Establishing and Improving Cost Per Mile to Land Work

The Competitive Edge in Courier Services

The courier industry is fiercely competitive, with players ranging from independent operators to large logistics companies. A precise calculation of cost per mile is essential for couriers to offer realistic pricing and stay profitable. According to the American Transportation Research Institute, the average operating cost per mile for trucking was $1.82 in 2020, a slight increase from previous years due to rising fuel and vehicle costs ATRI, 2021.

Breaking Down Cost Per Mile

Fixed Costs

Fixed costs are expenses that remain constant regardless of the amount of work performed. These include:

• Insurance premiums
• Vehicle registration fees
• Property rentals
• Vehicle loan payments
• Salaries
• Property taxes

Variable Costs

Variable costs fluctuate based on the level of activity and include:

• Fuel
• Maintenance and repairs
• Tolls and fines

Managing these costs effectively can lead to significant savings. For instance, the U.S. Department of Energy highlights that proper tire maintenance can improve fuel efficiency by up to 3% Energy.gov, 2021.

Strategies for Reducing Costs

Regular Vehicle Servicing

Ensuring that vehicles are serviced according to the manufacturer's schedule and addressing mechanical issues promptly prevents costly breakdowns and maintains fuel efficiency.

Optimal Tire Management

Maintaining tires in good condition and at the correct pressure not only ensures safety but also improves fuel consumption. The Department of Energy reports that under-inflated tires can lower gas mileage by about 0.2% for every 1 psi drop in the average pressure of all tires.

Fuel Management

Fuel costs can be reduced by:

• Turning off the engine during idle periods
• Ensuring regular vehicle maintenance
• Adopting efficient driving habits
• Maintaining steady speeds over long distances

Maximizing Return Loads

Securing return loads can drastically increase profit margins. It is beneficial to arrange for cargo on the return trip, thus optimizing every mile driven.

Implementing Cost Analysis

It is advisable to maintain a detailed spreadsheet that tracks all costs associated with each mile driven. This not only aids in providing accurate quotes but also helps in pinpointing areas where costs can be trimmed.

Conclusion

By meticulously calculating and managing the cost per mile, couriers can enhance their competitive edge, quote more accurately, and boost profitability. Regular vehicle maintenance, strategic fuel management, and optimizing load returns are key strategies that contribute to a more profitable operation.