What Owner-Operators Miss To Be Profitable (Cost Per Mile, Fuel & Margins) with Kevin Rutherford

What Owner-Operators Miss About Profitability

[00:00:01] Kevin Rutherford: Slow down one mile per hour. Does anybody notice one mile per hour? You know how much that saves you a year? With today’s fuel price, it is a thousand dollars. One mile per hour.

[00:00:12] John Howland: On today’s episode, we are coming to you on location at the Mid-America Trucking Show. MATS is the largest annual gathering in the trucking industry. Carriers, brokers, and industry leaders come together to connect, learn, and talk about real solutions.

[00:00:12] John Howland: We are joined today by a very special guest, Mr. Kevin Rutherford, founder and CEO of Let’s Truck and longtime host of Trucking Business and Beyond. Kevin has spent nearly three decades helping owner-operators and fleets improve fuel efficiency, reduce maintenance costs, and increase profitability.

[00:00:12] John Howland: Today, we will talk about knowing your numbers, especially the cost per mile, and how carriers can improve fuel efficiency. We will also discuss what Kevin is seeing on the ground at MATS. Welcome, Kevin.

[00:00:52] Kevin Rutherford: Great to be here.

[00:00:59] John Howland: With three decades, I have to ask: how many MATS shows have you been to?

[00:01:03] Kevin Rutherford: We are going to call it 36. I might be a year or two off, but I am pretty close. I first started coming here in the late eighties, around 1988 or 1989. I came specifically for a seminar because I wanted to learn how to be a better owner-operator.

[00:01:11] Kevin Rutherford: I had two trucks, having bought my first in 1986 and another in 1987. I was doing everything wrong, but I did not know it yet. I thought I was going to go learn, but unfortunately, the seminar turned out to be kind of a scam.

[00:01:38] Kevin Rutherford: It was an association selling insurance, and I really did not know what the speaker was talking about. Towards the end, I thought I could do that better than they were. That put the idea in my mind, though at the time I was focused on growing a trucking company.

[00:02:05] Kevin Rutherford: A couple of years later, that association did turn out to be a scam. They were collecting premiums, but there was no insurance. That is a big problem, though they had impressive profit margins while they had their run.

[00:02:10] Kevin Rutherford: That set me up for the idea that maybe I could teach, and that is what I was there for. Fast forward to 1999; we had a call from Overdrive magazine. Their business writer would call me every month to go over his business column.

[00:02:30] Kevin Rutherford: Keith said they were doing a business seminar at the Mid-America Truck Show and had someone to present. The presenter had written a book about being an owner-operator and was a sharp guy. They wanted a panel with an insurance guy and a senior engineer from Volvo.

[00:02:30] Kevin Rutherford: They wanted me to come and answer tax questions. I immediately said yes, and then I realized I had to go up on stage. My biggest fear in life was public speaking, and I thought about what I had just gotten into.

[00:03:10] Kevin Rutherford: The day of the show, it was standing room only with 300 people. They were trying to bring in more chairs as the event was starting. I was sitting at a table sweating bullets. The presenter started, and he was brilliant but the worst public speaker ever.

[00:03:10] Kevin Rutherford: Nobody had any idea what he was talking about. He told stories about camping in the mountains and how that applies to trucking. You could see the audience was lost, and this went on for forty-five minutes.

[00:04:00] Kevin Rutherford: Volvo was the big sponsor, and their executives were over from Sweden. Overdrive was in the back, and you could see the panic in the room. They did the old vaudeville thing and dragged the guy off the stage mid-sentence.

[00:04:10] Kevin Rutherford: They got everybody together and said that this was not going well because people were leaving the room. They told me that when we came back, we would take questions. They said to give the first question to Kevin, no matter what it was.

[00:04:20] Kevin Rutherford: I protested that I was there for taxes, but they said I knew this stuff and was the only one who owned a truck. I was in total panic mode. The guy started talking again but did not ask for questions. He went right back into storytelling about cooking in the mountains.

[00:04:44] Kevin Rutherford: I tuned out because I could not even listen anymore. Out of the blue, he walked over to the table and asked what I thought. I was not listening and had no idea, and everybody was staring at me.

[00:04:44] Kevin Rutherford: I went into this weird tunnel vision thing. I stood up, took the mic out of his hand, and walked to the middle of the stage. I asked if anybody had any questions, and they just flooded out.

[00:05:00] Kevin Rutherford: We spent two and a half hours just answering questions. They fired him and hired me, and I did that program for the next fifteen years. On the flight home, I was reading Barron’s about a crazy new technology called satellite radio.

[00:05:35] Kevin Rutherford: They had not even launched it yet. I thought that since I just answered questions for two and a half hours and was good at it, maybe I should have a radio show. That is exactly how that happened.

[00:06:08] Todd Waldron: We had Brent Hutto on our first episode, and he mentioned you as his mentor. We all appreciate what you are doing for the industry. How did you build such a great relationship and partnership with Truckstop?

[00:06:46] Kevin Rutherford: Business to me is relationships. That is the core of business. I met Brent at that event in 1999 when he was with Overdrive. Volvo was his big account and they were the sponsors.

[00:07:00] Kevin Rutherford: Fast forward several years, we were back at this event and I saw him in the aisle. He told me he was working with Truckstop. I told him I had been bouncing ideas off Truckstop for three years but nothing ever happened.

[00:07:30] Kevin Rutherford: He said it could get off the ground now, but I had a problem. I had just signed a year contract with his competitor. I had six months left and we do not do competing partnerships.

[00:07:40] Kevin Rutherford: I told him they were great, but I would much rather work with him. I told him to put it on the calendar and call me, and that is how we started working with Truckstop. It is a tool you cannot afford not to have as an owner-operator.

[00:08:04] Kevin Rutherford: I have always tried to help them use all the tools they are paying for. The subscription fee is cheap, but they are missing 80% of all the tools built for them. We have to communicate that repeatedly so people know.

[00:08:42] John Howland: How did that then continue into the creation of the radio show?

[00:08:56] Kevin Rutherford: I had that idea about the radio show with satellite radio before it even existed. They hired me at MATS, and the next show was two months later in Las Vegas. I had two months to get ready to do the presentation myself.

[00:09:10] Kevin Rutherford: I was nervous because now I had to do this all by myself. I came out of the hotel waiting for a taxi, and a woman asked if I wanted to share a cab. It was Mindy Baker, the program director for Midnight Trucking Radio.

[00:09:30] Kevin Rutherford: I told her the seminar story and how I had this idea to do a radio show. She said she would get me on as a guest. I got back to my office on Monday and sent an email, but there was no response.

[00:10:00] Kevin Rutherford: I put it on my calendar to send her an email every Monday, and I did that for six or seven months. She finally called me in February because tax time was coming up. That was my first radio appearance, and it was at 2:00 AM.

[00:11:00] Kevin Rutherford: About a month later, I got a call from Dave Nemo, the biggest name in trucking radio. He had read an article I wrote and wanted me to talk about it. We blew up their phone system; it melted down.

[00:11:20] Kevin Rutherford: He said they had never seen anything like that before with so many phone calls. He asked if I could come back every month for a regular spot. Before the week was up, they asked for every other week, and then every week.

[00:11:45] Todd Waldron: What is one key difference in how a smaller fleet and a large fleet manage their profitability?

[00:12:05] Kevin Rutherford: My focus is one truck and one driver. My goal is to teach them how to squeeze every penny of profit out of that operation. Once you have that figured out, buying another truck is like starting a whole new business.

[00:12:20] Kevin Rutherford: One to two trucks is a different world, and at seven trucks, you have more going on. There is another huge change when you get to about 20 or 25 trucks. The whole model shifts if you want to continue to stay profitable.

[00:12:40] Kevin Rutherford: At 100 trucks, it is a whole new model again, and then you get to the mega fleets. The most critical part is whether you add that second truck. That is the most difficult thing you will do.

[00:13:00] Kevin Rutherford: I can take almost anybody, show them how to buy the first truck, and guarantee their success. It is almost the opposite on the second truck; that is a total crapshoot. It is all about mindset.

[00:13:33] Kevin Rutherford: I talk about numbers and fuel mileage because that is how you become profitable. If somebody does not have the right mindset, it is not going to work. I can teach you everything else, but the mindset is critical.

[00:14:00] Kevin Rutherford: Generalizing, the longer somebody was a driver before becoming an owner, the worse their mindset tends to be. Someone from banking, real estate, or the military will succeed every time because they follow the system.

[00:14:20] Kevin Rutherford: The longer drivers have been in the industry, the more they feel entitled to a profit because of their experience. The world does not work that way, and you cannot convince them otherwise. So the single most important factor is mindset.

[00:14:56] Kevin Rutherford: Their experience works against them because they think thirty years of safety makes them successful. Driving experience and safety are just the baseline; they do not make you successful. If I cannot get them over that, they will struggle.

[00:15:30] Kevin Rutherford: I am working with a guy right now who said he will do whatever it takes to make this successful. I promise you that guy is not going to fail at this. I had a TV show called Turnaround.

[00:16:10] Kevin Rutherford: I took owner-operators, did their accounting, and modified their trucks. It was a failure because I was too nice. The success of those shows relies on the drama, like Gordon Ramsay screaming.

[00:16:40] Kevin Rutherford: Mine was too nice and it was really boring. We filmed five full episodes that were costing $10,000 each. I sold my show to Park ‘N View, which was a truck stop service with special lanes.

[00:17:10] Kevin Rutherford: When you pulled in, they had a giant tube for your window with TV, heating, and cooling. It was a great idea but horrible execution. They went out of business and took my show with them.

[00:17:56] Kevin Rutherford: Business comes back to two things: bringing in revenue and spending money. You want to bring in as much revenue as you can and spend as little as possible. You should figure out your biggest expense and how much control you have.

[00:18:20] Kevin Rutherford: In this industry, that is hands-down fuel; nothing else even comes close. You have tons of control over it. The industry average for fuel economy for an over-the-road truck is about 6.7 MPG.

[00:18:40] Kevin Rutherford: My Thursday show, “The Five”, is all about fuel economy because every co-host has owned trucks and maximized fuel mileage. Joel Morrow has five million miles of driving with a focus on fuel economy.

[00:19:00] Kevin Rutherford: Henry Albert specializes in fuel mileage on the Freightliner platform. John Bickner does heavy-haul stuff in the West and gets killer fuel mileage. I had a guy on who just built a new International with 12.02 MPG.

[00:19:40] Kevin Rutherford: That is almost double the average. I once spent six months trying to build a list of everything that affects fuel economy. I got up to over 80 items and gave up. You have control over many of those things.

[00:21:03] Kevin Rutherford: When fuel prices are high, the math is simple. Let some tension off your right foot and slow down one mile per hour. Nobody notices one mile per hour, but it saves you a thousand dollars a year.

[00:21:20] Kevin Rutherford: If you slow from 70 to 60, you just save $10,000. There is absolutely no reason you can’t deliver freight. I delivered freight for years at 57 miles an hour. Practically, the slowest is going to be about 55.

[00:22:10] Kevin Rutherford: Science found that 37 miles per hour was the spot for maximum fuel miles. This is why big fleets are so different. If it is my truck, I can maximize everything.

[00:22:40] Kevin Rutherford: With the next truck, I have very little control. At 100 trucks, you might save a million dollars on fuel mileage, except your recruiting budget might go up by two million. The driver dictates almost every decision you make.

[00:23:52] Kevin Rutherford: I just love wolves, so I think it would have to be a wolf. You have to have crazy endurance to make it in business for the long haul. Wolves can run all night; they are fierce and loyal.

[00:24:21] Kevin Rutherford: The truck’s going to be autonomous anyway, so they are just going to monitor systems. We have to deal with reality. The freight industry would be meaningfully better with more education at the driver level.

[00:24:40] Kevin Rutherford: The driver runs the whole industry, but we have failed miserably to educate them. We just throw them into the deep end and say, “Sink or swim”. The worst thing is the victim mentality.

[00:25:19] Kevin Rutherford: People blame brokers, load boards, the FMCSA, or mega carriers if they do not succeed. It is the worst mindset I have seen, and it stems from a lack of education. When you do not understand why you are failing, it is easy to blame someone else.

[00:26:13] Kevin Rutherford: Adam Wingfield has great material and is writing for Freightwaves now. We butt heads occasionally on social media, but we keep it civil. He is excellent if you want to build a small fleet and direct customer relationships.

[00:27:12] John Howland: If today’s episode helped you think differently about your operation, share it with someone who needs to hear it.

[00:27:19] Todd Waldron: If you are looking for tools to help keep your truck rolling, Truckstop.com is here to help. Visit truckstop.com to explore the load board, rate insights, and risk management solutions. Until next time, keep the wheels turning and the bad loads burning.