Are you interested in leveraging your logistics data? Perhaps you want a clearer picture of where your company budget is going, and how you can improve the cost to operate your fleet? One of the best ways to gain some insight into your internal investments is by calculating your cost per mile.
In this quick logistics guide, we’ll help you clarify and fully understand the true cost per mile in the transportation and logistics industry. We’ll also break down how you can find your own total cost per mile.
How to Find Your Total Cost Per Mile
What Does Cost Per Mile Mean?
Cost per mile refers to the total cost to operate your fleet on a per-mile basis. This number will help you determine the total cost to own your fleet, thus helping you make better, more data-driven decisions that can improve your profits and optimize your fleet. Plus, having an understanding of your total cost per mile will make it easier to bid on potential loads and determine the return on investment for your jobs.
How to Find Your Cost Per Mile
Using fleet management software is the easiest way to calculate your cost per mile. Such platforms have an automated feature that calculates your cost per mile, per fleet, automatically. However, there are some ways to calculate your truck costs on your own.
To find your trucking cost per mile, you will follow this formula: Fixed costs + Variable costs / Miles Driven = Your cost per mile
Example: $50,000 + $150,000 / 120,000 = $1.66
Let’s break this down a bit more. Your fixed costs are the costs that do not change for each transport job. Some examples of fixed costs for the transportation industry include taxes, insurance premiums, and permits or licenses.
Your variable costs will change on a job-by-job basis. They will also vary and fluctuate depending on how large your fleet is and how efficiently you are running your business. In general, the biggest variable expenses for fleets are fuel costs and maintenance fees. However, wages for your drivers, toll costs, and truck part replacement costs are also common variable costs to consider.
Other costs that may be considered either fixed or variable include tire maintenance, lease and purchase payments for the trucks themselves, truck driver benefits costs, etc.
Lastly, your miles driven will refer to the number of miles driven for a particular job.
It’s vital to have all this data and metrics on hand to calculate your total cost per mile. Fleet management software can be particularly helpful in calculating this number regularly, as well as gathering the necessary data to calculate it.
There are a few ways one can reduce their cost per mile for their fleets. To start, opting for fuel-efficient vehicles can help reduce the cost to regularly fuel your fleet, though the initial investment can be quite hefty and can take a while to be worth it. Managing and staying up to date with all of your fleet’s fuel receipts and connecting those inputs to your fleet management software can make a big difference.
Staying up to date with your vehicle preventative maintenance can cut down on costs related to regular maintenance and repairs. Using fleet management software can also help your management teams keep an eye on the routes that your truckers are taking to ensure the best possible mileage.
Trucking Cost Per Mile Calculators
There are a few different free trucking cost-per-mile calculators out there that are worth trying out. These include:
It’s worth noting that fleet management software is a superior way to calculate your cost per mile without having to lift a finger.
Trucking Cost Statistics
According to the American Transportation Research Institute, the average trucking cost on a per-mile basis for logistics companies in the United States is approximately $1.82. To put it simply, if one of your fleet’s trucks drove 75,000 miles this year, then your company has spent a significant $136,500 to keep that specific truck in operation. It’s clear that each and every mile that you can reduce will result in tangible savings for your business, which is why understanding your cost per mile and all of the factors that create it is so valuable.
According to the Transportation Index Report for July 2021, the transportation industry is experiencing some major changes. Shipments grew 15.6% in July, which was a sharp decrease when compared to June’s increase of 26.8%. There is a major issue with driver and equipment shortages in 2021, and these shortages could result in the highest cost per mile for your business. However, it is expected that truck and driver capacity for transportation companies will improve in the coming months. This is all the more reason to be on top of your fleet’s cost per mile.
Invest in Fleet Management Software
If you want to manage and monitor your fleet’s cost per mile and how much you’re investing into your fleet’s transportation capabilities, your best bet would be to invest in top-notch fleet management software. There are so many different things that fleet management software can offer a business, especially in an industry where so many logistics companies are still stuck in the dark ages with pen and paper tracking. Fleet management software can help organizations track the mileage and cost per mile of their fleets and drivers through easy-to-use dashboards and reporting.