cost per mile

I have seen people with mid 4's upto mid 7's on MPG. So many factors. Did you buy a similar truck to what you have been driving? If you plan to haul similar freight then that should give you some idea.

There is no reason that you should not make a good profit your first year if you focus on keeping your rate up compared to keeping your miles up. Yes,it is a balance but don't fall into the trap of the company and those leased onto someone. They have to think more miles = more money. You should be able to cover your weekly overhead in the second day of the week.

Budget everything worst case and set your rates on that.

 

Just as an exercise I went through and tried to calculate CPM on a fictitious truck. I checked around an found a decent deal on a 2008 Pete 387 and a Strick 101X53 trailer. Then I calculated payments on a 3 year note at the max of 23%, and insurance at a VERY high 7,000 a year, then I used the above list provided by 112Racing and padded those numbers a bit. I came up with a CPM of $1.25. When I decide to go solo I'll probably go through this kind of exercise again, but given the numbers people are using here, if you figure on a CPM of $1.25 and plan accordingly, you'll be out of the gate with a pretty good hedge. Just keep track of stuff and you'll start refining that down until you've got something that is more in line with reality. Still, by starting out with conservative numbers, and considering the availability of work out there, you should do fine almost from the start.

 

I was once told by a old timer O/O that you take the cost of fuel and divide it by your trucks fuel mileage them multiply it by 4 and that would be your base rate per mile ttt. The key phrase here is "Base Rate".

 

Some things worth mentioning. I think it is foolish to calculate your cost per mile without including driver's wages and benefits. Whether you drive or someone else drives, these costs are real and always there. In my opinion you also need to include income tax and social security. Depending on the situation this can be $5,000 - $12,000 a year. That is about 0.05 - 0.08 CPM.

Someone mentions a high insurance calculation of $7,000 per year with 0 - 1 year experience. This is a little low on that estimate if that is tractor, trailer, cargo and liability! An experienced driver in an established operation is looking at $4,500 - $6,000 annually. I have no recent experience and my quote is $8,400 with nothing on my MVR in the past five years. I have seen new driver quotes going $9,000 - $12,000 per year.

If you are talking about a lease to a company you are already in trouble at 1.08 CPM for costs as that will leave you with 0.22 - 0.32 CPM to pay wages, taxes and return on investment.

 

That is a nice thought but it won't fly too often in today's market. At $4.00 per gallon and 6.5 MPG the rate would be $2.46 per mile. Calculated as 4 / 6.5 = 0.615 * 4 = 2.4615.

This is a great idea an you could figure one-fourth (0.615 CPM) for fuel, wages, truck expenses and profit/return on investment. If this were possible I would be buying 2 - 4 trucks a year until I died. You'll do well to average above 3X or 1.85 CPM in many operations.

 

Yes John your correct, one would be hard press to even make $1.20 a mile pulling a van chasing volume freight. Specializing or offering a special service would be the best direction to follow. Unfortunately for every idea out there, there is probably 500 guys with the same idea at any one given time.

 

And that's is no truck or trailer payment as they are paid off. But I also am very big on maintaince. My truck is 11 years old., I keep premium tires on and We average 1500 miles per week. We normally average $1.80 mile. Some weeks $2.50 mile average doing some oversize.

 

One other point that I feel is important on cost of operation. I believe even if your equipment is paid off, you should be calculating a cost per mile equal to what you would be making in payments if your equipment were financed. This is a replacement fund and is above and beyond repairs, maintenance and tires.

Many things would right themselves in our industry if everyone would include all the costs I have suggested in this thread. First, we would have higher rates. Second we would have more that succeed than fail. Third we would have better compensated owner operators. Finally we would have better equipment on the road and money to replace our old equipment when needed.

As long as someone can buy a worn out truck, find a rusty trailer in someone's field and omit wages, benefits, taxes and replacement cost from their cost of operation we will have low rates supported by operators that think they are making money. They will haul cheap freight, pocket what is left after their incorrect cost of operation and think they are making money until they fail.

Let's suppose that your paid off equipment gets totaled. Can you replace it for what the insurance will pay? Do you have comp and collision on it? This is just one scenario where the replacement fund comes into play. I respectfully submit, if your cost of operation only supports operation in the present situation and not all conceivable situations you don't have your true cost of operation calculated.

If your business model does not have a cost of operation that pays all expenses, allows for equipment replacement and generates a return on investment and profit............you aren't really running a business, you are just driving a truck. There isn't a businessman in another industry that would operate like this. This mentality is why it is so hard to get financing on OTR equipment. A banker can see fail written all over this idea. I don't mean to be rude or condescending but it is obvious that most of us are better drivers than businessmen. Why do we buy ourselves a job when we could actually run a business with a little more knowledge and effort?

I can tell you if I had money to invest I sure wouldn't loan it to a businessman that did not include all the items I have spoke about in his cost of operation and his financial statements. It doesn't matter if you plan to keep this truck until you die, your cost of operation should include replacement. In addition, I wouldn't loan to someone that did not expect a profit and return on investment above his industry wages. There is absolutely no reason to be in business unless you can generate the revenue that businesses generally generate. We really must change our mentality.

 

All of this is pretty informative, but doesn't get back to the basic question. If you have regular work, as in 6 days, 52 weeks per year that is local so you go home every night (50 miles with an end dump that is dumped immediately with no idling), and get 130-140k miles/year, what is a good cpm? I can see how costs would drop further if the job only requires leisuresely 55-65mph driving for better fuel economy.

Taking all of this into account, what is the cpm that would make sense to you?

 

You are the only one that can figure out your own CPM. I can tell you that a local dump trailer operation will be way higher than a OTR rig running the same miles. Your maintenance will be sky high compared to a road truck. You will go through brakes and tires at 3 to 4 times the rate of an OTR, plus a lot more wear and tear on suspension parts. Your fuel milage will also be lower just because of the stop and go all the time, regardless of idle time. All this needs to be figured out by you.