Regan Brown
Fuel is the most expensive controllable cost for truck companies. The amount spent on fuel depends on several factors, including the type of equipment used, the skill of the drivers, the lanes and loads chosen, and the fluctuating prices of fuel. On average, truck drivers spend $50,000 to $70,000 per year on fuel, with diesel prices hovering around $3.00 per gallon. Fuel cards are a popular payment method for trucking companies, offering benefits like fuel discounts and simplified expense tracking. Some companies may also enter into fuel contracts with wholesale providers to lock in fuel prices for a set period. Understanding fuel costs is crucial for budgeting and determining the profitability of each haul.
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What You'll Learn
Fuel cards and discounts
Fuel cards are a popular payment method for trucking companies and owner-operators. They offer benefits like fuel discounts and simplified expense tracking, making them a preferred choice for managing fuel expenses efficiently.
For example, the Truckers Advantage Fuel Card includes cost-plus discounts at independent fuel stops and a 10% discount at all Pilot Flying J locations. The OTR Fuel Card provides discounts of up to $2.25 per gallon with average savings of $0.50 per gallon and $0 transaction fees at over 2,500 in-network locations. The TCS Fuel Card offers similar benefits with zero transaction fees at in-network truck stops and significant fuel discounts.
Some companies also offer fuel surcharge programs, which allow trucking businesses to charge customers additional fees to cover fluctuating fuel costs and ensure profitability. Additionally, freight factoring can assist truckers by providing immediate cash flow boosts to cover fuel costs and other expenses.
By utilizing fuel cards and taking advantage of discounts, trucking companies can gain a competitive advantage in the market and improve their overall financial health.
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Company vs. owner-operator costs
Fuel is the largest owner-operator expense and often the most difficult to project. For all of 2021, the average owner-operator spent $45,605 on fuel. This number can vary depending on the type of freight and weight being hauled. Dry van owner-operators spent $45,416 on fuel, Reefer owner-operators spent $56,165 on fuel, and Flatbedders spent $43,127 on fuel. Fuel costs have increased in 2022 and for the first quarter of 2022, the average owner-operator spent $41,632 on fuel.
As a company driver, you may not know how much you spend on fuel because companies get a discount off the pump price. The company's discount is applied at corporate headquarters, so even the stations where fuel is purchased do not know the cost.
Owner-operators can use fuel cards to manage their fuel expenses. These cards offer benefits like fuel discounts and simplified expense tracking.
Owner-operators can also enter into fuel contracts with wholesale providers, locking in fuel prices for a set period. This can help owner-operators manage their finances more effectively.
In addition to fuel costs, owner-operators have other expenses, including truck payments, maintenance, insurance, permits, and licenses. Owner-operators typically work at a 5% profit margin, not including salary. This means that for every $20 in gross revenue, only $1 is profit, with the other $19 going towards costs.
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Fuel as a percentage of revenue
Fuel is the most significant and unpredictable trucking cost. Fuel costs are typically covered by the trucking company as part of operational expenses. However, carriers are almost always responsible for their fuel costs. Fuel expenses make up a significant portion of their budget and directly affect net income.
For all of 2021, the average owner-operator spent $45,605 on fuel. This number can vary depending on the type of freight and weight being hauled. Dry van owner-operators spent $45,416 on fuel, reefer owner-operators spent $56,165 on fuel, and flatbedders spent $43,127 on fuel. For the first quarter of 2022, the average owner-operator spent $41,632 on fuel.
Another way to look at fuel costs is on a percentage of revenue basis. To do this, you take the dollar amount spent on fuel over a period of time and divide it by the revenue generated over the same period. For all of 2021, the average owner-operator spent 23.4% of their revenue on fuel. This number can vary depending on the type of freight and weight being hauled. Dry van owner-operators spent 23.2% of their revenue on fuel, reefer owner-operators spent 28.3%, and flatbedders spent 30.4%. Fuel costs have increased in 2022, and for the first quarter of 2022, the average owner-operator has spent 25.2% of their revenue on fuel.
Truck drivers spend an average of $50,000 to $70,000 per year on fuel. This amount varies widely and is influenced by factors such as the routes taken, the efficiency of their trucks, and the fluctuating prices of fuel. Fuel surcharges are additional fees that trucking companies calculate and charge customers to cover the fluctuating costs of fuel. A 100% fuel surcharge is a percentage-based fuel surcharge passed along with its base freight. This percentage is calculated based on the difference between the effective fuel price and the benchmark fuel price set by the carrier.
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Fluctuating fuel prices
Fuel is the most expensive controllable cost for truck drivers and trucking companies. The cost of fuel depends on several factors, including the tank's capacity, the current price of fuel, the routes taken, the efficiency of the trucks, and the fluctuating prices of fuel. The average truck driver spends $50,000 to $70,000 per year on fuel, and this figure can vary depending on the type of freight and weight hauled. For example, dry van owner-operators spent $45,416 on fuel in 2021, while reefer owner-operators spent $56,165.
To manage rising fuel costs and ensure long-term sustainability, trucking companies must adopt strategic approaches. One strategy is to utilize fuel cards, which offer benefits such as fuel discounts and simplified expense tracking. Another strategy is bulk fuel purchasing, where companies buy large quantities of fuel at a fixed price through futures contracts or agreements with suppliers. This provides price stability, volume discounts, and improved budgeting. Additionally, trucking companies can implement fuel surcharges, which are additional fees charged to customers to offset the fluctuating costs of fuel.
To safeguard against the impacts of rising fuel costs, truckers can adopt modern mechanical strategies to improve oil efficiency and explore renewable and sustainable energy sources. They can also adopt the nearshoring approach, reducing transportation lengths by sourcing raw materials and products from locations closer to the end market.
While fuel prices fluctuate, it's important to note that company drivers may not know their exact fuel expenses as companies often receive discounts that are applied at the corporate level. However, owner-operators and small fleet operators bear the full impact of rising fuel costs, affecting their profitability and competitiveness.
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Fuel taxes
Fuel is the most expensive controllable cost for truck drivers and trucking companies. In 2021, the average owner-operator spent $45,605 on fuel, with this figure rising to $56,165 for Reefer owner-operators. In 2024, truck drivers are estimated to spend $50,000 to $70,000 per year on fuel.
IFTA is a system that helps carriers track and pay fuel taxes across different states. Carriers must obtain an IFTA license in their home state and pay fuel taxes at the pump, reporting these taxes to the IFTA agency in their base state. IFTA then distributes the taxes to the corresponding states. IFTA licenses must be renewed annually, and carriers must file quarterly fuel tax reports, covering all qualified vehicles and paying the taxes owed.
Additionally, federal taxes in the form of excise taxes are levied on gasoline and diesel fuel at rates of 18.3 cents and 24.3 cents per gallon, respectively. These taxes contribute to highway maintenance and infrastructure development.
To simplify the fuel tax process, carriers can utilise fuel cards that offer benefits such as fuel discounts and expense tracking. Freight factoring is another option, providing immediate cash flow boosts to cover fuel costs and expand business operations.
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Frequently asked questions
On average, truck drivers spend $50,000 to $70,000 per year on fuel. In 2021, the average owner-operator spent $45,605 on fuel.
The amount companies spend on truck fuel is influenced by factors such as the routes taken, the efficiency of their trucks, and fluctuating fuel prices.
Companies manage the cost of truck fuel by monitoring fuel prices and optimising routes for fuel efficiency. They may also use fuel cards, which offer benefits like fuel discounts and simplified expense tracking.
Company drivers may not know exactly how much they spend on truck fuel, as the company often gets a discount off the pump price. The cost of fuel is typically covered by the trucking company as part of operational expenses.
Owner-operators typically spend more on truck fuel than company drivers, as they drive more miles. In 2021, owner-operators spent an average of 23.4% of their revenue on fuel, while the average for all truck drivers was around 25%.
