Trucking is a very competitive industry and business. It is essential for companies to accurately track their operating expenses for trucking and ensure they are covering their cost per mile. More than 300 carriers with five or more trucks were forced to go out of business in 2015. Good bookkeeping will help a company survive.
Pallet companies need to track their operating expenses for trucking, too, whether it is a small business with just a few trucks or a large company with a fleet of tractor-trailers. Knowing your cost per mile and managing trucking operations to maximize efficiency enables a company to be competitive in pricing the cost of delivering finished goods and controlling transportation costs.
Your accountant or chief financial officer may be able to provide guidance on calculating costs per mile. Basically, it amounts to accounting for expenses for a given period of time in three areas — fixed costs, variable costs, and salaries — and dividing those costs by the number of miles driven over the same period of time. Accounting software products can help you capture those costs.
Fixed costs are the expenses your company incurs whether your trucks are moving or not; they include expenses like insurance, property leases, permits, and other services. Variable costs are those expenses directly related to operating your trucks, such as fuel, maintenance, repairs, and so on. Variable costs increase as mileage on your trucks increases, so they should be calculated monthly.
Knowing the cost per mile will help you determine how much you should charge for delivering finished goods. It also will help you identify spending patterns and where you may be able to cut costs if needed.
There are a number of websites that provide more detailed information about calculating trucking costs per mile. One of them is www.rtsfinancial.com. RTS Financial provides factoring or accounts receivable financing and also offers software for trucking operations. The company’s website features a page about calculating trucking costs per mile, and it includes a spreadsheet that can be copied.
Besides carefully calculating and knowing your true cost per mile, there are a number of areas where companies can manage their trucking operations in order to maximize efficiency and control costs.
Western Truck Insurance Services has a blog on its website about best for efficient truck operations. It can be found in this section: www.truckinsure.com/blog.
At the top of the list on that blog: safety. That includes keeping trucks maintained regularly and continuously educating drivers about safe operations. Safety programs should feature regular meetings to refresh drivers.
Next on the list: maintenance. Trucks should be properly maintained in order to optimize efficient operation. For example, proper tire pressure is a factor in fuel consumption, especially for large commercial fleets driving from highway to highway. Trucks should have regularly scheduled tire pressure checks, and they also should be inspected for proper axle alignment, which can impact fuel consumption.
Load management and optimizing loads is another area where companies may be able to gain efficiencies. The goal is to maximize the best potential load. Trucks should be packed and loaded as close to capacity as possible, especially for deliveries of short distances. Of course, avoid running empty when possible. Software is available to optimize pickup and delivery routes according to distance or load capacity.
Another consideration is optimizing routes. The software that optimizes loads may be able to optimize routes, too. The goal is to select the most fuel-efficient and time-efficient routes. These may not necessarily be the shortest distances. Other factors will impact what is the optimum route, such as speed limits, traffic signals, regular traffic levels in certain areas, and other times where trucks are stopped.
The 21st Century Truck Partnership is a government and industry research collaboration with industrial partners across the commercial truck value chain and government partners. It seeks to foster technological innovation to improve energy efficiency and reduce costs of the nation’s truck freight transportation system. A panel review of the partnership, in a report issued in 2012, noted ways to reduce fuel consumption and increase efficiency in trucking operations.
In the area of maintenance, since tire pressure has been shown to have a measurable effect on fuel consumption, the panel noted it can be addressed by frequent, scheduled maintenance checks or automated tire pressure maintenance systems mounted on vehicles. Axle alignment can have an effect on rolling resistance and, therefore, fuel consumption, so it should be checked and adjusted as part of routine maintenance. Also, diesel particulate filters can increase fuel consumption as they fill with ash, so they should be properly maintained.
Load management optimization is also a key factor, the panel noted — always running as close to full load as possible over the shortest distance needed to make deliveries. Just a few percent difference in average load factor can mean the difference between a carrier being profitable or going bankrupt. Sophisticated software can optimize pickup and delivery routes to minimize distance and maximize vehicle capacity utilization.
The same type of software normally includes routing optimization to select the most time-efficient and fuel-efficient route. It takes into consideration congestion, which may vary by the time of day, speed limits, the number of traffic signals or other infrastructure requiring stops, and hills. Routes also can be adapted in real time to be updated for accidents, weather conditions, or other impacts on traffic.
Although some truck fleets have driver training programs that focus in part on improving fuel efficiency, there is no standard curriculum, and many drivers do not receive any training about fuel efficiency.
Engine and truck manufacturers have developed various control features to encourage or force drivers to operate in a way that reduces fuel consumption. These include progressive shift or load-based speed control, gear-down protection, speed governors, ‘smart’ cruise control, and driver reward systems.
Purchasers of new trucks also have the opportunity to select a vehicle specification that is optimized to achieve a good combination of productivity and low fuel consumption. There are many features that buyers can select from, and vehicle specification tools can compare the specs of different trucks on a variety of routes with loads determined by the customer, tailoring the analysis to their application.
