Updated 10/20/2015
Cost to operate a truck has always been high but cost have been skyrocketing in the past few years and the freight rates never really keep up.
I'm posting my cost to operate because so many people really have no idea how much it cost to run 500 miles or why a short haul of 250 miles needs to be around $770.
Rule number one - Trucking is a job like any other job, why obligate yourself to work way more than an average job with no overtime, insurance, benefits.
If truckers would come together on this one thing we could improve our conditions 10 fold.
My philosophy is a truck should generate revenue and operate approximately 240 days a year. A driver will want 8-10 days off a month or your going to have a high turnover or your going to hate your job if your the one driving.
To break it down.
I say give a driver 2-weeks off a year, your down to 351 working days, on top of that allow a driver 2 days off a week or allow 2 days off for 5 days out and your down to 251 days and allow 5 days for holidays and your down to 246 working days.
I haven't even discussed the fact that a truck will loose a days here and there due to downtime and maintenance and logistical issues especially if your doing live load and live unload. Where do you make up this, by subtracting home days and devoting your time back into the job.
So many companies exploit drivers time expecting them to be out 20-28 days and only allowing them 2 or maybe 4 days home. Even out of all those "days out on the road" they will probably spend a good 5-8 of those days laying over with little or no compensation. I'm talking from experience from companies I worked for in the past like JB Hunt, Super Service, and from taking to many of the drivers at these super carriers.
Below is my chart with my operational cost based off a full year then breaking my year down to 12 months, then eventually down to 240 operating days a year then figuring those days out to average 400 miles per day. My cost per day is at $378.02 before I even roll a single mile or pay myself a single dime. So if I want to clear $200 for the day I have to add $200 on to the $378 per day. Meaning I need to gross $580 to cover my cost to operate (CTO) and pay myself $200 in the process before fuel.
National average today on fuel is $2.53 meaning it cost .49 cents per mile to move 1 mile. (That's averaging 5.2mpg 6 cents less than IFTA reporting due to out of route and PC Miler differences and idling)
Lets say someone called me to haul a load 250 miles I need to charge: $804, here why...start out with fuel at 250 miles X .49cpm
so...
$121.63 Fuel
+ $378.02 to cover my daily cost to operate
+ $200 to me
-----------------
Total $699.66
+ 10% Total $769.63 for 250 miles or $3.08 per mile
If I were to haul a load 250 miles and agreed to do it for $500 I would be loosing money, even though the rate is $2 a mile. see below. How anyone can do it cheaper is only by doing more miles or working more days which in my book translate to unfair labor practices. Even if another driver has a truck that is paid for their maintenance will be much higher.
My Cost Breakdown
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| *Miscellaneous Expense may seem to be high but - This is anything from ATM Fees, Tolls, Scales, DEF, Special Permits such as HUT, Lumpers, Showers, Parking, Load board subscriptions, Drug Testing, Memberships and Dues, Truck Washes, Trip Packs to overnight paperwork, Faxes, ect, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
So what does the company provide you in exchange for 10% of your gross revenue?
ReplyDeleteThey settle with me every Friday for loads turned in by Tuesday,
DeleteThey file my IFTA every quarter,
They take care of my Cargo Insurance, bobtail and physical damage but I pay for it,
when i book a load I have the broker email me a copy of the confirmation sheet and have them fax it to MAG and MAG will call me to confirm everything is correct sign it and fax it back and email me a copy if I want it,
if I need any extra permits they call and get them for me right away.
They really stay on top of things.
Once I pick up a load I can get 40 or 50% of the load on my fuel card right away if need be, I only did that for about a month right at start up.
Your logs and all that are free.
Your really a true Owner Operator at Mag. You pay all your own expenses. They are just there at the office when you need them
They have a website. I thought I'd drop it in here. You can read how it works from here http://www.magcarriers.com/common/content.asp?PAGE=395
DeleteDo they offer you discounts on fuel and tires? I don't see that they're providing you with benefits worth what you're paying them. Your insurance seems really high as well. You seem to be paying as much as you would be on your own.
ReplyDeleteMy thoughts based on what I have read in your blogs is your fixed expenses are too high for the amount of revenue you're generating. My suggestion would be to consider selling your trailer and leasing on with a different company that pays your cargo and physical damage insurance, offers good discounts on fuel, tires, and maintenance in a mileage lease. Your revenue per mile might be a bit lower, but with those perks added in and a trailer provided I think your net would be better than what it is now. The greatest benefit would your fixed expenses would be much lower without the monthly trailer and insurance payments. Just my .02.
I've looked at those exact options.
DeleteLet's say a company paid my Tags, Cargo Insurance, Heavy Highway Tax, and bought me a set of tires every year and those those perks came up to $15,000 s year. I think that is a very high number, that would only average out to .15cpm.
If I was paid .95cpm and was given a .45cpm fuel surcharge my average cpm would still be about the same if not lower than what I'm doing now.
The only place I might come out a bit cheaper is the trailer.
My old truck payment before I traded in was $1515 for both truck and trailer.
After I paid off the old truck I expected my trailer payment to drop to somewhere around $450 - $500. For some reason it go jacked up to $757.
Nothing I can do about that now but pay it. That only come out to .08cpm.
I done put new tires, brakes, and drums on it this year so I should be good on that for a while now. That is part of the reason my net is so low this year to.
Also before trading in the old truck i put new tires all the way around on it two months before trading it in as well so there are two sets of tires on me this year.
I just started my blog and I really haven't covered the "why I my net is so low" it's my first year back as an O/O. I keep hoping each moth will turn out better but then something happens to mess me all up.
The blog was interesting to read. I think you're doing a great job tracking your expenses. I hope you're able to make it work.
ReplyDelete