Operating Ratio
Operating ratio is total operating expenses divided by gross revenue, expressed as a percentage. A ratio of 85% means $0.85 of every dollar earned goes to expenses, leaving a 15% profit margin.
In Depth
A healthy owner-operator operating ratio is typically 65–80%. Large carriers aim for below 90%. An OR above 95% means the business is barely profitable or losing money.
To improve your OR: increase revenue per mile, reduce fuel costs (MPG improvement, fuel cards), lower insurance through safety programs, and minimize deadhead miles.
Usage Example
Example: 'My total costs were $18,500 on $22,000 revenue — that's an 84% operating ratio and $3,500 profit.'
Related Calculators
Related Terms
Cost Per Mile
Cost per mile (CPM) is the total operating cost divided by total miles driven in a given period. It includes both fixed costs (insurance, truck payment) and variable costs (fuel, maintenance) per mile.
Factoring
Freight factoring is a financial service where a carrier sells its unpaid invoices to a factoring company at a discount (typically 2–5%) in exchange for immediate payment — usually within 24 hours rather than the standard 30–45 day broker payment cycle.
Frequently Asked Questions
What is a good operating ratio?
Under 85% is healthy for owner-operators. Large fleets aim for under 90%. Above 95% is problematic.