Owning and operating a commercial trucking business involves various expenses that can significantly impact your profitability. To accurately manage your finances and make informed business decisions, it’s essential to understand the actual cost of owning and operating a commercial truck or fleet of trucks. To make that happen, you need to calculate your cost per mile accurately. According to a recent operational cost study done by the ATRI in 2022 the cost of operating a truck was at an all-time high at $2.251 per mile*. The study also showed a $0.07 per mile difference between small and large fleets.
When calculating your cost per mile, you need to consider several things, from fixed costs to variable costs, driver costs, depreciation, and additional costs.
Fixed Costs
- One important step is to identify the fixed costs associated with your truck or fleet of trucks. These include expenses that remain constant regardless of the distance traveled, such as truck payments, insurance, licensing, and permits.
- Break down each fixed expense and calculate the monthly or annual cost.
- Divide the total fixed costs by the estimated miles your truck will cover in that timeframe to determine the fixed cost per mile.
Variable Costs
- Variable costs depend on the distance traveled, including fuel, tolls, maintenance, repairs, and tires.
- Keep track of fuel costs for a specific period and calculate the average cost per mile. As fuel prices change, you may need to adjust and monitor this amount.
- Maintenance and repair expenses can vary widely, so monitor these costs over time to determine the average.
Driver Costs and Other Overhead
- If you have drivers, factor in their wages, benefits, and payroll taxes.
- Evaluate the per-diem expenses associated with their accommodation and meals while on the road.
- Accounting for other overhead such as wages, benefits and payroll taxes for back-office staff should also be considered.
Depreciation
- Factor in the depreciation of your truck, considering its initial cost, expected lifespan, and estimated salvage value.
- Divide the calculated depreciation expense by the estimated miles the truck will be driven during its lifespan to determine the depreciation cost per mile.
- Considering your truck’s and other equipment’s depreciation is often overlooked but is a key consideration.
Additional Expenses
- Take into account any additional expenses specific to your operations.
- If you are working with a factoring company or other finance company, such as a merchant cash advance, you would also add that here.
Once you have gathered all the necessary information and estimated the expenses, you can determine the overall cost per mile for your truck or fleet of trucks. This amount will provide you with a complete understanding of your actual operating costs and help you make informed decisions regarding load selection and business growth.
Calculating the true cost of owning and operating a commercial truck or fleet is crucial for carriers and trucking business owners to maintain financial stability and profitability. By accurately assessing fixed costs, variable costs, driver expenses, depreciation, and additional expenses, you can determine your true cost per mile. With this information, you can make more informed decisions about which loads are good loads to haul and maximize your bottom line.
*The American Transportation Research Institute Analysis of the Operational Costs of Trucking: 2023 Update from June 2023.
