How to Calculate Load Profitability
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A load is profitable when its net revenue per mile exceeds your cost per mile. Net RPM is gross revenue minus tolls, broker or platform fees and total fuel cost, divided by loaded miles plus deadhead miles. The gross rate on the board tells you almost nothing until you have run that.
The formula
Net RPM = (Gross Revenue − Tolls − Fees − Fuel Cost) ÷ (Loaded Miles + Deadhead Miles)
Then the only question that matters:
Is Net RPM greater than your Cost Per Mile?
Why the gross rate misleads
Two loads are posted at $2,600. The first runs 1,000 miles from where your truck sits. The second runs 1,000 miles from a pickup 200 miles away.
| Line item | Load A | Load B |
|---|---|---|
| Gross | $2,600 | $2,600 |
| Loaded miles | 1,000 | 1,000 |
| Deadhead miles | 15 | 200 |
| Total miles | 1,015 | 1,200 |
| Fuel cost at $0.55 a mile | $558 | $660 |
| Tolls | $40 | $40 |
| Net revenue | $2,002 | $1,900 |
| Net RPM | $1.97 | $1.58 |
Same posted rate, 39 cents a mile apart. Against an operating cost of $1.80, one load makes money and the other loses it.
Working out your cost per mile
You cannot evaluate a load without this number, and it is specific to your operation. Total your annual costs and divide by annual miles:
- Fuel. The largest variable cost, and the one that moves most.
- Driver pay. Including your own, if you drive. Paying yourself nothing is not a low cost, it is a hidden one.
- Maintenance and tires. Averaged, not just the months nothing broke.
- Insurance. Liability, cargo, physical damage and occupational.
- Truck payment or depreciation.
- Permits, licensing, IFTA, ELD subscriptions and factoring fees.
Fixed costs are spread across whatever miles you actually run, which means an empty week raises your cost per mile on every load in it. Work out your cost per mile.
The costs people leave out
Origin deadhead. The most common omission. Miles to the pickup are miles you pay for and do not get paid for.
Fuel surcharge treatment. If FSC is separate from linehaul, be clear which number you are working from. Comparing one load's all-in rate against another's linehaul is how you talk yourself into a bad load.
Detention exposure. A load into a facility known for four hour waits costs a half day you could have run elsewhere. Detention pay rarely covers it.
Where it leaves you. A load paying well into a market with no outbound freight can cost more in the next leg than it made in this one.
What good looks like
Net RPM needs to clear your operating cost with margin left. As a rough guide, most dry van operations need to see $2.00 to $2.50 per mile all-in to sustain a profit, and reefer and flatbed run higher because the equipment and the work cost more. Your own number is the one that counts. More on rate per mile.
Run it on your own numbers
Use the load profitability calculator. Enter the rate, the miles and your cost per mile, and it works out the net.
Frequently asked questions
Yes. Deadhead miles cost fuel, wear and hours, and the load is what caused them. Excluding them makes every load look better than it is.
Sometimes, when it repositions the truck into a market with better outbound freight. The right comparison is the two load total, not the one in front of you. More on backhaul strategy.
Quarterly at minimum, and after any change in fuel prices, insurance renewal or truck payment.
It does, but compare like with like. If you are evaluating one load's linehaul against another's all-in rate, the comparison is meaningless.
Related
Hey Bubba! screens every load against your cost per mile automatically, including deadhead, before it is pursued. See how
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