Kottke Trucking Analyzes Freight to Improve Revenue per Mile
Kottke Trucking's search for more insight into their operations eventually led them to TCG’s Activity-Based Costing and Profitability Management Tools. The fleet says it’s seen an increase in revenue per mile of 10.5% over the past 18 months by using TCG’s Cost Information System to make better decisions.
Being able to analyze the profitability of loads, lanes, customers and more has helped Kottke Trucking increase revenue.Photo: Kottke Trucking
3 min to read
Being able to analyze the profitability of loads, lanes, customers and more has helped Kottke Trucking increase revenue. Photo: Kottke Trucking
While Kottke Trucking has been a going concern since 1938, the third-generation owners had to do some serious soul-searching after the financial meltdown of 2008. Their search for more insight into their operations eventually led them to TCG’s Activity-Based Costing and Profitability Management Tools. Today, the fleet says it’s seen an increase in revenue per mile of 10.5% over the past 18 months by using TCG’s Cost Information System to make better decisions.
Kyle Kottke, general manager at the Minnesota-based fleet, says with the software, which was an easy integration with its existing transportation management system, “we can completely analyze our freight … and pick winners and losers within our freight basket.”
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Drilling down in the TCG data allows Kottke to analyze profitability by state, lane, load, customer and origin-destination pairs.
“As a result, we have reorganized some freight lanes and focused on operations in eight specific metropolitan locations, and we are able to provide customers with justification for rate changes,” Kottke says. “TCG shows us where we can be the most profitable.”
Kottke fully implemented TCG’s activity-based costing and profitability management software for truckload operations in January 2015. Today, the combination of TCG for analytics and the carrier’s PowerPro Transportation Software enterprise management system is integrating data for analysis on more than 100 tractor-trailer combinations hauling approximately 1,200 loads per month.
It was eye-opening, Kottke says. “My assumptions about what was winning and losing weren’t as accurate as I had assumed they would be. Particular lanes I assumed would prove to be merited as a cornerstone of our business got altered and changed.”
He says how the fleet acts on the data varies. “Sometimes the solution is to just wait because we think the market will correct it. Sometimes it’s approaching a customer about an alternation of a rate, a discontinuation of a lane, or a candid conversation about the fact that it’s just not fitting our portfolio well.”
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Kottke says some people think using such software could turn off customers. His company works very hard to use the information as part of the communication that takes place in that customer relationship, he explains — not just “beating up shippers” for better rates.
Sharing the data with customers has resulted in solutions such as Kottke getting a block of freight that would make an entire route or lane look more promising, or getting freight that goes to a different destination for the same rate, turning those loads from losers into winners.
While there is a great deal of data that can be accessed via TCG’s software, Kottke says it’s all about how you use it. “You can get drunk on data fast. I try to figure out what my end game is first and then figure out how the data can feed that.”
Fleet Snapshot
Who: Kottke Trucking
Where: Buffalo Lake, Minn.
Fleet: 105 trucks and growing
Operations: Mostly refrigerated, 95% food goods and 5% pharmaceuticals, operating in the Midwest, South, Mid-Atlantic and Southwest.
Fun Fact: The third-generation business got its start in 1938 with one truck hauling for a local milk creamery.
Challenge: The economic meltdown of 2008 started a search for the information Kottke needed for higher profits.
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