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In addition, trucking companies are considering fuel costs to be the biggest expense that they are facing with nowadays.
Did you know that if the fuel prices slightly increase throughout this year it will result in increased marginal fuel costs for trucking companies next year?
Repair and maintenance
Repair and maintenance are not something uncommon for trucking companies. The costs that come from repair and maintenance can be impacted by several factors, such as are:
- The Age of the trucks and trailers;
- Vehicle configurations;
- Technologies that are installed on the trucks;
So, if you are a successful trucking company owner, I strongly believe that you have the answers to the following questions:
- Do your trucks demand excessive repairs?
- Do you have a record keeping system to track your vehicle maintenance?
- Are you aware of the guidelines and regulations that mandate a truck to be placed out of service?
- Is there a way for you to monitor how effective your preventative procedures actually are?
- Have you adequately trained your truck drivers to detect maintenance needs?
Tolls
Tolls are yet one more significant cost that motor carriers are facing with. Actually, toll costs are highly dependent on the region of operation and the routes that the truck driver will be arranged to drive.
What trucking company owners should have in mind is the following: shippers rarely almost never reimburse carriers and drivers for toll-related expenses.
The average toll cost in the northeast is varying from 4.1 cents per mile or 1.5 cents per mile.
How To Reduce Variable Costs
Unlike fixed costs, variable costs can be reduced in many ways.
Actually, the best way for trucking companies to reduce their variable costs is through:
- Increasing the fuel mileage by improving the driving habits of your truck drivers/ tire rolling resistance/ more aerodynamic parts;
- Decreasing maintenance costs- better preventative maintenance/ better quality parts/ better purchasing decisions;
- Knowing the best strategies for fuel-buying on long trips by using a fuel optimization tool;
- By planning out lodging and dining locations;
Total Cost Per Mile
Now we’ve come to the final step of calculating the revenue and profit per mile for your trucking company.
How can a trucking company determine the total monthly cost per mile?
Trucking company owners can determine the total monthly cost per mile by calculating the fixed, variable and salary costs all together.
Moreover, what you can also do in order to calculate the revenue and profit per mile for your trucking company is the following:
- Gather the receipts for the month and divide them into three piles:
- Fixed expenses;
- Variable expenses;
- Driver salary;
- Total each category then add each sum together to get the total expenses for the month;
- Divide the final total by the number of miles driven during that month;
Tip: If you have a fleet of trucks, I would recommend you to consider calculating the cost per mile for each truck. After you perform this step you can add each cost per mile amount together and divide the total number of trucks in order to get the average cost per mile for trucking.
By calculating the revenue and profit per mile you will be in the situation to know what in reality is going on in your trucking company.
| Fleet Operations | |
| Loaded Miles Run This Year | 120.000 |
| Deadhead Miles Run This Year | 20.000 |
| Total Miles | 140.000 |
| Fuel | |
| Fuel Gallons Purchased This Year | 19.500 |
| Miles Per Gallon | 6 |
| Average Price Per Gallon | $2.50 |
| Annual Fleet Income | |
| Gross Earnings | $200.000 |
| Interest Earnings | |
| Other Income | |
| The Annual Income | $200.000 |
| Annual Fixed Costs | |
| Truck Payments | 16.000 |
| Trailer Payments | |
| Liability Insurance Premiums | |
| Bobtail/Deadhead Insurance Premiums | |
| Cargo Insurance Premiums | |
| Health Insurance Premiums | $2.500 |
| Collision comp. insurance premiums | $3.000 |
| License Plates | $1.500 |
| Permits | $500 |
| Parking Expenses | |
| Office Lease Payments | $12.000 |
| Total Fixed Costs For The Year | $35.500 |
That will as well help you to see whether there are some problems with various spending patterns and areas.
In addition, if there are some problems in the spending patterns and areas you will be informed on time to cut back if needed.
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To put it another way, the determination of the revenue and profit per mile for your trucking company will help you as well in setting an appropriate per-mile rate for shippers, and a proper truck driver salary.
| Annual Variable Costs | |
| Fuel | $48.750 |
| Meals/Lodging | $6.500 |
| Telephone | |
| Satellite | |
| Loading/Unloading Fees/Tolls | $1.500 |
| Tires | |
| Maintenance | $4.500 |
| Repairs | $6.000 |
| Factoring Fees | |
| Broker Fees | |
| Drivers’ salaries/wages | |
| Payroll Taxes | |
| Professional Services | |
| Taxes-road/fuel/property | |
| Advance Fees | |
| Uncollected Receivables | |
| Collection Fees | |
| Miscellaneous Expenses | $1.000 |
| Total Variable Expenses For The Year | $68.250 |
Trucking companies that are calculating the company’s operating expenses per mile on a regular basis are the ones that have the information that they need in order to increase their profitability.
In either case, a trucking company is as well able to calculate an annual average cost per mile by adding the per mile cost for each of the 12 months together- then by dividing it by 12.
| Annual Summary | |
| Total Miles Run | 120.000 |
| Total Annual Income | $200.000 |
| Total Fixed Costs | $35.500 |
| Total Variable Costs | $68.250 |
| Total profit/loss | $96.250 |
| Gross Income Per Mile | $1.67 |
| Fixed Costs Per Mile | $0.30 |
| Variable Costs Per Mile | $0.57 |
| Total Costs Per Mile | $0.86 |
In Addition You Can See Few Facts about the Real Cost Of Trucking
- $1.38 Is the average per mile operating cost for the trucking industry;
- $180.000 Is the average total yearly cost of operating a commercial truck;
- A commercial truck can easily consume more than $70.000 of diesel fuel per year;
- Fuel is the largest operating expense in the trucking industry;
- The standard commercial truck driver salaries are based on the distance driven per mile;
- Multiple insurance policies can cause coverage to cost over $6500 per year;
- Issues with air-line hoses, alternators, wiring and brakes are common in the trucking industry and can cost $15000 annually;
- 2% of the overall expenses of a trucking company go for required permits and licenses;
- Federal diesel fuel taxes equal to $0.04 per mile;
- State diesel fuel taxes equal to $0.03 per mile;
It’s no secret that the trucking industry in the USA is moving more than 66% of all goods.
