There are a lot of factors to consider when talking about trucking cost per mile. If you own a trucking business it is important to understand how to calculate the cost of each mile your trucks drive. When you figure out trucking cost per mile you then know best per-mile rate to charge your shippers. You do want to turn a profit don’t you?
For starters accuracy matters. You must account for all of your company’s expenses on a per month basis. This means everything. If you forget something in your calculations then you will not have an accurate picture of your company’s bottom line. Accounting software is a big help when recording and calculating trucking cost per mile. Your company’s expenditures can fall under three basic categories: fixed costs, variables costs, and salaries.
Fixed Costs are expenses that you pay no matter what, whether your trucks are moving freight or not. This includes things like insurance, permits, etc. To figure your per-mile cost for all of your fixed costs simply add the values of your fixed cost and divide them by the total number of miles your trucks drove that month. Remember to factor in things like truck payments, insurance, office lease, health insurance, permits etc. Save that value and let’s move on.
Variable Costs come from the money you spend using your trucks. This includes the cost of fuel, maintenance, repairs and other expenses that might happen while moving freight. Variable costs are unique in that they can change dramatically from month to month. As your trucks become older variable costs might go up. Different seasons and weather also have a huge impact on these costs. Factor common costs like fuel, tires, maintenance, repairs, lodging or meals, taxes etc. Once again add these up and divide by the number of miles your company drove that month. You now have two thirds of your Trucking Cost per Mile!
Total up the amount you owe each employee for that month and again divide by the total miles for that month.
Now just add all three numbers: fixed cost per mile, variable cost per mile, and salaries/wages per mile. Viola! You just figured out that months Trucking Cost per Mile. Knowing your company’s cost per mile will help you in identify spending patterns, areas where you can cut back, and most of all determine an appropriate per-mile rate to charge shippers.
Not liking how high your cost per mile is?
Easy fix, just take on more shipments. Your variable costs will increase but your fixed costs will stay the same. Try using your most recent information and add some fictional miles that you can see your company doing and watch the cost per mile drop with the more miles you add.