Trucking Glossary
Quick definitions for common terms used in trucking cost analysis, factoring, compliance, and financing. Each term links to the relevant calculator where applicable.
- Cost Per Mile
- The total operating cost divided by the number of miles driven in a given period. It includes both fixed costs (insurance, truck payment) and variable costs (fuel, maintenance). Knowing your cost per mile is essential for setting profitable rates.
- → Cost Per Mile Calculator
- Deadhead Miles
- Miles driven without a paying load — typically when repositioning to pick up the next freight. Deadhead miles still consume fuel and time but generate no revenue, directly reducing your net profit.
- → Deadhead Cost Calculator
- Loaded Miles
- Miles driven with freight on board that is generating revenue. Revenue per loaded mile is a key metric for evaluating whether a load is worth accepting.
- → Load Profit Calculator
- Revenue Per Mile
- Total pay for a load or period divided by the number of miles driven. Often calculated separately as revenue per loaded mile and revenue per total mile (loaded + deadhead combined).
- → Load Profit Calculator
- Factoring Fee
- The fee charged by a freight factoring company to advance payment on your invoices. Typically expressed as a percentage of the invoice value (e.g., 2–5%). The factoring company collects from your broker or shipper and keeps the fee.
- → Factoring Fee Calculator
- Advance Rate
- The percentage of an invoice's value that a factoring company pays you upfront, usually within 24–48 hours of submitting the invoice. A 90% advance rate on a $2,000 invoice means you receive $1,800 immediately.
- → Factoring Fee Calculator
- Reserve
- The portion of the invoice held back by the factoring company until the shipper or broker pays. It equals 100% minus the advance rate. For example, a 90% advance rate means a 10% reserve. The reserve is typically released once the invoice is collected, minus the factoring fee.
- → Factoring Fee Calculator
- Fuel Surcharge
- An additional charge added to freight rates to compensate carriers for fluctuating diesel prices. Fuel surcharges are often calculated based on a published index (such as the DOE weekly retail diesel price) and are negotiated as part of the rate agreement.
- → Fuel Cost Calculator
- IFTA
- The International Fuel Tax Agreement (IFTA) is an agreement among U.S. states and Canadian provinces that simplifies fuel tax reporting for motor carriers operating in multiple jurisdictions. Instead of filing separately in each state, carriers file one quarterly return with their base state.
- → IFTA Fuel Tax Estimator
- Owner-Operator
- A commercial truck driver who owns and operates their own truck, either running independently or leased to a carrier. Owner-operators are responsible for all operating costs including fuel, insurance, maintenance, and compliance fees.
- → Monthly Profit Calculator
- Fixed Costs
- Operating expenses that remain relatively constant regardless of how many miles you drive. Common examples include truck payments, insurance premiums, permits, and lease fees. Fixed costs must be covered even in low-revenue months.
- → Cost Per Mile Calculator
- Variable Costs
- Operating expenses that change based on how many miles you drive. Fuel is the largest variable cost for most truckers. Other examples include tire wear, oil and maintenance, and driver pay per mile.
- → Fuel Cost Calculator
- Net Profit
- The amount left over after subtracting all operating expenses from gross revenue. Net profit is what you actually keep before personal income taxes. A healthy net margin for an owner-operator is typically 10–25% of gross revenue, though it varies widely.
- → Monthly Profit Calculator
- Operating Ratio
- Total operating expenses divided by gross revenue, expressed as a percentage. An operating ratio of 85% means $0.85 of every dollar earned goes to expenses, leaving a 15% profit margin. Lower is better — most carriers target below 90%.
- → Monthly Profit Calculator
- APR
- Annual Percentage Rate — the yearly cost of borrowing money, expressed as a percentage of the loan principal. APR includes the interest rate and may include certain fees, making it a more complete cost comparison than the stated interest rate alone.
- → Truck Loan Calculator