Saying yes to a load

OntarioVanMan · May 24, 2011

greg334 said:
OVM, much of what you have is a fixed cost across the board, so it really doesn't matter how many miles you run. If you run 125k a year, the Cost Per Mile is the same as if you run 50k a year. The only exception is when you use a system that replaces parts based on life cycle and even then it is an adjustment not to the accounting numbers but rather the timing.

The cost per mile as a variable comes into play when you are trying to figure out your true break even point because that is usually based on an estimated miles driven for the year going forward. This does include an assumption of cost for fuel and other things that are related to costs beyond your control.

True....what I was looking at is the cost difference between running say 500K to 350K over a span of say 4 yrs with the same income.... is maintenance costs not factored into the CPM?

nightcreacher · May 24, 2011

Greg,how can OVM have fixed costs across the board?miles cost :tires,fuel,repairs,those arent fixed costs,or does company pay all that

nightcreacher · May 24, 2011

if you have the same income for 350k as 500 k,your profit will be better at 350 k,less repairs

greg334 · May 24, 2011

OntarioVanMan said:
True....what I was looking at is the cost difference between running say 500K to 350K over a span of say 4 yrs with the same income.... is maintenance costs not factored into the CPM?

Same income?

Seriously you base everything on income over 4 years?

That is a great statement of how bad it must be for van owners.

nightcreacher said:
Greg,how can OVM have fixed costs across the board?miles cost :tires,fuel,repairs,those arent fixed costs,or does company pay all that

Of course the company doesn't pay for all of that.

Using those as variable costs would be alright if you are running off the cuff but if you are in business as a business, you can factor into the equation for a break even point those variables as fixed cost based on estimated future costs, not on past performance.

Take fuel, I set my fuel costs per mile (all miles) at a specific amount based on 30% of the average over the past year - right now my budget is set at $4.54 per gallon. This gives me a clear number I can work with when looking at a run and also helps me determine where I can cut costs when the estimates are compared to the actual costs. Remember I don't get DH or any other perks so when I negotiate a run, the cost for dh is included 60% of the time.

Tires are the same, the increases in tire prices are not more than 20% than what my last set cost so I use cost plus 20% to put in as a fixed cost over the life of the tire (200k).

Repairs come under a maintenance fund which is also fixed based on the replacement cost of key components and that takes care of any estimated cost of repairs, when the repairs exceed the total cost of a replacement unit, or truck, it is dealt with at that point.

As bizarre as this sounds to people in this business, it works rather well in other parts of the industry.

OntarioVanMan · May 24, 2011

greg334 said:
Same income?

Seriously you base everything on income over 4 years?

That is a great statement of how bad it must be for van owners.

Of course the company doesn't pay for all of that.

Using those as variable costs would be alright if you are running off the cuff but if you are in business as a business, you can factor into the equation for a break even point those variables as fixed cost based on estimated future costs, not on past performance.

Take fuel, I set my fuel costs per mile (all miles) at a specific amount based on 30% of the average over the past year - right now my budget is set at $4.54 per gallon. This gives me a clear number I can work with when looking at a run and also helps me determine where I can cut costs when the estimates are compared to the actual costs. Remember I don't get DH or any other perks so when I negotiate a run, the cost for dh is included 60% of the time.

Tires are the same, the increases in tire prices are not more than 20% than what my last set cost so I use cost plus 20% to put in as a fixed cost over the life of the tire (200k).

Repairs come under a maintenance fund which is also fixed based on the replacement cost of key components and that takes care of any estimated cost of repairs, when the repairs exceed the total cost of a replacement unit, or truck, it is dealt with at that point.

As bizarre as this sounds to people in this business, it works rather well in other parts of the industry.

I use a life span of 4 years for calculation basis for a van...

Camper · May 24, 2011

OntarioVanMan said:
I use a life span of 4 years for calculation basis for a van...

Why not use 5 years which is more the industry standard?

OntarioVanMan · May 24, 2011

Camper said:
Why not use 5 years which is more the industry standard?

Just my personal preference....

guido4475 · May 24, 2011

davekc said:
Probably shouldn't have posted that Fort Wayne.

Many carriers are dependant upon stupid & foolish drivers to maintain their profitability.

As harsh as it may sound, it is actually true.Nicely put, honest and to the point.Some companies make more money off of deductions and ridiculous charges than the freight itself.

bobwg · May 24, 2011

Notanewbie said:
Have I said I love Landstar? (Oh, yea I have .. sorry)

I am on a percentatge, now, Landstar bills the customer on a per mile basis, but that is their gig, not mine. I have to be pleased with what the percentage equates to ona per mile basis.

Some of those loads are acceptable to me, some are not.

Holiday? We dont do not stinkin holidays! Holidays are for sissies!

I dont think I would say I love Landstar but after almost 2 years with Landstar I am happy with them