$7800 ca-mi-ca

Danny, operating costs should include every single penny it takes to make your business do what it does. Including but not limited to, fuel, truck/trailer payment, insurance, maintenance, tires, taxes, load board fees, washes/washouts, tolls, license plates, log books, note pads,pens, computers, phone, internet, etc. If you do not have a truck/trailer payment then you should have a number in your operating cost for rebuild or replacement. Everything in my business has a cost per mile, I figure my cost per mile on an annual average of miles. Everything that I listed and some others like cargo securement is figured into my cost per mile.

 

Ok, here is an example for you. Truck #1 runs 3500 miles in a one week period. This truck averages $1.50 for all those miles, empty and loaded. So that comes out to a gross of $5250. Truck averages 6 miles per gallon, $3.95 per gallon is $2302.85. That leaves $2947.15 after fuel. Truck #2 only runs 2500 miles in the same period of time. But averages just .50cpm per mile more at $2.00 per mile for all miles loaded and empty. This comes out to a gross of $5000, $250 less than truck #1. Truck #2 also averages six miles per gallon, at $3.95 per gallon is $1643.20. That leaves $3356.80 after fuel. So the truck that ran 1000 less miles made more money and will pay less in taxes. So tell me, who wouldn't want to work less and make more. It has been said on this site many times before I got here, "just because the wheels are turnin doesn't mean your earnin."

 

I wanted to Thank this post again!!!!

So many people out here don't understand that! They think if they are sitting for a few hours they are losing money.

 

I agree with you for sure. My way of figuring would have been to just take the gross - all operating expenses (not just fuel). I was figuring $1/mile expenses, but now I am thinking it should be closer to $1.15, maybe even $1.20. The math on that would look like this.

truck 1 - $5250 - (3500 * $1.20)$4200 = $1050
truck 2 - $5000 - (2500 * $1.20)$3000 = $2000

almost double actual net !!

 

Ditto. Add at least $1.00 per mile to that rate minimum & I would take it if my regular customers are not shipping anything during that time frame.

 

You are more than welcome. I ran around this country for twelve years thinking miles, miles, miles, but also knowing that the rate per mile was important. It wasn't until a little over a year ago that I learned the rate is far more important than how many miles I thought I HAD to run. I had to put it out on paper to figure it out myself, and now it just seems like a no-brainer.

 

Oscar,i'm not questioning your way off doing things but you should keep the cashflow and gross revenue in mind.
As you stated above,you are now 12y an O/O?
A bit like me(i started in 1999).
So i'm guessing you have build up some reserves and you are no longer stuck with high truck/trailer payments?

I can see a scenario where someone who hasn't been a O/O for a long time has to been the wheels turning to keep the money coming in.

 

Read the example that I posted above again, only this time read it carefully. It does not discriminate against anyone who has been an owner op for two days or twenty years. The concept is the same in either situation, regardless of truck/trailer payments or cash reserves. The key to being succesfull is not how many trucks you can wear out, but running for the most per mile that you can get. I guarantee you that running less miles, and grossing less than everyone else that has the mentality of high miles and bigger gross you WILL NET MORE and pay less in taxes.

 

One more thing to add to that, I can easily gross $250,000 and be lucky to net what the average company driver does. Or I can gross $170,000 and double the net of the average company driver. For me the choice is pretty simple.