5 Cents Plus 5 Cents Can Make $12,000

Freightliner Trucks
Real Cost of Ownership

Over the years, I’ve had many discussions with fellow owner-operators who are struggling to make ends meet in their business. I usually ask them, “What are you doing to trim costs, increase your revenue, or lower your real cost of ownership?” In many cases, these individuals are fantastic drivers. However, they’re missing out on opportunities that would enhance their bottom line, or lower their real cost of ownership. Many of them feel powerless to do anything about their situation. If an owner-operator hasn’t done a whole lot to find ways to increase revenue or decrease costs, I try to help by sharing some ideas for them to improve their bottom line.

My response is to use the “Save 5, Make 5” theory. This method allows you to take action in two specific directions. The first course of action would be to trim costs by a nickel ($.05) per mile. First, pay attention to the type of truck you purchase. If you drive mostly highway, you will want to select the most aerodynamic truck for your business operation to reduce fuel costs. The difference between an aerodynamic truck and a classic truck is roughly one mile per gallon.

Here are some calculations to show you the comparison and the impact one of the most efficient trucks on the market can make to your bottom line. We’ll figure on $3.509 as our fuel costs for both of these calculations. At 6.5 mpg, your fuel cost would be $.539 per mile (CPM). At 7.5 mpg, your fuel costs would be $.467 CPM. The result is a difference of $.072 CPM. During a fairly normal driving year of 120,000 miles, this would add up to a savings of $8,640.00.

We’re over a nickel, and we haven’t even touched on the many other areas of potential savings. Tire selection is also very important. If you go from the worst tire to the best tire in regards to fuel mileage, there can be as much as 10% difference in fuel efficiency, saving you thousands on your real cost of ownership. Paying attention to costs such as oil selection, maintenance practices and even shopping around for insurance quotes can save lots of money. As you can see, a nickel in savings should be easy to achieve.

If you are leased to a carrier and have the option of choosing your loads or are operating on your own authority, it’s not difficult to raise your revenue by a nickel per mile. Paying close attention to the effects of supply and demand, market forces and deadhead miles can have you well on your way to that nickel or more per mile increase. Other items to consider are your customer’s perceived values and your negotiating skills. There are many informative books on these subjects.

If we put efforts into these areas, such as choosing the most efficient trucks and lowering your real cost of ownership, you can realize a 5 cent per mile gain in income combined with a 5 cent savings. We’re now at $.10 x 120,000 miles a year = $12,000 a year of increased income.

Over the years in business, I’ve managed to gain the 5 cents and find myself always looking for that next nickel… from whichever direction it comes.
See more at: http://www.teamrunsmart.com/the-pros/henry-albert/august-2015/05-plus-05-cents-can-make-12-000-$