Magellan
Load economics: what does the load contribute per truck-day?
Compare revenue, relevant costs and occupied truck time with a worked example before choosing between two available loads.
A load pays more than the alternative. It also holds the truck for an extra day, requires more empty miles and leaves the driver in a difficult reload area. On the rate confirmation, it looks like the winner. Across the full assignment, the answer is less obvious.
Compare the revenue left after the relevant costs with the time the assignment occupies the truck. Rate per loaded mile can help compare part of the job. It cannot, by itself, tell you what the truck could accomplish over the same period on a different plan.
Short-term load selection and long-term fleet profitability require related but different views. A contribution calculation can help evaluate the revenue remaining after the costs attributed to a particular option. It does not prove that the business has covered all fixed costs or earned a final profit.
The SBA's break-even guide (https://www.sba.gov/counseling/plan-your-business/) distinguishes fixed costs, selling price and variable costs. Apply that distinction carefully and have the responsible accounting person establish the company's definitions. Do not relabel every expense as variable merely to make a load comparison convenient.
Decide which alternatives are actually available. Comparing a real load with an imaginary perfect reload creates a result the dispatcher cannot use. Identify the current truck, driver, equipment, service commitments and feasible options before calculating the difference.
Keep the full-cost view for fleet profitability alongside the decision-specific contribution model. Ask the person responsible for accounting to define which costs change with the load choice and which remain under either option.
Count the movement and work required to reach pickup, perform the load and arrive at the point where the truck is available for the next realistic assignment. Identify empty miles, expected waiting and any necessary repositioning.
Use consistent cost assumptions. Fuel, driver compensation and other attributable costs should follow the approved model and the actual operating arrangement. Avoid mixing an all-in cost per mile on one option with a fuel-only estimate on another.
Keep uncertainty visible. If a detention charge is not approved or a reload is only a possibility, do not treat it as guaranteed revenue. Show the assumption separately and consider how the comparison changes without it. A model becomes useful when a manager can see which uncertain fact could reverse the decision.
Consider two hypothetical assignments. Option A brings $2,200 in revenue and has $1,400 in the direct variable costs defined for this example. It occupies two truck-days. Its contribution before fixed costs is $800, or $400 per truck-day.
Option B brings $1,800 and has $1,150 in the same defined cost categories. It occupies one truck-day. Its contribution is $650 for that day. Assume, for the illustration only, that the stated costs include the necessary empty movement and that the timing estimates are reliable.
Option A produces more total contribution for its assignment, while Option B produces more per occupied day. Neither fact chooses the next load automatically. The manager still needs to consider what the truck can actually do after Option B, the commitments already made and whether the two-day demand really competes for the same available capacity.
Compare the same two-day window
For the illustration above, Option B leaves $150 less contribution than Option A on its first day: $800 minus $650. If a feasible second-day assignment after B contributes more than $150 after its own relevant costs, the two-day B plan exceeds A's $800. If no second assignment is available, B's stronger per-day figure does not create that extra contribution.
Use this short comparison record for each option: total agreed revenue; relevant costs under one approved definition; empty movement included; time until the truck is available again; realistic next assignment; uncertain charges; and the reason for the final choice. Keep an unapproved detention charge separate from confirmed revenue.
A truck held at a facility cannot simultaneously perform another assignment. That fact matters even when a waiting charge is available. The payment may reimburse some delay without restoring the lost service opportunity.
Define the time measure consistently. Truck-day can be useful for longer cycles; another operation may need a more precise planning interval. State when the clock starts and when capacity is considered available again. Do not use a delivery timestamp if the truck still has required work before it can accept the next job.
Check safety and qualification constraints before comparing the available choices. A calculation cannot create lawful driver availability or make an unsuitable vehicle appropriate. The financially attractive option is only an option if the business can perform it under the applicable conditions.
Topics
- Management
- Contribution
- Truck-day
- Load economics