When you want to understand how much value you’re getting out of your fleet and your contracts, you need to know your trucking cost per mile. Your variable and fixed costs play a role in your expenses per mile, and you’ll likely want to be more aware of how much you’re spending for every mile your drivers travel. By knowing your expenses at this granular level, you can better understand your primary costs and make more accurate bids for new contracts.
Find out more about what trucking cost per mile calculators are and why they matter. You might also be interested in learning how to calculate cost per mile and the ways fleet management software can help.
A trucking cost per mile calculation examines your expenses to determine how much it costs to operate and maintain your fleet’s vehicles on a per-mile basis. Typical items involved in calculating cost per mile include fuel, maintenance, driver and non-driver compensation, insurance and variable driving expenses. By figuring out your cost per mile, you have a much more detailed view of what expenses are affecting your bottom line.
When you employ a trucking cost per mile, you can better define your return on investment for every job your fleet handles. Alongside helping you identify your ROI, it enables you to make more accurate bids on the loads you hope to haul. Since trucking companies often operate on thin margins, you need a comprehensive idea of your total cost of ownership to take steps to reduce it.
As you attempt to determine your costs per mile, it’s crucial to understand what factors go into calculating them. Figuring out your costs per mile starts by assessing your expenses. You can place these into two categories — variable costs and fixed costs. Fixed costs refer to expenses that occur regularly without any changes. Primary types of fixed costs include insurance, taxes and permits.
In contrast, variable costs refer to expenses that fluctuate based on factors like your fleet’s use, efficiency and size. Significant sources of variable expenses include maintenance and fuel, as an area’s gas prices can change without warning, and unexpected repairs can spring up from time to time. Other variable costs can also include tolls, drivers’ wages and replacement parts.
Calculating your cost per mile is a reasonably straightforward equation after you determine your variable and fixed costs. All you have to do is add these two numbers, then divide the answer by your miles traveled. The total will be your cost per mile.
While the equation for calculating your cost per mile is simple, many companies struggle to make reliable calculations. One significant reason for this inaccuracy is a company’s inability to determine its overall variable costs. If you lack a central location for storing your data and the capabilities to record costs, you’ll probably have incorrect information about your variable cost totals, thus leading to imprecise calculations about your trucking costs per mile.
Since correct information about variable and fixed costs is critical to receiving accurate results, your trucking company might want to consider using fleet tracking software. With this solution, trucking companies can keep more accurate records by using devices to track their fleet and place all the gathered data in a centralized platform.
Fleet managers can use the software to track all their trucking costs and analyze them to see where they could improve. Centralized data also helps companies quickly calculate their fixed and variable costs and receive more accurate trucking cost per mile results. Some software programs even allow users to automate many central processes to make the calculation process faster and more accurate.
While it’s critical to calculate your cost per mile, you probably also want to lower your expenses. Besides helping you more easily calculate your expenses, fleet management software makes it easier for you to reduce your overall costs, resulting in a lower cost per mile. Review some of the top ways you can use fleet management software to minimize your expenses below.
Since accurately calculating your cost per mile can help you plan for the future and get more value from your fleet, you might be interested in fleet management software. At Track Your Truck, we make tracking your expenses easy with our software and GPS tracking devices. Our innovative vehicle tracking system makes it simple for you to spot inefficiencies and excess costs. Reduce your expenses, increase your ROI and get more value for every mile your drivers travel.