A FreightMath-Based Approach To Right-Sizing Your Fleet

With the ongoing delay in freight market recovery, the KSM Transport Advisors (KSMTA) team has launched an article series containing practical recommendations designed to help carriers “level-set” in any market environment. The need to “prepare to thrive” has become a powerful mantra, reminding us and our clients to stay focused and resilient, even in the face of significant challenges.

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In today’s volatile world of freight, there comes a point when running a truck does more harm than good. While many carriers push for utilization at all costs, FreightMath^TM principles offer a more disciplined, financial lens: trucks that consistently run below breakeven don’t just fail to help – they actively drain profitability. Knowing when to park a tractor can prevent sustained cash burn, protect overhead margins, and allow smarter redeployment of capital.

KSMTA provides a playbook of strategic levers carriers can use to navigate the current freight recession and seemingly never-ending industry headwinds in the companion article, When Will the Great Freight Recession End? Strategies for Carriers To Survive the Storm.

The below information provides a practical example of how carriers can use their financial and operational data and resulting metrics to “right size” their fleet.

The Core FreightMath Question: Is the Truck Contributing to Overhead?

At the heart of FreightMath is a deceptively simple concept: each truck must contribute positively to covering fixed overhead. If a truck’s net revenue – after variable expenses – is insufficient to cover its share of fixed costs, it’s not just unproductive. It’s destructive.

The costs used in this article are calculated average costs as reported by dry van contributors to KSMTA’s FreightMarks^TM benchmarking platform.

Step 1: Calculate Your Revenue Per Total Mile (RPTM)

This is the actual billed revenue divided by total miles. RPTM is highly dependent on each carrier’s strategic footprint; lanes served within the strategic footprint; shipper’s rates and fuel surcharge; broker freight component; and deadhead required to haul the freight.

Variable Cost Per Total Mile (VCPTM) components include:

• Linehaul Revenue: The base billing to your customer for each load
• Fuel Surcharge: The accessorial amount billed to your customer, which is typically based on a schedule provided by the customer. Note broker freight is typically booked as all-in and all of the revenue will be shown in the linehaul revenue section.
• Other Accessorial: Accessorial billings for lumpers, detention, etc.

RPTM in our FreightMarks data ranges from $2.011 to $2.779. As stated above, there are many issues that affect this metric and the number in and of itself is only meaningful when used in conjunction with the steps below. The two most profitable carriers in this dataset have RPTM’s of $2.011 and $2.257 respectively.

Step 2: Calculate Your Variable Cost Per Total Mile (VCPTM)

The expenses included in the VCPTM scale with usage or are consumed with each mile a truck runs. For the purposes of this article, “miles” refers to dispatched or total miles. In most transportation management systems (TMS), dispatched miles include all empty and loaded miles paid to the driver.

VCPTM components include:

• Driver Pay and Benefits: Mileage, in this example
• Fuel: Mileage, in this example
• Tractor Maintenance: Including shop wages and overhead (mileage-based)
• Miscellaneous Variable Costs: Any other mileage incurred costs that do not fit the categories above

VCPTM is highly dependent on each carrier’s length of haul, freight network density, deadhead, fuel purchasing and consumption, tractor fleet age, maintenance practices, etc.

VCPTM in our FreightMarks data ranges from $1.324 to $1.726. As stated above, there are many issues that affect this metric and the number in and of itself is only meaningful when used in conjunction with the steps below. The two most profitable carriers in this dataset have VCPTM’s of $1.323 and $1.548.

Step 3: Calculate Net Contribution Per Total Mile (NCPTM)

NCPTM is a financial measure of how much each mile a carrier runs – whether empty or loaded – contributes to covering fixed overhead. The higher the VCPTM, the fewer miles a carrier needs to run to cover those fixed costs. Conversely, the lower the VCPTM, the more miles are needed to break even on overhead.

The calculation of NCPTM is: RPTM – VCPTM = NCPTM

Two examples of NCPTM calculations from the FreightMarks database are:

• Carrier A: $2.011 – $1.323 = $0.688 (this carrier has an OR in the mid 90’s)
• Carrier B: $2.498 – $1.624 = $0.873 (this carrier has an OR in the mid 100’s)

NCPTM is the amount available to cover fixed costs as discussed below.

Step 4: Know Your Fixed Cost Allocation Per Truck

Fixed costs are generally incurred monthly or annually, and are time-based, not usage-based like variable costs. Fixed costs support a carrier’s trucking operations, but do not increase or decrease based on miles run by the fleet.

Fixed cost components include:

• Tractor depreciation or lease
• Trailer depreciation or lease
• Trailer maintenance
• Insurance
• Tolls
• Administrative overhead

As with the other components discussed above, fixed costs depend on many factors that make up the operational and financial structure of each carrier.

Since the size of carriers varies, we show fixed costs as an amount (or allocation) per truck. In our FreightMarks dataset, the fixed cost per truck ranges from $5,291 to $9,093.

Although Carrier A and Carrier B (above) have similar fixed costs per truck – $6,763 and $6,619, respectively – their NCPTM values and resulting operating ratios differ significantly, highlighting how even small variations in performance metrics can have a major impact on overall financial efficiency.

Step 5: Calculate Breakeven Mileage

A carrier’s breakeven mileage represents the number of miles it must run – at its VCPTM – in order to generate enough variable contribution to cover its fixed costs. The easiest way to calculate this is at the fleet level, using the following formula:

• Variable Contribution Per Total Mile (VCPTM) / Fix Cost Allocation Per Truck = Breakeven Mileage Per Truck

Continuing with the examples of Carrier A and Carrier B from above – with VCPTM values of $0.688 and $0.873, and fixed costs per truck of $6,763 and $6,619, respectively – the breakeven mileage calculations are as follows:

• Carrier A: $0.688 / $6,763 = 9,826 breakeven miles per truck per month (actual are 10,250)
• Carrier B: $0.873 / $6,619 = 7,579 breakeven miles per truck per month (actual are 5,956)

Carrier A exceeds its breakeven mileage and operates profitably, while Carrier B falls short and operates at a loss.

The Math Works

While the decision to park a truck involves both art and science, the framework above provides a data-driven approach to help determine how many trucks should be removed from service based on a carrier’s freight levels and its variable and fixed costs.

According to the FreightMath framework, you should park a truck when:

• Its projected monthly miles fall significantly below the breakeven mileage.
• There is no near-term rate improvement or lane optimization to increase contribution.
• The cash burn exceeds the cost of idling (e.g., insurance and base payments while parked).

Additional considerations:

• Don’t confuse cash flow with profit. You might have cash coming in, but if you’re bleeding on depreciation or unabsorbed fixed costs, you’re still losing.
• Monitor fleet contribution by unit. Using trailing 30- and 90-day data helps identify chronic underperformers.
• Don’t park too late. The longer an unprofitable truck runs, the more it erodes equity and liquidity.

The Bottom Line

Running a truck below breakeven isn’t a show of resilience – it’s a sign of denial. At KSMTA, we like to say, “Trucking for fun is no fun.” With a FreightMath-driven financial lens, carriers can make objective, performance-based decisions about when to park equipment, ensuring fleet strategy is guided by data – not wishful thinking.

Every mile run below breakeven erodes value. In today’s market, knowing when to stop is just as critical as knowing when to go.

Next month, we’ll share a framework to help carriers determine which trucks to park and which freight to prioritize in a smaller, more efficient network.

To learn more or start your FreightMath journey, please contact a KSMTA advisor via the form below.