What is cost per mile?
Also called CPM
Cost per mile is a carrier's total operating cost divided by total miles driven, including empty ones. It is the number that decides whether a given rate is profitable.
It combines fixed costs that accrue whether or not the truck moves, such as insurance and truck payments, with variable costs that scale with distance, such as fuel, tyres and maintenance.
Because fixed costs are spread across whatever miles are actually run, cost per mile rises when a truck sits. A week of low utilisation raises the cost of every mile driven that week.
What it means on a dispatch desk
Most carriers who think they know their cost per mile have calculated it on loaded miles and left out their own wage. Both errors flatter the number, and a desk negotiating against a flattering number accepts loads that lose money while believing they clear. Divide by total miles, include every fixed cost, and recompute quarterly rather than once at the start.
Related terms
- DeadheadDeadhead is any distance a truck drives empty, most often between delivering one load and reaching the pickup for the next. Those miles cost fuel, hours and wear while earning nothing.
- LinehaulLinehaul is the base charge for moving freight from origin to destination, excluding fuel surcharge and every accessorial. It is the core of the rate.
- Dispatch feeA dispatch fee is what a dispatch service charges a carrier for finding and booking loads, usually a percentage of the linehaul or a flat weekly amount per truck.
- BackhaulA backhaul is a load that moves a truck back toward its home base or toward the next place it wants to be, rather than further away. It exists to stop the return trip running empty.
Put cost per mile in context when researching carrier leads by state, including Texas, California and Illinois.
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