Cost of Truck Hauling
Now, when we speak about cost in trucking industry, the real cost of trucking can seem overwhelming. There are so many factors to consider, often those that are overlooked. Proper bookkeeping is the key to successful business. Always break it down to the per mile rate, when either working out how much to charge for a contract or to determine overall cost.
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The estimated average cost of operating one truck is $180,000, per year. That is about $1.38 per mile (of course it does depend on the actual number of miles travelled).
At first that number might seem crazy, but factor in all the cost associated with operating the truck and you’ll see it adds up, quickly. A commercial truck can consume as much as 70,000 gallons of fuel! New trailers can cost $50,000+ while a cab runs $100,000+.
Then you need to factor in the driver’s salary. Don’t forget insurances. Other costs that many new business owners don’t consider are the various tolls, permits, and licenses that are needed. Then there are other expenses such as taxes, operating cost, paying your support staff, and general business expenses.
But don’t let these scare you, many of these costs can be offset by the size of your fleet, and the combined miles travelled. Also consider what you actually charge a customer. If the rate of $1.38 cents per mile is accurate, then anything over that is potential profit. Keep in mind these are estimates, your actual expenses will vary. This was only done as an example so that you can see the importance of calculating prices based on the per mile rate and not from the total price.
Small but Important Detail – Insurance Coverage
Insurance is one of the expenses that everyone hates but is a must have. I am not just referring to truck insurance or health insurance. I am referring to the coverage and protection of the freight being hauled. In the event of an accident, sometimes the insurance will cover it, but often it only covers vehicles and personal injury. It might not cover the freight being carried. So guess who pay? You do!
There are different insurance plans and rates depending on a variety of things. It ranges from the merchandise being hauled to the actual coverable material. Also your deductible will vary with your plan, the higher your deductible, the lower your monthly premium. Just be sure you can cover that cost in the event of an issue. Either way you must have insurance.
With the added regulations imposed on the trucking industry there have been many limits imposed on the drivers. One of the most obvious was in July 2013, when the Federal Motor Carrier Safety Administration (FMCSA), ‘federal hours-of-service’ went into place. It effectively eliminated the 34 hour ‘restart’. As you know, drivers have a 70 hour per week cap regarding how much time they can be on the road. Before that they could reset their cap to zero, if they had 34 consecutive hours off. But that has changed and they are no longer allowed.
According to The American Transportation Research Institute (ATRI), over 80% of carriers have seen a loss in productivity. Many have said they now need more drivers to haul a similar amount of freight as before the 2013 regulation. As a result, according to The American Trucking Association (ATA) there might actually be a shortage of available truck drivers for you to hire. And as the cost of licensing and training goes up, finding qualified drivers will be a problem.
I am sure there have been many issues encountered in your operations. Do you have any cost saving ideas to share? What about something you had to learn the hard way?