top of page
  • MAX

Understanding Your Rates and the Cost of Operating Your Trucking Company


Understanding your rates and the associated costs is fundamental to running a profitable trucking company.
Finding your trucking rates 2024.

Running a successful trucking company involves more than just picking up and delivering loads. It requires a deep understanding of the costs associated with operating your truck and setting competitive yet profitable rates. Knowing your expenses and accurately calculating your rates per mile is essential to ensure the sustainability and profitability of your business. Here's an in-depth look at the key costs you need to consider and how to determine your rates.


Why Knowing Your Trucking Rates Is Important

Understanding your rates is crucial for several reasons:


  1. Profitability: Knowing your costs allows you to set rates that cover all expenses and provide a reasonable profit margin.

  2. Competitive Pricing: Accurate rates help you stay competitive in the market without underpricing your services.

  3. Budgeting and Planning: Understanding your costs helps you create accurate budgets and financial plans.

  4. Negotiation Power: Being aware of your costs gives you a strong position when negotiating with shippers.


Key Costs to Consider


  1. Fuel Costs

  • Fuel Efficiency (MPG): Know your truck’s miles per gallon (MPG) and the average cost of diesel.

  • Calculation: Price Per Gallon / MPG = Fuel Cost Per Mile.

  1. Driver’s Wages

  • Hourly or Mileage Rate: Include wages, benefits, and other compensations.

  • Calculation: Total Driver Wages / Total Miles Driven = Driver Wage Per Mile.

  1. Insurance Premiums

  • Monthly Insurance: Covering liability, cargo, and other insurances.

  • Calculation: Total Monthly Insurance / Monthly Miles Driven = Insurance Cost Per Mile.

  1. Maintenance and Repairs

  • Regular Maintenance: Oil changes, tire replacements, and other routine maintenance.

  • Unexpected Repairs: Engine repairs, brake replacements, etc.

  • Calculation: Total Monthly Repairs / Monthly Miles Driven = Maintenance Cost Per Mile.

  1. Truck and Trailer Payments

  • Monthly Payments: Loan or lease payments for your truck and trailer.

  • Calculation: (Truck Payment + Trailer Payment) / Monthly Miles Driven = Equipment Cost Per Mile.

  1. Operational Overheads

  • Annual Overheads: Accounting fees, permits, registrations, and subscriptions.

  • Calculation: Total Annual Overheads / (Monthly Miles Driven * 12) = Overhead Cost Per Mile.

  1. Miscellaneous Expenses

  • Include: Tolls, parking, meals, and other incidental expenses.

  • Calculation: Total Miscellaneous Expenses / Monthly Miles Driven = Miscellaneous Cost Per Mile.


Using a Rate Per Mile Calculator

A rate per mile calculator can help simplify these calculations. Input your various costs and the tool will calculate the total cost per mile, providing a clear picture of your expenses.


Example Calculation:

  • Monthly Miles Driven: 12,500

  • Truck's MPG: 7

  • Price Per Gallon of Diesel: $3.00

  • Driver's Wage Per Mile: $0.42

  • Monthly Insurance Premium: $1,670

  • Monthly Worker's Compensation Insurance: $138

  • Monthly Tractor Payment: $1,500

  • Monthly Trailer Payment: $900

  • Monthly Repairs and Maintenance: $1,250

  • Annual Accounting: $2,400

  • Annual IRP: $2,000

  • Annual Subscriptions: $1,560


The calculator will combine these inputs to determine your total cost per mile and suggest a rate per mile with a profit margin. You can try out our Rate Per Mile Calculator to get started.


Setting Your Rates

Once you understand your costs, you can set your rates. A common approach is to add a markup percentage to your total cost per mile to ensure profitability. For example, a 30% markup can cover unforeseen expenses and provide a profit.


Suggested Rate Per Mile:

  • Total Cost Per Mile: $1.50

  • 30% Markup: $1.50 * 1.30 = $1.95


Thus, your suggested rate per mile would be $1.95 to ensure you cover all costs and earn a profit.


Leveraging Technology for Better Rates

Utilize tools and platforms like LogisX to find and bid on loads directly from shippers. These platforms can help you get better rates by cutting out the middleman and allowing you to set your own prices based on your cost calculations.


Conclusion

Understanding your rates and the associated costs is fundamental to running a profitable trucking company. By accurately calculating your expenses and setting competitive rates, you can ensure the sustainability and growth of your business.


Use tools like rate per mile calculators and leverage platforms like LogisX to optimize your operations and secure profitable loads.


Stay informed, stay competitive, and keep your trucking business on the road to success.



1 view0 comments

Comments


bottom of page