Profitability Report

Introduction

New this month

We’re aiming to get this report out earlier in the month, so the data is more recent when the report is published.

Our intention is to improve the contents of this report over time based on the sophistication of our analysis and customer and industry interest.

If you have any requests for data 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 read last month’s report, you can skip the rest of the introduction (it’s redundant) and jump directly to the September Profitability Report section. If you haven’t read last month’s report, you can find the August 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. We all 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, taking your costs into consideration.

About SmartHop’s Profitability Report

Our monthly 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 month’s report, you’ll find an overview of September’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 a ranking of fuel prices by US region, from most to least expensive.

The intention is for this report to serve as a resource for small fleets looking to make smarter decisions that impact their profitability, with the goal of driving business growth.

About SmartHop

SmartHop helps small fleets and independent dispatchers grow their businesses. We were built by truckers, for truckers and have built the solution we wish we had, a single platform that combines the functionality of multiple point solutions. 

With SmartHop, you can accomplish the tasks you used to need a separate load board, TMS, factoring company, and fuel card provider for.  Plus, our added layer of market intelligence helps users make better decisions faster. The result for our customers is hours back, increased profitability, happier drivers, and improved cash flow.

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September 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 September. 

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:

🔥 Chicago

🔥 Grand Rapids

🔥 Toledo

Reefer:

🔥 Grand Rapids

🔥 Chicago

🔥 Twin Falls

Flatbed:

🔥 Syracuse

🔥 Elmira

🔥 Cleveland

In September, six markets met the Hot Market criteria for dry vans, up from five in August. Chicago remained the most profitable market month-over-month, and Grand Rapids stayed in the second position in September, with Toledo replacing Terre Haute as number three.

Reefer lanes continued to be more profitable than dry van lanes on average, with 15 markets meeting the Hot Market Criteria, up from six markets in August. The only consistent Hot Market was Chicago, which moved to position two in September from three in August. 

Two of the August flatbed Hot Markets remained in the top three in September, with Syracuse moving from position three to position one, and Cleveland moving from position one to position three. The total number of flatbed hot markets in September was 11, down from 18 in August.

Profitable Lanes

We evaluated the inbound and outbound freight for thousands of US 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 September for van, reefer, and flatbed lanes:

September Lane Profitability

Three Month Trend

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. The SmartHop platform highlights these lanes as “Hop” 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 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 negative 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. 

September Analysis

For the third month in a row, for all three equipment types, the largest percentage of lanes fell into the unprofitable lane to unprofitable market category, with 63.87% of dry van lanes, 42.1% of reefer lanes, and 52.94% of flatbed lanes falling into that category. Optimistically, all three equipment types saw the percentage of lanes in this category drop in September, by 6.39% for dry vans, 5.43% for reefers, and 5.16% for flatbeds, suggesting a shift toward more profitable lanes. 

The next largest lane category across equipment types was profitable lanes to unprofitable markets, with 19.31% of dry van lanes, 27.57% of reefer lanes, and 21.09% of flatbed lanes falling into that category.

To stay on the profitable path, carriers should aim to create trips out of profitable lanes ending in profitable and neutral markets, which made up 5.97% of dry van lanes (up from 3.95%), 13% of reefer lanes (up from 10.37%), and 9.27% of flatbed lanes (up from 7.85%) in September. 

The dry van and reefer markets continued their positive trend, with an increase in the percentage of lanes that could lead to profitable trips, and a decline in the “worst” lanes (unprofitable lanes to unprofitable markets). In September, flatbed lanes moved in the same direction, with an increase in lanes that led to profitability and a decrease in the “worst lanes.” In August there was a big (9.29%) increase in unprofitable flatbed lanes to unprofitable markets, so this is a notable reversal. 

In this market, booking profitable trips still feels like a big challenge. To help small fleets and dispatchers more confidently book loads that will keep their business running profitably, we built automated load recommendations and a background load search feature that finds loads that meet your criteria while you’re not actively searching. See a demo of how it works.

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, from highest to lowest price per gallon.

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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For the second month in a row, fuel costs reached a 6-month high in September, with an average cost of $4.56 per gallon for diesel across the country, a 4.35% month-over-month increase from August. The West Coast remained the most expensive fuel region, with a price of $5.58 per gallon, a 9.14% or $0.47/gallon increase from August. 

Fuel is a major cost that carriers should take into consideration when calculating profitability. When fuel costs are high, carriers must focus even more on finding high-paying loads and cutting costs across their business to run profitably. At SmartHop, one of the ways we help our customers cut costs is with a fuel card program that offers competitive discounts at over 2,700 major fuel stations.

Conclusion

Based on September data, we strongly recommend staying close to the Midwest in the near term; it’s the most promising region for running profitably. The Midwest was home to the majority of September’s Hot Markets, plus it had the second-lowest fuel costs.

September saw a continuation of positive August trends for dry vans and reefers, with an increase in lanes that allow fleets to run profitably and a decrease in unprofitable lanes going to unprofitable markets. Flatbeds joined them in this promising pattern this month, after seeing a big decrease in “good” lanes (profitable lanes to profitable and neutral markets) and increase in “bad” lanes (unprofitable lanes going to unprofitable markets) in August from July. Fuel costs continued to rise in September, making it harder to run your fleet profitably, and decreasing the number of profitable lanes overall.

Even with the market moving in a positive direction, for fleets and dispatchers relying primarily on the spot market, running profitably remains tough. High RPMs are only part of the equation, and being singularly focused on that metric can often hurt a carrier’s overall profits. We believe profitability should be the deciding factor when selecting loads, and we’ve built it seamlessly into our platform to make it easier to make smarter decisions. We’re excited to provide the industry with a snapshot of what our platform can do in this monthly report.