What exactly does an empty truck cost a trucking company? "Not that Much" said one brave soul. "A whole lot!" replied another. "I don't know!" he said quietly to himself, and he was right.
Let's jump right in and figure it out, because the water is warm and getting hot. The purpose of this blog is not to cause grown men to cry, nor put the fear of God or additional pressure on already nervous Driver Recruiters, but quite the opposite. Where are your resources going? Are you giving your recruiting departments enough resources?
Now, you may not want to know what that an empty truck costs you and I don't blame you... You may purposely avoid driving around the side of the building where all the empty trucks are parked when you arrive in the morning. I don't blame you for that either... Now, settle into your favorite bar stool, grab yourself a pencil and cocktail napkin, turn the napkin over onto its back, and lets do some accountin'...
Feel free to insert your own costs here, if you don't know these off the top of your head, these are good averages to use. (These descriptions and amounts all meet again in a column near the bottom, I felt some explanation was needed as to just how I arrived at my numbers.)
Tractor Payment - $2075.00 - Just an average payment amount based on a new truck with 5 year straight financing.
Trailer Payment $300 - $600 (Oh wait, multiply that $300 trailer payment number by two! Remember the person(salesmen, operations manager, VP of this and that, CFO) who convinced you that you need to be at a 2 to 1 trailer to tractor ratio? (Yes, Sir, you now have two trailers for every tractor. You did that so you could do some fancy dropping and hooking and increase your revenue, yes, Sir.)
Actual Depreciation - $1541.00 5 Year to $7500 (I don't care about how you speed up or slow down depreciation for taxes, doesn't matter here, stop thinking it's a good thing, and stop thinking about it entirely for this exercise, please.)
Overhead - $900 Includes (Non-driving Employees, Office Staff, Mechanics, Phones, company cars and so on. I'm going to peg this at $.09 per mile as a good average, basically all admin costs divided by number of trucks by 10,000 miles per month. Again, please feel free to use what number you feel is a realistic representation of your company.
Profit per truck - How much do you make per truck per month? I don't know how much you make, but the 5 - 25 - 100 empty trucks on your lot play a major role in your overall profitability - Please feel free to insert your profit per truck number here. I left it at ZERO
To Summarize -
Tractor Payment $2,075
Trailer Payment $600
Depreciation $1,541
Overhead $900
Profit $0
Cost per Empty Truck per Month $5,116
The trucking business makes for a good mistress but she's a mean wife. She's very cyclical as we all know and full of mood swings. "And Boy, I Say Boy", she's been in a mood for the last year or two. The carriers who understand the cost of an empty truck and address it head on are sure to weather the storm. Stay strong, our time to shine is coming again...
COPYRIGHT 2012 Michael H. Komadina
