Now, there is a way or two where you can add to your profit. The most obvious are either by adding to your revenue stream through finding and adding new clients to haul for, or by reducing you’re overall trucking expenses.
So far the practice is showing that it is much easier, better, and smarter to reduce the trucking expenses and that way to add up to the revenue and increase profit, than it is to focus on adding new business.
When it comes to reducing trucking expenses, there are numerous ways to do that. Perhaps you can start using different driving techniques and improve your gas mileage. It might not look to you like a big saving on fuel at the beginning, but in the long run, can save you many bucks.
Since trucking expenses eat up almost 95% of your revenue, making that small improvement by saving on fuel is equivalent of adding $50,000 in revenue to your business!
So when you think about, it’s better and more efficient to eliminate and lower as many trucking expenses as possible, than it is to focus on adding business. I know you need revenue too, but don’t take more on your plate than you can handle!
Fixed vs. Variable Trucking Expenses
Keep in mind though, that some things cannot be changed. There are trucking expenses where you can reduce and save, but also there are things on which you just can’t cut and they remain same or pretty much the same the entire time.
Some of the fixed trucking expenses that remain static and stay pretty much constant on monthly bases are:
Of course these trucking expenses can slightly change, but most of the time they stay same month after month.
On the other side, you have the variable trucking expenses like fuel costs, food costs, and maintenance, which vary and depend on other factors like:
- How much you are driving;
- What you are hauling;
- The type of the truck;
- Condition of the truck and the routes, and so on.
One thing is sure though! Trucking expenses are there regardless. The real trick is finding the ways to reduce them.
There’s no need to pin yourself down to one route or way of doing things. Experiment and try to find your own way and comfort zone for reducing trucking expenses.
I guess you already know this, but fuel costs presents one of the biggest trucking expenses. Especially when you are the owner operator responsible for fueling.
On average, an owner operator spends anywhere from $50,000 to $70,000 on fuel.
If you know how much you’ll be spending on fuel, you will figure out your truck’s average cost per mile (fuel cost per gallon divided by average MPG). Then multiply it by the number of miles you will run and you will get the big picture.
Truck and Trailer Monthly Payments
Some owner operators own the truck and trailer they drive, while others are renting/leasing it, but the second one is more probable. Whichever the case might be, you still have trucking expenses related to the truck itself.
That might be the cost of the truck and the trailer (like monthly payment) or the cost of the monthly payment for rent. However, the truck expenses are there, and they cannot be avoided.
The only way of avoiding this deduction from your overall profit is if you had fully paid off your truck and trailer cost and they are at your possession now. Then we are speaking different language, and you can count on those extra pennies in your pocket!
As a matter of fact the truck and trailer trucking expenses, come right after the fuel, running close as second of the trucking expenses that eat up your profit!
Truck and Trailer Maintenance and Repair
Truck and trailer maintenance and repair are without a doubt one of the bigger trucking expenses. Regardless if you own a brand new Volvo straight from the dealership, you have a used semi truck with a dry van trailer, or you drive one of the biggest trucks in the world, you still need to consider maintenance.
Now, a brand new vehicle should have less break down time and all, but you can never be sure and always have some money on the side if need be.
I will suggest you to be extra cautious when predicting maintenance. To play safe you should always estimate more than you think you will need and set aside a dedicated maintenance fund just in case things did go wrong.
Maintenance and repair costs are estimated to be around 10% of the total trucking expenses and they vary a lot.
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As I said earlier, it’s not same when you drive a new truck or an old beat up truck, but if you want to get the idea of how much approximately you will need for maintenance on a specific type and model of truck, you can do some research on the many trucker forums and magazines online. In generally, it will all depend on things like:
- The age of the truck;
- Make and model of the truck;
- Personal and Individual maintenance decisions;
- The quality of the maintenance.
However, the most common trucking expenses related to maintenance is the tires repair or purchase, and they can vary too. It will all depend on things like: