MAKING YOUR MILES COUNT Robert D. Scheper
Are You Making Enough to Survive 2024? I had a client in my office today who was in a deep financial mess. Their $24k engine job that was done two months ago missed some issues and now it will cost an additional $40-75k (their quote not mine). I ran through their issues one step at a time and helped them evaluate what they should do. This is the part of my job I don’t feel adequate to advise… and I don’t think anyone is qualified, because perseverance through a difficult situation is much more a personal issue than a simple numerical business choice. Often the stress of debt impacts choices and paths. Too often, before they even enter my office for advice, they have already pushed the “enough is enough” button. If the plug is pulled, sometimes it can take years to recoup the losses. Mechanical issues are just one part of the overall choice to shut down or power through. The carrier contract is another major consideration. A very simple judge to find out if the carrier margin is sufficient is a simple litmus test. After fuel and carrier charges 6 • OVER THE ROAD
(not including maintenance and truck payment, see last month’s article), is the amount deposited in your bank more or less than $1.00 per mile? For example: if you drove 11,000 miles in a month, what was the amount deposited? Was it more or less than $11,000? Though this figure can make numerous operators cringe (either too high or too low), it represents a figure that nationally reflects survival. One client was getting $8,500 deposited on 9000 miles traveled ($.94 CPM). I had another operator who got $7,500 on 6000 miles ($1.25 CPM). As far as national averages go, $.94 CPM is a little low, but $1.25 CPM is not. However, the volume of miles is now more of the issue - not the rate. Long distance drivers operate on 10,500-12,500 miles as a national average, so both of the above illustrations would have difficulty surviving with a new truck payment… but not necessarily with a fully paid for truck. When the industry starts to show overcapacity, the first thing to drop is the available miles per month. If it drops too much, even with acceptable margins, survival becomes an issue. JANUARY 2024
