Infomarine On-Line Maritime News - Operating Ratio 101 – The Small Carrier Metric That Tells the Real Story About Your Profitability

2. It benchmarks your business.

An OR of 78% is great. But if you’re running at 91% while your buddy with the same kind of truck and lanes is at 83%, it’s time to look in the mirror.

3. It’s what lenders and investors look at.

Want to grow? Thinking about financing another truck? Your OR will come up. It shows whether your business can handle more volume or if it’s barely hanging on.

4. It predicts your future.

You might still be paying the bills at 96%, but for how long? One major repair or a market dip, and you’re upside down.

Let’s Do Some Real-World Math

Here’s an example using realistic numbers for a single-truck operation:

Monthly Revenue: $21,000

Expenses:

Fuel: $7,000
Truck Payment: $2,000
Insurance: $1,800
Maintenance: $1,200
Tolls & Misc: $300
Dispatcher/Back Office: $1,500
IFTA/Permits: $200
Driver Pay (if you’re paying a driver): $6,000
Total Operating Expenses: $20,000

OR = ($20,000 ÷ $21,000) × 100 = 95.2%

That means you’re keeping less than five cents per dollar after costs. That’s a dangerous spot to live in for long.

What’s NOT Included in Operating Ratio?

This is key. OR only includes operating expenses, not things like:

Taxes
Equipment depreciation
Owner draws or dividends
Loan principal payments (only the interest is counted)

That’s why it’s even more important to keep your OR below 90%—because profit after tax and reinvestment only comes after you subtract those additional costs.

Improving Your Operating Ratio – Where to Start

If your OR is too high, it’s either a revenue problem or a cost problem. Sometimes both. Here’s how to troubleshoot:

Revenue Side:

Negotiate better rates – Don’t settle for $2.10/mile if you can consistently target $2.40.
Focus on efficiency, not just miles – 3,000 loaded miles at $2.40/mile is better than 4,000 miles at $1.90.
Reduce deadhead – Even 10% empty miles adds up.

Cost Side:

Fuel – Shop for discounts, join fuel networks, and drive smart. This alone can drop OR 2-4%.
Maintenance – Preventative maintenance beats reactive repair. Schedule it.
Back office – Review tools and subscriptions. Are you overpaying for a TMS or factoring service?
Insurance – Shop policies every renewal. Don’t auto-renew blindly.

What About Multi-Truck Fleets?

Now it gets even more powerful. Once you scale past one truck, your operating ratio helps you compare performance by truck, by driver, or even by lane.

If Truck A is consistently at 78% and Truck B is hovering at 92%, it’s time to dig into why.

Is the driver taking longer routes?
Is the truck older and requiring more maintenance?
Are the loads less profitable?

You can’t scale chaos. Operating ratio gives you a flashlight.

Common Mistakes Carriers Make With OR

Not including all operating costs.

Don’t forget things like ELD fees, subscriptions, and dispatch support if you outsource.

Only reviewing once a year.

You should track OR monthly, or at worst, quarterly. Year-end accounting is too late to course-correct.

Confusing “busy” with “profitable.”

Just because trucks are moving doesn’t mean you’re making money. OR tells the truth.

FAQs

Q: What’s a good operating ratio for small carriers?

Ideally, under 85%. This current market is an anomaly but in normal conditions this is a good place. Under 80% is strong. Anything over 90% for more than 2 months? You’re skating on thin ice.

Q: Should I track OR if I only have one truck?

Absolutely. Especially if you want to stay in business. Even owner-operators benefit from tracking it monthly.

Q: Is OR better than breakeven?

It’s not better—it’s different. Use both. Breakeven tells you “how much,” while OR tells you “how efficiently.”

Q: What tools can help me track OR?

A simple spreadsheet works. QuickBooks, TruckingOffice, or even a TMS can all calculate OR automatically.