Percentage pay may make you feel like you get a better deal but in reality its the same.
If you look at a load offer and divide
the Pay by the DHPU + RUN, to find the per mile rate you've done the same thing in reverse.
If that load does't meet your rate you turn it down right?
If you feel it meets your rate you take the run.
What if every run met that rate, you'd have less TD's would you not.
Again, as I pointed out in another thread, and as you point out here, turn down rate improves as pay improves. It's not about flat rate or percentage pay, it's about the money you make.
Whatever compensation arrangement you use, your truck costs X amount per mile to operate and a load will pay Y amount per mile. You make money by accepting loads where Y is greater than X.
nightcreacher's point about short loads is important to note. Allow me to add a point about infrequent loads. The cost of sitting (fixed costs) must be considered as well as the cost of driving. Call the fixed costs Z. Thus profits happen when Y is greater than X+Z.
A flat rate system puts an owner-operator's focus on the need to generate miles, miles and more miles. But in expedite, a lot of the money we make is on shorter runs that pay more. And we wait for freight, sometimes for days at a time.
Under our present percentage pay system Diane and I can do just fine taking short runs, waiting for freight, and hitting the occasional grand slam cross country run. While our monthly income varies, sometimes dramatically, annual income is enough to keep our truck in the game.
The flat rate system you propose would not keep our truck in the game because we do not run enough loads and enough miles to make it pay. You could argue that lower pay would increase our run count and miles by making more loads available, but working harder for less money is not a prefered solution.
Granted, our truck is not the dry-box basic D-unit you are discussing. But when it comes to pay plans, the one size fits all plan that a flat rate plan is, does not fit all.
Also, when it comes to paid relocation, say you deliver to centeral Indiana. How long will you be willing to sit in Indianapolis waiting for freight before you started complaining about the fact that your paid relocation was not to Chicago where the freight is more abundant?
If you deliver in central PA, would you want paid relocatin to Pittsburgh, where you might wait a day or two for freight, or Newark, where you will likely be dispatched out sooner? And if they paid you to relocate to Pittsburgh, how long would you be willing to sit there while you watched trucks move quickly in and out of Newark?
I do not envy the people at any carrier that are tasked with establishing compensation arrangements. It is not as simple as looking at it from an owner-operator's point of view and providing a pay schedule that offers consistency and increases load acceptance ratings.
Shipper needs, carrier needs, owner-operator needs must all be considered and balanced. So do the needs of fleet owners who provide multiple trucks to carriers and split the pay with drivers. Economic winds and competitive forces whipsaw a variety of factors every which way. Long term and short term realities must be considered. And projections must be made that may or may not be reliable.
It all goes into the mix. When one item is changed, the others react. Notice how fuel prices are changing things now. Increased fuel prices changed the mix. In response, owner-operators, shippers, and suppliers of truck products and services - themselves part of the mix - are changing their behavior. And to those changes, the mix components react again.
With compensation arrangements, when a change is made that may solve one problem (more money to owner-operators increases load acceptance rates), that pricing schedule will be reacted to by shippers, carriers, owner operators, drivers, and (very importantly), competitors.
The rewards of this business don't go to owner-operators that demand a different mix. They go to those who learn how to identify the mix of the day and operate in it.
