About 4 years ago we bought our first 1-ton dually, a beast of a machine, a used 1999 Ford F-350 with the 7.3 liter turbo charged engine. The truck is still on the road with 363,000 on the clock. It pulls a Kaufman 3-car wedge, a beast of a trailer, to produce a combination running under 26,000 GVWR. We built an operational cost sheet when we put that truck on the road that was based on and average revenue per mile of $1.55 and a fuel price of $4.10 per gallon. Over the weekend we bought fuel in at a Delaware Valero truck stop for $3.08 a gallon. That’s 24.9% below our target and then ran a trip to Orlando at $2.10 a mile, or 35.5% over the revenue target! Don’t ya just love the snow-bird season!
The cost profile of a 3-car hauler operating under 26,000 GVWR in general terms under our model breaks down like this as a percentage of gross revenue based on $1.55 per mile:
30% Fuel $ .465 cents per mile
30% Driver $ .465 cents per mile
40% Truck $ .62 cents per mile
The truck component includes, insurance, maintenance, registrations, tolls, and depreciation or a truck payment
This week’s 1,050 mile trip from Delaware to Orlando had a gross revenue of $2,200 on a fuel burn of about $ 420 for a fuel cost of 19% of the gross. Keeping the truck cost component a constant at 40%, the lower fuel cost drops right into the pocket of the driver, who now makes 41% or $902 for 2.5 days on the road. Nice! The rates back north will be well below target, but we have some solid dispatch strategies to get that done.
The point is that falling fuel prices will cause us to re-think some dispatch strategies to keep pace. Even if the truck dead-headed 100% of the route home from Orlando and burned another $300 of fuel the total fuel cost for the trip would be 32% and just slightly above the 30% target. Even 1-car on the trailer north bound at $300, which is running at less than 30 cents a mile brings the overall trip back on target. On the back half of this week we’ll be running north with $1,150 on the trailer, just about half the gross revenue of the southbound route, but very profitable overall.
Lower fuel effects dispatch decisions, and the rate per mile needed to run profitably. If we keep the driver pay and truck pay constant ($.62 per mile $.47 per mile for driver) and drop the fuel cost to $ .37 cents per mile the truck can now run profitably at a $1.46 per mile or $ .487 cents per mile per car on the trailer. Running units at under $ .50 cents per mile on a 3-car hauler clearly makes some drivers nervous, but lower fuel costs yields the same net profit.