If you own a working truck, you already know that the cost of diesel fuel is sky-high.
If you haven’t seen it at the pump, take the word of the U.S. Energy Information Administration. On April 13, the U.S. national average price for a gallon of diesel fuel was $5.61 per gallon. That’s up $2.03 (about 36%) from a year ago. If your truck gets 6.5 miles per gallon of fuel, it’s costing you another 31 cents for every mile you drive.
Know your cost per mile
Regardless of current fuel pricing, it’s important to know your per-mile cost of operation. If you don’t, then every decision you make regarding accepting or passing on loads will be based on guesswork. That’s a poor way to run a business in any economy — and a disastrous one during tough times.
At a minimum, you should know how much you need to break even before you even consider a load.
Remember, too, that load postings are based on origin-to-destination mileage. They don’t include your deadhead miles to get to the pickup point, additional miles you’ll drive due to routing and miles you’ll drive after delivery to wherever you’ll work out your next load. You’ll need to estimate these in order to determine whether an offered load is worth your effort.
Understand fuel usage
Fuel expense is always a large part of total operating expense; in fact, it’s often the largest. Because of this, it’s helpful to understand as much about fuel usage as you can. This entails logging every fill up, every tank, to identify trends that can be used to your advantage.
Whether you use an app, a spreadsheet or a sheet of lined paper, record every fuel purchase the gallons purchased and the mileage since the last fill. Calculate the fuel mileage you have achieved for that tank of fuel. Additional columns can be used to identify fuel brand and any conditions of that trip that could have impacted the mileage.
After a while, you’ll be able to identify trends that impact fuel mileage.
• Wind Direction
A common factor that’s easy to miss is wind direction. Headwinds, for example, can increase fuel consumption considerably. Airline pilots routinely plan for headwinds or tailwinds, taking advantage when they can to maximize fuel economy.
Truckers don’t always have the same options, but sometimes there’s a workaround. Instead of bucking a headwind, for example, a driver might choose to travel at night, after winds die down, or to monitor weather reports and adjust driving schedules to after a front passes through.
• Fuel Prices
Since fuel prices can differ from station to station, truck owners can somewhat control this expense with a little shopping. Prices posted on signs can be helpful, but fuel cards and other programs often offer discounts from the posted prices. Be sure you’re taking advantage of the best prices you can. Trucking-specific apps allow drivers to report fuel prices they find.
Also, be aware of service charges and fees on fuel cards: Know what you’re paying before you pump.
• Fuel Tax
One drawback to shopping for the best fuel prices is running afoul of International Fuel Tax Association (IFTA) requirements.
Fuel prices can fluctuate from state to state, and it’s tempting to buy in states where fuel is cheapest. IFTA tracks mileage driven in each state, however, requiring quarterly reports to settle accounts. If you haven’t purchased enough fuel to cover the fuel tax for the miles you’ve driven, you may be required to pay the fuel tax separately.
It’s important to track fuel purchases in each state to make sure you’re buying enough fuel in each state you drive in.
Remember, however, that although fuel prices might be fluctuating wildly, fuel taxes are not. Georgia, for example, charges just shy of 37 cents per gallon tax per gallon. Whether diesel is selling for $1 per gallon or $10, the state gets the same amount of tax for each gallon.
So, when fuel prices are high, buying in states where fuel is cheaper makes sense … as long as you make up the difference later when prices come down.
• Sales Tax
The exception to this rule is sales tax. Only four continental U.S. states charge sales tax on diesel fuel — California, Florida, Illinois and Michigan. Since IFTA does not collect state sales taxes, it may be cheaper in the long run to purchase fuel elsewhere and pay any fuel taxes owed through IFTA collection.
Review driving habits
Saving fuel is saving money, especially when fuel costs are high. A review of your driving habits can’t hurt. Driving a few mph slower or paying more attention to the time your engine idles can pay off in higher fuel mileage.
Take advantage of technology
Consider an investment in fuel-saving technology, too. Trailer skirts, hub caps, spoilers are proven to be effective in reducing fuel consumption. A recent study released by MVT Solutions showed a fuel savings of 140 gallons per year from the use of Eco Flaps instead of traditional mud flaps. At the April 13 national average price of $5.61, that’s $784 in your pocket in a year instead of your fuel tank. It may not seem like much, but it’s an investment that pays off.
Never forget the fuel factor
Finally, consider fuel in every load decision you make. Always ask if quoted rates include a fuel surcharge.
Don’t be afraid to negotiate; in fact, make it a habit to always ask for more. Brokers often have some leeway in the rates they quote and may be willing to work with you on rates.
As capacity continues to shrink in the trucking marketplace, there will be more competition for available trucks. Shippers and brokers may be more willing to sweeten the pot if they know carriers will go elsewhere for freight.
Remember that your fuel costs apply to deadhead miles too. Include those miles in your calculations.
High fuel costs are a problem every carrier — from owner-ops with single trucks to mega carriers with thousands — faces. Your success depends on your ability to minimize the impact on your business. That starts with knowing your break-even cost per mile, including expenses for fuel. Decisions you make daily will impact your profit and loss statement when tax time rolls around again.
Cliff Abbott is an experienced commercial vehicle driver and owner-operator who still holds a CDL in his home state of Alabama. In nearly 40 years in trucking, he’s been an instructor and trainer and has managed safety and recruiting operations for several carriers. Having never lost his love of the road, Cliff has written a book and hundreds of songs and has been writing for The Trucker for more than a decade.
