The trucking industry generates a huge amount of revenue annually, therefore it is normal for a lot of people to think of starting a trucking company. Right now, the trucking industry is going through a phase where freight demands are high. So, the rates are also rising and drivers are not easily available. Therefore, it is the right time to start a trucking company.
But before you even think of starting a trucking company, you should carefully go through the expenses and the cost of operating a trucking company. We can generalize the operating cost in two categories.
To operate a trucking company, there are few expenses that are going to happen whether you drive the truck or even when your construction trucks are just parked and doing no business. We call them the fixed expenses. Fixed cost stays unchanged on a monthly basis. You can always have fair knowledge, how much these costs will be on a yearly basis.
“I’ve been on every interstate highway in the lower forty-eight states by now, and I never get tired of the view.” — Steve Earle
These are some of the fixed expenses to run a trucking company. As you can see, that most of the time, these costs stay the same. You can predict them in advance and have a decent knowledge of the fixed costs to run a trucking company.
Well, as the name suggests variable costs are never stationary. They change with the number of miles you drive. Therefore, if your trucks are parked, then most of your variable costs vanish. This is an area where you can save a lot of money by cutting expenses in multiple ways.
Fuel spending depends on the miles your vehicle is driven in a month. It keeps changing with the number of miles. You can save on fuel by cutting out of route miles and by reducing the truck idling time.
With age, your vehicle requires more maintenance, and more often it needs to be taken for service. It’s another example of a variable cost. Newer vehicles cost less to maintain as compared to the older ones.
Video Credit – Manuel Ochoa
Sometimes, you have to park the truck and pay for the parking fee, this is another cost that is not fixed for the month.
This depends on the type of load your vehicle carries. You always have to maintain a clean tractor and trailer. In the rainy and snowy season, you have to get your truck washed more often.
There are various other variable costs like scale fees, fuel taxes etc which depend on the load weight and the distance covered in a particular state.
To get the correct cost of running a trucking company, you need to know the cost per mile for your vehicle’s operations. You need to know the number of miles your truck will run in a year. On an average basis, a single truck usually drives 65000 mile in a year. We take this number as a base to find out the running cost of a trucking company.
Now we add all the fixed costs of operating a trucking company with the variable costs of the company. This will give us the cumulative figure of expense that is going to occur in a year of operating the company.