Honest question from a manager about driver pay

[bfeagley]

Hi, i wanted to ask for a little help and am new to this forum.

We are a small expedite company in the mid-west and are starting to grow again after 2 rough years. We added an expedite brokerage division and that has also increased our business.

We pay on a 60/40 split, but since we lowered our rates to be more competitive, our drivers are complaining that they are not making enough. Our business has increased because of the lower rates, but now we have a few unhappy drivers.

We are looking to going to per mile. Something like 75cpm for cargo van, 1.20 cpm for straight, and maybe 1.35 cpm for TT plus 100% FSC to the driver. Then paying after 50 miles, deadhead at .15 for van, .25 for straight, and .35 for TT

We need to be competitive with our pricing and have happy drivers too. What does everybody think is fair for both sides?
I know I'm probably going to get wildly different answers depending on which side of the isle you are on, but any input would be much appreciated.

Thanks

 

[layoutshooter]

At lot would depend on the straight truck. $1.20 per mile would put my TVAL truck out of business. If I had a smaller, single axle, no lift gate truck it might be ok.

 

[davekc]

Depends on what you are looking at. The 1.20 per mile is pretty much a industry average. Some other carriers are below it and some are above.
Other items would fit into that equation as well. Of course referring to costs for communication equipment (QC's) insurance and the like.
Average mileage range from shipper to the truck would be the other issue.
Why? A truck that is averaging say 20 percent DH under a 1.20 plan would be much different than a truck at that same rate but deadheads back every time. In other words, what is the truck making for ALL miles.
The other variable would be what are the actual fuel surcharge averages.
Lot of things to look at. If you are trying to recruit trucks, it may be a tough go unless you have something different or better than the other carriers.

 

[greg334]

What is competitive?

I mean who are you competing against and why would you lower your rates?

Do you have a customer base of your own?

Or are you getting the work off the load boards?

You may need to be a bit more flexible with your revenue share scheme, maybe set floors on what you consider profitable after you figure out operating costs.

 

[bfeagley]

We provide all the communcations and trailers. Really, the only charge to the driver is the insurance. Most of the older drivers are use to running out and coming straight back. We have been trying to break them of this because its costing us a fortune and them too! We belong to some expedite load boards and are partner carriers for many of the big boys, so we have loads, just not drivers staying out to get them.
We are looking to get some new drivers willing to stay out on the road.
For the life of me, I cant figure out why these guys won't wait a day to make twice as much!

 

[bfeagley]

We have a large customer base around our HUB and usually have to use partner carriers and load boards to get them back to the general area. Although, we have hired sales people to build are base in areas we go to a lot.

We lowered our rates because we were the highest in town. Some other carriers had came into town and were taking market share. Ex: 6 months ago, we were at 2.50 per mile plus 18 to 19% FSC for a basic single axel straight. Our competition was much lower. We used to pretty much have a monoply in this area for years.

 

[davekc]

We have a large customer base around our HUB and usually have to use partner carriers and load boards to get them back to the general area. Although, we have hired sales people to build are base in areas we go to a lot.

We lowered our rates because we were the highest in town. Some other carriers had came into town and were taking market share. Ex: 6 months ago, we were at 2.50 per mile plus 18 to 19% FSC for a basic single axel straight. Our competition was much lower. We used to pretty much have a monoply in this area for years.

As you will see here in a few recent posts, you have carriers throwing loads to trucks for a buck a mile. That will give you some idea what they are really doing rate wise on many of them. And be assured, they are under that 2.00 per mile number. Most of it is to gain market share or retain what they already have. The bad part is they are trying to retain past profitability and have to do it on the back of owner operators.
When you have some carriers making record profits and yet the pay to drivers drops, that is a sign.
But to be fair, many carriers are experiencing a shortage of trucks within their own fleet. That forces them to outsource/broker other freight. The owner operators for the carrier have to subsidize that as most brokered freight is hauled above what they pay their own contractors thus reducing their margins.

 

[dotcommark]

bfeagley, I sent you a message.

 

[greg334]

OK, I am getting more of the picture but read the questions and ask them to yourself. Write them down and do some homework.

With load boards and all that, it may be where you need to look at where you want to head and then review how you can be more flexible getting there.

Case in point - there is an owner who bought into the idea of having 16 tractors and he would make a fortune. He went the employee route, hiring people which was a bad thing to begin with but he had employees before so it wasn't much work for him. He took half the trucks and put them on with expediting companies and the other half with three main stream trucking companies. He was losing a lot money with the 8 on with the expediting companies and losing money with the other trucks. His problem wasn't that he didn't understand the game but he was inflexible - not one of these trucks moved for any reason under X amount per mile. He lost focus of what he was trying to do, while he was sinking. When he got help, he was just about to file for bankruptcy. His advisor suggested that he drops the idea of worrying about how much he makes per truck per load/day and focus on weekly and monthly revenue. It worked for him so far, out of debt and doing well.

 

[Jefferson3000]

...so we have loads, just not drivers staying out to get them.
We are looking to get some new drivers willing to stay out on the road.
For the life of me, I cant figure out why these guys won't wait a day to make twice as much!

Can't figure it out either.

 

[Vinnie T]

When you say they pay insurance, do you mean they pay bobtail and occupational coverage? Or do they pay Cargo and Liability too? Biggest expense you have is insurance! makes a big difference what they are paying for. If they are paying cargo and liability aside from trailers on the E units your making pure profit aside from a few bills, IFTA, Phone, Rent etc etc etc. If they are paying the bulk of the insurance, then you could afford to pay them a lot more to keep them happy. Rates are down now because it's July, they will go up come third and fourth quarter of this year. As far as drivers not accepting loads, not staying out etc. that is something i would address in orientation and maybe shy away from ops that treat this business like a travel agency.

I know a guy with a small company, pays something like 85% of the load to his Ops, but he makes them pay for all the insurance costs. May be a good way to go, that way of these guys don't want to run they will still be on the hook for those payments and they won't want to go home empty all the time.

 

[ebsprintin]

From a drivers stand point. It doesn't matter how you slice and dice it, I'm going to be looking at all the pay divided by all the miles for any particular load. I like going a percentage route, because it shares the pain so to speak, and it self adjusts to the market. A fixed rate works great today, but when the market swings one way or the other, there is going to be an imbalance, and no one likes being on the wrong side when it tips. Things get off balance enough and then you'll have to be looking at a new contract rate to avoid bankrupting the drivers or yourself.

Sounds like your drivers HAD a good thing going.

eb

 

[geo]

it is a con job to get them to change there ways
the drivers alway's think dispatcher is lie to them
you have to change the way they think
i look at the end of week and month
and when i take a load that may not be that good
i firgure how to get more out of load, may have to off load by hand or taken to second floor , they may make you wait and firgure how to get d time for waitting etc
and sometime a poor load gets better by the min
you have to take the good with the bad