Part of The trucking guide
Cost per kilometre: the number that decides which loads to take
If you don't know what a kilometre costs you, you can't tell a good load from a bad one. Here's how to work it out from your own books, with worked examples for an owner-operator and a small fleet.
Key takeaways
- Split your costs into fixed (per month) and variable (per kilometre), then add your own pay
- Judge loads on total kilometres, including deadhead, not just loaded kilometres
- In a fleet, track cost per kilometre by truck. Averages hide the unit that's losing money
Most carriers know their rate per mile or per kilometre. Far fewer know their cost per kilometre, and that's the number that tells you whether a load is worth taking. It also tells you when to walk away from a lane, what to quote a new customer, and whether that older truck is quietly eating your profit.
The good news: if your books are up to date, you already have everything you need to work it out. This article is part of our guide to the financial side of running a trucking company.
Step 1: Split your costs into two piles
Fixed costs are the ones you pay whether the truck moves or not. Work them out per month:
- Truck and trailer payments (or lease payments)
- Insurance
- Plates, permits and licensing
- ELD subscription, phone and software
- Parking or yard rent
- Bookkeeping and accounting
Variable costs go up with every kilometre you drive. Work them out per kilometre:
- Fuel
- Repairs and maintenance
- Tires
- DEF, oil and other fluids
Your bookkeeping should already sort expenses into these categories. If everything is lumped into "truck expenses", that's the first thing to fix. You can't manage a number you can't see.
Step 2: Turn them into a cost per kilometre
Example: an owner-operator with one truck
Dave runs one tractor out of Leduc, mostly on dry van loads across the Prairies. He drives about 160,000 km a year. (All figures in these examples are illustrative. Use your own.)
Fixed costs per month
| Cost | Per month |
|---|---|
| Truck payment | $3,200 |
| Insurance | $1,500 |
| Plates, permits, licensing | $400 |
| ELD, phone, software | $150 |
| Parking | $150 |
| Bookkeeping | $300 |
| Total | $5,700 |
That's $68,400 a year. Spread over 160,000 km, it's about $0.43 per kilometre.
Variable costs per kilometre
| Cost | Per km |
|---|---|
| Fuel (38 L/100 km at $1.60/L) | $0.61 |
| Repairs and maintenance (set aside) | $0.15 |
| Tires | $0.04 |
| DEF, oil, fluids | $0.02 |
| Total | $0.82 |
So Dave's truck costs him about $1.25 for every kilometre it drives.
Don't forget to pay yourself
That $1.25 doesn't include Dave. If he wants to take home $70,000 a year, that's another $0.44 per kilometre. His real break-even is about $1.69 per kilometre driven.
Plenty of owner-operators skip this step. They make a "profit" that's really just their own wages, and then wonder why they're working 60-hour weeks for less than a company driver earns.
Step 3: Count the empty kilometres too
Rate confirmations show loaded kilometres. Your truck burns fuel on every kilometre, including the empty ones getting to the next pickup.
If 15% of Dave's kilometres are deadhead, he's only paid for 136,000 of his 160,000 km. His break-even per loaded kilometre jumps to about $1.98.
Example: which load is better?
Dave is in Regina and has two options:
| Load A | Load B | |
|---|---|---|
| Pays | $2,400 | $1,900 |
| Loaded km | 1,050 | 700 |
| Deadhead to pickup | 250 | 400 |
| Rate per loaded km | $2.29 | $2.71 |
| Total km driven | 1,300 | 1,100 |
| Truck costs ($1.25/km) | $1,619 | $1,370 |
| Dave's pay ($0.44/km) | $569 | $481 |
| What's left | $212 | $49 |
Load B looks better on the rate confirmation. Once you count the deadhead, it leaves Dave with a quarter of what Load A does.
That's the point of knowing your cost per kilometre. It turns "that sounds like a good rate" into a quick, honest calculation.
Step 4: In a fleet, do it truck by truck
A fleet average can hide a truck that's losing money.
Example: two trucks in a six-truck fleet
A small carrier near Nisku runs six tractors. Two of them look like this over a year of about 140,000 km each:
| Unit 101 (2022) | Unit 104 (2015) | |
|---|---|---|
| Truck payment | $40,800 / year | Paid off |
| Fuel economy | 36 L/100 km | 42 L/100 km |
| Fuel per km ($1.60/L) | $0.58 | $0.67 |
| Repairs per km | $0.12 | $0.31 |
| Fuel + repairs per year | $97,000 | $137,000 |
Unit 104 is "free" because it's paid off, but it costs about $40,000 a year more in fuel and repairs. That's almost exactly the payment on Unit 101. The paid-off truck isn't saving the business any money. It's just spending it in a different place, and with more downtime.
You'll only see this if your books track fuel, repairs and kilometres by unit. In QuickBooks Online that usually means using classes or locations for each truck, and coding every fuel-card line and shop invoice to the right one.
Step 5: Keep it current
Fuel prices, insurance renewals and repair bills change through the year. Update your cost per kilometre:
- Monthly, as part of your month-end routine
- Whenever fuel moves by more than about 10 cents a litre
- Before quoting a new customer or a dedicated lane
- At insurance renewal
Related numbers worth watching
- Operating ratio: total expenses divided by revenue. A ratio of 95% means you keep 5 cents of every dollar. Track it monthly.
- Revenue per truck per week: a quick early warning when a unit is sitting.
- Days sales outstanding: how long customers take to pay. See cash flow for carriers.
The bottom line
Your cost per kilometre isn't a one-time spreadsheet. It's a number your bookkeeping should hand you every month. If yours doesn't, or the categories are too muddled to work it out, we can help set that up.
Sources
This article is general information, not advice for your situation. Rules and rates change, so talk to us before acting on it.