Trucking: Charge per mile, direct shippers, grand scheme of things

Question
Dear Jim,

I have been a company driver for about 8 years and I have finally decided to start working for myself. I am going to haul dry goods, no reefer, (too noisy and too many things can go wrong!) to all 48 states (no Can or Mex). I have financing lined out for my equipment and I have taken the steps necessary to obtain my insurance and authority. I have a local broker who I've talked to for loads plus two direct shippers which look promising. During my initial conversation with one of those shippers, he asked me what I charged; flat fee, per mile, etc. I told him I would work up a quote and get back to him. I said all that to ask you this: what is the average rate per mile for hauling freight? Is it better to charge by the mile or just charge a flat fee? I've asked dozens of brokers and O/O's and they all say the same exact thing "it all depends." While I understand that there are many factors in our industry that define cost to haul vs. profit for a particular load, there must be a ballpark figure of what carriers charge, per mile, to their customers. I have calculated with a reasonable degree of certainty that my CPM is going to be $1.64 which includes my salary. I've been kicking around $1.75 as my rate per mile but I have no idea where that stands in the grand scheme of things. I don't want to quote a price to a potential client and then have them slam the door in my face forever because my price was too much or not high enough. I just want to make certain that my service is competitive without putting me out of business in 30 days or taking my clients to the cleaners.

Any help you can give on this topic would be greatly appreciated. Sorry for such a long question.....

Thank you very much...

Rick

Answer
As you might guess Rick, I like the rest cannot give you a specific CPM for all the same reasons.  I can however give you some generalities to think about.  Length of haul makes a difference as does the nature of the business.  Is it regular, predictable on-going repeat business, or one shot spot quote?  It is definitely good that you have an idea what your costs will be and the need to price above cost.  I would encourage you to think a little deeper into fixed vs. variable costs.  Things like truck finance costs, insurance, tags, etc. are fixed and will be incurred regardless of wether you are hauling a load or not.  Your variable costs such as fuel, oil and most maintenance will be a function of miles driven.  Think about what my truck will cost me for a day before it moves and then separately what it will cost per mile to move the load including deadhead miles.  From this you will see that you need a whole lot higher per mile price for a short haul than for a long haul.  Then you have to think about empty miles.  On a short haul you are likely to come back empty or have 50 percent empty miles, while on a long haul you will defiantly need a backhaul to make the trip pay.  
With that background, mostly what I see are rates quoted in cents per mile for longer haul moves and flat charge for short haul.  The short haul is more driven by time than miles, highway congestion, load unload time, etc.
Spot market rates (1 time quotes) tend to be flat rated inclusive of fuel, whereas a longer term quote for on-going business will tend to have a base freight charge plus an appropriate fuel surcharge.  You can always be candid with potential customers and ask what it will take to get the business.  Some will share and others won't.  Keep track of your costs and try to cover them all including a profit, but also be ready to accept that sometimes if you need a backhaul or have a truck sitting idle it's better to cover the variable cost and make some contribution to fixed and overhead rather than eating the cost with no revenue.  Hope this helps a little.  good luck.  Jim.