Gentlemen, please help me solve this

When I was working at Landstar pulling dry van they said don’t go to northeast or Florida or Laredo TX and Denver Colorado and the northwest. Unless you get really good rate to cover deadheading out. The problem was the only good paying loads went to all them places.

 

You are going through what every other owner operator and company is going through. We all have to learn. The first thing you should learn is how much does it cost to operate your equipment by the mile. What is your fuel cost? Maintenance cost? Fixed cost like insurance, 401k etc.?

Knowing your cost to operate can provide you with the knowledge of what loads to take and what loads to pass on. If you know you're getting a good rate to a dead area in the country, then you take a cheaper rate to get your truck back to an area with good rates, does that cheaper rate load affect your bottom line to the point where you will lose money or is that rate good enough to cover the bills and break even while getting back into a profitable location?

Informed decisions make a huge difference in your business. Use the available tools to your benefit to learn the areas of the country where you will make money. Learn how to sell yourself to potential new customers. If you are going to a dead area look at what kind of manufacturing is in the area that fits your kind of trucking and make some phone calls to see if they have some freight available. If you don't find anything see what your other options are withing your deadhead zone. My deadhead zone is the amount of miles and time that I am willing to go to find a good load or a load decent enough to break even on my way to a better load.

 

FR8Connect An online direct carrier and direct shipper load matching load board.

Call Paul.
He’s been doing this for years, lot of knowledge and had direct customers, i don’t do Van/reefer work and he does not do bulk so it doesn’t help me anymore to call him.


Disclaimer; I get nothing from this.

 

He’ll probably call you, used to be would.
I haven’t talked with him in 3-4 years

 

The easiest thing to calculate is your fuel cost per mile. How many miles per gallon does your truck get? Don't use what shows in the trip computer or the instrument cluster. Pen and paper here. How much fuel does the truck hold when full? Say it's 250 gallons. Next, how many miles can you drive on 250 gallons before you are empty and need fuel. Let's says it's a 6.0mpg truck.
250 gallons x 6.0mpg is 1500 miles. 250 gallons at your current fuel price of let's say $3.75 per gallon = $937.50

At these prices and fuel mileage it cost you $937.50 to run 1500 miles.

$937.50 ÷ 1500 = $.625 cents per mile

The more expensive the fuel the more to operate per mile. The better the fuel mileage the cheaper it cost to operate.

Now, how much are your fixed cost? Insurance, retirement, PrePass, any monthly fees that stay the same, etc.?

Next, monthly miles average so far for the year. Let's call is 10,000 miles per month average. FIXED COST ÷ MONTHLY MILES = FIXED COST PER MILE. Let's say your fixed cost are
$2,500 ÷ 10,000 = $0.25 cents per mile

Next, maintenance. New tractors can cost more to maintain than older tractors. On my older, non-emissions equipment I could operate them at $0.07-0.15 cents per mile depending on what I had to spend to maintain them. Newer, modern emissions equipped trucks can cost as much as $0.25 per mile or more if they become shop queens. Look at your monthly maintenance receipts for the year, total up each month and divide it by your monthly miles for each corresponding month. Engine replacement will add quite a bit to your monthly maintenance cost so it will take a while for the monthly average to come down after you recuperate from that large dollar expense. Let's say you spend $.20 per mile and average 10,000 miles per month which equals $2,000 per month towards maintenance. This needs to include anything you spend on the truck or trailer. Lights, wipers, tires, engine, brakes, air line fittings, etc. Tally up each month and divide it by that months miles.

Then, are you a sole proprietor or an LLC taxed as an S-Corp? Do you pay yourself a weekly or monthly wage? If so, how much? Is it the same every month or do you vary the dollar amount based on net revenue?

Let's say you pay yourself $1,000 per week x 52 weeks = $52,000 and you average 10,000 miles per month which will be 120,000 miles for the year so $52,000 ÷ 120,000 = $0.43 cents per mile.

Add it all up using my numbers and math...

Fuel - 120,000 miles x $0.625 per mile
$75,000.00 for fuel

Fixed Cost -120,000 miles x $0.25 cpm
$30,000.00 in fixed cost

Maintenance-120,000 miles x $0.20 cpm
$24,000.00 in maintenance cost

Driver Wages-120,000 miles x $0.43cpm
$52,000.00 in driver wages

Using the numbers I provided as an average and guesstimated the total cost to operate is...

$181,000.00 for 120,000 miles per year.

Now, knowing what your fuel cost per mile can aid you in seeing that a problem may exist when your fuel mileage goes down and the dollar amount starts to rise. If you have a 6.0mpg truck but over the last few months it has gone down to 4.7mpg or 5.2mpg you can start to look at WHY. Is it winter and you are burning a ton of winter blend fuel in the cold northern states? Are you idling a ton at night to stay warm or cold using the AC without an APU or bunk heater? Have all of your loads been 45,000lbs. in the box running I-70 through the mountains? Or has nothing really changed and you've been running the same lanes and same weights and getting fuel at your favorite cheap stops? If not much has changed in your operation then you know something else is causing the loss of fuel economy and it's time to figure out why before it breaks the bank.

Hope this helps. Not everyone can catch on. Not everyone is a savvy businessman but with some basic math and some input from you and you can figure out what it cost to operate a truck, a flower shop, automotive repair shop or a bicycle shop. Put in the work now so you can reap the rewards and before something goes south you can see the numbers to help prevent financial ruin and bankruptcy because an engine lets go twice in one year. Use the math and your own numbers.