Thread by @umzuvukilem

Truck Owners and Aspiring Truck Owners: How to Calculate or Differentiate Between A Good rate and Bad Rate

A THREAD

In trucking we have what you call a CPK which stands for 'Cost Per Kilometre'
We also have what you call LOI which stands for Letter Of Intent: Usually when a client or company offers a load to be transported they will pull all details of the load on the LOI.

The LOI would have details such as the loading point, offloading point, the rate or how much they offering to transport the load, the payment terms(100% or full payment after loading or 50% after loading and 50% after offloading or Cash on delivery or weekly payment or fortnight)

Including monthly payment, these are all different kinds of payment terms you get in trucking so the kind of payment term the client is offering will also be on the LOI, the total distance the truck will travel it will also be stated on the LOI.

The formula to calculate CPK is simple: rate of the load ÷ by round trip distance = CPK
NB: it is important to clarify if the kilometres being quoted on the LOI is one way distance or round trip because that plays a huge role when calculating the CPK

because when counting CPK you must use the whole round trip distance. Roundtrip meaning from loading to offloading and back to loading. A rate must be sufficient for you to go and offload and return back to offloading point empty don't let people fool you by decreasing the rate

or offer you a less rate by saying the is a return load. A return load is a separate load meaning its just a bonus on your profits that you have a return load but the main load rate must be so good that you can return back to the loading empty and not worry about getting

or looking for return load because looking for return load it can minimize your productive time because you have to look and wait for the return load because you want to add more profits because the main load rate wasn't sufficient enough for you to return back empty

to the main loading point.Taking a return load if it's available and ready to load must be an option to increase your profit but not mandatory because it can decrease your productivity as it's time consuming.

Something important to note:
A 34 ton Side tipper trailer legal maximum loading capacity is 34 tons
For example: R350 per ton x 400km roundtrip
R350 per ton x 34 tons = R11900
R11900 (total rate) ÷ 400km (roundtrip distance) = R29.75 (CPK)

This is a good rate because it is over R25.
If CPK is below R25 bad rate
If CPK is above R25 good rate

Please note: a flatdeck triaxle, flatdeck superlink trailer, tautliner, tanker and abnormal lowbed trailer loads are calculated different from a side tipper trailer loads.

So when it comes to loads that you transport with either flatdeck triaxle, flatdeck superlink trailer, tautliner, tanker or abnormal lowbed trailer it's calculated different.
I have attached pictures of the trailers below for better understanding.

There is no perfect formula rather my personal formula which I use when charging clients to transport using either flatdeck triaxle, flatdeck superlink trailer, tautliner, tanker or abnormal lowbed trailer.

NB: For flatdeck triaxle, flatdeck superlink trailer, tautliner, tanker or abnormal lowbed trailer total expenses includes diesel to go offload and return to loading point empty, tolls, driver's allowance for food/groceries and truck stop fees.

if it's a long distance he will need money to pay for him to rest at truck stops, if it's cross border load then I also need to consider costs like border charges, agents to assist the truck for clearing it the client didn't preclear the goods before the truck gets to the border.

My formula: total expenses x 40% = the amount + total expenses = the amount(A) x 60% mark up = the amount + the amount(A) = the final rate
For example a load from Johannesburg to Lubumbashi in DRC with flatdeck triaxle, flatdeck superlink, tautliner, tanker or lowbed trailer.

Total expenses: around R85k x 40% = R34k + R85k = R119k x 60% mark up = R71400 + R119k = R190400
This is why the current market related price from Johannesburg to Lubumbashi in DRC is around R190k
Your profit on this load: R190k - R85k = R105k

I know people will say DRC is far and trucks take weeks up to a month to get there. Yes DRC can be unpredictable by having delays at the border. The video below is when the was a delay at the border but it's not an everyday thing.

Also the reason trucks stay long in DRC it's because truck owners take crazy rates which makes them can't afford to return back empty and end up in DRC for weeks looking for loads coming back. So if you take the right rate you can quickly drive back empty

and while driving back you might happen to get a load in Zambia since you passing through Zambia when coming back tomorrow Johannesburg.

Trucking is not hard and is not easy but it's workable as long as you know you are in trucking to build and not to only finance your expensive lifestyle. You must be patient, willing to learn everyday, you even listen and learn from your driver in that way your business grows.

On my next thread I will share the difficult things about the trucking business, how to avoid them and how to grow within the trucking industry. The do's and don'ts of the trucking industry.
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