Establishing and Improving Cost Per Mile to Land Work

Any courier who has been around the block a few times knows just how competitive the industry is. Courier jobs can be difficult to land when you are competing against both independent operators and major contractors, and when everyone is looking to get the contract by lowering their prices.

When competing for courier jobs, it is vital that you provide an entirely accurate assessment of your operation’s cost per mile. This is important for two reasons: firstly, it allows you to quote realistic prices. Secondly, it provides you with a clear overview of your operation so that you can see where you could be more efficient, enabling you to stay competitive and maximise your profits.

So, what determines your cost per mile figure? Let’s take a look.

Fixed Costs

These are expenses that you have to pay, no matter how much or little work you have. They include insurance, vehicle registration fees, property rental, truck purchase payments, wages and property taxes.

Variable Costs

Any cost that fluctuates is considered a variable cost. Key examples include fuel, maintenance, repair and fines. You have an element of control over these costs (unlike most fixed costs), so these are the key expenditures to analyse to see where savings can be made. Read on for a few handy tips for reducing your variable costs.

Servicing

Your vehicle should be regularly serviced (see the handbook to determine how often) and any mechanical faults should be immediately addressed. A poorly maintained automobile that is not regularly serviced could break down at any moment, and this could cost a fortune to repair. "A stitch in time saves nine", as they say. In addition to the cost of repairs, this could leave you temporarily without a vehicle, preventing you from taking on new work. A well-maintained and regularly serviced vehicle, meanwhile, will operate at maximum efficiency and save you money in the long run.

Tyres

Much like you wouldn’t run a marathon in worn-out shoes, a truck needs a set of quality tyres that are free from wear and tear. Each tyre should also be inflated to the correct pressure. In addition to safety, this can improve fuel efficiency, so be sure to check the condition and pressure at least once every week.

Fuel

Every motorist is painfully aware of how expensive fuel can be. Fuel efficiency can have a huge impact on your profit, so here are a few ways to increase your average miles per gallon:

• Turning the engine off when not required
• Regularly servicing and maintaining your vehicle
• Driving with proper acceleration, braking and speeds
• Maintaining speed over long distances

Return Loads

A return load is a fantastic way to pocket serious cash – and every courier’s dream! The majority of courier jobs will involve making a delivery and then returning in an empty vehicle with the cost covered for both legs. If possible, see if you can pick up a delivery at your original drop-off destination (or nearby) to bring back with you. This may allow you to increase your profit significantly.

It is worth taking the time to figure out your cost per mile in a spreadsheet so that you can provide accurate quotes and look for ways to reduce costs. The above information will start you off on the right foot – and is sure to help you maximise your profits going forward!

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Norman Dulwich is a correspondent for Courier Exchange, the world's largest neutral trading hub for same day courier jobs in the express freight exchange industry. Over 4,800 transport exchange businesses are networked together through their website, trading jobs and capacity in a safe 'wholesale' environment.

Writer and Online Marketing Manager in London.