The Whole Story of Revenue or How to Get Out of Florida
I know some truckers who say they will never take a job less than $3 per mile. I call it the “Glory Load.”
Good luck, I say… until they call my dispatcher and ask for a load to get them out of Florida.
It’s easy to get a load down to Florida. It’s not so easy to get one out, much less one at $3 per mile. A driver tries to find a load that will not cost them money to haul back up north and finds they’ve got to develop a different strategy if they want to keep those $3 per mile loads down there.
Truckers have to look at a bigger picture when it comes to revenue. It’s not just about this load, but it’s about several loads put together. When we understand that, then we can discover the reasons why we’re not making as much money as we think we can.
Suppose I’ve got a load from Cleveland to Miami. $3 per mile. That’s a nice load. But once I get down there, the best I can find coming back north is a measly $1.25 from Tampa, Florida up to Atlanta. Should I take it? Maybe I should skip it and hold out for something better. In the meantime, I’m losing income while I bet that something better will come along.
Revenue looks simple enough: it’s what we get per load. I think it’s wiser to look at the big picture. Getting the big payday take a load has to take the distance you drove to get to the pickup. I generally accept that 50 deadhead miles to my next load is part of doing business. I figure them into the overall value of the load – sharing the revenue between the loaded and empty miles. If I have to go beyond 50 miles, I think long and hard about the load before I agree to take it. (That’s why knowing my expenses per mile is critical – if I don’t know what it costs for me to haul a load, then how can I know if I’m going to make money with it?)
There’s a lot of math involved with this method of calculating revenue. Of course, software is going to make it simple – as long as you aren’t the one doing the programming of the calculations. Averaging one’s income over a longer period of time will give a more precise picture of a trucking business’s revenue than going load to load.
Think about this: a round trip from Ohio to Florida. But the load down is $2.50 a mile – a nice $3,000 haul. But coming back up, the best load to be found to Ohio pays only $1.08 per mile. That’s a week’s worth of driving, a good 2,400 miles for an income of $4,300. If you try to compute a revenue per mile, one leg of the trip looks good, while the other looks very, very bad.
Consider another load: Ohio to Indiana. It’s an easy 300 miles at $2.33 per mile. Turn it around and come home for $2.67 per mile and get another $800. For 600 miles, it’s $1,500. Nice. That’s $2.50 per mile for the trip. But’s just a day’s worth of work. You’d need to repeat the lane three times a week to get near the take from the Ohio/Florida trip. That would get you $4,500 per week, with only 1,800 miles.
By sharing the revenues over a longer period of time, you get a better sense of what your revenue per mile is and what it needs to be to make a profit.
Short Trips and Small Pay
I think drivers have to know the cost of short trips. Like the example I made above, some trips can be pretty profitable. But unless you build a strategy and a plan, too many short trips can lead to a lot of deadhead miles. In the end, you may end up paying for those quick, convenient trips when taking longer jobs would be better for you in the long haul.
(Oh, come on, you know I’ve been waiting to use that pun for a while now.)
Customers don’t care about how far you have to drive with an empty trailer to pick up their load. You have to care about it. I generally accepted that 50 miles deadhead was part of the way that I had to do business. If the load was further away, I had to be sure that I’d know I was going to make enough money to justify the trip. Knowing my revenue per mile helped me make smart decisions. It will help you make smarter load decisions too.
How Do You Find Your Revenue Per Mile? I Use TruckingOffice.
Not all trucking management software programs are equal. Many of them produce reports that bankers like and accountants want, but what about what you need as a trucker?
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