By the numbers: Selling time--using ELD data to better understand your business

Image: Jim Allen/FreightWaves

Image: Jim Allen/FreightWaves

A weekly review of the Key Performance Indicators (KPIs) that all trucking companies should be tracking on a daily, weekly and monthly basis. These standardized KPIs are the foundation of the TCA Profitability Program’s inGauge Benchmarking Platform  - the largest (and only) online benchmarking platform for the North American Truckload market.

Let’s face it, we’re all selling time in one way or another. In fact, if you’re in business it is one of your primary inputs. On one end of the spectrum, for service providers such as lawyers, there are two inputs to their product – expertise and time. The more knowledgeable you are as a lawyer or a consultant, the more you can charge for your time, the more you make. Yet, as we creep away from that end of the spectrum, there is a tendency to forget about time and its importance to operating in the black versus red. This post is a call to action to both motor carriers and their ELD device providers. It’s time to stop using miles as the default pricing mechanism and replace it with the verifiable data that is now flowing from these government mandated devices. 

Customer/Shipper scorecards are a popular topic within TPP Best Practice Group meetings. It is always a great discussion to understand the various criteria that carriers are using to rate/rank their customers. However, with very few exceptions, time is missing as a column in those evaluations. The capability for adding time as primary ranking criteria in customer scorecards is available to all. However, it may be more difficult to obtain this data depending on the ELD device provider (ELD Device Providers: Please take note! You want to differentiate yourself from other providers? Make it easy to aggregate, filter and report on the time from pickup and delivery for each of you client’s customers!).

In the last eight months, we have started to collect summary ELD data for TPP participants. Currently, approximately 35% of the reporting population is submitting the following data points (split between Company and Owner Op Fleets):

  • Driving Hours

  • On-Duty Hours (Not Driving)

  • Sleep Berth Hours

We have combined this data with our vast amounts of financial and operational data to give those reporting companies better reporting insight, that many (not all) haven’t focused on the past. There are now over 35 Key Performance Indicators using the summary ELD data as the denominator (instead of miles, loads etc). The result? Most of those reporting companies are now starting to focus on ‘time’ as their most important production input. The logical next step is to add gross margin per hour as a key criteria in their customer scorecards. Once we have mass adoption of this valuable data as an industry, revenue per mile will go the way of the dodo. 

If you are not currently reporting your key revenue and expenses items on a per Driving Hour or On-Duty Hour basis, this should be a key objective for the final two quarters of the year. This will not only better inform your decisions; it will also put you ahead of the curve with pricing your driver’s valuable time accordingly. 

How does your Gross Margin stack up against similar companies? Find out, by booking a demo here.