To run your fleet efficiently, you must know your trucking cost per mile. Knowing the cost per mile helps you determine your break-even point, and know what rates to charge a customer. To do this, stay on top of your monthly expenses, then calculate your average cost per mile at the end of the year.
How to Calculate Your Trucking Cost per Mile
Use these steps to calculate monthly trucking costs per mile:
- Gather receipts for the month and divide them into three piles: fixed expenses, variable expenses, and driver salary.
- Total each category, then add each sum together to get total expenses for the month.
- Divide this final total by the number of miles driven during that month.
- If you have more than one truck, consider calculating the cost per mile for each truck first. Add each cost per mile amount together, then divide by the total number of trucks to get average cost per mile for trucking.
- You can also calculate an annual average cost per mile. Add the per mile cost for each of the last 12 months together, then divide by 12.
Fixed costs are considered expenses you incur whether you are operating or not. For example, you’ll pay the same insurance premium every month, even if it contains non-working holidays or your driver spends a day or so waiting for a load. Insurance and truck payments make up the bulk of fixed expenses. Examples of other fixed transport costs include accounting fees, licenses and permits, health insurance, and your office lease.
Add in annually paid amounts in the monthly truck cost per mile calculations. Just divide the yearly fee by 12 and use that number as your cost basis for that month.
Variable expenses include day-to-day costs that keep your trucks operating. They may be low one month and high the next. Typically, the more you run your trucks, the more these expenses are. Variable costs include but are not limited to:
- Truck Maintenance
- Meals and Lodging
- Cell phone
It is vital that each driver tracks their variable expenses. Whether you have the driver turn in receipts at the end of a run, or send a quick photo via smartphone, make sure you are recording these expenses as they come in. Entering a single batch at the end of the month can be time consuming and may result in misplaced receipts.
Salaries are often the most significant single expense a fleet owner encounters. Wages are usually paid on a per mile or a salaried basis. Both methods have advantages and disadvantages. Paying a flat per-mile rate makes it easy to calculate the cost of trucking per mile. If you pay 40 cents per mile, then your cost is merely 40 cents per mile.
Salaried calculations are a little more involved, but still not difficult. Assume you make $60,000 per year, or $5,000 each month. If you drive 13,000 miles this month, you may gross about 38.5 cents per mile.
Reducing Cost per Mile for Trucking
You, however, can trim some operating costs by reducing meal allowances, idle time, and making sure deadheading is minimal. However, one good way to improve cost per mile figures is to take on more work. The more miles you are dividing by, the lower your final cost per mile will be.
Knowing your average cost of trucking per mile can help you negotiate better pay rates on jobs or place competitive bids. Proper bookkeeping is essential to running a profitable business.