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Straight Truck Operations
Over-the-Road Expedited and Local
Operators Overview
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Niche markets are profitable,
but one must go with the flow!!!
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TYPICAL COSTS FOR "NEW" OPERATION WITH OWN AUTHORITY
To look at profitability of different size equipment operations, one must take into account the different key variables that affect each number. A typical mid-sized truck operation includes the expedited truck market, including Class 7 and Class 8 equipment. In reviewing the numbers in the following, please reference the background and philosophy used in our tractor-trailer operations overview as it applies to this segment. The key differences are revenue, utilization and actual fuel mileage.
We took $1.25 per mile overall revenue at 8,000 miles per month. We adjusted this gross using an average combined factoring and brokerage rate of 5%. We rolled in a fuel surcharge of $0.03 per mile against an average pump price of $1.50 per gallon. We used a straight truck with an insured value of $40,000, with a payment of $950 per month and getting 9 miles per gallon.
We used revised costs as noted in the fixed and variable cost pages for fuel / cash transaction fees, road and fuel taxes, servicing costs, licensing costs and collision / physical damage insurance. We also included that for liability / cargo insurance and typical office management / administrative costs.
The results follow for 1,850 miles per week, 8,000 miles per month or 96,000 miles per year:
"OWN AUTHORITY" PROFITABILITY SUMMARY
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Monthly Annual CPM
Income $8,790 $105,480 $1.099
Surcharge $216 $2,592 $0.027
Total $9,006 $108,072 $1.126
Fixed Expenses
Equipment $950 $11,400 $0.119
Licensing / Permits $151 $1,815 $0.019
Federal Use - 2290 $46 $550 $0.006
Collision Insurance $100 $1,200 $0.013
Variable Expenses
Fuel / Taxes / Fees $1,538 $18,451 $0.192
Liability Insurance $650 $7,800 $0.081
Cargo Insurance $95 $1,140 $0.012
Servicing $80 $960 $0.010
Repairs $320 $3,840 $0.040
Tires $160 $1,920 $0.020
Total Expenses $4,090 $49,076 $0.511
Taxable Income $4,916 $58,996 $0.615
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NOTE: Profitability will improve when factoring / brokerage use decreases, equipment gets paid down, liability insurance experience gets established and maintenance costs are minimized.
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TYPICAL COSTS FOR "NEW" OPERATION CONTRACTED TO FLEET
To look at profitability, we took $0.82 per mile overall revenue at 8,000 miles per month. We rolled in a fuel surcharge of $0.027 per mile against an average pump price of $1.50 per gallon. We used a tractor only with an insured value of $40,000, with a payment of $950 per month and getting 9 miles per gallon.
We used typical costs as noted in the fixed and variable cost pages for fuel / cash transaction fees, road and fuel taxes, servicing costs, licensing costs and collision / bobtail insurance. This average contract includes liability / cargo insurance and no charge for typical office management / administrative costs.
The results follow for 1,850 miles per week, 8,000 miles per month or 96,000 miles per year:
"LEASED TO FLEET" PROFITABILITY SUMMARY
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Monthly Annual CPM
Income $6,540 $81,072 $0.845
Surcharge $216 $2,592 $0.027
Total $6,756 $81,072 $0.845
Fixed Expenses
Equipment $950 $11,400 $0.119
Licensing / Permits $100 $1,200 $0.013
Federal Use - 2290 $46 $550 $0.006
Collision Insurance $100 $1,200 $0.013
Bobtail Insurance $35 $416 $0.004
Variable Expenses
Fuel / Taxes / Fees $1,538 $18,451 $0.192
Servicing $80 $960 $0.010
Repairs $320 $3,840 $0.040
Tires $160 $1,920 $0.020
Total Expenses $3,423 $41,077 $0.428
Taxable Income $3,333 $39,995 $0.417
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NOTE: Profitability will improve when equipment gets paid down and maintenance costs are minimized.
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Transportation Business Associates
Copyright (c) 1996-2008 Transportation Business Associates |
P. O. Box 17531
Denver, Colorado 80217-0531
Info@TBAbz.com
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