Cost Per Mile

[vtrover]

I recently calculated my cost per mile (CPM) while waiting for delivery of our new truck. We ran our last truck without truck payments for six years, so I expected the CPM to be considerably higher.

The CPM on the new Class 8, D Unit with tandems and liftgate is
.83 cents per mile. Wow! This amount is obviously before we pay ourselves or pay for home related expenses (which are minimal).
Based on an average of 96,000 miles per year this seems to be an excessive CPM with a very slim margin for profit.

I am wondering what the CPM is for other owner-operator teams with similar D Units. Considering the high cost of purchasing new equipment and the certainty of fuel prices increasing I am starting to seriously question whether we will be able to meet our financial obligations. Scary!

I am not looking for an assessment of the truck we chose. It was spec'd based on our personal preferences.

I would appreciate some actual numbers from others out there.

Thanks.

 

[RichM]

Difficult question to answer as everyone's down payment is different,everyone's purchase price is probably different etc. I am assuming you are calculating fixed costs as part of the CPM. The more expensive the truck the higher the insurance premimum is and so on.My truck has been paid for 5 years so I can't really give figures any more ,but when I had a payment my cpm was about .75 but that included salaries and health insurance costs. But I had a relatively plain Jane d unit without a lot of bells and whistles.

I think you need to throw out some figures so others in your situation can make a real comparison.I agree in that it seems you are working for the truck and not for yourself. Good Luck.

 

[Glen Rice]

Your CPM seems really high, but then again your miles per year seems awful low. Is that really the number of miles you will run for 12 months? We averaged 145000 miles per year. What are you doing the other 4 months of the year? Are you a single driver? As a single I ran a little over 120000 miles. Are you calculating paying yourself in that .86 cents?

 

[vtrover]

Rich & Glen -

Thanks for the replies. I realize that CPM is relative to the cost of the truck. I based the paid miles at approximately 10,000 a month maintaining an 80% availability. My wife have run a team for 9 years and I consider this to be a realistic estimate for us. In the post I mentioned the .83 cents CPM does not include paying ourselves.

Glen, sounds like you were very successful as a single driver averaging 2,000 miles a week.

 

[beenthere]

I find it important to break it down to fixed cost per mile and variable. Fuel is a variable cost. From the truck you are describing I am assuming you are getting about 7 miles per gallon??? Is that right? Class 8 trucks are beautiful as far as longevity so I think perhaps you need to amortize your payments over 8 years and figure depreciation based on that.

In other words, your cpm will seem much higher now than a typical straight truck, but figuring the longevity of the truck it should come down considerably. I would hope that you are also hauling some % of your loads above the standard straight truck rate, otherwise, the fuel cost offset is probably a waste of money and waste of horsepower. (vs a class 7 truck)

The best scenario that I have figured, is to purchase a 3 year old class eight with lower miles after the greatest depreciation has been taken by someone else. Amazingly the cost for a class eight conversion that is 3 years old will be less than a new class 7 and you will still have a longer life in the truck.

Just my .02
Bob

 

[vtrover]

Beenthere, Yes, my calculations included both fixed and variable costs. The truck is a 2005 KW T600. I expect to take delivery in three weeks. My research has indicated mpg will be in the 8 to 11 range.

I agree that longevity is important. Our last truck ran over 900,000 miles with usual maintenance and repairs averaging 10.2 mpg. Sure was nice running so many years without a truck payment, but all good things must come to an end.

I'm not sure how you can amortize a 60 month note for 8 years in regard to CPM?

I gave some serious consideration to "stretching" a 3 year old tractor. I am familiar with a few of the better shops doing frame stretching, but was concerned about things like the particular truck's previous life (did it haul heavy loads consistently) and the effect of altering a factory configuration voiding any remaining warranties? However, I think a stretch is a cost effective solution to buying new.

I don't expect to be hauling straight truck loads at a higher %. Only to legally scale over the maximum weight requirements.

 

[terryandrene]

I'm not sure how you can amortize a 60 month note for 8 years in regard to CPM?

To keep it simple, a class 8 should keep earning money for an anticipated 10 years so if you plan to keep working it that long, that should be the basis for your CPM. (truck cost)+(interest)-(sale value at end of 10yrs) / (10) = cost per year. Factor this with the miles per year you plan to drive to get this one fixed element of expense in current year dollars.

That example is more realistic than determing your costs only for the term of your loan. I suspect your figure of $.83 assumes the truck has no value at the end of your 60 month loan.

Terry

 

[davekc]

Your CPM seem alittle high. The concern I would have is that you will do ok for the first two years. After that, even though the drivetrain is still under warranty, other expenses start to creep in. This is where alot of folks get into trouble.
Depending on what your personal income requirements are, really look at your numbers to insure you are going to be running at a high enough rate to pay yourself.
Just remember....you haven't signed on the dotted line yet.
Davekc
owner
20 years

 

[Tuck]

Just to give you a number that thru me for a loop when I found it out was our fuel cost rose fron 15 % to 31 % with the price of fuel around $1.95 .
Just thought I would throw that out to ya'll.
Thanx

 

[davekc]

Just to give you a number that thru me for a loop when I found it out was our fuel cost rose fron 15 % to 31 % with the price of fuel around $1.95 .
Just thought I would throw that out to ya'll.
Thanx

Excellent observation
You can't say enough for the continuing need of fuel surcharges.
Davekc