTL freight services can also be a great way to open up new business opportunities and delivery routes. Whether you own a box truck or a large semi-truck, LTL is a useful way to fill up empty space and ensure you get more out of each delivery mile you drive.

If you’re considering starting a trucking business, then keep LTL in mind as an option to keep your business flexible. Of course, this all starts with having the right truck to manage LTL freight in the first place.

Contact Mission Financial Services for the easiest and most convenient way to secure financing for your new commercial semi-truck.

What Is OTR Trucking

OTR, or over-the-road trucking, is a lucrative career in the trucking industry that involves transporting goods over long distances, often across state lines or international borders.

The job requires significant commitment and adaptability. Drivers must cover vast distances while adhering to strict hours of service regulations for safety.

If you’re considering a career in OTR trucking, this guide covers what the role entails, key aspects of operations, average earnings, and both the benefits and challenges, along with tips for success.

What is an OTR Truck Driver?

Also commonly referred to as a long-haul trucker, an over-the-road truck driver is a trucker who spends long periods–approximately 300 days annually–on the road. They transport freight over long distances, from coast to coast, within the U.S. and overseas to Mexico or Canada. OTR drivers differ from other types of truck drivers, including regional and local truck drivers, in various ways:

OTR truck drivers often spend several consecutive weeks or months on the road. In contrast, regional truck drivers spend 1-2 weeks on the road at a time, and local truckers return home daily.

As an over-the-road truck driver, you can operate alone as a solo driver or in teams of two as a team driver, whereas your regional and local counterparts can only work as solo drivers.

You’ll likely transport fewer loads over longer distances in OTR or long-haul trucking. However, in regional trucking, drivers move more goods over shorter distances. Conversely, most local drivers transport less than truckload (LTL) shipments.

OTR drivers typically operate on interstate highways, whereas regional truckers operate on highways plus local roads, and local truckers mostly use smaller, local roads or streets.
Expect to cover approximately. 1,200 to 1,400 miles for a typical over-the-road trucking load. Although, you may sometimes travel over 3,000 miles per trip, especially if you’re transporting goods from the West to the East Coast.

How Much Do OTR Truck Drivers Make?

The latest salary estimates from PayScale reveal that OTR drivers earn an average salary of $64,409 annually, with a typical range of about $42,000 – $91,000.

Earnings vary widely based on freight type, expertise, location, and employer. Independent owner-operators earn more than company OTR truckers because of control over rates and schedules. Many drivers make between $24 and $44 per hour or more.

Core Elements of OTR Operations

Understanding the core elements of conducting smooth OTR operations is crucial to becoming a successful OTR trucker. Overall, three fundamental elements play a vital role in ensuring your over-the-road trucking operations are efficient:

Vehicle types. Almost all OTR trucking operations require large and heavy vehicles designed for long-distance hauling. These include full trucks or semi-trucks. When choosing between a semi-truck vs. a full truck, always consider your cargo size and long-haul route requirements.

Route planning. Proper route planning helps you identify efficient routes that can save time and reduce fuel costs while ensuring timely deliveries. This requires you to consider several factors, such as weather, traffic, and the state of the road.

Scheduling. An OTR trucker must create their schedule meticulously to make the most of their on-duty hours. Most truckers, especially new drivers, time their activities, including breaks and rest periods, to minimize time wastage and earn more.

Advantages of Long Haul Driving

Even though long-haul trucking keeps drivers away from their family and friends for extended periods, many prefer this career path over local or regional trucking because of the following advantages:

Lots of Trucking Jobs–job opportunities for heavy and tractor-trailer truck drivers are projected to grow by 4% through 2032, without about 241,200 openings annually. This makes OTR trucking a high-demand career.

Higher Salary in Over-the-Road Trucking–OTR trucking pays more than regional and local trucking because of the long hours spent on the road and the skills required to manage long-haul trucking operations. Drivers must know the logistics and be well-prepared for unexpected situations on the road.

Chance to See the Entire Country–compared to regional and local trucking, OTR trucking provides unmatched travel opportunities. Drivers enjoy spectacular views and see several tourist attractions when moving from coast to coast and get paid for it.

Flexibility of Over-the-Road Trucking–OTR truckers enjoy some independence that regional and local drivers don’t. The employer cannot monitor every step you make when traveling for extended periods.

The Challenges of Being an OTR Trucker

The Federal Motor Carrier Safety Administration (FMCSA) introduced the ELD mandate to ensure drivers adhere to the hours of service regulations. This can disrupt OTR trucker schedules, adding pressure to meet strict regulatory provisions and making it challenging to manage driving hours effectively.

Navigating areas with poor roads can lead to detours, delays, and increased wear or tear on vehicles. All these affect an OTR trucker’s efficiency and job satisfaction.

Unpredictable weather makes it hard for truckers to maneuver, affecting their trucking operations.

Time spent waiting at pickup docks or delivery centers, often called being in detention, can reduce OTR truckers’ earning potential. The delay eats into truckers’ valuable driving time, and there’s no compensation.

Extended time away from family and friends can lead to loneliness, emotional strain, and mental health challenges. The demands of OTR trucking also disrupt work-life balance, impacting overall well-being. Here are a few tips to help you protect your mental health and well-being as an OTR truck driver.

Long-haul truckers often face chronic back pain and other musculoskeletal issues from extended periods of sitting. To stay fit and healthy on the road, consult our guide for practical tips on maintaining physical health while trucking.

Final Thoughts

OTR driving is one of the most rewarding careers in the trucking industry. It’s also one of the most complicated jobs because it’s a lifestyle that requires a specific mindset to maintain.

Besides having a commercial driver’s license and a clean driving record, truckers require several essential attributes and skills to prosper in the field. Some of these include appreciation for travel, resilience, love for solitude, flexibility, and the skillset to operate different tractor-trailers.

For additional tips on succeeding in the trucking industry, check out our blog. Contact Mission Financial Services if you’re looking to start your OTR trucking career as an independent owner-operator. We offer customized commercial vehicle loans and can finance your first truck purchase.

Freight Factoring: What You Need to Know

One of the major challenges of running a trucking business is maintaining a steady cash flow. Even if your business is generating a good income, you might still have a hard time paying bills on time. This is where freight factoring is so useful.

Working with a leading freight factoring company can be an excellent way to free up your business’s cash without taking on debt or unnecessary risk. We’ll explain everything you need to know about this in the guide below.

What is Freight Factoring?

Freight factoring is a financial service where trucking companies or owner-operators sell their unpaid invoices to factoring companies for immediate cash.

Instead of waiting weeks or months for payment, they get most of the invoice value right away. The factoring company then takes over the collection process, charging a small fee for the service.

This helps trucking businesses maintain steady cash flow to cover expenses like fuel, repairs, and payroll, which helps to keep operations running smoothly.

How Freight Factoring Works

Freight factoring may seem complicated, but it’s actually a straightforward idea. Here’s the general process of how trucking factoring companies work:

Deliver the load: First, a trucking company delivers a load for a customer. Normally, the customer might take 30, 60, or even 90 days to pay the invoice.
Sell the invoice: Instead of waiting for payment, the trucking company sells the invoice to a freight factoring company. The factoring company buys the invoice at a discount, usually paying around 80-90% of the invoice value upfront.
Get paid fast: The trucking company gets the money within a day or two, which helps them cover immediate expenses like fuel, maintenance, and payroll.
Factoring company collects payment: The factoring company waits for the customer to pay the invoice. When the customer pays, the factoring company takes their fee and sends the remaining balance to the trucking company.
Fees: The fee the factoring company charges depends on how long it takes the customer to pay and other factors like the creditworthiness of the customer.

Why Companies Use Factoring

While it’s not always recommended if you can avoid it, working with factoring companies can be a great way for truck drivers to improve their cash flow and operations. This is especially true if you’re a new truck driver building your business.

Here are some of the main reasons truckers use factoring companies.

Simplifies Financial Management

Factoring simplifies financial management by providing a steady and predictable cash flow.

This means trucking companies can manage their budgets better, plan for future expenses, and avoid the complications that come with uneven or delayed payments. It streamlines the financial side of the business, making it easier to focus on growth and operations.

This is especially important if you need to make emergency repairs on your vehicle or run into unexpected truck maintenance costs, as you’ll be able to access cash faster.

Greater Flexibility Compared to Traditional Financing

Traditional loans or lines of credit can be restrictive, with fixed repayment schedules and amounts. Taking out a loan can also be a risky business.

Factoring, on the other hand, offers flexibility.

Companies can factor the invoices they choose, and the amount of available funding grows naturally as their sales increase. Plus, a freight factoring company works off cash you’ve already earned, so it’s a very different scenario to borrowing debt.

This kind of adaptability makes factoring an appealing option for businesses that need different funding levels.

Access to Immediate Working Capital

Companies use factoring to get immediate access to working capital.

Instead of waiting weeks or months for customers to pay their invoices, businesses can convert those invoices into cash right away. This allows trucking businesses to cover essential expenses like payroll, inventory, and rent without delay, to keep operations running smoothly.

Reduces Financial Risk

Freight invoice factoring helps companies reduce financial risk by transferring the responsibility of collecting payments to the factoring company.

This means businesses don’t have to worry about late payments or bad debts. The freight factoring companies take on this risk, allowing the trucking business to focus on other areas.

Helps Trucking Businesses With Rapid Expansion

When transportation companies experience rapid growth, they have a greater need for cash on hand.

Freight factoring provides a flexible solution by offering more funding as sales grow. Unlike traditional loans, which might require lengthy approval processes, factoring allows companies to scale up operations quickly without waiting for credit approval.

Working with the best factoring companies offers a convenient solution to gaining working capital when you need it.

Benefits of Freight Factoring

The right freight factoring agreement can offer many benefits to businesses in the transportation industry. Here are some of the main ones.

Helps New Trucking Companies and Owner-Operators Get Established

Freight factoring can be a lifeline for new trucking companies and owner-operators.

Starting a trucking business requires a lot of upfront costs, like buying a truck, fuel, and insurance. But customers often take weeks to pay for deliveries.

Freight factoring gives new truckers quick access to cash by advancing payments on their invoices. This helps them cover their expenses and get their business up and running smoothly.

Get Paid Faster

In the trucking industry, it’s common for customers to take 30, 60, or even 90 days to pay invoices. Freight factoring speeds up this process.

Instead of waiting for weeks, trucking companies and owner-operators get paid within a day or two after delivering the load. This fast payment helps them stay on top of expenses like fuel, maintenance, and payroll.

Helps Owner-Operators Avoid Debt

Freight factoring companies do not provide loans, so owner-operators don’t have to worry about taking on debt.

Instead of borrowing money, they’re simply getting an advance on the money they’ve already earned. This means they don’t accumulate debt or have to worry about making loan payments.

It’s a smart way to maintain financial stability without the burden of additional debt or risk damaging your long-term cash flow.

Improves Cash Flow

Consistent cash flow is crucial for any trucking business.

Freight factoring ensures that money comes in regularly, even when customers delay their payments. This steady flow of cash allows owner-operators to manage their day-to-day operations without financial stress.

They can pay for all necessary expenses without worrying about when they’ll get paid next.

Enables Growth

Freight factoring provides the financial flexibility needed for growth.

With quick access to cash, freight companies and owner-operators can take on more loads, hire additional drivers, or expand their fleet. They don’t have to worry about cash flow problems holding them back.

This enables them to grow their business and take advantage of new opportunities.

Provides Client and Freight Broker Credit Checks

Freight factoring companies often provide credit checks on clients and freight brokers. This service helps owner-operators avoid working with customers who have a history of late payments or financial problems.

By knowing which clients are reliable, truckers can make smarter business decisions and reduce the risk of non-payment. It’s an added layer of protection that can save time and money in the long run.

Qualifying for Freight Factoring

Qualifying for freight factoring is easier than getting a traditional business loan.

Unlike bank loans, you don’t need to provide a lot of paperwork. Factoring companies mainly focus on the creditworthiness of your customers, not your credit history.

To qualify, you usually need to have unpaid invoices from reliable customers. These invoices should be free of any liens, meaning they haven’t been used as collateral elsewhere.

Of course, the work or service related to the invoices must also be completed. As long as your customers have good credit and pay on time, you have a strong chance of qualifying for freight factoring.

Recourse and Non-Recourse Factoring

Recourse and non-recourse factoring are two types of invoice factoring that differ mainly in who takes on the risk if a customer doesn’t pay the invoice.

In recourse factoring, the trucking companies remain responsible for the invoice if the customer fails to pay. This means the factoring company can ask the business to repay the advance or replace the unpaid invoice with another. Recourse factoring usually has a lower factoring fee because the business bears the risk.

In non-recourse factoring, the factoring company takes on the risk of non-payment.

If the customer doesn’t pay, the business isn’t required to repay the advance. This offers more protection but comes with higher fees, since the factoring company is assuming more risk.

Truck Factoring Rates

Truck factoring rates are the fees that a factoring company charges for advancing payment on your invoices.

These rates typically range from 1% to 5% of the invoice amount. The exact rate depends on factors like the volume of invoices you factor, how creditworthy your customers are, and how long it takes for your customers to pay.

Lenders usually offer lower rates to companies with high invoice volumes or customers with strong credit. If your customers take longer to pay, or if they have poor credit, you’ll probably have to pay higher rates.

Understanding these rates is important because they directly impact your profit margins. It’s also important to compare rates from different factoring companies and consider any extra fees they might charge, like setup costs or monthly minimums.

Final Thoughts

If you’re having a hard time managing cash flow, then working with a factoring company can be an excellent solution. This is especially true for new trucking businesses without sufficient cash reserves.

Of course, when looking at your business finances, your biggest investment will be your vehicle. So, getting favorable vehicle financing that works for your situation is essential. Discover how Mission Financial Services can help you access easy vehicle financing that helps you grow your trucking business smarter.

Commercial Truck Efficient Route Planning

As a trucking business owner, one of the best moves you can make to ensure your business thrives is to adopt a commercial truck route planning system.

Without an efficient truck routing setup, you risk making unnecessary detours, taking dangerous turns, and getting involved in avoidable accidents. This leads to longer travel times and increased operational costs. The right truck route planning system will help you cut expenses, boost productivity, and increase profit margins.

Below, we explain the significance of effective route planning, its difference from regular consumer route planning, and show you the best ways to optimize trucking routes for maximum returns.

Importance of Efficient Trucking Routes

Truck route planning allows you to identify commercial truck routes and map out the most efficient routes your commercial vehicles can follow to make timely deliveries without too much fuel. Doing this is essential for several reasons, such as:

Cost-effectiveness

Strategically planning truck routes can significantly reduce fuel consumption, leading to lower fuel costs. Since fuel accounts for nearly 60% of a commercial fleet’s total operational expenses, reducing fuel costs directly lowers overall operational costs. As operational costs decrease, profit margins increase.

Compliance with Regulations

Truck route planning helps you comply with various legal regulations governing commercial trucking operations. Some of these include hazardous material restrictions, adhering to weight limits, and road closures. Complying with set regulations is mandatory.

Better Time Management and Increased Productivity

Efficient route planning helps commercial truck drivers manage their time, optimizing their shifts and boosting productivity. This ensures loads reach their destinations within the set time frame, especially when handling time-sensitive deliveries or adhering to customer-specific delivery time windows.

Proper planning also promotes smooth trucking operations, minimizing driver stresses on the road. Less stress results in more output, helping truck drivers to maximize their earnings.

Improved Customer Satisfaction

Effective truck route planners calculate an accurate estimated time of arrival (ETA). This information is helpful when creating contracts or service-level agreements with clients because you’ll estimate delivery times and create customer expectations you can comfortably meet.

Timely deliveries enhance customer satisfaction, helping you build strong business relationships with several stakeholders in the transportation sector.

Environmental Impact

The transport industry produces a significant portion (about 29%) of the total greenhouse gas emissions. By planning truck routes, you avoid unnecessary journeys and minimize fuel consumption. The less fuel you use, the less CO2 you’ll release into the atmosphere.

Improved Driver Safety and Well-being

Route planning for commercial vehicles considers different factors, like traffic conditions, road construction, and weather conditions. As a result, it prioritizes the safety and well-being of commercial truck drivers by avoiding high-risk areas. It also includes adequate rest time to minimize driver fatigue and reduce the likelihood of accidents.

How is Commercial Truck Route Planning Different?

Commercial truck route planning differs from consumer route planning, although both activities share a similar goal, i.e., to map out the most efficient route to arrive at a specific destination safely within a stipulated time.

What makes truck route planning different from, say, regular commute planning or planning a trip with friends is the priorities, scale, and requirements of the route planning process.

With commercial truck routing, there’s a binding agreement with clients. Your top priority is to serve clients and meet your end of the contract, in the most efficient way possible. On the contrary, planning routes for leisure trips is entirely for fun. There are no client contracts to fulfill.

Unlike consumer route planning, which focuses on individuals’ preferences, efficient route planning for long-haul trucking ventures must consider several factors to optimize fuel efficiency and comply with various federal and state regulations. Some of these factors include:

Road restrictions, like vehicle types, height, width, and weight restrictions
Traffic conditions, patterns, and potential congestion during peak traffic hours
Distance traveled and fuel station locations for cost optimization purposes.
Time tracking to ensure compliance with the Federal Motor Carrier Safety Administration (FMCSA) regulations for long-haul trucking

How to Optimize Trucking Routes

You can employ various tactics to optimize your trucking routes and save more money. Here are some of the best commercial truck route optimization techniques to consider:

Fixed Routing

Also known as static or standard routing, fixed routing is a strategic planning technique, where a commercial truck follows the same pre-configured route daily.

With this technique, a commercial truck driver has a well-structured daily routine, making the same stops each day with no deviations allowed. It works well if your trucking company serves the same clients weekly. You’re guaranteed to meet your deliverables and achieve your financial targets since the route followed is predictable.

The only downside to this technique is its inflexibility to unexpected changes. For example, if the predefined route becomes unusable because of unforeseen circumstances, truckers stop their trips because they cannot respond to the changes. Such logistics failures can lead to huge losses.

Dynamic Routing

Dynamic truck routing lets drivers create alternative routes and stops each day based on that day’s circumstances. These may be traffic conditions, order quantities, or customer demands. It’s a popular commercial truck route optimization choice among small fleet owners and managers because of its scalability and adaptability.

Truck drivers can adjust their routes anytime to respond to last-minute changes or unforeseen incidents. This means they can find and take advantage of the most efficient route at any point throughout the trip to ensure maximum transportation efficiency.

Real-Time Dynamic Routing

Like dynamic routing, real-time dynamic routing allows route adaptations in response to changing circumstances. The only difference is – trucking companies use this technique to focus on constantly restructuring their routes following new consecutive daily orders.

To be more specific, as the business gets new service requests or orders throughout the day, companies add these to a trucking route strategically to minimize run-around times while increasing delivery speeds. Real-time dynamic route planners use complex algorithms to identify optimal routes.

Fleet Management Software

If you’re a manager for a large fleet, consider using fleet route planning software. This software allows you to automate the route planning process based on elements, such as customer orders, resource availability, road networks, and other legalities concerning operational constraints.

The best route optimization software for fleets analyzes all relevant factors and automatically identifies the most economical and fastest routes for the entire fleet. You can then dispatch these optimized routes directly to your drivers’ navigation systems, ensuring they perform their duties smoothly and efficiently.

Most route management software also lets you trace your vehicles’ positions on a map to monitor your trips in actual time. Other innovative features of trucking route planning platforms for fleets include up-to-date reports and alerts on the status of specified routes and mobile capabilities.

Use the Right Software

An important point worth emphasizing is that successful truck route planning requires using the right software for your trucking business goals. The software you use will determine the effectiveness of your truck route planning endeavors.

Take your time to find the best route planner designed for fuel-efficient truck route planning, as some popular route planners work best for consumer route planning, not truck routing. An example of such a platform is Google Maps.

Google Maps offers options to create routes for cars, bikes, or pedestrians, but not trucks. It cannot factor in the numerous vehicle attributes and legal restrictions you must consider when planning a truck route. If you use it, you might end up on roads unsuitable or unapproved for trucks and have to waste resources turning around or taking detours.

The same goes for Google’s other direction apps, like Waze. Waze lets you plan single-stop routes only. You’ll find it challenging to create multi-stop long-haul trucking routes. It’s best to avoid these apps altogether. Instead, go for comprehensive route planner tools that go beyond creating fuel-efficient optimized routes and help you achieve more, including integrating dispatch and accounting.

Final Thoughts

Route planning tools are essential for optimizing journeys, maximizing fuel efficiency, and maintaining healthy profit margins. However, there is no one-size-fits-all commercial truck routing app.

Every trucking business has unique needs, requiring different route planning approaches. Our guide will help you find the most suitable route-planning software for your specific needs. Once you have the ideal route planner, monitor local fuel prices in various areas and factor in these price variations when selecting refueling stations along optimized routes. Strategic fuel stops can result in significant savings.

Visit our blog to learn more about improving your semi-truck’s fuel efficiency. You can also reach out to us if you want to expand your fleet and need help financing new or used truck purchases. We offer flexible commercial vehicle loans for this purpose.

How Inventory Shifts are Impacting Purchase Decisions

When it comes to buying trucks and equipment, the majority of owner-operators prefer the used market, according to Overdrive’s Truck Purchase and Lease Survey. Out of all of the survey’s respondents, 56% of them reported buying used trucks, 32% bought new, and less than 10% leased their trucks or equipment.

However, while purchasing used trucks and equipment is preferred among owner-operators, finding said trucks and equipment at a fair price is more challenging than ever. Thanks to the COVID-19 pandemic and the delays in production, brought on by component shortages, many owner-operators are forced to consider other purchasing options.

Unfortunately, truck dealerships aren’t receiving much in the way of new inventory. In 2021, new trucks were being ordered, but they wouldn’t arrive until December. And, to top it off, fewer trade-ins are making their way onto the lots, thus pushing prices of used trucks through the roof. In 2021, used trucks retailed for the most they ever have in the modern era. For example, a used sleeper, with over 450,000 miles on it, sold for a little over $90,000. This price was approximately 85.5% higher than the previous year. And while some industry professionals anticipated a slow descent in used truck prices in 2022, others caved to the pressure of the market and sold off their fleets for substantial amounts of money.

Are higher lending rates to come?

Industry experts also predict that new truck production will eventually catch up and balance out. Once trucks start rolling off of assembly lines, used-truck buyers will want to consider the potential financing impact new truck production could have on trade-ins with higher mileage than normal.

Financing a used truck is already a challenge due to the higher risk lenders take since used trucks typically face engine problems. When the trade-ins that drivers clung onto in lieu of new inventory arrive at dealerships, they will arrive with higher mileage and a higher risk of performance issues. Thus, lenders will be even more hesitant when drivers request financing and likely raise lending rates.

For small fleets, experts believe it may be wise to consider extending the life of their trucks and equipment through maintenance rather than buying new or used. And for any owner-operators who are searching for a used truck in today’s market, they can also expect higher down payments. In fact, those just entering the industry should be prepared to put 25-35% down. Overdrive recently surveyed a group of drivers who recently bought a used truck to further prove the state of the market. They found that 38% of used-truck buyers paid in cash, and 57% of buyers financed with a bank loan or through a captive or specialty lender.

Is a lower interest rate possible?

Despite all of this, there are ways to acquire a lower interest rate on your loan. The main factors that lenders look at to calculate the monthly payment include your credit score, the model year of your truck, how much money you put down, the owner/driver’s business experience, and your resourcefulness.

“I’d rather lend money to a guy with a 600 credit score whose father was an owner-operator, grandfather was an owner-operator, brother is a diesel mechanic, and maybe his credit score is down because of divorce,” Grivas said. “That’s a great risk compared to a guy with a 700 credit score who’s just getting started.”

When buying a new truck, experienced owners and drivers can expect a single-digit interest rate. However, drivers financing a used truck will see interest rates ranging from 10-13% or higher.

How Mission Financial Services can help.

We understand that sometimes times are tough and we’re here to get you back on the road to financial independence. Whether you’re a first-time buyer, have limited driving experience, or have bad credit, we can help.

Mission offers direct lending for owner-operator purchases, lease purchase buy-outs, repair loans, and title loans for operating capital. And even better, we will perform a complete review of applications and get you an answer within four hours.

Our approvals are structured as simple interest contracts with limited terms that let you build equity in your loan quickly to avoid additional finance charges. Mission considers all applicants living in all states except Hawaii and Alaska. And we offer affordable loans and report to all major credit bureaus so you can start turning your credit around. Why wait?

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Rising Fuel Prices: An Ongoing Problem for Drivers

5 Tips for Conserving Fuel

These days, the glowing numbers on gas station signs cause drivers to wince as they pass. What once was affordable for most drivers now costs anywhere between $4 and $6 a gallon in some areas. This surge in fuel prices has become a top concern for consumers, affecting drivers and the broader economy.

Higher fuel prices, especially diesel, strain owners and operators, affect the cost of goods that require transportation via truck, and so much more. In this article, we will look at the reason behind increasing fuel prices, who they affect, and what drivers can do to conserve their fuel.

Fuel prices continue to climb, but why?

The Russian invasion of Ukraine primarily influences today’s surging fuel prices, however, prices were on the rise well before the war. Before the COVID-19 pandemic settled in, energy producers reduced their investments and cut back on projects that were less than profitable. Once the pandemic hit, these same producers minimized output even more as the need for petroleum diminished due to quarantine restrictions.

The economy has since reopened, goods are being manufactured, and the roadways are filled once again. The reboot of society led to a surge in demand and a tightening oil market that led President Biden to tap into the Strategic Petroleum Reserve in hopes of leveling prices, but this plan failed.Once Russia invaded Ukraine, the already fragile energy market was sent spiraling downward. With Russia being the largest oil exporter in the world and the U.S.’s ban on Russian oil imports, U.S. oil reached its highest price point since 2008 at $130 per barrel.

Oil companies are now reluctant to drill and face obstacles like labor shortages and increasing prices for parts and raw materials. On top of that, Russian petroleum product exports are being sanctioned, pushing the price of diesel higher than ever.

All of these factors contributed to the national average of a gallon of gas reaching $4.589, according to AAA. Now, every state in the U.S. averages more than $4 per gallon. In some areas, like California, they’re averaging above $6. And diesel prices retail at an average of $5.577 a gallon, which is 76% higher than last year’s average.

Who is affected by rising fuel prices?

Higher fuel prices impact not only consumer spending but also company spending, affecting many industries, including transportation. For instance, Target is the latest company to speak out about its struggles with higher costs. Target CEO Brian Cornell said, “We did not anticipate that transportation and freight costs would soar the way they have as fuel prices have risen to all-time highs.” Cornell estimates that the higher fuel costs will run the company approximately $1 billion in incremental costs this fiscal year. Walmart executives had similar concerns, “fuel ran over $160 million higher for the quarter in the U.S. than we forecasted.”

But the prices aren’t just impacting domestic costs. Companies like Tractor Supply and Amazon have noted that their import freight costs have increased over the last year. Currently, the cost to ship an overseas container has doubled compared to pre-pandemic rates. Even the airline industry is experiencing the effects of higher fuel prices. The CEO of United Airlines explained that jet fuel prices would cost the company $10 billion more than in 2019.

The ultimate worry for freight companies is how the higher fuel prices will affect the overall cost of operations. A carrier moving shipments from the West Coast to the East Coast will have to pay approximately $1,000 more in fuel costs than in 2021. If things continue in the same direction, this inflation will impact truckload shipping, ocean freight shipping, air cargo shipping, and train shipping costs, which will ultimately cause a domino effect throughout the economy.

5 Tips for Conserving Fuel

Conserving fuel is no longer just a want or a good deed. It’s now something we must do to save money. In the U.S. alone, the trucking industry consumes approximately 38 billion gallons of diesel annually. And 39% of drivers’ operating expenses come from fueling their rig. So, drivers must do what they can to improve their fuel economy.

Here are a few ways they can do so:

1. Drive more responsibly

Follow speed limit signs and take things slow. Studies show that every 5 mph over 65 mph yields a 7% decrease in fuel economy. You can also do things like:

Switch off the air conditioner (weather permitting)
Avoid idling unnecessarily
Turn off your engine when not in use
Use cruise control on the highways (if possible)

2. Improve your truck’s aerodynamics

Research shows that about half of a truck’s fuel is consumed, overcoming aerodynamic drag while traveling at highway speeds. Lucky, there are a few simple ways to improve your truck’s aerodynamics, including using a roof-mounted cab deflector, a deep angled bumper, or a sun visor to push wind to the top of your trailer. You can also use side fairings to avoid turbulence underneath your trailer.

3. Be conscious of the traffic conditions

Every time you have to restart your rig due to stop-and-go traffic, you use a considerable amount of fuel. So, it’s essential to use your GPS and monitor traffic conditions to get to your next location efficiently. Avoiding traffic will also help your clutch last longer.