What to charge myself per mile?

Discussion in 'Ask An Owner Operator' started by Accidental Trucker, Oct 17, 2019.

  1. Accidental Trucker

    Accidental Trucker Road Train Member

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    Here's the situation. I own to companies, one produces the goods, one is the trucking company that delivers. Trucking company also grabs some outside loads occasionally, as capacity permits.

    All employees (production and trucking) get paid a profit share, so I need to charge a fair rate for trucking to production.

    All trips are round trip, 53' dry van, 86K outbound, mostly empty inbound or occasionally 68K. 1600 to 1800 miles round trip, six trips average per month. All PNW. Production pays all miles, inbound and outbound.

    What's the fair number per mile?
     
  2. Ridgeline

    Ridgeline Road Train Member

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    You have to talk to your accountant to determine the value of the transaction between the two companies.

    He can look at the costs and determine a rate or charge to the one from the other.
     
  3. F4T6UY

    F4T6UY Light Load Member

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    I’m not qualified to answer this question. However, I stayed at a Holiday Inn 2 1/2 weeks ago and still have some residual smarts and have been reading the forums for a couple years.

    I would say anywhere from $1.30 a mile to $5 a mile. However you want the books to work out.
     
  4. starmac

    starmac Road Train Member

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    I would try and see what it would cost you to have a dedicated carrier do the haul, and come in close to that number. That should make most happy, but the old saying tat you can't please everybody will likely apply, no matter what you figure out.
     
  5. Accidental Trucker

    Accidental Trucker Road Train Member

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    That's what I've done so far. I had it contracted out for $1.75 per mile power only, and am charging $2.00 internally right now. So far, that's given the driver a profit share check, but a modest one.

    The only other gauge I can think of is a freight index average of some sort, but I'm not sure where to find one, and my google-## is not working.

    Because this effects people's pay, this needs to be fair. Talking to the accountant is inward looking and thus myopic by definition. I am looking for a way to benchmark this to the real world.
     
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  6. starmac

    starmac Road Train Member

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    We used to bail and sell alfalfa to dairies, It was 500 miles or a little more to most of our customers. We charged ourselves 300 a loaded mile for our own trucks. We could have it hauled much cheaper and finally just ran the one truck and shipped the rest. I only ran mine because someone had to be there to deal with customers, or we would have just shipped it all on mega backhaul trucks.

    For your deal, having a truck dedicated to just your freight is worth something above just a standard freight rate I would think.
    I know when I was hauling hot oil, I was dedicated to hauling their oil, meaning I could not be off making other runs when they needed a truck, they paid me very well to be available, but it was all in the rates.
     
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  7. Intothesunset

    Intothesunset Road Train Member

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    Run the trucking side at a loss. Keep the production profitable. I have heard this several times.
     
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  8. rank

    rank Road Train Member

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    Should be charging yourself what you would have to pay to hire it out.

    You didn’t ask but I’ll say it anyway. The trucking should be a corporation by itself with very few assets so you don’t lose the manufacturing business in the event of a fatal highway accident
     
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  9. jammer910Z

    jammer910Z Road Train Member

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    As much as you can get that SkinFlint Shyster owner to shell out!
    Take him to the wood shed!!
     
  10. Accidental Trucker

    Accidental Trucker Road Train Member

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    Why? Like I said, all employees are on profit share and each should benefit from their contribution in a equitable manner

    Both businesses are LLC’s for that exact reason.

    The economist in me completely agrees that I should use the market rate.

    So..... what is the market rate (he says, scratching his head. .....)?
     
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