Cost per mile

on a good month. $1.10

on a bad month. $2.10

this month is a bad month.

cost is cheaper in the summer. better fuel economy.

breakdowns will vary.

 

Based on a long nose runnin mountains you will maybe avg 5.5mpg
need to escrow 0.20 cpm for repairs, tires, etc
add in fixed costs - ins, authority fees, trk/trl pmts/depreciation, office stuff

now comes the tricky part - the more miles you run will allow the fixed costs to 'spread out' and vary your operating cpm
SO:
say u run 2000 mi/week, your cost / mi will be $1.40 ish
if u run 2700 mi/wk, your cpm will be $1.30 ish
This is the cost to roll the truck down the road, keep it maintained, and etc

Now, you have to add driver cost = drivers pay + payroll tx and such
will depend on how you set things up, i.e., 1099 or employee, but either way the costs will be somewhat similar, cause even if u go 1099, chances will give the driver a larger piece of the pie since he will be paying more out of his pocket
SO: prob need to allow 0.55 CPM ish for driver and associated payroll items

this gives a grand total of $1.85 to $1.95 to operate, more or less depending on MPG, ins rating, luck, and etc

 

I don't think it's low. There are ALOT of costs people don't think about and if they were added in, cpm would be higher. Payroll taxes, income taxes, health insurance, vacation pay, holiday pay, cost of compliance, invoicing, dispatching, meals, parking.....

Plus, that $1.35 I use is for 3 trucks and 8 trailers so utilization is low, driving cpm up. Also, IMO the minute you step out of the truck and put a driver in, your cpm goes up ~10%.....and that's for the good drivers.

 

I C what you mean for sure. So many factors for sure.

 

I get what your saying. I already have Fixed&Varible figured all those listed except Driver. I'll be the CEO/Driver-Employee,INC. And with Varible at worst scenario figures per year then add fixed I'm at 1.10PM. Worst Scenario before I pay myself. at 5MPG Average per year. So 1.10PM not bad then?

 

Just for the record, I have never driven or owned my own truck. However, I have helped my dad with some of his decision making as an owner operator over the past few decades. And, I have been a business owner in other industries for a long time.

That being said, trucking seems to very closely parallel construction in a lot of ways. Many times, I have seen a brick mason or drywall guy get a little ahead on his bank account and decide to print up some business cards. In TN, as long as the individual jobs you bid are less than $25K, no contractor's license is required, as long as its a trade, like electrical, which require permits to be pulled. So, the guy bids a job with his friend who is a builder, and is of course much cheaper. The buddy builder helps him acquire materials, doesn't ask for an insurance certificate, and etc. The guy gets out there with a few buddys working for cash and gets the job done. Now with even more cash in his pocket, he looks into insurance, tools, and etc. It doesn't take long before his expenses have caused him to raise his prices to that of his competitors, if he makes it that long. The make it or break it becomes how quickly he can really get his ducks in a row and sell jobs at a profit, and sometimes how long his builder buddies will help him along. I have seen some of these guys who have held on for quite a while, and still don't know what there costs are, or how they should price their work to be successful.

In trucking, there is a similar low cost of entry, but there seems to be a huge gap in income. I see a few reasons for this. In my dad's case, he was a paper log company driver in the 60's - 80's. Drive a ton of miles to make a living. As on O/O, if you drive enough miles, your overhead will 'average down' and you will make some money or at least stay in business, as long as you have the loads to haul. This seems to be the 'hook' for the lease O/O. The other thing I see is O/O's not really using an escrow to finance maintenance and repairs. Think of it like fuel. Everyone knows that when the tank gets low, it has to be refilled. Well, tires, oil, pistons, egr's, wiring harnesses, and etc. are the same way. Every mile you drive burns fuel, and uses up everything on the truck as well. So, you escrow funds as you go to cover the cost of replacing stuff when it wears out or breaks. If you don't budget these real costs into your bids, you will wind up in the hole when something breaks.

Sorry for being a bit long winded, but I hate to see so many guys venture into something and getting off to a bad start. I don't want to come across the wrong way, but there is money in the transportation industry. But, there are a lot of truckers running hard week in and week out that are being taken advantage of, primarily because they lack the necessary business and financial education. You have guys running for companies making less than minimum wage, lease operators that are slaves to the payments, and guys with their own authority who leave way too much on the table. Not all but most, in my opinion.

 

I do have all that figured in ALL fixed (fixed cost= cost me daily no matter if my truck sits or moves) and varible cost total 1.10 CPM to operate. I am CEO-Driver-Employee so no vacation, driver, dispatching etc........No plans on expanding unless a miracle happens i can't pass up.

 

$1.10cpm is fine if u run 3200 mi per week, EVERY week, and don't have a payment and don't include and driver's pay or payroll taxes

 

Fixed costs are things that you pay whether the truck is running or not. Insurance, 2290 HUT, Plate, Trk/trlr pmts, communication fees(cell, internet), obamacare, etc. Even if u sit at home a month, these bills will have to be paid. In business, and owning a truck is a business, a lot of things have a way of filtering into your fixed overhead. Let's see, there's always the cell phone upgrade, hometime parking, insurance increases, bookkeeping/accounting service, legal fees, and my personal favorite is the bi annual call from the Fraternal Order of Police soliciting a donation.

Now, Variable Costs, at 5 mpg @$3.69/gal, that's 0.738CPM, plus 0.20CPM maintenance escrow, and I add 0.08CPM for misc expenses. Take a look at one of the tax threads for lists of things that are consumed on the road and are tax deductible. That puts u at 1.02CPM some would add per diem to this.

So, you have 0.08CPM left from your 1.10 to cover all of the fixed overhead. let's say all of your fixed overhead adds up to $1100/mo. 1100/.08 = 13750 mi/month = 3175mi/week

Now remember, if u take a week off, get sick, go on vacation, blow an engine, or whatever, you will need to run extra, every week, to make it up the lost miles.

I'm not saying that $1.10 is not possible. But, I would be very careful putting together a budget with no 'fluff' to cover things that do not go your way, especially starting out.
That is why u see guys on here saying $1.30 to operate, and they won't start the truck for less than $2 or whatever.

If you take my previous post, and say all in including the driver to operate is $1.90/mi and most healthy businesses try to achieve a 15% profit margin, you would get: 1.90/.85 = $2.24/mi running around 2200 - 2300 mi/week. I know this seems a bit high, and may not be achievable everywhere, but if you could get close, you would make a good living without running yourself to death.