How do I compute for my trucking rates for my Trucking Business in the Philippines?
In the Philippines, the trucking industry is one of most saturated industries under the transportation and logistics sector, and you don’t need to be a rocket-scientist to understand this. This could simply be explained by looking at the past events for the last 3 years, including but not limited to the Philippines’ GDP growth rate which may only lead to one thing – booming businesses.
And when businesses are expanding, the trucking industry follows, because there is no other way to move cargos more economically but in bulk and using trucks, right? This only leads to a never ending quest to increase the number of trucks that many companies, truck owners and operators manage. With too much and too many out there, there is always this one thing that crosses our minds especially for those who are into the trucking business as a service, and that is if we really are still that profitable amidst the proliferation of trucking companies and operators, ever increasing costs and expenses, taxes and all.
While there are too many factors to consider and study in managing profitability, definitely one learning material alone is insufficient to explain this in depth. Hence, this is why this learning material will begin focusing in one of the most neglected portions in operating a trucking business — trucking rates.
To begin, we need to understand first what is a trucking rate. It my simplest definition, trucking rates are compensation for the trucking service rendered to a customer. That compensation is the income that the company or truck owner earned, which is then defrayed and used to pay creditors, suppliers, employees, Philippine Government, and of course, the owners. Get it right, you can at least be competitive, profitable and sustainable. Get it wrong, and run the risk of bleeding and losing money to operate, consequently leading to bankruptcy.
In this mini series of learning, we will discuss about:
- What are variable and fixed costs to consider in running a Trucking Operations
- What are selling, and administrative expenses and costs that need to be factored
- What is markup, and how do we say that our markup is just right.
- How do we actually make use of these costs and markup to come up with the trucking rate.
- And other key areas to manage profitability of the Trucking Business
Do note that computing for the trucking rates should set our mentality and idea that it is “more art” than complete science. While we will exhaust all means to use data, we will also make use of “intelligent” assumptions to come up with balanced trucking rates, that are neither wildly high or suicidally low.
“Get it right, you can at least be safe with competitiveness, and profitability. Get it wrong, and run the risk of losing money to operate, consequently leading to bankruptcy.”
Stay tuned for Part 1 of this mini-series as we will give a sample Trucking Rate Calculator by submitting your contact information by clicking HERE and keep following to help you manage your Trucking Business, the right way!
