Transportation costs are unlike anything else your company might have to spend its money on. Unlike most of your other company running costs, the truth is that transportation costs fluctuate throughout the year. For example, what you spend in the first part of the year isn’t going to be the same as your expenditure at the end, even for the exact same distance. How do you calculate accurate transportation costs with fluctuating prices?
How Do You Calculate Transportation Costs?
Here’s your quick, easy guide to transportation costs for businesses.
1. Calculate Your Distance
The first thing you have to calculate in order to find out your transportation costs is your distance. Distance affects transportation costs. Are you shipping goods a long distance? Figure out how many miles the goods will be traveling before you try to calculate anything else.
Remember to account for any alternative routes that you might have to take along the way.
Calculate Your Fuel Cost
Fuel cost is a complicated part of the equation because fuel prices are always changing. Not only are fuel costs not the same from one month to the next, but they’re also hardly the same from one day to the next!
Once you know the current price of fuel, take a closer look at the estimated mileage of your fleet of trucks.
Check Your Trucks Fuel Economy
If you don’t know the fuel economy of your fleet of trucks, then stop to figure it out immediately. The fuel economy isn’t just guesswork, but it’s a number that’s calculated by the manufacturer in order to guarantee reliability – and of course, to help people with their own cost calculations.
Fuel economy is an approximate measurement, but gets you a very close measurement of how many miles per gallon of gas your truck will get.
Remember that this measurement is only truly accurate for a truck that has been kept in great condition – and one that has been well-maintained over time. This is the company’s responsibility. A responsibly maintained fleet has the benefit of lowered insurance payments.
If your fleet doesn’t get the fuel economy you want, there are two options you might consider. Maintain trucks better or replace your fleet with new trucks that have better fuel economy.
All Together Now
Transportation costs are finally calculated by putting everything together. Take the total mileage of the trip and divide that by the trucks fuel economy. Then, multiply that number by the current price of gas.
The final measurement isn’t exact, though it’s one way to get a closer-to-accurate estimate of how much your company can expect to spend on gas in the future. Adjust the measurements with time, especially as the price of fuel changes.
Don’t forget that there are many helpful apps out there designed to make calculating additional costs much easier. If you aren’t sure what your fuel costs are going to be, just use an online calculator to do all the hard work for you.
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