Rajan Wilcox
Owner-operators of trucking businesses spend a significant amount on fuel, which is their most expensive controllable cost. The average owner-operator spent $45,605 on fuel in 2021, with some spending between $50,000 and $70,000 annually. Fuel costs can be reduced by taking advantage of discounted fuel programs, tracking fuel consumption, and optimising routes to minimise fuel use. Owner-operators also face other significant expenses, such as truck payments, insurance, maintenance, and taxes, making cost management crucial for profitability.
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What You'll Learn
Fuel is the largest owner-operator expense
Fuel is the largest expense for owner-operators, and it is often difficult to predict how much will be spent on it. The average owner-operator spent $45,605 on fuel in 2021. This number varies depending on the type of freight and weight being hauled. For example, dry van owner-operators spent $45,416 on fuel, while reefer owner-operators spent $56,165.
As an owner-operator, fuel is your most expensive controllable cost. The cost of fuel can be calculated in a few ways. One way is to look at the cost per gallon each time you fill up your tank. Another way is to calculate the cost as a percentage of revenue. To do this, divide your fuel costs by your revenue over the same period. For 2021, the average owner-operator spent 23.4% of their revenue on fuel.
You can also calculate the cost of fuel per mile. This is done by dividing your total fuel costs by the total number of miles driven. This calculation can help you estimate your cost-per-mile and inform your route planning.
There are ways to reduce fuel consumption and save on fuel costs. For example, investing in route optimization software can help reduce fuel use and idle time. Additionally, maintaining your equipment and keeping it in good working order can improve fuel efficiency. Owner-operators can also take advantage of fuel discount programs offered by companies like Schneider, which provides discounted fuel at nationwide truck stops.
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Cost per gallon
Fuel is the largest expense for owner-operators and it can be difficult to project the costs. On average, owner-operators spend between $50,000 and $70,000 on fuel each year. This equates to around 23.4% of their revenue.
The cost per gallon method is the easiest way to look at fuel costs. To calculate the cost per mile, divide the truck's miles per gallon (MPG) by the current cost per gallon of fuel, and then multiply by the number of miles you plan to drive.
There are ways to reduce fuel consumption and, therefore, costs. Firstly, speed is the main reason for increased fuel consumption, so reducing speed can help to lower costs. Idling requires about a gallon of fuel per hour, so this should also be avoided.
Route optimization software can be used to reduce fuel use and idle time, and some companies offer fuel discount programs.
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Cost as a percentage of revenue
Fuel is the largest expense for owner-operators, and it is also one of the easiest ways to save money. The average owner-operator spent $45,605 on fuel in 2021. This number varies depending on the type of freight and weight being hauled. For example, dry van owner-operators spent $45,416 on fuel, while reefer owner-operators spent $56,165.
When looking at fuel costs as a percentage of revenue, the average owner-operator spent 23.4% of their revenue on fuel in 2021. This number also varies depending on the type of freight and weight being hauled. Dry van owner-operators spent 23.2% of their revenue on fuel, while reefer owner-operators spent 28.3%. Fuel costs have increased in 2022, and the average owner-operator is expected to spend a higher percentage of their revenue on fuel.
Owner-operators can calculate their fuel costs as a percentage of revenue by dividing the dollar amount spent on fuel over a period by their revenue generated over the same period. They can also calculate their cost per mile by dividing their total fuel costs by the total number of miles driven. This information can help owner-operators understand their fuel efficiency and identify areas where they can save money.
There are several ways for owner-operators to reduce their fuel costs. For example, they can invest in technology solutions like route optimization software to reduce fuel use and idle time. They can also negotiate fuel surcharges with every contract to stabilize fuel costs. Additionally, owner-operators can consider the long-term costs when buying tires and opt for those that offer excellent traction, long tread life, and rolling resistance, which will improve fuel economy.
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Cost per mile
Fuel is the largest expense for owner-operators, and it can be difficult to project how much will be spent on it. On average, owner-operators spend between $50,000 and $70,000 on fuel each year, with some sources giving the average as $45,605 for 2021. However, this can vary depending on the type of freight and weight being hauled. For example, dry van owner-operators spent $45,416 on fuel in 2021, while reefer owner-operators spent $56,165.
To calculate the cost per mile, you can divide your total expenses for the month by the total number of miles driven in that month. For example, if your expenses totalled $3,000 and you drove 10,000 miles, your cost per mile would be $0.30.
Another way to calculate the cost per mile is to divide your variable costs by your total miles driven, and your fixed costs by your total miles driven. You can then add your fixed costs per mile and your variable costs per mile to get your total cost per mile.
The cost per mile can also be calculated by dividing your truck's miles per gallon (MPG) by the current cost per gallon for fuel, and then multiplying by the number of miles you plan to drive.
There are also ways to reduce fuel consumption and, therefore, the cost per mile. These include:
- Finding your engine's "sweet spot", which is the most efficient revolutions per minute (rpm) to run your engine and reduce fuel burn.
- Using a fuel card to purchase fuel at a discounted price.
- Planning your routes to eliminate deadheads and avoid driving empty miles.
- Negotiating fuel surcharges to provide stability in predicting and covering fuel costs.
- Making informed tyre purchases by considering long-term costs and choosing tyres that deliver excellent traction, long tread life, and rolling resistance to improve fuel economy.
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Ways to save on fuel
Fuel is the largest expense for owner-operators, with the average operator spending between $45,605 and $70,000 annually on fuel. This expense is difficult to project and can vary depending on the type of freight and weight being hauled.
Slowing Down
Experts agree that speed is the main reason for increased fuel consumption. Even a slight decrease in highway driving speed can help, and only adds a few minutes to travel time. According to the Department of Energy, every 5 mph over 50 will cost you an extra $0.19 per gallon. So, reducing speed can help save a lot of money in the long run.
Reducing Idling
Idling requires about a gallon of fuel per hour, which can add up to extra costs. Many drivers idle to power climate control and accessories at night, but this can be avoided by using an APU, which can reduce costs by more than $5,000 a year.
Route Optimization
Using technology solutions like a TMS can help track hauled loads and find faster routes. Route optimization software can also help reduce fuel use and idle time while maximizing load capacity. Tools like the Truckstop Load Board can help identify the best locations to fuel up and optimize routes.
Preventative Maintenance
Regular inspections and services can help identify issues before they turn into costly repairs. A well-maintained vehicle is more fuel-efficient, so keeping an eye on things like tire inflation and rolling resistance can help save on fuel.
Choosing the Right Tires
When buying tires, consider the long-term costs by looking for those that offer excellent traction, long tread life, and rolling resistance, which will improve fuel economy.
Tank Storage
Opting for larger tank storage allows you to stock up on cheaper fuel and reduce the number of stops.
Roof Fairing
Implementing a roof fairing can improve fuel efficiency and lead to substantial savings. Even a simple flat-style roof fairing can enhance fuel efficiency by up to 5%.
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Frequently asked questions
On average, owner-operators spend between $45,000 to $70,000 on fuel every year. This amount varies depending on the type of freight and weight being hauled.
The median pay for OTR truckers, including owner-operators, is $50,000 per year. However, successful owner-operators can gross $340,000 to $400,000 per year before expenses. After expenses and taxes, owner-operators can net over $100,000 per year on average.
Owner-operators can reduce fuel costs by opting for larger dual tanks, which allow them to stock up on cheaper fuel and reduce the number of stops. They can also track their fuel consumption and utilise technology solutions to identify the most cost-effective truck stop locations along their routes. Additionally, maintaining their equipment and reducing speeding can help improve fuel efficiency and lower fuel consumption.
Other significant expenses for owner-operators include truck maintenance, insurance, food, permits, and licenses. Owner-operators also need to consider the cost of purchasing or leasing a truck, which can range from $45,000 to $175,000 depending on whether it is new or used.
Fuel is typically the largest expense and most difficult-to-project for owner-operators. It accounts for a significant portion of their revenue, with some spending as much as 23.4% of their income on fuel alone.
