Fleet fixed costs: what they are, how they go into freight

A fleet's fixed costs are information that must be included in the final freight price of each delivery. But do you know what they are and how to separate this calculation from the expenses that change as the operation runs?

When we stop to think about how goods reach the supermarkets and stores we visit, we can see that practically everything there arrived by truck.

That is because road transport is mainly responsible for distributing products across Brazil.

As the most common type of distribution, it has high demand for services, which requires a lot of organization to stay in the market.

That includes the time to calculate freight, since there are several costs to consider and apply on top of the service. At the same time, it is necessary to keep some balance so you do not end up with exorbitant prices that drive away all potential customers.

But how do you do that? First of all, you need to know which costs must be part of this calculation and which should be kept track of in another way. Below, see which fixed fleet costs you need to consider.

To learn about variable costs, also read the dedicated post on that subject on the Prolog blog.

What are a fleet's fixed costs?

Licensing, IPVA and insurance

In Brazil, for the truck to run on the roads and the company to operate legally, it needs to have all its taxes up to date, including vehicle licensing and IPVA (the Brazilian state tax on vehicle ownership). Insurance, in turn, is a way to avoid surprises in the event of accidents or theft, guaranteeing money to cover any problems that may arise.

These obligations are among the fleet's fixed costs because they need to be planned for in the operation and considered before setting the freight price.

Every year, you need to have these amounts available so you do not get fines or lose the right to provide your services. Likewise, be careful not to miss the deadlines and end up facing these same consequences.

Employee salaries

If the company's headcount and salaries are fixed, they are also included as a fleet fixed cost. We should take into account the drivers, who are responsible for internal cargo transport and refueling the truck.

It is also important to consider the payroll charges and benefits provided to employees, because a complete cost analysis of an operation should look at pay, benefits, taxes and other expenses associated with the team.

That is why labor costs in a fleet are not limited to base salary. The budget needs to bring together pay, benefits, taxes and team-related expenses to show how much the staffing structure really represents.

In the debate in Brazil over the wage floor for long-haul truck drivers, a provision for a national floor of R$5,000 was included by the joint congressional committee, but it was removed in the Senate for being considered unrelated to the original content of the provisional measure (medida provisória, a decree issued by the Brazilian president that requires approval by Congress). The approved text establishes that collective bargaining agreements and conventions will set the floor applicable to these professionals. To project fixed costs, therefore, a trucking company should consult the collective agreement in force for its team, instead of treating the removed amount as a national rule.

The organization of shift schedules also needs to be part of the simulations. The text approved by the Brazilian Senate to end the 6x1 schedule (six days of work for one day off), sent for promulgation, reduces weekly working hours from 44 to 40 without a pay cut and provides for two days off per week, one of them preferably on Sundays. The indicated transition is from 44 to 42 hours two months after promulgation and, one year after that first stage, to 40 hours.

When planning for this change, it is worth simulating how many people and which schedules will be needed to maintain coverage of the operation, without assuming that salary and working hours can be adjusted in isolation. This exercise helps anticipate possible effects on team availability, payroll charges and the labor cost that goes into freight pricing.

Part of maintenance spending also goes into fixed costs, related to the team of mechanics and assistants in this stage of the operation. Purchases of parts and materials used for repairs, on the other hand, are included in variable costs.

Vehicle depreciation

Over the years, every vehicle model loses value. This happens because new models come out, made with better and more modern parts.

A truck bought for R$300,000 is worth around R$200,000 after 5 years. That assumes you carry out all the appropriate maintenance care, keeping the vehicle in the best possible condition.

This is where vehicle depreciation comes into the fleet's fixed costs, as a reserve amount for renewing the vehicles when the time comes.

The renewal timeframe does not need to be treated as a single rule for the entire fleet. What matters most is that depreciation is planned as a reserve for replacing the vehicle when that makes sense for management.

So, during this period, you should be charging for it in the freight you deliver and, on top of that, setting the corresponding amount aside to put toward buying new models.

Opportunity cost

When you buy a truck, you are giving up investing in other businesses that could yield a monthly return for you, such as a rental property or even a financial investment.

Adding this amount to the company's fleet fixed costs, as a sum corresponding to the opportunity that was not taken, is a smart way to avoid losing money.

This calculation is not the same as depreciation. Depreciation looks at the loss of the vehicle's value over time; opportunity cost looks at the return that the capital invested in the truck could generate if it were in another investment.

Why is it important to know a fleet's fixed costs?

When your company is a service provider, as is the case with trucking companies, it is essential to know all of its costs so you can add them to the final freight price.

That way, the business does not lose out and is unlikely to go bankrupt. The customer, in turn, pays a fair price for the service they hired.

Salaries and loading and unloading time are among the operating costs considered in the freight table. So changes to the applicable wage floor, to working hours or to the need for shift coverage should be reflected in the cost calculation before the price is set.

The goal is for everyone to come out ahead. Beyond that, the goal is for you to know how much you invest and how much you earn so you can plan a sound, well-grounded fleet expansion.

How to improve fleet management based on this?

Knowing and controlling the costs of the company's transport operations is part of a larger effort: developing your trucking company's strategic planning.

In it, the cost survey is an essential part of deciding on conscious cuts and reductions. In other words, ones that do not harm the fleet's operation and efficiency.

Basically, the logic is:

You know all of the fleet's fixed costs, organize the expenses that need to be planned for the operation to keep running, and separate those amounts from the expenses that vary with usage, corrective maintenance, parts and materials.

This amount should be set aside in your budget and considered in the freight calculation, as already established.

Now you have a better understanding of variable costs and of how much you could save by seeking specific solutions for the areas with the greatest financial impact.

This view also helps you see direct and indirect costs, and even costs that tend to stay hidden in the operation. That is why a more complete analysis can support resource allocation, budget management and supplier evaluation.

On the labor side, keep a calculation record that separates salary, benefits, payroll charges and shift coverage. Review the assumptions when the applicable collective agreement changes or when the working hours rules enter a new stage, and carry the updated total into freight pricing.

To keep expanding your knowledge and continuously improve your business's fleet management, check out the free resource we offer on our website:

The Fleet Management Guide – Make Your Management More Efficient (in Portuguese) — click to download it and always have it at hand.