Profitability Report

Introduction

New this quarter

This Profitability Report includes data on lane profitability and fuel prices from Q2 2024.

We intend to improve this report over time. If you have any requests for information you’d like to see in this report or feedback on how you’d like to see it evolve, please contact profitabilityreport@smarthop.co.

If you’ve read a previous edition of our Profitability Report, you can skip the rest of the introduction (it’s redundant) and jump directly to the Q2 2024 Profitability Report section. If you missed our last edition, you can read the Q1 2024 Profitability Report here.

Why is profitability so important?

When evaluating which loads to book, many dispatchers and fleet managers look for the highest RPM they can find. However, the most successful dispatchers know that optimizing for RPM can be shortsighted. If you’ve been in this industry for some time, you know the pain of booking a high RPM load, only to find that the destination market is “cold,” with few, or only low-paying outbound loads.

At SmartHop, we believe that profit potential should be the deciding factor when planning routes and booking loads, not RPM. This means doing two things differently:

1. Instead of just focusing on how much revenue you could earn by looking at RPM, we encourage our customers to focus on profit, by taking the total trip rate and their costs into consideration. This gives dispatchers and fleet owners an understanding of the loads they could book and still make money, even if they don’t have the highest RPM.
2. Instead of choosing loads by finding the highest RPM, we believe the key to sustainable profitability is to plan routes that drop your trucks in markets with a high potential to book another high-RPM load. This could mean passing over the highest RPM load for something that is still profitable but also ends in a market that allows you to book another profitable load. Stringing together loads in this way is what we mean by optimizing for profit potential.

If you’re a SmartHop customer, you get real-time profitable load recommendations built into our load board, considering your costs.

About SmartHop’s Profitability Report

Our profitability report analyzes millions of reefer, dry van, and flatbed spot market loads from 70 US markets to highlight the most profitable lanes and markets across the country. In this quarter’s report, you’ll find an overview of Q2 2024’s Hot Markets and Profitable Lanes for dry vans, reefers, and flatbeds. You’ll also see how lane profitability has changed over the past 3 months.

To calculate profit, we input a standard cost structure that is representative of the average truck on the SmartHop platform.

You’ll also find an overview of how fuel prices have changed over the last 6 months and an overview of fuel prices by US region.

This report is a resource for small fleets looking to make smarter decisions that impact their profitability, with the goal of driving business growth. Independent dispatchers can leverage this information to improve their load-booking strategies for their customers.

About SmartHop

SmartHop helps small fleets and independent dispatchers earn more while simplifying the day-to-day, with trusted load recommendations and task automation. We provide a booking and trip management platform that enables trucking companies to manage their load booking and back office all in one place.

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Q2 2024 Profitability Report

Hot Markets

In this section, you’ll see the markets where it was easiest to pick up a profitable dry van, reefer, or flatbed load from the spot market in Q2 2024.

To come up with our list of Hot Markets, we use SmartHop’s Market Profitability Index (MPI) to compare 70 US markets. The markets that we consider “Hot” have to have an MPI of 85 or above, meaning that the profitability of that market is much higher than the US average, which would be a market with an MPI of 50.

Dry Van:

*While Atlanta was the 3rd hottest dry van market in June, it had an MPI under 85, so it didn’t meet our Hot Market criteria.

Reefer:

Flatbed:

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In Q2, the dry van market fluctuated in terms of profitability, starting with 14 hot markets in April, before shifting to 10 in May, and then declining sharply to just two in June. Memphis was in the top 3 markets for all three months. Los Angeles also was in the top three markets for May and June, ending the quarter in position one.

Carriers searching for reefer loads saw a decline in Hot Markets during Q2. April had seven Hot Markets, but this number decreased to just three in both May and June. Early in the quarter, Green River, Los Angeles, and Twin Falls were the most profitable markets. In May and June, the top three markets were San Francisco, Los Angeles, and Tucson.

The number of Hot Markets for flatbeds varied throughout Q2. April had the most with 13, followed by a dip to five in May, before climbing back up to 10 in June. Q2’s leading flatbed markets were concentrated in the Midwest and South, with Memphis in the top three markets for all three months and Cleveland in the top two markets in April and May.

Profitable Lanes

We evaluated the inbound and outbound freight for thousands of lanes to determine where it was possible to make a profit on one load while positioning yourself to pick up another profitable load in your destination market. This is what we saw in Q2 for van, reefer, and flatbed lanes:

Q2 Lane Profitability

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Three Month Trend

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Lane Categories

Profitable Lane to a Profitable Market: These are the best lanes available. A carrier can expect to earn a profit on the delivery and easily pick up another profitable load in that market. Identifying and booking these lanes isn’t easy, but it is the best way to keep your trucks on the money path in a very difficult market. Request a demo to see how the SmartHop platform highlights these lanes to make them easier to find and book.

Profitable Lane to Neutral Market:  You’re likely to break even on loads coming out of neutral markets. In this scenario. While big profits are unlikely, these loads can be used strategically to keep your balanced profit above $0.

Profitable Lane to Unprofitable Market: The cost of taking a load from the destination market could cancel out profits from the initial profitable load, leaving you with a negative combined profit. 

Unprofitable Lane to Profitable Market: This is the best possible option when deciding between unprofitable lanes. In this scenario, you’d end up in a market where it’s more likely to pick up a profitable load, which could be enough to offset the loss you took on the initial load.

Unprofitable Lane to Neutral Market: In this scenario, while you’ll lose money on the initial load, you’ll break even on the load coming out of the neutral market. While you’re not continuing to lose more money by taking a load here, you’re still netting negatively on your trip so far.

Unprofitable Lane to Unprofitable Market: This is the worst scenario you could be in, hauling bad loads to markets where it’s also difficult to pick up a good load. Carriers can anticipate losing money on the delivery and only unprofitable options for reloads. 

Q2 Analysis

In Q2 2024, a significant portion of lanes across all equipment types fell into the unprofitable lane to unprofitable market category, underscoring the difficulties carriers are facing in the current freight environment. For dry vans, 77.23% of lanes were unprofitable to unprofitable markets, while 61.09% of reefer lanes and 30.15% of flatbed lanes fell into this category. Despite these high percentages, the trend over the quarter showed some improvement, particularly for dry vans, where the share of unprofitable lanes to unprofitable markets decreased from 84.85% in April to 69.27% in June. Reefers also saw a decline, dropping from 78.28% in April to 51.21% by June. Flatbeds maintained a more stable trend, with a slight reduction from 39.89% in April to 25.33% in June.

Another significant category was profitable lanes leading to unprofitable markets. In Q2, 18.16% of dry van lanes, 23.57% of reefer lanes, and 19.59% of flatbed lanes were profitable but led to unprofitable markets. While these lanes may seem appealing, carriers often face challenges finding profitable outbound loads from these destinations.

To maximize profitability, carriers should aim to focus on lanes that end in profitable or neutral markets. These lanes accounted for a small but crucial portion of the total: 2.05% of dry van lanes, 7.47% of reefer lanes, and, significantly,  24.86% of flatbed lanes.

Navigating these market conditions can be challenging, but SmartHop’s platform offers tools to help. Our automated load recommendations and background load search feature are designed to help operators find loads that keep their fleets profitable, even in tough markets. To learn more, request a demo.

Fuel Costs

In this section, we’ll share data from the U.S. Energy Information Administration to show how diesel fuel prices have changed over the past 6 months. We’ll also share fuel prices by region.

Fuel is one of the largest costs factored into the profitability of a fleet operation. As diesel prices increase, we expect to see fewer profitable lanes across the spot market.

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Diesel fuel prices continued their downward trend from April to June, with the national average dropping from $4.002 per gallon in April to $3.722 per gallon in June. This decline followed a brief increase earlier in the year, where prices peaked at $4.044 per gallon in February. The West Coast remained the most expensive region for fuel, with prices reaching $4.177 per gallon in April before dropping to $3.962 per gallon in June. Meanwhile, the Gulf Coast consistently offered the lowest prices, with a Q2 low of $3.453 per gallon in June.

Conclusion

Despite fuel prices declining from their early-year peak, the challenge of finding and booking profitable loads remains critical. The majority of lanes across all equipment types continue to fall into the unprofitable lane to unprofitable market category, making it essential for carriers to be strategic in their market and lane choices.

In Q2, the Midwest and South stood out as profitable regions for dry vans and flatbeds, with Memphis in the top three markets for both equipment types throughout the quarter. Reefer Hot Markets, however, were more localized around the western part of the country.

Given the ongoing competitiveness of the spot market, we strongly recommend that carriers evaluate not just the rate per mile (RPM) of a load, but also the profitability of the destination market. To make this easier, our platform integrates these insights directly into load recommendations, as well as providing real-time market profitability data. We’re excited to showcase how SmartHop can help carriers navigate this challenging environment and stay profitable, as highlighted in this quarterly report.