What Effects Cents Per Mile?

What Effects Cents Per Mile?

The Trucking industry uses Cents Per Mile as a basis to the cost analysis for all work done daily. Financially, you will base the work you do based off of the distance you will cover.

The Average Cents per mile is based on supply and demand in the freight market.

There are several variables to watch that affects the CPM (Cents Per Mile)

Location

Where you are located is a highly integrated variable to your current freight market. Each major city has its own freight market. All big companies create economies in their perspective cities, like Tesla in Fremont, CA or the Strawberry market in Southern California, which is seasonal. The industry rates per mile can move like stocks up and down in a period of weeks or months. There are locations however which have higher or lower cents per mile going in or coming out of those locations. A city that is less populous, such as Boise Idaho, will have a great CPM rate going into the city however, due to the low to no volume outbound of the city, you will be forced to drive empty into other markets to retrieve a load. This is the give and take in which you must plan for when routing your weeks.

The Location variable on your Cents per mile calculation will depend on the volume inside of the city or the market itself and the destination you are looking to plan.

Commodity

What you’re transporting is just as important as where you are going. This variable is the difference between transporting general freight such as cereal, and specialized freight such as an oil drill and processor. Commodity affects the CPM heavily depending on the trailer type. General freight is usually carried inside of a 53-foot food grade dry van trailer which the whole economy has a need for. Specialized freight can vary however, it is few and far in between when it comes to finding the volume needed to keep your truck running throughout the year.

Time of Day

Each and everyday loads are booked from loadboards in the mornings for better rates due to trucks desiring a guaranteed option on their next lane. The reason why the time of day is a variable when it comes to CPM is that you must measure the need for a broker or shipper as you are negotiating the rate per mile.
For example, if you are being called at 22:00 pm from a broker that has a sense of desperation due to their initial carrier canceling on them, then you would admittedly give a higher rate per mile given you must head out at such a late time. This is also apparent when you are one of the first callers in the morning for a brokered load, they now have more bargaining power and will ensure your CPM is lower to meet their margins.
Focusing on becoming the answer for the times with the least amount of trucks will excel your efforts in seeking a higher CPM. See what shippers are working 24/7 and would need assistance, always be in contact and lastly keep your truck posted on the popular load boards!

Relationships

Consistently working with the same customers will increase your rapport with them. Proven efficiency and dependability is one of the intangible characteristics that affect CPM. If you are able to prove to your customers in your terminal city that you are the most dependable and easy to work with the carrier then you will be given a load at a higher CPM at an increased rate. This is because longevity is key when it comes to transportation, as a carrier or an owner-operator you will find that certain brokers will become 70% of your business workload due to your niches being congruent. Ensure you are always looking for these types of connections and relationships and do great by them in order to increase your ability for exponential growth in the future!

Best of Luck!

Andrew Gomez
Andrew@AJGTransport.com