Do you know the cost-per-mile to operate your truck? If you don’t, then every decision you make about which loads to accept is suspect. In today’s market, not knowing what it costs to operate is nearly a guarantee of failure.
One of the largest areas where owners fail to understand their operational costs is fuel. Many drivers rely on information provided in the driver interface in the truck. Most of these can provide information such as miles traveled, average speed, average miles per gallon and other statistics. It’s great if you regularly review the numbers, but many drivers depend on the “current mpg” information shown on the display — without understanding that the number shown may not be close to the long-term average.
A fuel log is an important part of tracking not only expense, but also vehicle performance. Whether on paper or in a digital spreadsheet, you should make an entry in your fuel log every time fuel is purchased. The entry should include, at a minimum, the odometer reading, gallons purchased, miles traveled since the last fuel purchase, and the price paid for the fuel. A space for recording engine idle hours is helpful, especially if you idle the engine while sleeping.
Another bit of information that can be very helpful is a column for recording conditions. By recording this information, you’ll be able to identify trends for certain conditions that you can factor into your load decisions. For example, let’s say you’re taking a 1,000-mile load from Denver to Chicago. Denver’s elevation of 5,280 feet above sea level is the reason it’s called “the mile-high city.” Chicago’s elevation is a little less than 600 feet. Your trip will include uphill and downhill portions, and you may not even notice the nearly a mile of altitude you’ll descend — but it makes a difference. If the origin and destination were reversed, you’d be climbing that mile.
Wind is a huge factor in fuel mileage. Jet airliners often change altitude to take advantage of tailwinds, but that’s not an option for trucks. However, if you keep track of whether you were moving with or against the prevailing winds, you’ll soon see a difference in fuel mileage. That difference can be meaningful when you’re deciding whether to take a load.
Whether you use statistics provided by the truck’s system or calculate your own, you should know exactly how many mpg your truck averages, as well as the average fuel price you paid (including discounts). If you idle your engine a lot, keep track of that separately.
But there’s a lot more to overall cost per mile than just your truck’s mpg.
Another factor in your cost-per-mile calculations is insurance premiums, both for your truck and for you as a driver. If you lease your truck to a carrier, don’t forget to include any deductions taken from your settlements for liability, workers compensation or other forms of insurance.
In addition, maintenance is a large part of your annual budget. It’s important to keep track of all expenses for maintenance, whether for recurring services, such as oil changes, or major repairs, like engine or transmission work.
If you financed your truck, all payments and fees count, too. Other credit fees might be charges or interest on the use of a fuel card or a credit card you use for business expenses.
As an owner-operator or the owner of a small business, your salary, including benefits, is another expense. If you’re assuming that any settlement money left over after you pay the bills is personal cash, you’re setting yourself up for failure. As a business owner, calculate a salary to pay yourself each week. Remember that you are responsible for self-employment tax of 15.3% of your profit. If you own your own truck, you may also be able to claim per diem at the end of the year and you can adjust your pay rate to reflect the savings.
Often, personal savings and especially a retirement account are overlooked by those who are self-employed. Those things are a part of your pay, too, as is health insurance, if you do not have it through a spouse or other source.
A good accountant or tax preparer can save you much more than the cost of their services. They can also help you avoid legal issues that stem from incorrectly reporting income and taxes. Their fees are business expenses and tax-deductible as well.
Other expenses, such as food, clothing, footwear and personal toiletries are costs you may not be able to claim as business expenses, depending on the item and whether you were away from your home when it was purchased. However, they ARE expenses you’ll need to factor in. If you typically purchase three meals per day while on the road, the cost of them should be included in the rate you receive for a load.
Finally, accounting for deadhead, bobtail and personal conveyance miles is important, too. When considering whether to accept a load, be sure to factor in how many miles you’ll need to drive to the pickup location. If your trip includes a stop at home, you’ll have expenses for the extra miles you’ll travel to and from your residence. If your delivery is to a region where finding a return load is difficult, you should factor in the miles you’ll need to drive to another area to pick up your next load.
At the end of the year, if you have recorded your costs properly, you (or your accountant) will be able to calculate total expenses for the year. That number, divided by your total miles travelled, will give you an average cost per mile (CPM). You may need to adjust this number if, for example, you know you’ll have expenses next year that you didn’t have this year. For example, if you know you’ll need a brake job or a new set of tires in the coming year, you’ll want to add to your CPM to make sure you can cover those costs.
Cliff Abbott is an experienced commercial vehicle driver and owner-operator who still holds a CDL in his home state of Alabama. In nearly 40 years in trucking, he’s been an instructor and trainer and has managed safety and recruiting operations for several carriers. Having never lost his love of the road, Cliff has written a book and hundreds of songs and has been writing for The Trucker for more than a decade.
