This article was written by Jack Porter, a facilitator for the Truckload Carriers Association’s TCA Profitability Program (TPP).
I have been a member of the TPP (TCA Profitability Program) Facilitator Team for 23 years. In that period of time, we have measured our member carriers through good times and bad times. I strongly believe that successful businesses measure their business by the numbers. The comparative benchmarks that TPP allows its members is invaluable to the success of these carriers.
One of the critical measurements we track is Administration Cost as a Percentage of Gross Profit.
In short, this is the overhead personnel costs including benefits (not including drivers and technicians) divided by the gross profit (the revenue, not including FET, minus the variable operating costs).
When people are your most valuable asset, this measurement not only gives the company a targeted measure; it also provides a very comparative benchmark when comparing.
The great companies producing sub-90 operating ratios (ORs) have a very tight ratio. The best-in-class companies target a 25% gross margin with a 25% admin overhead as a percentage of their gross margin.
We noted this as the “Golden Rule of Profitability” 10 years ago. That ratio has been challenged many different times over the past three or four cycles in trucking.
Think about it: We measure the amount of revenue we make divided by multiple denominators. We slice and dice miles versus umpteen different cost and revenue line items.
However, we rarely do consistent measurements of the effectiveness of our people.
Through good times and bad times, the challenge of keeping, hiring or right-sizing your staff during every changing business cycle is often one of the most challenging decisions a leader must make.
As you can see in the “Gross Profit Margin” chart above, during the past three tears gross margin has eroded 3.9 percentage points or 24% from 2023 to 2025.
In the past, the measurement may be as a percentage of revenue, or as a cost per mile.
It’s a great place to start.
However, those metrics often do not reveal the true opportunity costs and efficiency levels of your staff. As you can see by the “Administrative Expense as % of Revenue” chart, the change is than 1 percentage point and only shows a 5% increase.
The true measure of the productivity of your support staff is their cost versus the margin they contribute to the carrier. When measured against gross margin leaders can now make some tough decisions.
If the ratio is low (20%-40%), then you are concerned about burnout and or understaffed.
If the number is high (70%-90%), you are overstaffed for the current business level.
I know what you’re thinking: How can my staff impact margin?
Don’t think about the revenue part of the margin equation. Instead, think about the variable costs they can affect.
The first one is driver experience. Educate your staff on best practices, company cultures and just plain attitudes toward your driving staff. This will help reduce turnover, keeping trucks full.
How about safety? Educate your staff on the impact of an accident on the company. How meaningful would it be if every staff encounter ended with a heartfelt, “Be safe out there”?
And how about just answering the phone with a friendly and helpful greeting and attitude?
The absolute accelerator to the connection of staff to gross margin is “skin in the game.” Develop incentives that the team can target for success. Measure the ratio and incentivize gains toward the 25% target.
Now, let’s talk about AI.
Why bring this up now? AI is the hottest buzz word anywhere!
TPP members reached the best aggregate Administration Ratio during the 2023 recovery year. As you can see in “Administrative Expense as % of Revenue” chart, the ratio came closer to the “Golden Rule” target of 25%.
However, you can see the difference between year average for 2023 compared to the 2025 averages: The measure has increased 39 percentage points, and a huge 132% increase. That is the compounding of rates dropping, variable costs increasing and gross margin shrinking. Then, when you divide your pretty steady admin costs, the result is the “Administrative Expense as % of Gross Profit” chart.
As a result, many carriers were looking for people in 2022 and added folks to the admin staff. That was probably at the wrong time to expand staff, due to the fact that 2023 was the start of the great freight recession.
We saw the Admin ratio begin to climb as carriers saw their margins eroding and their staff basically staying intact. This measurement became a key operational benchmark for those companies that were right-sizing their staff to fit the new market conditions.
Today, as we begin recovery, that ratio of Admin to margin has never been as high as the completion of 2025. As you can see, in some cases we are barely covering our personnel costs with the eroded gross margin.
Leadership has to look at this ratio and strategize ways to employ AI. In my opinion, AI is not a staff reducer, but instead a staff TASK reducer. Since you’ve probably already right-sized your staff — and have kept the high performers — you need to employ AI to help the effectiveness of those high performers.
I believe AI will be the greatest asset a carrier can employ during this Great Freight Recovery.
For more information about TPP, visit truckload.org/about-tpp.
This article first appeared in the September/October 2026 print edition of Truckload Authority, the official publication of the Truckload Carriers Association.
The Truckload Authority News Staff, comprised of award winning journalists and graphic artists, produces content for Truckload Authority, working in cooperation with the Truckload Carriers Association staff. Truckload Authority aims to keep TCA members abreast on the latest trends in the trucking industry as well as articles that feature TCA member executives and drivers. The Truckload Authority staff is based in Little Rock, Arkansas.
