How to Calculate Profit on Each Truck Trip (With Example)

Ask a transport owner how much a trip made, and the usual answer is the freight minus the diesel. That number feels good, but it is not your profit. It leaves out the empty return, the tolls, the driver's bata, tyre wear, and the EMI and insurance that have to be paid whether the lorry runs or not.

This guide shows how to work out the real profit on one trip, step by step, with a worked example you can copy for your own lorries.

The three kinds of cost on every trip

Every rupee a lorry costs falls into one of three groups. Profit is what is left of the freight after all three.

1. Running costs: paid because the trip happened

• Diesel, for the loaded leg and the return
• Tolls / FASTag deductions, both ways
• Driver bata and any helper's bata
• Loading and unloading charges you pay
• Other trip expenses: parking, weighbridge, police or check-post receipts

2. Wear costs: paid per kilometre, but later

• Tyres, which wear out with every kilometre
• Regular service: oil, filters, greasing
• Repairs that come with running: brakes, clutch, suspension

These don't come out of your pocket on the day of the trip, which is why they are easy to forget. Set aside a fixed amount per kilometre for them. Work it out from your own tyre and service bills over the last year divided by the kilometres run.

3. Fixed costs: paid whether the lorry runs or not

• EMI on the vehicle loan
• Insurance premium
• Permit and road tax
• The driver's monthly salary, if you pay one on top of bata

Work out your fixed cost per day

Fixed costs are billed monthly or yearly, but a trip takes days. Turn them into a cost per day, then charge each trip for the days it kept the lorry busy:

Fixed cost per day = (EMI × 12 + insurance + permit and road tax + driver salary × 12) ÷ 365

Divide by 365, not by the days the lorry actually ran. A lorry that stands idle for a week still pays its EMI that week, and spreading the cost over every day shows you what idle days really cost.

Worked example: one round trip

A 10-wheeler takes a 12-tonne load from Salem to Chennai for ₹28,000 freight and comes back empty. The round trip is 680 km and keeps the lorry busy for 2 days. The lorry normally gives 4 km per litre.

Freight minus the diesel to Chennai alone would have shown about ₹20,000. The real figure is ₹360. The lorry did not lose money, but it barely covered its costs, and only the full calculation shows that.

The same sheet shows what would change the result. A return load from Chennai earns fresh freight while most of the return leg's costs are already counted above. Two days' detention billed to the customer, covered below, would turn ₹360 into several thousand.

Check diesel mileage on every fill

Diesel is the biggest cost on most trips, so it is worth checking every time the tank is filled. Fill to full each time and note the odometer reading at the pump. Then:

• Mileage = kilometres since the last full fill ÷ litres filled now
• Compare it with that lorry's normal figure, not the fleet average: an older lorry or a loaded tanker runs differently
• Decide how big a drop you will look into, for example 15 to 20% below normal, and check every fill that crosses it

A low figure has an explanation: a wrong odometer entry, a leak, tyre pressure, an overloaded trip, a hilly route, or diesel going missing. Asking the question on the day of the fill is far easier than a month later.

Charge detention when the lorry is held

Every extra day a lorry waits at a factory gate costs you a day of fixed cost, and earns nothing unless you bill it. Detention only works if the terms are agreed before loading:

• Free time at loading and at unloading, for example 24 hours
• A rate per day after that, by truck type
• Whether a part day counts as a full day
• Arrival and release times written on the LR or trip sheet and signed, so the bill can't be argued

Example: the lorry reaches the unloading point at 9 am Monday and is released at 1 pm Wednesday. That is 52 hours held. With 24 hours free, 28 hours are chargeable, which is 2 days if each started day counts. At ₹2,000 a day, add ₹4,000 to the freight bill.

If you hire a market lorry

When you carry a load in a hired lorry, the owner's running and fixed costs are not yours. Your margin on the trip is the freight from the customer minus the lorry hire, minus anything you pay on the owner's behalf. Two habits protect that margin:

• Pay the owner's balance only after the signed LR (proof of delivery) reaches your office
• Write in the hire memo that shortage or damage in transit is deducted from the balance

5 mistakes that hide losses

1. 1

   1. Ignoring the empty return. A one-way load still burns diesel and tolls on the way back. Price the trip on the round trip unless a return load is confirmed.

2. 2

   2. Leaving out fixed costs. EMI, insurance and permits don't appear on a trip sheet, so they get forgotten. Charge every trip its days of fixed cost.

3. 3

   3. No provision for tyres and service. A set of tyres paid for in one month makes that month look terrible and the others look better than they were. A per-km provision spreads it fairly.

4. 4

   4. Not billing detention. If the waiting time isn't written down and signed, it can't be billed. Record arrival and release times on every trip.

5. 5

   5. Working from memory. Profit worked out at month end from a diary and phone calls is a guess. Each trip needs its own record of freight and expenses, written while the trip runs.

Keep the numbers per trip

None of this works without a record for every trip: the vehicle, the driver, the route, the freight and each expense. A proper trip sheet is the place to start. Once each trip has its own record, the profit sum above takes minutes, and patterns show up: which routes pay, which customers hold your lorries, and which lorry costs more than it earns.