Calculating running costs for transport companies

Many people who start transport companies approximate the cost of running a vehicle without taking into account all aspects of its operation and upkeep. Consequently, the vast majority of new owner-driver couriers tend to underestimate the amount. It is important to be as accurate as possible when assessing your overheads because you don’t want any costly surprises halfway through your first year.

To estimate the monthly income of your delivery company, you should have identified as far as possible how many deliveries you expect to make and at what price. From this you can go on to calculate approximately how much you will have to spend on fuel and other running costs for your vehicle.

You can estimate your fuel costs from the average fuel consumption of your vehicle and the mileage you expect to cover when carrying out delivery jobs. This will vary greatly between delivery companies because of the different environments couriers drive in. Fuel consumption will be far higher in urban areas than on open country roads. This is due to the increased time spent idling and the inconsistent speeds that are commonplace on urban roads. You should also include an estimate of the fuel you will use that you will not be able to charge for, e.g. when driving between delivery jobs.

In addition to fuel costs, the cost of replacement parts and servicing must be considered by those running transport companies. Contact local garages to find out the price, including VAT, of servicing your vehicle. Also ask about the cost of items you are likely to need, such as oil, filters, exhausts and tyres. Make a note of the cost of servicing and parts for your vehicle under ‘Motor and travel expenses’ in the months in which you are likely to pay for them.

Transport companies are likely to see an increase in deliveries at certain times of year, such as the months leading up to Christmas and the end of the financial year. Consequently, your running costs may be a lot higher at these times of year.

Try to be as accurate as possible with your forecasts, and don’t leave anything to chance.

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