When dispatching company drivers, a trucking operations person has to weigh multiple considerations. Foremost is serving the customer, but a close second consideration is getting your drivers enough miles for the week. If your drivers don't get the miles, the good ones will leave. Then you have to replace them, on top of the normal churn that is a hallmark of this industry.
Most over-the-road (OTR) truck drivers are paid by the mile. That can create a mismatch between the trucking company's goals and the driver's goals. The company wants to build revenue faster than expense. For the driver, it’s all about getting the miles. Company drivers won't care that the carrier operation was able to increase revenue per mile by focusing on shorter hauls — unless the drivers are getting paid more, too.
Note that owner-operators with their own authority may actually prefer these shorter trips. The rate per mile is higher, and these trips often pencil out. Most O-Os are perfectly willing to travel 250 to 300 miles per day if they can make $900 to $1,000. Shorter trips can also be profitable for a carrier that relies on company drivers. The problems arise when there are so many of these trips that the drivers become dissatisfied and leave the company.
Option #1: Give the Driver More Than 2,000 Miles Per Week
The simplest way of insuring that your drivers get enough miles is to assign them to trips of at least 400 miles, or to multi-day trips where they can average better than 400 miles per day. For a driver who is paid by the mile, it's ideal to have more than 2,000 miles per week. If the pay rate is 40¢, those 2,000 miles add up to $800 per week, or about $40,000 per year for the driver. Some trucking operations might be able to generate 2,200 weekly miles or more but it's hard to get there with too many trips in the 225- to 375-mile range.
Drivers who feel shortchanged on miles will be likely to look elsewhere, including leaving driving completely. The electronic logging device (ELD) mandate will make things worse, at least initially, as reported by early adopters. Many fleets have found that drivers were not able to cover as many miles per week with ELDs as they did with paper logs. The end result is that most company drivers will make less money than they did before, so the industry needs to be proactive with a new approach.
Option #2: Increase Driver Pay to Make Short Hauls More Attractive
Raising the pay per mile can help retain drivers, and there is enough profit on shorter hauls to support a pay increase. When applied to long hauls, however, increased driver pay can add enough cost to make the trucking company less competitive. Also, some drivers prefer long hauls, because they know they will spend less time sitting at docks. Even a higher rate per mile might not be enough to tempt those drivers to accept shorter hauls.
Option #3: Get Creative
It’s about time the trucking industry got creative and addressed this issue! Two possible solutions are to switch company drivers to an hourly pay rate, or to establish a tiered scale of per-mile payment according to the number of miles driven, with a weekly minimum guarantee. Carriers should also consider paying drivers when they are on duty but not driving, so they will not have to work for free whenever they're detained at a shipper's or receiver's dock.
Categories: Trucking Industry Trends