Carrier Management Homework 3

The contract is for a per tractor utilization level of 2,800 miles and it involves a backhaul revenue of $600 to be split 60% for the shipper and 40% for the trucking company. Use MS Excel and the following information to prepare a fixed-variable pricing structure for a private fleet opportunity requiring 10 tractors, 10 drivers and 20 trailers. You should be able to recommend a minimum weekly charge per truck per week. There is an example in your book (p. 207).

Variable Costs

Driver Pay: $0.40/mile

Fringe Benefits: 25% of wages

Fuel: $2.80/Gallon and 10 miles per gallon (new Freightliner Cascadia)

Maintenance: $0.15/mile

Insurance: $0.13/mile

Fixed Costs

Tractor Depreciation: Tractor is sold after three years for $66,000

Trailer Depreciation: Trailer is sold after three years for $9,000

Legalization/Recruiting/Administration: $21,000/year/driver

Tractor Cost: $135,000

Trailer Cost: $42,000

Driver wage split: 30% variable, 70% fixed

Driver benefit at 25%; 30% variable, 70% fixed

Profit split: 70% fixed, 30% variable

On-site manager $75,000

Startup cost: $40,000

Contract duration: 3 years

Operating ratio Target Rate for Truckload Operations: 85%

Weeks per year: 52