How to Calculate Cost Per Kilometre for a Truck (Formula + Worked Example)
Cost per kilometre is the single number that tells you whether a rate is worth accepting. Here is the formula, the costs most operators forget to include, and a fully worked example in Kenyan shillings.
Cost per kilometre is the total cost of running a vehicle divided by the distance it travels over the same period. It is the number that turns a rate quote into a decision: if a client offers KES 95 per kilometre and your true cost is KES 88, you have a seven-shilling margin. If your true cost is KES 102, you are paying for the privilege of doing the work.
The formula: Cost per kilometre = (Fixed costs + Variable costs) ÷ Total kilometres travelled, measured over the same period.
The formula is simple. Getting a truthful answer is not, because most operators leave costs out of the numerator. This guide covers what belongs in each category, how to run the calculation, and the four mistakes that make the result flattering but useless.
What counts as a fixed cost, and what counts as variable
Fixed costs accrue whether the truck moves or not. Variable costs accrue per kilometre driven. Both belong in cost per kilometre — the distinction matters for deciding which costs you can influence, not for whether to include them.
| Cost type | Examples | Commonly forgotten |
|---|---|---|
| Fixed | Insurance, licensing, financing or lease payments, depreciation, base driver salary, parking or yard fees | Depreciation and the cost of capital tied up in the vehicle |
| Variable | Fuel, tyres, engine oil, scheduled servicing, tolls, per-trip driver allowances | Tyre wear, which is a real per-kilometre cost even though it is paid in lumps |
| Semi-variable | Repairs, roadside breakdowns, clerk and loading fees | Unplanned repairs, which are usually excluded because they are irregular |
| Overhead | Office rent, dispatch staff, accounting, software | Almost always excluded entirely, which understates true cost |
How to calculate cost per kilometre, step by step
- Pick a period long enough to smooth out lumpy costs. A single month will be distorted by whether a major service fell inside it; twelve months is better, and three months is the practical minimum.
- Add up every fixed cost for that period, including depreciation and financing.
- Add up every variable cost for the same period, including tyres and servicing.
- Add a share of overhead. If you run six trucks, one truck carries roughly one sixth of office and admin cost.
- Total the actual kilometres travelled in that period, using odometer readings rather than the sum of quoted route distances.
- Divide total cost by total kilometres. That is your cost per kilometre.
A worked example
The figures below are illustrative, chosen to show the method rather than to represent any particular operator. Substitute your own and the arithmetic is identical. This is one truck over twelve months, covering 90,000 kilometres.
| Cost category | Annual amount (KES) | Share of total |
|---|---|---|
| Fuel | 4,140,000 | 52% |
| Driver salary and allowances | 960,000 | 12% |
| Financing and depreciation | 1,200,000 | 15% |
| Tyres | 480,000 | 6% |
| Servicing and repairs | 640,000 | 8% |
| Insurance and licensing | 310,000 | 4% |
| Share of overhead | 230,000 | 3% |
| Total | 7,960,000 | 100% |
Result: KES 7,960,000 ÷ 90,000 km = KES 88.44 per kilometre. A rate of KES 95/km yields a margin of KES 6.56 per kilometre, or roughly 7%. A rate of KES 85/km loses KES 3.44 on every kilometre driven.
Notice what that last line means in practice. A truck running a 500-kilometre lane at KES 85/km does not break even — it loses about KES 1,720 per trip, and it does so on every trip, invisibly, because the invoice still shows revenue arriving.
Four mistakes that make the number too low
- Excluding depreciation. A truck that cost KES 6,000,000 and will be worth KES 1,500,000 in six years is consuming KES 750,000 of value a year whether or not you write a cheque for it.
- Using quoted route distance instead of odometer readings. Repositioning, diversions and empty running are real kilometres that burn real fuel, but they are often absent from the distance figure.
- Ignoring empty running altogether. If a truck returns unloaded, those kilometres carry cost and earn nothing, and they still belong in the denominator.
- Averaging across a mixed fleet. A three-tonne truck and a prime mover have different cost structures; one blended figure hides both.
Why a fleet-wide average is not enough
A single cost-per-kilometre figure for the whole fleet tells you whether the business is viable. It does not tell you which lanes to keep. Two routes at the same rate per kilometre can have very different margins once detention, loading delays, road condition and return-leg availability are counted — which is why the more useful version of this calculation is per trip, not per fleet.
Travada calculates this automatically by attaching every income and expense record to the trip it belongs to, so net profit appears per trip rather than in a monthly total. That is the same arithmetic as above, run continuously and at the level where you actually make decisions.
Cost per kilometre: common questions
What is a good cost per kilometre for a truck?
There is no universal benchmark, because cost per kilometre depends on vehicle size, fuel price, route conditions, financing terms and how much empty running you do. The useful comparison is not against an industry figure but against the rates you are being offered: if your cost per kilometre is above the rate on a lane, that lane loses money regardless of what other operators achieve.
Should I include the driver's salary in cost per kilometre?
Yes. A base salary is a fixed cost and per-trip allowances are variable, but both are genuine costs of moving the vehicle and both belong in the calculation. Excluding driver cost is one of the most common reasons an operator's figure looks healthier than reality.
How often should I recalculate cost per kilometre?
Quarterly at minimum, and immediately after any significant change in fuel price, financing, or insurance. Fuel is typically around half of total cost, so a sustained fuel price move of ten percent shifts your cost per kilometre by roughly five percent — enough to turn a thin-margin lane into a loss-making one.
What is the difference between cost per kilometre and cost per trip?
Cost per kilometre normalises by distance, which makes lanes of different lengths comparable. Cost per trip captures costs that do not scale with distance — loading fees, detention, clerk charges — which a per-kilometre figure spreads thin and can hide. Operators who track both catch problems that either one alone would miss.
Can I calculate cost per kilometre in a spreadsheet?
Yes, and for a single vehicle over a single period a spreadsheet is perfectly adequate. It becomes difficult when you need the figure per trip across a fleet, because that requires every fuel, repair and detention record to be linked to a specific trip and kept current — which is where manual reconciliation tends to break down.
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