It's a Team's Life
Sitting is not free
When our truck sits while not under a load, there are still expenses that have to be paid. When a fleet owner’s trucks are sitting, there are still expenses with each truck. A one-truck operation has fixed costs that occur 24 hours a day, day in and day out. If the truck is paid for, there are still expenses that add up as we sit.
Waiting and then waiting a little longer for the perfect load to be offered can and often is detrimental to a business. Having a fixed rate per mile minimum can also lead to not taking a lower-paying load to get you into a better freight area. Think before saying no to a load.
Some fixed expenses:
Truck Payment
Insurance
Truck Insurance
Health Insurance
Workers Comp
ELD
Cell Phone
Carriers fixed weekly fees
Estimated Taxes
Our maintenance costs are estimated, and each month I put the estimated amount into savings. For those payments that come quarterly or once a year, I have a set amount each month that will go into savings to cover those bills when they come due. Any money left over at the end of the month will also be placed into savings. Create an emergency fund that is only for emergencies and add to that each month. The goal is never to have to borrow money to repair the truck or replace tires. It is hard enough to fix or replace tired and borrowing money and paying interest is a losing battle.
Figuring out how much it costs you to sit is not that difficult and can be estimated by a new truck owner or driver. Write down the expenses you know you will have each month, including the minimum you have to pay yourself. Estimate the cost if you need to replace tires or any maintenance costs for the year. A new driver estimates how many days you will be off the road and subtract that figure from how many days in a year. Now divide expenses by days on the road. This figure will give you the minimum daily pay that is needed to stay profitable.
Many loads should be above your minimum, and with that being said, sometimes a lower-paying load makes sense that will get you into a better area. Knowing this number will also show why a high paying rate per mile but has short miles can actually hurt your business. If not many loads cover your minimum it is time to look over your costs and figure out a way to lower them. We have to fit our business into the market as our costs do not dictate rates. Being able to make a profit when freight is slow is a successful business.
Every business has different expenses and that is why we need to know our numbers and what we need to make to stay profitable.
Bob & Linda Caffee
TeamCaffee
Saint Louis MO
Expediters since January 2005
Expediting isn't just trucking, it's a lifestyle;
Expediting isn't just a lifestyle, it's an adventure;
Expediting isn't just an adventure, it's a job;
Expediting isn't just a job, it's a business.