DET Cost Modeling — LA Port Empty Container Haul¶
Companion file: DET-cost-model-LA-port-empty-container.xlsx (Excel workbook with full calculations)
Tag: arm: atg
Read the operating model first
This cost model originally compared DET to freight-market rates, which is the wrong frame. DET's real purpose is captive salvage transport with driver-livelihood-sustained-by-AI-dispatch. Read DET Operating Model for the strategic frame; this document is a sub-analysis of haul-level costs under that model.
Summary¶
Cost model for Desert Equipment Transport (DET) to haul an empty 40-foot container from the Port of Los Angeles (Wilmington) to Casa Grande, Arizona, with origination and return in Phoenix.
Total cost per haul: approximately $2,400.
The model establishes break-even pricing at $3.04/mile and identifies pricing scenarios from below-cost to premium. At spot market mid pricing ($3.75/mile), gross margin is approximately $580 per haul (19%). At 100 hauls per year, single-lane annual gross margin is approximately $58,000.
The model also identifies a fueling discipline opportunity: AZ-first fueling captures approximately $130 of margin per haul over mixed CA/AZ fueling. At 100 hauls per year, that's $13,000 in margin retained simply through disciplined fueling location.
Verify before relying
This cost model is built from May 2026 industry data and current diesel pricing. Specific haul economics will depend on actual fuel prices at time of haul, real operating cost basis on DET's T680 (which depends on tractor age and maintenance history), and port fees specific to each move. Verify assumptions at activation time before committing to specific customer pricing.
Route and timing¶
The full cycle:
- Phoenix to Wilmington (Port of LA): 380 miles
- Wilmington to Casa Grande: 365 miles
- Casa Grande to Phoenix: 50 miles
- Total round trip: 795 miles
Driver time breakdown:
- Driving time: ~17 hours (at 47 mph effective speed accounting for traffic, DOT breaks, fuel stops)
- Port pickup operations: 3 hours (Port of LA empty container pickup typical 2-4 hours)
- Casa Grande drop: 1.5 hours
- Pre/post trip inspections and fueling: 1.5 hours
- Total paid driver hours: 23 hours
Information needed
The 23-hour total trip exceeds the 14-hour HOS (Hours of Service) window for a single driver. The haul requires either:
- 10-hour mandatory break overnight in California
- Team driver (two drivers)
- Restructured route to fit single-driver HOS
DET activation requires this constraint to be resolved before commercial operations begin. Resolution requires: Brandon Tomkins decision on driver model.
Cost breakdown¶
Direct costs¶
| Cost component | Amount | Calculation |
|---|---|---|
| Driver labor (23 hrs × $28/hr) | $644 | Hours × wage |
| Fuel — Arizona portion (60 gal × $5.50) | $330 | AZ miles ÷ MPG × AZ price |
| Fuel — California portion (59 gal × $7.75) | $457 | CA miles ÷ MPG × CA price |
| Operating costs (795 mi × $0.70/mi) | $557 | Tires, maintenance, insurance, permits, depreciation |
| Port chassis and gate fees | $100 | Empty pickup at Port of LA |
| Tolls and incidentals | $20 | Misc on this route |
| Driver overnight (sleeper) | $50 | T680 sleeper + meal allowance |
| Direct cost subtotal | $2,158 |
Overhead allocation¶
| Component | Rate | Amount |
|---|---|---|
| Overhead (dispatch, back-office, regulatory) | 12% of direct | $259 |
Total¶
Total cost per haul: $2,417 Cost per mile: $3.04
Operating cost components (the $0.70/mile)¶
The "all-in operating cost per mile" beyond fuel and driver labor breaks down as:
| Component | $/mile | Notes |
|---|---|---|
| Tires (steer + drive, prorated) | $0.050 | ATA industry average |
| Maintenance and repairs | $0.175 | Oil, brakes, DPF, routine |
| Insurance (commercial auto + cargo) | $0.125 | Industry standard rate |
| Permits, licensing, IFTA | $0.030 | DOT, IFTA, state permits |
| Tractor depreciation | $0.250 | T680 amortized |
| Trailer depreciation | $0.065 | 53-ft trailer amortized |
| Total | $0.695 |
Information needed — Insurance gap
DET does not currently carry commercial auto liability, cargo insurance, or physical damage coverage. The $0.125/mile insurance line in the cost model assumes coverage is in place.
Until DET is properly insured, ANY commercial haul exposes Brandon Tomkins personally to catastrophic risk. The DET liability isolation entity structure does not protect against operating without legally required insurance.
DET activation MUST include insurance procurement before any commercial mileage. This is non-negotiable — it's both regulatory compliance and personal asset protection.
Resolution requires: Brandon Tomkins decision on DET activation timing AND insurance procurement plan.
Pricing scenarios¶
Per-mile pricing¶
| Scenario | Rate ($/mile) | Total revenue | Gross margin | Margin % |
|---|---|---|---|---|
| Below cost (losing money) | $2.50 | $1,988 | -$430 | -22% |
| At cost (break-even) | $3.04 | $2,417 | $0 | 0% |
| Spot market low | $3.25 | $2,584 | $167 | 6% |
| Spot market mid | $3.75 | $2,981 | $564 | 19% |
| Spot market high | $4.25 | $3,379 | $962 | 28% |
| Contract / dedicated lane | $3.50 | $2,783 | $366 | 13% |
Flat-rate pricing¶
| Quote type | Flat rate | Implied $/mile | Gross margin | Margin % |
|---|---|---|---|---|
| Below-cost quote | $2,000 | $2.52 | -$417 | -21% |
| Break-even quote (rounded up) | $2,500 | $3.14 | $83 | 3% |
| Light-margin quote | $2,800 | $3.52 | $383 | 14% |
| Target quote | $3,200 | $4.03 | $783 | 24% |
| Strong-margin quote | $3,500 | $4.40 | $1,083 | 31% |
| Premium quote | $4,000 | $5.03 | $1,583 | 40% |
Documented assumption
Pricing scenarios are based on May 2026 spot market data for empty container repositioning. Actual market rates vary by port congestion, fuel surcharges, customer relationship, and seasonal demand. Empty container repositioning is generally a low-margin lane compared to loaded freight.
Fueling discipline analysis¶
Diesel pricing between Arizona and California has a significant spread. May 2026 estimates:
- Arizona diesel: ~$5.50/gallon
- California diesel: ~$7.75/gallon (with some stations exceeding $8/gallon)
For a 119-gallon round trip:
| Scenario | AZ gallons | CA gallons | Total fuel cost |
|---|---|---|---|
| Mixed fueling (CA + AZ as needed) | 60 | 59 | $787 |
| AZ-only fueling (single fill before crossing) | 119 | 0 | $655 |
| Savings per haul | $132 |
The T680 has dual-tank capacity (typically 200+ gallons total), making AZ-only fueling for the full round trip operationally feasible. The savings compound at scale:
| Hauls per year | Annual fuel savings |
|---|---|
| 25 | $3,300 |
| 50 | $6,600 |
| 100 | $13,200 |
| 150 | $19,800 |
| 200 | $26,400 |
Documented assumption
The AZ-only fueling strategy assumes driver discipline at fueling locations and operational planning that supports tanking up in AZ before any CA crossing. Real-world operations may require occasional CA fueling for safety margins, route deviations, or HOS-required stops. The savings figures represent the maximum capture; actual capture will be 70-90% of this depending on operational realities.
Strategic implications for DET activation¶
Lane selection¶
Empty container repositioning is a low-margin lane. DET activation strategy should evaluate:
-
Higher-value lanes: Loaded freight backhauls from LA to Phoenix at higher rates per mile. Specialty hauling tied to ATG operations (water trucks, parts, equipment that ATG already needs moved). These can yield $4-5/mile vs. $3-4/mile for empty containers.
-
Casa Grande as a hub: Casa Grande is a major intermodal facility. Regular hauls into Casa Grande may justify building relationships with intermodal terminal operators for repeatable business.
-
Mexican market intersection: When SP-MX expansion activates (see SP-MX Expansion), DET may have natural backhaul opportunities aligned with the cross-border parts flow.
Activation prerequisites¶
Before DET runs commercial mileage:
- Insurance procurement (non-negotiable) — Commercial auto liability, cargo insurance, physical damage coverage
- DOT authority — USDOT number, MC number, BOC-3 process agent
- IFTA registration — International Fuel Tax Agreement for interstate operations
- ELD installation and verification — Electronic Logging Device per FMCSA requirements
- Driver qualifications verification — CDL, DOT physical, drug/alcohol program enrollment
- HOS strategy decision — Single driver with overnight, team driver, or restructured routes
These prerequisites have associated costs that should be factored into DET startup capital requirements.
Economic threshold for activation¶
At 100 hauls per year on this single lane at spot market mid pricing ($3.75/mile), annual gross margin is approximately $58,000. After insurance, ELD, regulatory compliance, and driver costs, net contribution to ATG cash flow is likely in the $20,000-35,000 range annually.
This is meaningful but not large. DET activation makes more sense when:
- Multiple lanes are available (not just LA port empty containers)
- ATG-internal hauls are absorbed at cost (reducing external transport spend)
- Backhaul utilization is high (avoiding empty miles)
- Operational sophistication exists to optimize utilization
Verify before relying
The $20,000-35,000 net contribution estimate is a back-of-envelope figure pending real operational modeling. Multi-lane analysis, utilization assumptions, and seasonal patterns will materially affect actual contribution. This is an indicative not committed figure.
Strategic context links¶
- Desert Equipment Transport overview — DET entity, current dormant state, activation thesis
- SP-MX Expansion — Mexican market expansion that may create complementary backhaul opportunities
- ATG Operations — Internal transport demand from truck operations
Open questions¶
Information needed
The following questions need resolution before DET activation:
-
Driver model: W-2 employee (cost basis $28/hour as modeled) vs. owner-operator (different cost structure) vs. 1099 contractor (different again). Decision affects cost basis significantly.
-
James's current arrangement: James was documented as DET's driver. His current status (on vacation per earlier context), employment arrangement, and expected return are not currently documented. Continuity of his role through DET activation is unknown.
-
Insurance procurement timeline: When does insurance get procured? Who handles the procurement? What's the budget? These are blocking items for any commercial operation.
-
Initial lane mix: Is LA port empty container the right starting lane, or should DET activation begin with ATG-internal hauls (lower regulatory complexity, controlled customer)?
-
Capital requirements: Insurance premiums, ELD installation, DOT compliance setup, initial working capital. What's the activation budget?
Resolution requires: Brandon Tomkins strategic decision on DET activation plan.
Companion Excel model¶
A complete Excel workbook (DET-cost-model-LA-port-empty-container.xlsx) provides:
- Editable assumptions (route distances, driver wage, fuel prices, operating costs, overhead rate)
- Live calculation of all derived costs
- Pricing scenario comparison (per-mile and flat-rate)
- Fueling discipline impact at various annual haul volumes
- Honest-state notes capturing caveats and information gaps
Use the workbook for what-if analysis (e.g., what if driver wage is $32/hour, what if fuel hits $6/gallon in AZ). The MkDocs document captures the strategic content; the Excel workbook supports operational scenario testing.
— chat-MC1, 2026-05-27