operating costs

[tankyanker]

this is kind of stupid, but how do you O/O's figure your cost per mile? i was reading a thread about cheap freight and a driver described a hypothetical load on which you would lose money: "well your revenue was $1.13 per mile and your cost was $1.70 per mile, so your profit was= negative $ .57 per mile." ok.

but at any given time, how do you know that your operating cost is $1.70 (or X amount) per mile? what are some of the major things that you factor in to you cost per mile besides the cost of fuel? how specific, or inclusive do you get? does it ever vary? or is it more like ... well, in general and with my setup, if i take any load generating more than say $1.90 a mile i should be in the green?

[DD60]

this is kind of stupid, but how do you O/O's figure your cost per mile? i was reading a thread about cheap freight and a driver described a hypothetical load on which you would lose money: "well your revenue was $1.13 per mile and your cost was $1.70 per mile, so your profit was= negative $ .57 per mile." ok.

but at any given time, how do you know that your operating cost is $1.70 (or X amount) per mile? what are some of the major things that you factor in to you cost per mile besides the cost of fuel? how specific, or inclusive do you get? does it ever vary? or is it more like ... well, in general and with my setup, if i take any load generating more than say $1.90 a mile i should be in the green?

1.70 a mile to operate? :shock: That is B.S. Just figure in how much you spend on fuel,maintenance,insurance,wireless laptop,truck and trailer payments and you will have your cost-per-mile. It is usually an average of 1.25 a mile. Here is the breakdown and this can vary greatly from truck to truck but should give you an idea.


.75cpm fuel(reefer included)
.15cpm maintenance
.10cpm insurance
.05cpm permits,plates,fuel tax,internet
.10cpm trailer payment
.10-12cpm truck payment



At 1.70 a mile you will not go in the red but your overall yearly average should be higher.

[2]

this is kind of stupid, but how do you O/O's figure your cost per mile? i was reading a thread about cheap freight and a driver described a hypothetical load on which you would lose money: "well your revenue was $1.13 per mile and your cost was $1.70 per mile, so your profit was= negative $ .57 per mile." ok.

but at any given time, how do you know that your operating cost is $1.70 (or X amount) per mile? what are some of the major things that you factor in to you cost per mile besides the cost of fuel? how specific, or inclusive do you get? does it ever vary? or is it more like ... well, in general and with my setup, if i take any load generating more than say $1.90 a mile i should be in the green?

Looks like you're doing your homework.

You will get many a varied opinion, on what it costs to run a truck. There will be a great disparity in how people treat river wages, depreciation & replacement, down time, ect.

Some say that the minimum rate should equal the cost for a gallon of fuel. This would solve many a problem, industry wide.

Make no mistake, it is a sick industry - since 1980, and gets worse by the year. The cash flow will keep you alive, but it is a slow death, when you work cheap.,

Almost nobody figures in the need for a decent wage for a driver to take care of the rig and the family. Wages are too low now, but there seems to be a steady influx of new drivers willing to work cheap.

Another cost that nobody ever figures is the cost related to the economic cycle. Right now, we are headed down. The fear is just now hitting wall street.

A rate that matches the cost of fuel would allow you to use the down time of an economic slump, to do extra mnaintenance and repairs, tighten up loose things, take care of the many things ignored on the home front, ect.

The number of drivers that fail, is high and growing.
Like the old saying: You want to make a small fortune in trucking, start with a large one.

The way liberals are killing our economy, though, means that trucking is just another stop on the merry go round. For some, it is a desperation move.

When all is said and done, you are on your own.
There ain't no safety net.

[GMAN]

Your expenses will vary according to the type of operation you run. If you run your own authority your costs will be somewhat higher than when you operate under another carrier's authority. For instance, running under your own authority you will need to pay for your own cargo and liability insurance. That is a cost you won't have when you lease to a carrier. Rates can vary widely. It is different with each carrier. When you lease to a carrier you will need to have bobtail or unladen liability insurance, depending on which carrier you lease. That can run as little as about $35/month. Liability and cargo can run from about $400-1,000 or more per month, depending on how long you have driven.

Your truck and trailer payments should be the same regardless of whether you lease or operate under your authority. Most expenses will be pretty much fixed. Your main variable is your fuel. I have seen fuel costs rise more than $0.20 or more in a few days.

[allan5oh]

I find it cute that the older guys have all these nice little algorithms for what they should haul for. Examples:

- The rate should be the price of fuel
- Fuel should be no more then 25% of your linehaul

Truth is, it's an open market. The best way to survive in one is to reduce your costs as much as possible.

If a person cannot survive in todays climate, they're doing something seriously wrong.

[trinitron]

Expenses
Leased to a carrier- carriers pays plates and fuel tax
Based on 10,000 miles month

.58 fuel (December)
.18 depreciation (paid cash stright line over 36 months)
.12 maintainence
.025 tires
.025 collision and bobtail
.025 non reimbursed tolls
.040 health insurance
.400 wages
.020 SET
.040 meals
.020 misc

Total - 1.475 cost with wages

Current lease is 1.18 + fuel surcharge (Dec .38) = 1.56 per mile

.085 profit (after salary) Not much !!!

[GMAN]

I find it cute that the older guys have all these nice little algorithms for what they should haul for. Examples:

- The rate should be the price of fuel
- Fuel should be no more then 25% of your linehaul

Truth is, it's an open market. The best way to survive in one is to reduce your costs as much as possible.

If a person cannot survive in todays climate, they're doing something seriously wrong.

I think it would be great if the rates would match the cost of fuel. It would solve a number of problems for truckers. We would no longer need to worry about whether we were getting 100% of the fsc, or a surcharge at all. We would no longer need to worry about being in a bad area and getting a decent rate coming out. That would be an ideal situation. Unfortunately, this is not an ideal world and business changes on a daily basis. Those who keep expenses low and haul for a rate that will give them a good profit can survive. Those who don't or can't will fail. That is business. I think one thing new people have difficulty with is understanding that every owner has different expenses and different costs. A big chunk of the difference is in the cost of the equipment. One may pay cash for his truck, another may have a $500 payment and still another may have a new truck and payment of $2,500. Each will have different break even points. Fuel mileage is another area where costs can differ, depending on the equipment, product hauled and driving habits. You can't use a cookie cutter approach when looking at breakeven costs.

[anthony1995]

GMAN talked about the breakeven point being different for the O/O who paid cash for his truck vs. a $500 payment vs. the payment on a new truck. The other day, I saw what appeared to be an old Wal-Mart cabover pulling a Landstar trailer. I thought to myself, I bet that guy only paid $10K or so for that truck. If he paid cash for it, it's my guess that he should be making a pretty good revenue after taxes and expenses as long as he doesn't have constant mechanical failures. With that being the case, why is it you see so many owner operators driving decked out Peterbilts with chrome and chicken lights. Is it the fact that they are more successful and can therefore afford this new/newer truck or are they pissing their money away?

Just curious what you guys think.

[allan5oh]

Could be many things.

That decked out pete might be 10 years old, and paid off for the last 5. The guy might drive 60 mph and still get 7 mpg with it.

He could be hauling specialized, getting 5.00+ per mile, and could care less about 10 CPM.

Some guys also only do 40,000 miles a year or so.

I've learned in this industry never judge a book by the cover. If you talk to the guy, you can generally find out pretty quick if he's doing good or not. If he constantly whines about "the good ole days" and how there's no money left, the rookies and mexicans are ruining it, odds are he's not a good businessman and never was.

[Bigmon]

Some people took out equity loans on their houses and bought trucks too. So the guy might be paying only a few hundred a month over 10-20 years for that new Pete.

[GMAN]

Allan is right about not judging a book by it's cover. I have known some who drive Pete's or KW's and do well. Others spend all their money on chrome and don't have enough left over to pay their bills. There is nothing wrong with owning a Peterbilt, if you can afford it. I don't think it is very practical starting out. You can buy a good aerodynamic truck comparably equipped for about 1/2 the cost of a Peterbilt. Not everyone who enters this business is in it for the money. Some just like to look cool. Who cares whether you can make your payments or not if you look cool doing it. :wink: 8)

[DD60]

Who cares whether you can make your payments or not if you look cool doing it.