Understanding Trucking Costs and Staying Profitable

Running a trucking business is more than just hauling loads. It's about knowing your costs and making sure you're making money. Many small trucking companies fail because they don't keep track of their expenses or know how much it costs them to drive a mile.

Let's break down the main costs in trucking, how to figure out your cost per mile, and what rates you should charge to stay in business.

What Are Trucking Costs?

Trucking costs fall into two main groups:

Fixed Costs: These are bills you pay every month, even if your truck isn't moving. Things like truck payments and insurance.

Variable Costs: These change based on how much you drive. Think fuel and maintenance.

Knowing both helps you set the right prices for your services.

Main Trucking Expenses

1. Truck Payments

Buying a truck can cost $1,500 to $3,500 per month.

Leasing might be $2,500 to $4,500 monthly.

Tip: Be careful with big payments. They can hurt if business slows down.

2. Insurance

Insurance costs depend on your truck, what you haul, and where you drive. You might pay $1,000 to $2,500 per month for all your insurance.

Tip: Ask different companies for prices and see if you can bundle policies to save money.

3. Fuel

Fuel is often the biggest expense. It can be 35% to 50% of all your costs.

Example:

If your truck gets 6.5 miles per gallon

Fuel costs $4.25 per gallon

And you drive 10,000 miles in a month

You'd spend about $6,538 on fuel that month

Tip: Use fuel cards and plan your routes to save on fuel.

4. Driver Pay

How much drivers earn depends on how they're paid:

Company drivers: 50 to 75 cents per mile

Owner-operators: $1.00 to $1.80 per mile after expenses

Some drivers get bonuses for being safe or saving fuel

Tip: Offer rewards for good performance to encourage efficiency.

5. Maintenance and Repairs

Regular maintenance: $500 to $1,500 per month

Big repairs: Plan for $12,000 to $20,000 per year

New tires: $400 to $1,000 each

Tip: Save 10 to 15 cents per mile for repairs.

How to Calculate Your Cost Per Mile

Use this simple math:

(Fixed Costs + Variable Costs) ÷ Total Miles Driven = Cost Per Mile

Example:

If your fixed costs are $4,800

Variable costs are $9,500

And you drove 10,000 miles

Your cost per mile would be $1.43

Setting Prices That Make Money

To make a 20% profit, multiply your cost per mile by 1.20.

In our example: $1.43 × 1.20 = $1.72 per mile (minimum price to make money)

Typical rates in the industry:

Spot market: $1.80 to $2.50 per mile

Contract jobs: $2.00 to $3.50 per mile

Flatbed and oversized loads: Usually higher

Tip: Always aim for loads that cover your costs and leave room for profit.

After verifying a freight broker's legitimacy, there are a few more crucial steps carriers should take:

The last thing carriers want to do is lose money in this highly competitive industry. To protect themselves, they should always check a broker's information on cargocredible.com before booking a load. This extra step can provide valuable insights into the broker's payment history, credit score, and overall reliability.

For owner-operators who are considering leasing onto another carrier, it's equally important to do your due diligence. Before embarking on a partnership with a company, owner-operators can verify and obtain more detailed information about potential carriers on cargocredible.com. This can help ensure you're making an informed decision and partnering with a reputable and financially stable carrier.

By taking these additional precautions, carriers and owner-operators can significantly reduce their risk of financial losses and make more informed business decisions in the trucking industry.

Staying Profitable

Keep track of all your costs.

Know your cost per mile so you don't lose money on jobs.

Ask for fair prices based on what others charge.

Use technology to track your expenses easily.

Find ways to save on fuel and keep your truck in good shape.

Remember, knowing your numbers is key to running a successful trucking business!

Do you currently track your cost per mile? What’s your biggest expense? Let’s discuss in the comments!