Trucking Business Overview

Trucking businesses transport goods, playing a needed role in supply chains across various industries. These companies move everything from raw materials to finished products, serving industries such as retail, manufacturing, construction, and agriculture.

There are several common business models in the trucking industry:

• Owner-Operator Trucking: Independent drivers own and operate their trucks, often contracting with larger freight companies or directly with clients.
• Freight Brokerage: Companies act as intermediaries, connecting shippers with carriers to arrange transportation without owning their own trucks.
• Full Truckload (FTL) Services: Companies transport large shipments that fill an entire truck, usually over long distances.
• Less-Than-Truckload (LTL) Services: Companies consolidate smaller shipments from multiple clients into a single truckload to optimize capacity and reduce costs.
• Specialized Freight: Businesses focus on transporting specific types of goods, such as refrigerated items, hazardous materials, or oversized loads

Related: Checklist To Start A Business

How Do Trucking Companies Make Money?

Trucking companies earn money by charging customers to transport their goods. The rates depend on various factors such as distance, weight, type of freight, fuel costs, and delivery timeframes. Most companies typically start at a per-mile calculation, with additional factors like equipment type, route difficulty, and market conditions influencing the final price.

Industry Statistics

The trucking industry transports goods and materials by road across various distances and regions. Companies in this industry operate under NAICS code 4841: General Freight Trucking.

Here are some statistics about the industry:

Trucking Industry Size & Growth: The trucking industry generated $459 billion in annual revenue during the last year. Freight shipments decreased 1.9% in the most recent quarter, marking the ninth consecutive quarterly decrease in volume, though this represents the smallest drop in more than a year. The marginal cost of operating a truck rose to $2.27 per mile, with increases in truck payments (8.8%), driver wages (7.6%), and insurance premiums (12.5%) affecting overall costs. (Vertical IQ)

Number of Trucking Companies: The industry consists of 147,000 companies employing 1.1 million workers. About 88% operate from a single location, and 80% employ fewer than 10 workers. Major companies include UPS, FedEx, DHL, YRC Worldwide, Ryder, XPO Logistics, Penske Truck Leasing, and JB Hunt Transport Services. About 25% of drivers are independent owner-operators who own their trucks and contract services to trucking companies. (Vertical IQ)

Trucking Company Profit Margins: Most trucking companies see profit margins between 2.5% to just over 8%. However, profit margins fluctuate based on factors such as route type, freight category, and operational efficiency. An estimated 85% of small trucking businesses fail before their second year of operation, highlighting the challenging nature of maintaining profitability in this industry. (Vertical IQ)

Costs To Start a Trucking Business

Starting a trucking business could range from $30,000 to $250,000, depending on whether you begin with one truck or a small fleet, and whether you purchase new or used equipment.

Here are some of the main costs to consider when starting a trucking business:

Commercial Trucks and Trailers: A used semi-truck might cost between $30,000 to $80,000, while new trucks can cost $130,000 to $200,000. Many owners start with one used truck and expand their fleet over time. The cost of trailers ranges from $8,000 to $30,000, depending on type and condition.

Insurance and Licensing: Commercial truck insurance costs can range from $8,000 to $15,000 per year, often requiring a significant down payment. Various permits and licenses are needed, including commercial driver’s licenses, DOT numbers, and operating authority.

Technology and Equipment: Dispatch software, electronic logging devices (ELDs), GPS tracking systems, and other fleet management tools can cost between $2,000 and $5,000 for initial setup.

Maintenance Fund: Setting aside $5,000 to $10,000 for initial maintenance and repairs helps cover routine service and unexpected breakdowns during the startup phase.

These estimates provide a general overview of startup costs, but actual expenses will vary.