How to calculate your trucking cost per mile and use it to choose loads

Why cost per mile matters more than the rate

A broker offers a rate. You can see what it pays per loaded mile in seconds, but that number means nothing until you know what a mile costs you. Two carriers can look at the same load and both be right: one with a paid-off truck and a tight lane takes it at a profit, the other with a new lease and a long empty run back loses money on every mile.

Cost per mile turns your whole month of bills, settlements and fuel receipts into one figure you can hold against any offer. It also tells you where the money goes, so you know whether a fuel price change, a repair bill or a slow month for loads did the damage.

The calculation is simple. The work is in counting every cost and every mile honestly, and in doing it again each month so the number stays current.

Fixed costs and variable costs

Sort every cost into one of two groups. The split matters because they behave differently when miles change: fixed cost per mile falls as a truck runs more, while variable cost per mile stays roughly the same.

Fixed costs

Costs you pay every month whether the truck moves or not:

• Truck and trailer payments or lease payments.
• Insurance: liability, cargo, physical damage and occupational accident cover.
• Licences, plates, permits and authority fees, spread over the months they cover.
• ELD, software and phone plans.
• Office, yard and overhead: rent, office wages, accounting and a share of anything else the business pays to keep running.

If you own the equipment outright, there is still a cost: the truck loses value with every month. For tax purposes in Canada, heavy freight trucks rated above 11,788 kg have their own capital cost allowance class, Class 16. For cost per mile, many carriers use a monthly replacement cost instead, so a paid-off truck still carries a charge toward the next one. Ask your accountant which figure suits your own analysis.

Variable costs

Costs that rise with every mile:

• Fuel, adjusted for what you pay or get back on your IFTA returns.
• Driver pay: per-mile pay, percentage pay, accessorial pay and the employer share of payroll costs for company drivers. For an owner-operator, use the settlement amount.
• Maintenance and repairs, including preventive maintenance, shop bills and roadside repairs.
• Tires.
• Tolls, scales and permits bought per trip.

Which miles to count

Divide by all the miles the truck drove in the period: loaded miles, empty miles to the next pickup (deadhead), and miles to the shop or home. The truck burned fuel and wore tires on every one of them.

That is also how IFTA counts. The IFTA Articles of Agreement define total distance as all miles or kilometres travelled by every qualified vehicle in the fleet during the reporting period, whether or not they are taxable in a jurisdiction. If your IFTA records are complete, your total miles for cost per mile are already in them.

Take miles from records rather than memory. IFTA’s procedures manual lists what an adequate distance record contains: trip dates, origin and destination, route, beginning and ending odometer or ECM readings, total trip distance, distance in each jurisdiction, and the unit number. The same records give you miles per truck.

Keep a second figure as well: cost per loaded mile, which is total cost divided by loaded miles only. That is the amount each paid mile has to earn for the truck to break even at your current empty-mile ratio.

A worked example: one truck, one month

A company-driver truck ran 10,500 miles in a month: 9,000 loaded and 1,500 empty. Figures are in your billing currency.

Total cost divided by total miles gives a cost per mile of about 2.10. Divided by the 9,000 loaded miles only, it is about 2.45: that is what each loaded mile must earn to break even.

Now the revenue side. The truck billed 25,200.00 for the month, including fuel surcharge. That is 2.80 per loaded mile, or 2.40 per total mile. Profit is 25,200.00 less 22,065.00, which is 3,135.00: a margin of about 12.4%, or about 0.30 per total mile.

Notice what the empty miles do. If the same revenue had needed 3,000 empty miles instead of 1,500, variable costs would rise by about 2,295.00 (1,500 more miles at 1.53), and most of the month’s profit would be gone without a single rate changing.

Using cost per mile to quote and accept loads

Price every load on the total miles it causes, not just the loaded miles on the rate confirmation. Add the empty miles to reach the pickup, and the empty miles from the delivery to where the next load is likely to be.

Checking an offer

Using the truck above: a load pays 1,650.00 for 600 loaded miles, and the truck is 150 miles empty from the pickup. That is 2.75 per loaded mile, which looks comfortably above 2.45. On all 750 miles it is 2.20 per mile against a cost of 2.10, so the full cost is about 1,575.00 and the load makes about 75.00. It covers its costs, but only just.

The variable cost of those 750 miles is about 1,147.50. Anything above that adds something toward fixed costs you pay anyway, which is why a carrier sometimes takes a thin load to reposition a truck for a strong lane. Do it on purpose, and not every week.

Building a quote

To quote a lane, start from cost and add the margin you want. For a lane of 800 loaded miles with about 100 empty, cost is 900 miles at 2.10, or 1,890.00. For a 15% margin on the price, divide by 0.85: about 2,223.50. Then compare that with what the lane is paying in the market and decide whether it is a lane for you.

Per truck and per customer

Run the numbers per truck as well as for the fleet. An older unit with high repair costs, or a truck that keeps getting the long empty runs, can drag the fleet average down while the rest are doing well. The same goes for customers: a shipper whose loads always leave you 200 miles from the next freight costs more than the rate shows.

Cross-border carriers often bill in US dollars and pay most costs in Canadian dollars. Pick one reporting currency and convert at a consistent published rate, such as the Bank of Canada daily exchange rate, so last month’s cost per mile can be compared with this month’s.

How TruckerPro Finance handles it

In TruckerPro Finance, the numbers behind cost per mile are already where you work. On Essentials, add your trucks as units. The per-truck P&L sets each unit’s revenue beside the fuel, driver pay, maintenance and other bills tied to it, with its miles, net profit, margin and profit per mile.

The load margin view sets each delivered load’s revenue against its costs, using the average fuel economy and fuel price you set for its fuel estimate, so you can see which customers and lanes carry their weight. A cash flow view shows money in and out from the payments you record. Load margin, cash flow and per-truck P&L are all on Essentials.

Fuel card transactions from EFS/WEX, Comdata and BVD, or file imports from Petro-Pass, Pilot Flying J, Pride and SPOL, feed the same fuel data your IFTA quarterly reports use, and those reports are built from the trip miles you enter. The company-wide profit view, from the general ledger, is on Advanced. Compare the plans.