Transportation and transport of goods is a regulated utility; loads and shipments are always moving throughout the USA and internationally. Yet some carriers generate revenue that is inadequate to equal total transport costs and reach a breakeven point. In this case, carriers cannot yield a fair and reasonable return on invested capital.

Industry research has shown, however, that maintaining an accounting system that will measure adequate revenue and adequate transport margins can help carriers reach and surpass their breakeven points. They can then target revenue points to create net profits sufficient to yield a fair and reasonable return on invested capital.

Tracking Data

Currently, no uniform system of record keeping is available for the freight industry. While there are hundreds of computerized record keeping systems for transport carriers, the vast majority have no uniform system of cost accounts for yielding financial data to make freight pricing decisions.

Most transport carriers have inadequate records and transport cost data available to calculate empty mile costs, adequate freight rate levels, and the revenue needed to stay in business over the long haul. Many do not understand nor measure major pitfalls, such as key transport cost segments nor the transport margin dollars needed to breakeven and generate profits. Many do not even consider cost/volume/profit relationships or know how certain fixed costs behave in relationship to volume of miles driven.

This is where CarrierNet comes in. Their multiple solutions, including a uniform system of costs accounts model (which is already available in their software platform), a handbook that explains this model and a dispatch and accounting software system can help you address issues of inadequate record-keeping to solve the problem of inadequate revenue.

About the Author: Ryan Noonan

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