The trucking world can be confusing at times and no where else is this more obvious than the trucking world’s use of the term mile.
Since the default pricing variable for trucking is the mile, it has always been in the carrier’s best interest to line up their expenses (or inputs) to match this variable. The largest expense for trucking companies is driver compensation. For those people outside of trucking, it would be natural to assume that:
1) Driver picks up load; and
2) Drives X miles to deliver load; and
3) Gets paid for all of those miles. The end.
Here is where it gets confusing, a ‘mile’ at one company does not necessarily equal a ‘mile’ at another. In fact, there are three main types of mileage calculations utilized by trucking companies, and the differences between them, depending on origin and destination can be significant. This has long been a point of frustration with drivers, making it difficult to not only understand what they will be paid, but it also makes it difficult to compare compensation amounts between companies.
Source: SONAR – MILTR.VCFOO, MILTR.RCFOO, MILTR.FCFOO
Let’s start with the most accurate mileage type first – Hub miles. The way to think of Hub miles is simply the total miles the truck is driven in the process of delivering a load. The word ‘hub’ is a reference to the hubodometer, a measurement device which was installed on a truck’s axle back when odometers were not considered reliable instruments. Today, that’s not the case, and the odometer is considered the source of truth for reporting hub miles. The miles travelled are stored in the tractor’s ECM and transmitted to various databases used by trucking companies via various wireless and manual methods. In recent years, there has been a growing trend of companies starting to pay drivers based on hub miles, as the competition for experienced, professional drivers has increased.
The next type of mile on the spectrum of accuracy, are Practical Miles. The starting point in the calculation of practical miles is locating the nearest U.S. Post Office for both your origin and destination locations. Using the base information, services such as PC Miler (Trimble) or Intelliroute (Rand McNally) calculate the most likely (or practical) mileage based on truck-specific/designated routes. Practical mile calculations place a higher priority on interstate highway routes over toll and secondary highways. Progressive fleets have been using practical miles for decades, for the purposes of calculating driver compensation. Using practical miles as opposed to hub miles, allows carriers to establish a benchmark target or standard for each load, and a natural incentive not to deviate from that target.
The final and oldest mileage type (for the purposes of freight hauling) are Short Miles. Short miles, otherwise known as HHG (Household Goods) miles are still used today by some carriers, even though the mileage deviation from hub miles can be as much as 15%. HHG miles were originally developed by the Department of Defense, as a way of establishing an upper limit on the cost of moving servicemen and women across the country. Short miles are similar to practical miles in that the base calculation starts with the distance between the nearest post offices within each zip code area. However, this is where the similarities end. With short miles, the calculation to determine mileage does not take into account the most efficient (interstate highways) route for getting from origin to destination. It simply provides a low-end benchmark for the least number of driveable miles between two points, regardless of infrastructure or typical congestion.
Since driver payroll is a multi-variable calculation, it is possible for a driver to make more money, while being paid based on short miles. Likewise, it is possible that a driver could get paid less with hub miles, relative to other carriers on the same routes. Drivers must understand their base rate per mile, the mileage type, plus any bonuses, per diem pay, and benefits to truly evaluate or benchmark their compensation with other carriers. Conversely, it is in the carrier’s best interest to educate their drivers on their ‘effective’ compensation rate per mile.
Bill
Slow news day?
E.V. Smith
Anything outside of actual miles driven is stealing from the driver. The companies get paid on actual miles yet they pay drivers on PC mile or Air miles which in my opinion is crooked.
Richard M Gaskill
Verify that carriers get paid actual miles. I never heard that.
Drivers should ask the pay method before accepting the job. If they accept it they have no reason to whine about it.
Rodger Armstrong
Your comment is very valid. Sadly, the phrase: ” its in your rate” is claimed all too often…customers must have defined parameters on pricing with drivers knowing in black and white what they are being paid for..
Rodger Armstrong
Hello to all.
Good article. Road service providers, must not be taken advantage of. Assets and drivers tied up…detained at shipper or receiver must be compensated. In a tight freight market service providers will look the other way, not approaching the detaining party for compensation. Furthermore, Hhg, miles are by far the most accurate but used via less than One (1) percent of carriers. Sadly these carriers are the smart ones which are at a competitive disavantage. Carriers loose up to Ten (10) percentage of possible revenue in short miles as well as being detained. THIS IS A INDUSTRY WIDE STAGGERING AMOUNT OF MONEY..Carriers must forget about the chrome and concentrate on the loss factor for drivers and equipment utilization.
Bill
No they don’t. They may get paid different than how the customer pays but I can’t recall EVER bidding hub miles.
They give you city or zip. And often TELL you the miles to bid on.
Mario
Wow
Richard M Gaskill
Pay by the hour or hub mile won’t work because too many drivers waste too much time and go off route too much.
One pay method not mentioned is percentage. Rates vary per load. You can be sure drivers paid a flat per mile rate are getting less than the average.
Just because drivers aren’t paid detention time doesn’t mean carriers aren’t charging it.
It is easiest to get detention pay when loads are loaded or unloaded by appointment. Most carriers charge detention after 2 hours.
Robert
in reguards to the dentention, I work in customer service and can tell you , Just because detention is being submitted , It does not mean we are getting Paid for it , I would estimate 60-70% of the time , the carrier never sees detention or the detention paid is very very little and sometimes takes weeks to obtain ,especially from load brokers, and some customers have different guidelines, like detention doesn’t start unless truck has been sitting for 4 hours and then just pays x amount for time after that etc….
Richard M Gaskill
I would never drive for a carrier that used brokers. The carriers I drove for had detention clearly defined in the contract and there were no issues collecting it. A few times I was paid over 24 hours detention time. I pulled a tanker. One receiver had little storage space and we made just in time drop and hook deliveries. A couple of times that customer had their production line break down and the return trailer wasn’t empty.
Another time I made a Sunday delivery and their sample was slightly off spec. They needed a QC supervisor to approve it but they couldn’t contact the supervisor. I had to wait until Monday morning (at a nearby hotel) and they accepted the load then because they needed it to keep the plant running.
Too many drivers accept jobs without awareness of things like detention time or the turnover percentage of that carrier.