Sign of the times

| August 01, 2001

“No business can operate without knowing the bottom line and the profit margin,” says carrier owner Scott Elgin of Home, Pa., who thinks CPM is so important he wrote a how-to book, Cost Per Mile. Owner-operators who don’t know their CPM “get weeded out sooner or later, and it’s a shame,” Elgin says, “because there are a lot of hard-working people out there who could be successful if they just had this basic information.”

Monthly fixed costs
· Truck payment $1,550
· Insurance $475
· Federal use tax $45
· License fees and permits $100
· Income tax $685
· Clothes $50
· Worker’s comp $175
· Accounting fees $125
Total fixed costs $3,205

Monthly variable costs
· Fuel $2,080
· Maintenance $125
· Repairs $325
· Meals $350
· Tolls $35
· Tires $455
Total variable $3,370

Fixed costs $3,205
Variable costs +$3,370
Total costs $6,575

$6,575/10,000 miles = 66 cents per mile

Good load or bad? CPM can tell you.

What might seem like a good load could turn out to be a loser. If you know your CPM is 65 cents, you’ll know at a glance that a load paying $1.10 a mile will net you 45 cents a mile.

You can also evaluate leasing opportunities. If you know a company’s per-mile rate, you can tell whether your net pay will be enough for you to live on.

Of course, if you use per-mile accounting, your revenue should be expressed in cents per mile also. If you work on a percentage, you must convert that into revenue per mile. If your lease calls for 70 percent of the freight bill revenue and you have a load going from Chicago to Los Angeles that pays the carrier $4,500, $3,150 will be paid to the truck ($4,500 X .70). Based on that 2,034-mile-trip, your revenue per mile will be $1.55 ($3,150

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