Trucking KPIs: 6 That Freight Managers Need to Track
Over the last decade or so, the trucking industry has been going through a major transformation. A growing number of companies are abandoning legacy management systems in favor of agile cloud-based digital alternatives.
Of course, digital transformation is taking place across all industries today. It’s particularly prevalent in transportation and logistics, where the category is on pace to reach $145.28 billion by 2025. This growth is being driven largely by advancements in the internet of things (IoT)—including connectivity improvements, the proliferation of autonomous vehicles, telematics, and more.
As a result of this transformation, trucking companies have little choice but to modernize their systems. Otherwise, they risk becoming displaced by digital, data-driven competitors.
While some organizations might be slow to embrace digital transformation, it’s only a matter of time before regulations start to affect operations. For example, the Federal Motor Carrier Safety Administration (FMCS) is now rolling out electronic logging in phases. Soon, the agency will require all companies to comply with the new digital standards.
Naturally, some trucking companies are struggling to adapt to the new data-driven transportation industry.
The good news is that—while it’s undoubtedly a big change—it doesn’t take much to become a data-centric organization. With the right approach, any company can modernize its processes and become digitally savvy—without breaking the bank, either.
It all starts with understanding the vital role that key performance indicators (KPIs) play in the trucking industry. Trucking KPIs are critical for success—and something every company should be using to guide its operations.
What Are Trucking KPIs?
Trucking KPIs are specific goals that companies can use to guide their short-term and long-term strategies. KPIs serve as a dashboard of sorts to help companies make more informed decisions using metrics instead of gut instinct.
It's possible to break down trucking KPIs into three categories.
1. Descriptive Trucking KPIs
Descriptive analytics help trucking companies understand what happened in their daily operations and why those events took place.
For example, a company might look at its operating expenses at the end of March and see a noticeable spike from the previous quarter. With that data on hand, the company's leaders could analyze data from a variety of sources to get a sense of why their expenses increased.
2. Predictive Trucking KPIs
The next progression from descriptive analytics is to analyze data and predict future events using what’s called predictive analytics.
Let's go back to the operating expenses example. A trucking company might analyze its first quarter data and compare it to historical data to get a sense of what to expect in the near future.
3. Prescriptive Trucking KPIs
The third type of trucking KPI is prescriptive analytics, which involves using data to help make key decisions.
Here, a business would first calculate its past and future business expenses. The business would then use those calculations to inform budgeting and operational decisions.
For example, a company might look at fuel consumption and weather conditions to determine how making a few adjustments—imposing fuel level limitations, for example—could help save money.
You may ask, "Is making all these calculations really worth it?"
Why Trucking KPIs Are Important
Some companies may be unsure about using data to guide daily decisions.
That’s understandable, to an extent. But, truth be told, it’s far riskier to avoid using data altogether. As the famous mathematician Charles Babbage once said, errors using inadequate data are much less than errors that stem from using no data at all.
In other words, the more data you have, the more efficient your operations will be—assuming you use that data to figure out the best way forward.
Disregard using data, and your company will have a hard time understanding what’s working and what isn’t. Even if you make changes, there will be no way of determining whether they're effective over time.
It may seem like implementing trucking KPIs is a hassle. But the long-term results are entirely worth it. Using trucking KPIs will produce a company that's leaner, more cost-effective, more sustainable, and better to work for in the long run.
Top Trucking KPIs to Track
Now that you have an understanding of what trucking KPIs are important, here’s a breakdown of some of the specific categories that fleet managers should be tracking.
1. Safety Metrics
All trucking companies have a responsibility to continuously study safety metrics and use that data to help prevent future incidents.
A company might use telematics to assess average driver speeds, acceleration and braking patterns, and accidents over time. The company could then use that data to try to identify poor driving habits and make important procedural changes.
For example, a company might identify specific times of the day or week that drivers tend to speed the most. They could then share that information with employees to help create awareness and curb speeding violations and accidents.
2. Sustainability Efforts
According to the Environmental Protection Agency (EPA), the transportation sector is responsible for:
- over 50 percent of total oxides of nitrogen emissions inventory in the United States
- more than 30 percent of volatile organic compounds emissions
- over 20 percent of particulate matter emissions
Therefore, the trucking industry needs to step up to help create a cleaner future.
In addition to helping the planet, improving sustainability can translate into significant financial rewards. A growing number of companies are now considering sustainability measures when choosing supply chain partners. At the same time, they're avoiding companies that fail to implement green practices.
It makes sense for trucking companies to track and share KPIs such as average idle times, weight loads, and daily fuel consumption with managers and drivers to help protect the environment.
3. Fuel Pricing and Consumption
Fuel costs can swing wildly over time. They often spike without notice due to a variety of global conditions. This can make it very challenging to plan and budget.
Trucking companies can track historical fuel prices to get a sense of how they're moving over time. In addition, it’s possible to track average fuel consumption to understand how often drivers are going to the pump and what could be done to reduce trips.
What’s more, a variety of free tools provide daily gas averages for fleets. For example, TruckMiles.com offers daily fuel averages and truck stop data.
4. Shipping Error Rate
Shipping errors can happen for a variety of reasons—sometimes nefarious and sometimes accidental. It’s management’s job to closely track and monitor bills of lading and freight bills in order to identify trends and improve accuracy.
For example, after tracking shipping errors over time, a company might be able to trace multiple errors to a certain day or time. Company managers can then investigate the cause to help eliminate future issues.
5. Average Turnover Time
Drivers handling less-than-truckload (LTL) shipments typically make several stops throughout the day. On this type of delivery schedule, time is of the essence. Drivers can’t afford to spend too much time chatting with customers or filling out paperwork.
Companies should track the time spent during unloading, conducting inventory, and signing paperwork.
6. Time to Pay
One of the biggest issues facing the trucking industry today is slow payment times. Many companies are still using traditional payment methods. These can take several weeks or longer to process—causing trucking companies to struggle with cash flow.
By tracking average time to pay, you can get a better idea of how long it takes for the average check to come in. This information can be useful when negotiating with creditors during freight factoring negotiations.
Companies that are spending too much time waiting for payments to come through should look into streamlining the process using a mobile app. It’s the easiest way to move to instant, accurate, and secure payments.
This post was written by Justin Reynolds. Justin is a freelance writer who enjoys telling stories about how technology, science, and creativity can help workers be more productive. In his spare time, he likes seeing or playing live music, hiking, and traveling.