Choosing a Trucking Company: Paid Miles

Choosing a Trucking Company: Paid Miles

In order to compare different company contracts, operators must compare sheep to sheep. The problem is some companies dress wolves in sheepskin. Accurate comparisons can be achieved if the details can be set side by side. Unfortunately, the industry does not have a very predictable standard when it comes to paid miles.

It’s rare but some companies actually pay by odometer. These industry anomalies are usually peculiar to niche markets. They should not be considered “standard” or even as the proposed standard. There are just too many drivers in the industry who would take advantage of odometer pay. For example, it would be much easier and profitable for the driver to route themselves around a city than through one, however the added expense to the company would soon strangle the profits. There must be a reasonable tradeoff, or give and take between the driver/operator and the company.

Fifteen years ago 8-12% of companies paid shortest route, today only about 4-6%. It’s a nice drop and helpful in many situations but doesn’t address any “practical routing shenanigans”. For the sake of this shenanigan’s article we’ll assume everyone uses practical.

The software used to calculate paid miles has many more settings than just practical and shortest. I don’t wish to present an exhaustive list of options in this article but I would like to state a couple of the obvious ones.

Outskirts to outskirts

When a destination city is chosen, the software can place the destination at the outskirts of the city you are entering, then when its time to change to an origin (leaving) the software again begins at the outskirts (even if it starts at the opposite end). In a large city the difference between destination and origin can be 20-30+ miles.

Manual routing

When a route is chosen from point A to point B (practical) the route can be altered if the dispatcher (or whomever) places a city/town along the shortest route path. This effectively changes a practical setting to a shortest route setting (or at least something closer).

City center to City center

Some companies choose a city center to city center setting. This can be a fare system since occasionally an operator’s destination is on the outskirts going in and leaves the way they came (gleaning the extra miles from outskirts to center and back to outskirts). However, at times it can also work against an operator with the destination on the far side outskirt while a pickup is located on the opposite outskirt and then heading back through the city. It becomes a tradeoff that can be very comfortable or aggravating depending on dispatch and luck.

The industry standard… postal/zip code to postal/zip code

What is the most accurate setting and should prove to have the least potential conflict is postal code to postal code. Unfortunately too many companies don’t use this standard (unless maybe they’re billing/quoting, but usually not even then). It’s the most accurate and fare system to use.

If every trucking company charged customers using the same measurements (postal code to postal code) and then passed down those identical measurements to their driver/operators, apples would be apples and sheep would be sheep. There would be no place for wolves to hide.

Unfortunately if a wolf can shave .5-5% off their running costs by using a different calculation method, a wolf can afford to stay in business when they probably shouldn’t. This method of cost cutting is deceptive at its very core. It is this very practice of lying to drivers that must stop.

The professional and efficient companies would love to standardize their revenue and costs. Why should a good company have higher costs than a poorly run wolf? Standardizing pay structure is the truest method of leveling the playing field (as opposed to speed limiters). The real question is… who should be responsible for standardizing it?

I’m not a believer in being dependent on the government or even the industry associations (who couldn’t enforce it anyway). Drivers must be educated to make their own best choices.

If every driver/operator understood the facts, collective individual choices would create pressure on the wolves to stop lying. The future of the industry is in the hands of you and your five friends.

Education may at times be slow but supply and demand is the most efficient method of protecting every free market industry.

Robert Scheper

Robert D Scheper has a Masters Degree in Business Administration and is the author of two books, “Making Your Miles Count: Taxes, Taxes, Taxes” and "Making Your Miles Count: Choosing a Trucking Company".

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