A carrier should right-size its fleet by determining whether each truck's expected miles and net contribution are sufficient to cover its monthly fixed-cost allocation, not simply by looking at revenue or utilization in isolation.
Step 1: Calculate Revenue per Total Mile
Revenue per total mile includes linehaul, fuel surcharge, and accessorial revenue divided by all dispatched miles. FreightMarks results cited in the article range from $2.011 to $2.779 per total mile.
The two most profitable carriers in the comparison did not have the highest revenue per mile. Their results were $2.011 and $2.257, demonstrating that rate alone does not determine profitability.
Step 2: Calculate Variable Cost per Total Mile
Variable cost per total mile includes expenses that rise as trucks operate, including:
- Driver pay and related compensation.
- Fuel.
- Tractor maintenance, including shop wages and overhead.
- Other variable operating expenses.
The FreightMarks range was $1.324 to $1.726 per total mile. The two profitable carriers reported $1.323 and $1.548, respectively.
Step 3: Determine Net Contribution per Total Mile
Net contribution per total mile is calculated as:
Revenue per total mile - Variable cost per total mile = Net contribution per total mile
This amount must first cover fixed cost. Anything remaining becomes operating profit.
Carrier A generated $2.011 in revenue per total mile and incurred $1.323 in variable cost, producing $0.688 of net contribution per total mile. Its operating ratio was in the mid-90s.
Carrier B generated $2.498 in revenue per total mile and incurred $1.624 in variable cost, producing $0.873 of net contribution. Despite the higher contribution per mile, Carrier B's operating ratio was in the mid-100s because its trucks did not run enough miles to absorb fixed costs.
Step 4: Identify Monthly Fixed Cost per Truck
Fixed costs continue even when a truck is not moving. The article includes:
- Tractor and trailer depreciation or lease expense.
- Trailer maintenance.
- Insurance.
- Tolls.
- Administrative overhead.
Monthly fixed-cost allocations in the FreightMarks comparison ranged from $5,291 to $9,093 per truck. Carrier A's fixed cost was $6,763 per truck, while Carrier B's was $6,619.
Step 5: Calculate Breakeven Mileage
Breakeven monthly mileage is calculated as:
Monthly fixed cost per truck / Net contribution per total mile = Breakeven miles
For Carrier A:
$6,763 / $0.688 = 9,826 miles
Carrier A averaged 10,250 miles, exceeding breakeven and producing a profit.
For Carrier B:
$6,619 / $0.873 = 7,579 miles
Carrier B averaged only 5,956 miles, leaving too little contribution to cover fixed cost even though its revenue and net contribution per mile were higher.
When Parking a Truck Becomes the Better Decision
A truck should be considered for parking when projected mileage is materially below breakeven, no near-term freight or utilization improvement is expected, and the cash burn from operating exceeds the cost of idling the asset.
Management should evaluate both a 30-day and 90-day outlook. A short-term slowdown may not justify a permanent fleet reduction, but recurring underutilization can make continued operation more damaging than parking equipment.
The analysis should also distinguish accounting profit from cash flow. Some fixed costs continue after a truck is parked, while certain operating cash expenses stop immediately. Both views matter when deciding how quickly to act.
Waiting too long can consume cash that the carrier needs to survive the downturn. Right-sizing is not simply an equipment decision; it is a disciplined comparison of expected freight, contribution, fixed cost, and financial runway.