Every mile a truck is driven costs money. Every day a truck costs money, whether it hauls a load or sits. Sounds simple enough, but why do most truckers ask each other, “How much do you make per mile?” and not “How much does the truck earn a day?”

Let’s examine why it’s more important to know what a truck makes per day than how much it makes per mile.

Remember, “It’s not how many miles you drive that brings you success; it’s how smart you drive each mile.” Because how many miles can you guarantee you’ll drive in a day, a week or a month? A guarantee isn’t possible; there are too many variables: weather, road conditions, traffic and delays, not to mention what kind of miles: actual, practical, PC, HHG, deadhead, and so on.

Example: If a load from Dallas, TX to Little Rock, AR pays $664, is it a good load? (For the per mile buffs, that’s $2.00 per mile, 332 miles.)

That depends.

1. Where did you drop the previous load? How many actual miles will you invest in this load? And what kind of load is waiting for you at destination?
2. How many days will you invest from pick up in Dallas and last drop in Little Rock?
3. Any special handling requirements you have to pay? (labor, tolls, permits, etc.)

If you picked up the load Thursday morning and delivered Thursday afternoon, it’s a no-brainer.  But if you picked up this load Thursday morning and delivered it in Little Rock late Friday afternoon, suddenly this “$2” per mile load doesn’t look good.

1. You’ll have two days invested in this load and the cost of owning the truck still ‘cha-chings’ out of your bank account each day.
2. You’re delivering this load late Friday afternoon and unless you have a preplanned load out of Little Rock, your truck will spend the weekend at the Little Rock truck stops. That means you’ll waste another two days of fixed costs, sitting.

In both examples, the truck is making “$2 per mile,” but in the second case, the cost of owning the truck is subtracted from the profit each day the load is on the truck. The conclusion is simple. Your profit is determined by the amount of time you’re involved with the load, not the rate per mile you’re receiving. So the correct question is: What is my revenue per day on this load? How does it compare with the daily cost of owning and operating my truck?

Let’s do the numbers on this load. We’ll assume:

• The Fixed Cost per Day for this truck is $250
• Fuel Cost is 40 cents per mile
• and Operational Cost is 20 cents per mile. (Add the Fuel and Operational per mile costs together for your Total Operational Cost per mile figure. In this example, it’s 60 cents per mile.)

On the same day, pick up and delivery of 332 miles, the total cost would be:

• One day times $250 per day equals $250
• 332 miles time 60 cents per mile equals $199.20
• Total cost for Load is $449.20
• Revenue over cost equals $214.80 ($664 – 449.20 = 214.80)

For the Thursday pick up and late Friday afternoon delivery:

• Two days times $250 per day equals $500
• 332 miles times 60 cents per mile equals $199.20
• Total cost for Load is $699.20
• Your loss on this load is ($-35.20)  ($664 – $699.20 = $-35.20)
• If you sit the weekend, that loss increases by $250 per day to a total loss on Monday morning of $535.20! ($664 – $1199.20 = $-535.20)

Note: The only reason to take a load like this would be to get your truck to where you have scheduled a quality-paying load, with a hauling rate that compensates for the revenue loss on the load that got you there.

By using the correct figures, you’ll determine the value of a load, which assures you’ll hear ‘Cha-Ching’ as the money lands in your bank account.

In next week’s Blog4Truckers.com, I’ll discuss how to quickly determine the quality of a load for a 'thumbs up' or 'down' decision.

Good roads and good loads, everyone.

Timothy Brady
©  2009