Mercedes Mullins
Owner-operator truckers face a variety of expenses, but fuel costs are the most significant and hardest to predict. Fuel prices are constantly changing, and the amount of fuel used depends on the type of freight and weight hauled, as well as driving techniques. In 2021, the average owner-operator spent 48 cents per mile on fuel, or $45,605 overall. This equated to 23.4% of their revenue. Fuel cards, freight factoring, and fuel surcharges can help owner-operators manage their fuel expenses, but they must also consider ways to improve fuel efficiency and reduce costs.
| Characteristics | Values |
|---|---|
| Fuel as a cost | Fuel is the largest owner-operator expense and often the most difficult to project. |
| Average cost per gallon | As of April 4, 2022, the average national diesel fuel cost was $5.144/gallon. |
| Average cost per gallon in Gulf Coast States | $4.929/gallon |
| Average cost per gallon in California | $6.289/gallon |
| Average cost per gallon in 2023 | $4.215 |
| Average cost per gallon in 2024 | $5.55 |
| Average cost per gallon with federal and state taxes in 2024 | $5.55 + $0.244 (federal tax) + $0.3476 (state tax) = $6.1416 |
| Average miles driven per year | 104,000 – 156,000 miles |
| Average fuel economy | 6.5 miles per gallon |
| Average fuel consumption per year | 24,000 gallons |
| Average cost of fuel per year | $45,605 (2021) |
| Average cost of fuel per mile | $0.48 (2021) |
| Average cost of fuel as a percentage of revenue | 23.4% (2021) |
| Fuel cards | Truckers Advantage Fuel Card, Fuel cards by freight factoring companies |
| Fuel surcharges | Additional fees charged by trucking companies to customers to cover fluctuating fuel costs |
| Fuel contracts | Contracts with wholesale providers to lock in fuel prices for a set period |
| Fuel efficiency improvement techniques | Using cruise control, avoiding quick acceleration and braking, keeping tires at optimal pressure, minimizing idling, controlling speed, finding the engine's "sweet spot", planning routes |
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Fuel cards
Fuel is the largest and most expensive controllable cost for owner-operator truckers. With fuel prices constantly fluctuating, fuel cards can provide stability in predicting and covering fuel costs.
In addition to reducing fuel costs, fuel cards can increase profitability by eliminating the need to keep receipts or manually record fuel purchases. Some cards also have mobile apps that track purchases automatically, simplifying IFTA reporting. Fuel cards can only be used to purchase fuel or pay for specific purchases at fuel stations, and they are PIN-protected, making them secure.
When choosing a fuel card, it is important to consider any fees that may be associated with the card, such as account setup fees, administrative fees, and late fees. It is also worth looking for cards that offer additional benefits, such as partner discounts for hotels, truck accessories, maintenance, and emergency services.
By wisely tracking and managing fuel expenses with fuel cards, owner-operator truckers can simplify their business tasks, reduce costs, and improve long-term success.
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Negotiating fuel surcharges
Fuel is the largest expense for owner-operator truckers, and fuel surcharges can make up a significant chunk of the overall cost of a shipment. With fuel prices in constant flux, negotiating a fuel surcharge with every contract can provide stability in predicting and covering fuel costs.
A fuel surcharge is a fee agreed upon by a carrier and shipper that reflects the average cost of fuel. It is a way for carriers to ensure their income remains steady despite surging fuel costs. This negotiated fee ensures that the carrier doesn't incur losses if fuel prices increase. Fuel surcharges are charged per mile or as a percentage of the load, and they allow owner-operators to avoid the costs of fluctuating fuel prices while keeping profits intact.
There are currently no legal restrictions or regulations regarding fuel surcharge rates, so it is up to the owner-operator to determine how much to charge. It is important to keep an eye on fuel prices and evaluate your baseline fuel price to ensure your fuel surcharge prices are competitive with other carriers. A fuel surcharge is typically calculated as a percentage of the difference between the effective fuel price and a benchmark fuel price set by the carrier. For example, if a carrier has a baseline fuel price of $3.00 per gallon and the current diesel price is $4.00 per gallon, the 100% fuel surcharge would mean charging an extra amount equal to its base freight cost.
To negotiate fuel surcharge rates, it is essential to keep track of fuel prices and rate trends. Strategies such as establishing the correct fuel baseline, implementing surcharge caps and floors, and determining whether a fixed or variable surcharge rate is best for your business can help ensure your negotiation goes smoothly. Additionally, using a fuel surcharge calculator can help you determine the correct surcharge rates by cost per gallon and miles per gallon.
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Fuel efficiency
Fuel is the largest expense for owner-operator truckers and is a highly variable cost that can be difficult to project. Owner-operators alone consume nearly 8.4 billion gallons of fuel per year, with fuel costs sometimes surpassing driver pay.
There are two basic ways to improve fuel efficiency: setting up vehicles to use fuel more efficiently and operating vehicles in ways that use less diesel.
Setting up vehicles to use fuel more efficiently
- Buy trucks with automatic transmissions. However, manual transmissions are more fuel-efficient than automatic transmissions, so if you are comfortable with a manual, this could be a better option.
- Close the gap between the power unit and the trailer with trailer gap devices.
- Install auxiliary power units (APUs) and/or bunk heaters to reduce idling.
- Avoid aftermarket devices that block airflow like radiator covers and grille guards.
- Make an informed tire purchase: Look for tires that deliver excellent traction, long tread life, and rolling resistance, which will improve your fuel economy.
- Aerodynamic devices such as TruckWings, trailer skirts, and trailer tails have been proven to increase efficiency.
Operating vehicles in ways that use less diesel
- Drive at or just below the speed limit. Every 5 mph you drive above 60 mph is like paying an additional 20 cents per gallon for fuel.
- Use cruise control whenever possible.
- Avoid quick acceleration and braking, which take more energy.
- Keep tires at optimal pressure.
- Minimise idling. For every hour of idling, an average truck burns between 1 and 1.5 gallons of gas.
- Plan your routes: Eliminate deadheads and avoid driving empty miles.
- Find your engine’s “sweet spot”, or the most efficient revolutions per minute (rpm) to run your engine, which reduces the amount of fuel you burn. A good sweet spot is 1250–1350 rpm.
- Use a fuel card: Fuel cards let you purchase fuel at a discounted price.
- Use fuel-saving apps: These can provide real-time fuel price comparisons, live traffic alerts, turn-by-turn navigation, and load booking.
- Negotiate fuel surcharges: With fuel charges constantly changing, negotiating the fuel surcharge with every contract can provide stability in predicting and covering fuel costs.
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Fuel costs per mile
Fuel is the largest owner-operator expense and the most expensive controllable cost for truckers. Small changes in fuel costs can have a significant impact on profitability.
There are several ways to calculate fuel costs per mile. One way is to divide the total fuel costs over a period of time by the total number of miles driven during that same time period. For all of 2021, the average owner-operator spent 48 cents per mile on fuel. This number can vary depending on the type of freight and weight being hauled. Dry van owner-operators spent 45 cents per mile on fuel, reefer owner-operators spent 51 cents per mile, and flatbedders spent 52 cents per mile.
Another way to calculate fuel costs per mile is to first determine the fuel efficiency of the truck, which is the number of miles the truck can travel per gallon of fuel. Semi-trucks average about 6.5 miles per gallon, but this can vary depending on where and how you drive, as well as the age of the truck. To calculate fuel cost per mile, divide the distance by the fuel efficiency, then multiply that number by the fuel price.
There are several ways to improve fuel efficiency and reduce fuel costs. These include:
- Driving at or just below the speed limit
- Using cruise control
- Avoiding quick acceleration and braking
- Keeping tires at optimal pressure
- Minimizing idling
- Buying trucks with automatic transmissions
- Installing auxiliary power units (APUs) and/or bunk heaters
- Avoiding aftermarket devices that block airflow
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Fuel taxes
Fuel is the largest expense for owner-operator truckers, and fuel taxes are a significant component of this cost. Truckers are required to pay fuel taxes in order to maintain the roads and support infrastructure development and highway maintenance.
In the United States, fuel taxes are filed four times a year by drivers and carriers. The International Fuel Tax Agreement (IFTA) simplifies the process of reporting fuel taxes and fuel usage for carriers driving interstate. Before the IFTA, carriers and drivers had to obtain fuel permits for each state they entered and report fuel taxes directly to those states. The IFTA now tracks fuel taxes across states and distributes them accordingly. However, some states like New Mexico, New York, and Oregon still require fuel taxes to be reported directly to them, and Oregon does not collect taxes at the pump. Additionally, Kentucky, New Mexico, and New York require weight-mile taxes to be reported, and special permits are needed to drive through these states.
To file fuel taxes, truckers must report the total miles travelled in each jurisdiction and the total gallons of fuel used. The federal diesel tax in the US is 24.4 cents per gallon, and the average state tax is 34.76 cents per gallon. Texas, for example, charges 20 cents per gallon on gasoline or diesel fuel. Truckers can use trucking maintenance software to organise their fuel taxes and prevent errors, as penalties may be imposed for late or missed reporting.
Owner-operator truckers can also improve their fuel efficiency to reduce costs. This can be achieved by purchasing trucks with automatic transmissions, using trailer gap devices, installing auxiliary power units, driving at or below the speed limit, using cruise control, and keeping tires at optimal pressure.
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Frequently asked questions
Fuel is the largest expense for owner-operator truckers and it is difficult to project. In 2021, the average owner-operator spent $45,605 on fuel. This can vary depending on the type of freight and weight being hauled.
Owner-operator truckers can save on fuel costs by using fuel cards, which offer benefits like fuel discounts and simplified expense tracking. They can also improve their fuel efficiency by using vehicles that are more fuel-efficient, such as trucks with automatic transmissions, and by driving in ways that use less diesel, such as driving at or just below the speed limit.
Owner-operator truckers consume nearly 8.4 billion gallons of fuel per year. On average, an owner-operator consumes around 24,000 gallons of fuel every year.
Fuel costs are a critical factor in determining the profitability of each haul and the financial health of an owner-operator's trucking business. Fuel is a variable expense that changes from month to month depending on the number of miles driven. It can account for 25% or more of a trucking business's operating expenses.
