The trucking industry is important in the freight world. The primary methods of moving goods are on rail, plane or truck in the interior United States. Trucks can pull up to three trailers, but most pull one or two. The industry is volatile, and revenue varies, according to fuel costs. Many trucking companies will increase and decrease shipping prices, according to fuel spikes. This ensures that revenue is adjusted to match costs, while also maintaining profitability. The weight and value of the shipment can also influence profitability. Short runs with raw material, such as gravel, are considerably different from long-haul trucking that carries retail products, refrigerated goods and other forms of freight.
Rail and air are both viable shipping options, and each have their own benefit, but ultimately, trucks account for the majority of goods that are moved. The major advantages of trucks is in their flexibility. A truck can move loads that range from small to large, to most locations, using the existing road systems. Trucks can leave at any moment and can run on a pretty tight schedule. Air is fast, but expensive, and rail is capable of moving huge loads, but the routes are static.
There are two primary models outside of independent ownership. Essentially, the owner-operator runs his own business, pays for his gas and overhead, and leases the truck from the company. The company owns the truck and trailers, and contracts the individual drivers. This model has a lower barrier to entry, as drivers are not required to invest in a vehicle and trailers. Owner-operators are often paid by the mile, with additional payment for overages, and long-haul requirements. The employee model hires drivers directly and pays them on a flat wage. The revenue on an owner-operator model is more flexible, as the company pays only when the operators work. The employee model requires payment when the work is slow, but many companies can keep drivers busy with maintenance and yard work, during slow periods.
The American Transportation Research Institute reports an average cost of 1.592 dollars per mile driven in 2016. This reflects all costs associated with the operation. Driver pay, insurance, fuel, maintenance, permits, toll fees and all basic expenses, are incorporated into the figure. Trucking companies will base their billing off this number to drive profitability. The figure billed per mile, per tractor trailer reflects the overall revenue. Subtract the cost per mile to determine the profit margin on each tractor trailer per mile. The revenue is dependent on the company pricing strategy. Trucking bids are competitive and pricing often fluctuates based on each individual load.