The Profits in Ready-mixed Concrete
There is no question that concrete is the foundation of construction in North America. The concrete industry is worth over $37 billion, and it employs more than 2 million people in the United States alone. About 10 billion tons of concrete are produced and delivered on this planet every year. Demand for ready-mixed concrete continues to explode and huge multinationals are consolidating the transit mix industry. Falling profits are forcing smaller truck-delivery operators to sell out to the big boys.
If you plan to enter into the concrete delivery business then you should look for the highest profits possible. Those high profits are not coming down the chute of a traditional transit-mix truck. You might want to consider a 1-yard trailer delivery model with very high profit margins.
With all of this growth and demand it is interesting that the profit margins from selling concrete using truck delivery has been sinking every year for the past three. According to the The National Ready Mixed Concrete Association the profits in truck delivery systems has dropped as much as 20% per year since 2017. Even with sales increases each year, the profits from trucking concrete are in the tank. On the other hand, both sales and profits in trailer delivered concrete systems are growing each year.
Why are Transit-mix Truck Profits so Low?
There are a couple of reasons why transit-mix trucking is losing profitability. First, the critical raw materials, cement and aggregates, have become a higher cost-driver in this space. With supplier consolidation controlling much of the market, the price for these basic concrete materials have increased dramatically. Secondly, the good economy and low unemployment has dramatically increased wages for ready-mixed truck drivers. Studies place the average base wage for a driver at $20 per hour. That is before the competitively-forced generous benefits packages add to the labor cost.
The math makes trucking profits challenging. The NRMCA studies find that the US average sale price for a cubic yard from a truck is $126.09. Our research indicates that there is $74.65 worth of raw materials needed to make that yard of concrete. This leaves only $51.44 gross profit from which to pay the driver, maintain the truck, fund a huge batch plant and to run the business.
The capital expenditures for equipment are enormous in a traditional read-mix operation. It is no wonder why only the most well-funded conglomerates can afford to operate a traditional transit-mix operation. As the trucking of ready-mix falls under the control of fewer competitors, the pricing and service continues to suffer. This fully explains why they charge such high short-load fees to people looking for less than full truckloads. It is these pressures that has allowed the trailer delivery model to succeed and profit within the concrete industry.
Start a High Profit Concrete Business
The alternative to low profits from trucking concrete is the Cart-Away system. For about the price of one new transit-mix truck ($170,000 to $225,000) you can be completely set-up with a Cart-Away trailer delivery fleet and a loading system.
With the Cart-Away system there are no drivers to pay, no huge trucks to maintain and no million-dollar batch plant to monitor. Less costs all add up to greater profit margins and less headaches.
The US average sale price of 1-cubic yard of concrete in a Cart-Away trailer is $177.00. With raw material costs at $74.65 you will enjoy a gross profit of $102.35 with each yard. That profit margin is nearly double what a truck can produce, with much less operational costs to eat away the profit.
The Magic of Self-Delivery
Letting customers control their schedule for concrete delivery is at the center of the “U-cart” self-delivery model. Contractors, municipalities and homeowners can come into a Cart-Away location and tow away a trailer full of concrete behind their own vehicle. They choose the time and how many trips that they want to make. They invest their gas and labor to save the short-load fees and wait times that are charged by the large ready-mix trucking companies. Customers happily save the delivery fees and Cart-Away business people happily grow their profits.
So while driver costs and truck maintenance are eating the profits of a transit-mix operation, a Cart-Away self delivery business is just putting more money into their bank with every yard sold. Why would you invest in truck delivery when self-delivery returns double the margin for a fraction of the investment?