Ask a transport operator whether a contract is profitable and most will answer with revenue per load. It is the number that comes up first because it is the number on the quote. But revenue per load only tells you what the job pays. It says nothing about what the job costs, and in transport the cost side is where the margin is actually won or lost. A load that pays well can still lose money once the truck, the fuel and the empty return are counted properly.
The discipline that separates a profitable transport business from a busy one is a true cost per kilometre. Not the fuel cost, not the driver wage, but the fully loaded figure that includes every cost of putting a truck on the road and bringing it home. Until you can put a number on what each kilometre costs, judging whether a contract is worth running is guesswork dressed up as a quote.
Building the real cost per kilometre
Cost per kilometre is built from more lines than most operators carry in their head. Fuel is the obvious one, and the fuel cost ratio moves with prices that nobody controls, which is exactly why it has to be measured rather than assumed. Driver wages, registration, insurance, maintenance, tyres and the steady drip of compliance costs all belong in the figure. So does the cost of the truck itself.
Maintenance in particular tends to be costed badly, because it arrives in lumps rather than evenly. A major service, a set of tyres, an unexpected repair, none of these land in the month you priced the contract, so they get treated as occasional shocks rather than as the steady per-kilometre cost they actually are. Averaged across the kilometres a truck travels in a year, maintenance is a predictable line, and a cost per kilometre that ignores it will read low until the workshop bill arrives and the quarter that looked profitable suddenly does not. The same is true of tyre replacement, which is one of the most directly per-kilometre costs a fleet carries and one of the most often left out of the figure.
Fleet financing is the line that gets understated most often. A truck on finance carries a repayment whether it runs or sits, and that cost has to be spread across the kilometres it actually travels. A vehicle that is financed but underused carries a brutal cost per kilometre, because the same repayment is divided across fewer kilometres. This is where fleet utilisation quietly decides profitability. The contract did not change. The truck just spent more time parked.
The kilometres that earn nothing
Then there are the deadhead miles, the kilometres run empty to position the truck or return it home. They cost exactly the same in fuel, wear and driver time as the loaded kilometres, and they earn nothing. A contract that looks healthy on the loaded leg can turn marginal once the empty return is counted. Operators who only price the loaded kilometres are quietly subsidising the empty ones out of their margin.
Reading deadhead miles against total kilometres tells you how much of your fleet’s movement is actually generating revenue. Reducing them, through better backloading, smarter scheduling or rethinking which lanes you run, is one of the most direct ways to lift margin without winning a single new contract. The work is already being paid for. It is just not being paid for on the empty legs. A lane that runs loaded in both directions can be worth more than one that pays better on the outbound leg but sends the truck home empty, and that comparison only becomes visible once the empty kilometres are counted against the contract that caused them.
Pricing from cost, not from habit
Once the true cost per kilometre is built, every contract can be judged honestly. Some that felt like good business turn out to be thin once fleet financing and deadhead miles are counted. Others that felt marginal are actually carrying the operation. The point is not to drop the thin contracts automatically, it is to know which is which, so pricing and lane decisions are made on real numbers rather than on the revenue per load that sits on the quote.
A Cost and Margin Deep Dive builds this picture for a transport operator, costing each lane and contract on a fully loaded basis and ranking them by the margin they actually deliver. The result is usually a clearer map of where the business earns, which lanes to defend, which to reprice, and where utilisation is dragging on otherwise sound work.
With fuel prices and financing costs both moving, the close of the third quarter is a sensible time to rebuild the cost per kilometre before pricing the next round of contracts. ProfitPulse works with Queensland transport operators on exactly this, and our wider insights library covers the margin discipline behind it.
Frequently asked questions
Why isn’t revenue per load enough to judge a transport contract?
Because revenue per load only tells you what the job pays, not what it costs. In transport the cost side is where margin is won or lost. A load that pays well can still lose money once the truck, the fuel and the empty return are counted properly. Judging a contract on revenue per load alone is guesswork dressed up as a quote. The number that tells the truth is a fully loaded cost per kilometre measured against what the contract pays.
What goes into a true cost per kilometre for a truck?
More lines than most operators carry in their head. Fuel, with a fuel cost ratio that moves with prices nobody controls, plus driver wages, registration, insurance, maintenance, tyres and compliance costs. The cost of the truck itself belongs in the figure too, spread across the kilometres it actually travels. Leave any of these out and the cost per kilometre understates reality, which makes thin contracts look healthier than they are. A full cost build is the foundation for honest pricing.
How does fleet financing affect cost per kilometre?
A truck on finance carries a repayment whether it runs or sits, and that cost has to be spread across the kilometres it actually travels. A financed but underused vehicle carries a brutal cost per kilometre, because the same repayment is divided across fewer kilometres. This is where fleet utilisation quietly decides profitability. The contract did not change, the truck just spent more time parked. Fleet financing is the line operators understate most often.
What are deadhead miles and why do they matter?
Deadhead miles are the kilometres run empty to position a truck or return it home. They cost exactly the same in fuel, wear and driver time as loaded kilometres, but they earn nothing. A contract that looks healthy on the loaded leg can turn marginal once the empty return is counted. Operators who only price the loaded kilometres subsidise the empty ones out of their margin. Reducing deadhead miles lifts margin without winning a single new contract.
How can a Queensland transport operator improve fleet utilisation?
By measuring how much of the fleet’s movement actually generates revenue, then attacking the gaps. Better backloading, smarter scheduling and rethinking which lanes you run all cut empty kilometres and lift the revenue each truck earns against its fixed cost. A financed truck that sits carries a heavy cost per kilometre, so keeping it moving on paid work is direct margin. ProfitPulse works with Queensland operators on building this full cost and utilisation picture.
How often should I rebuild my cost per kilometre?
At least annually, and sooner when fuel or financing costs move sharply. Both are moving inputs, so a cost per kilometre built last year may already understate what it costs to run a truck today. Rebuilding it before pricing the next round of contracts means your quotes reflect current economics rather than last year’s. Treating this refresh as a regular habit is part of the wider cash flow discipline that keeps a fleet pricing from real numbers rather than memory.
Should I drop contracts that turn out to be thin on margin?
Not automatically. Once you build a true cost per kilometre, some contracts that felt like good business turn out thin, while others that felt marginal are actually carrying the operation. The point is to know which is which, so pricing and lane decisions rest on real numbers. A thin contract might be worth keeping if it improves utilisation or enables backloading on another lane. The decision should follow the full margin picture, not the revenue per load on the quote.
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