Decide what the measure should answer
Cost per delivery can help compare service patterns, while cost per kilometre highlights vehicle activity. Neither automatically captures the price of a difficult stop, waiting time or an empty return journey. Keep those operational facts available beside the ratio.
The numerator needs an equally clear definition. Driver employment costs, fuel, repairs, vehicle financing and dispatch overhead do not all have the same accounting treatment. A management measure should say which items it includes and how shared costs are allocated.
Illustrative example: volume changes the comparison
A Surrey delivery company records $6,300 of defined direct weekly cost for Route A and $7,200 for Route B. Route A completes 300 deliveries and Route B completes 400. Under that definition, direct cost per delivery is $21 and $18 respectively.
If Route B also needs $1,200 of additional support cost included in the comparison, its adjusted figure becomes $21 per delivery. The apparent advantage disappears. This does not decide which route to keep; revenue, customer commitments, capacity and service quality still matter.
Collect the same evidence each period
Retain route identifiers, completed and failed delivery counts, distance records, driver allocation and vehicle assignments. Connect fuel and repair invoices to the vehicle. When a replacement van serves a route, record the dates instead of attributing every monthly cost to the usual vehicle.
Review major exceptions with operations. A one-off repair, holiday schedule or new delivery area should be explained, not silently excluded because it makes the ratio less attractive. Consistent definitions make trends more useful.
Reconcile the total before using the result
Add the route allocations back to the relevant ledger totals and explain costs deliberately left in overhead. If allocated costs exceed the actual pool, the comparison may be double counting expenses. If they fall short, the owner needs to know what remains outside the measure.
Use the result as one input to pricing and route planning. A busy route can consume working capital through payroll and fuel before customer invoices are collected. Pair cost analysis with the receivables schedule and upcoming cash commitments to see the full operating picture.
Put this into practice
Sources and current guidance
A practical next step
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