Other drivers killing us!
- Thread starter aimeejos
- Start date
Is there a possibility that the driver/team/truck is from California, and that rate covered their costs just to get home? Is there a possibity that this truck might have another load booked on the other end of this one that pays much better?
Lots of folks are quick to villify someone for taking a load that doesn't meet another's needs, but may meet theirs. Everyone's costs and personal financial needs are different.
Excellent!!! NO 2 trucks costs are the same....we are,... last time I looked "Independent" Owner Operators....NOT...The "Association" of Owner Operators....
Humble2drive
Expert Expediter
Back to the O.P.
How do you know that they did?
Several scenarios:
1) They negotiated the rate higher.
2) They negotiated a backup load out of CA.
3) They live in N. CA and just wanted the fuel paid to get home.
4) They have experienced being stuck in Fort Worth in the past and decided to cut their loss and move to a better freight area.
5) They drive for an owner who pays the fuel and they needed some cash.
1715 miles @ $1.22 = $2,092 x 40% = $836
6) They have not bothered to determine what rate is necessary in order for them to be profitable.
7) They may be focusing on a monthly average rate rather than a per run rate and may get the last laugh by moving rather than sitting.
I could go on but I would like to expound on number 7 since we have Newbies in attendance.
As with most owners, we have determined to the penny what rate per mile (all miles) we need in order to make the profit goal we desire.
I have seen owners use 2 different strategies built around that information.
1) Get that rate or higher or the truck doesn't move.
2) Be flexible with that rate on each individual run in order to maximize revenue opportunity and make sure that the average rate per mile meets or exceeds their goal at the end of a period of time (ex: monthly).
I have witnessed strategy #1 become a disaster for some friends and acquaintances because of the excessive sit times. Obviously we use strategy #2 and it has worked very well for us. Our annual average rate per mile has been well above goal for 5 years straight because of it.
This may sound harsh but Screw Solidarity! It ain't gonna happen in the trucking industry. There has and always will be someone to take the "cheap freight" for whatever reason. You sitting there for days is not a noble cause that will eventually create a change in rates.
Do what you need to do to gain the knowledge of where you need to be in order to consistently get above your rate and get there even at a short term loss.
Admittedly, this is easier for us because of the specialized equipment and the full list of qualifications that we possess.
In your example, we have very few "special" accounts in Ft. worth; however, I know of 2 specific regular weekly cross country reefer runs that come out of the Bay area. With that knowledge, I could call dispatch and offer to take the first run at a per mile loss on the provision that I be awarded one of the regular cross country runs as a back up. That is a sweet deal for both parties involved. Our total per mile average for both runs together would exceed our goal and because we kept moving our total revenue for the month would most likely exceed our goal.
Hate me for taking a "cheap" run from time to time but while others are sitting and waiting for their rate, we are out the running to exceed our rate.
Just some food for thought.
How do you know that they did?
Several scenarios:
1) They negotiated the rate higher.
2) They negotiated a backup load out of CA.
3) They live in N. CA and just wanted the fuel paid to get home.
4) They have experienced being stuck in Fort Worth in the past and decided to cut their loss and move to a better freight area.
5) They drive for an owner who pays the fuel and they needed some cash.
1715 miles @ $1.22 = $2,092 x 40% = $836
6) They have not bothered to determine what rate is necessary in order for them to be profitable.
7) They may be focusing on a monthly average rate rather than a per run rate and may get the last laugh by moving rather than sitting.
I could go on but I would like to expound on number 7 since we have Newbies in attendance.
As with most owners, we have determined to the penny what rate per mile (all miles) we need in order to make the profit goal we desire.
I have seen owners use 2 different strategies built around that information.
1) Get that rate or higher or the truck doesn't move.
2) Be flexible with that rate on each individual run in order to maximize revenue opportunity and make sure that the average rate per mile meets or exceeds their goal at the end of a period of time (ex: monthly).
I have witnessed strategy #1 become a disaster for some friends and acquaintances because of the excessive sit times. Obviously we use strategy #2 and it has worked very well for us. Our annual average rate per mile has been well above goal for 5 years straight because of it.
This may sound harsh but Screw Solidarity! It ain't gonna happen in the trucking industry. There has and always will be someone to take the "cheap freight" for whatever reason. You sitting there for days is not a noble cause that will eventually create a change in rates.
Do what you need to do to gain the knowledge of where you need to be in order to consistently get above your rate and get there even at a short term loss.
Admittedly, this is easier for us because of the specialized equipment and the full list of qualifications that we possess.
In your example, we have very few "special" accounts in Ft. worth; however, I know of 2 specific regular weekly cross country reefer runs that come out of the Bay area. With that knowledge, I could call dispatch and offer to take the first run at a per mile loss on the provision that I be awarded one of the regular cross country runs as a back up. That is a sweet deal for both parties involved. Our total per mile average for both runs together would exceed our goal and because we kept moving our total revenue for the month would most likely exceed our goal.
Hate me for taking a "cheap" run from time to time but while others are sitting and waiting for their rate, we are out the running to exceed our rate.
Just some food for thought.
Just some food for thought.
Food for thought indeed, and your item seven is pleasantly digestible. Since newbies are in attendance, it would be helpful to share the math formula you use to determine your average pay per mile.
Say you do three runs in a week; one for $3.50 per mile, one for $1.70 per mile and one for $2.10 a mile. Do you simply average those three numbers to determine your average pay per mile ($3.50 + $1.70 + $2.10) / 3 = $2.43, or do you use additional information and a different formula? How do you factor in deadhead miles?
I presume you use a weighted-average formula that includes deadhead miles since the shortcomings of the above formula are obvious.
To the group, I ask, when averaging runs as Humble2drive describes in his item seven above, what is the best formula to use to calculate one's true results?
Murraycroexp
Veteran Expediter
I like to look at it weekly but as I advance in the week.
Revenue through "this" load and all miles through "this" load. I usually do that, at least in my head, on every load.
Lets face it. It matters not what the loaded rate per mile is if you deadheaded a lot to get there or have to drive hundreds of miles out of that black hole.
Revenue through "this" load and all miles through "this" load. I usually do that, at least in my head, on every load.
Lets face it. It matters not what the loaded rate per mile is if you deadheaded a lot to get there or have to drive hundreds of miles out of that black hole.
I think formulas can be flexible enough to allow for many of the twists a specific load may bring with it...Most of us have a CPM...some chose different paths to get there....I don't believe there is a one size fits all formula...
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Murraycroexp
Veteran Expediter
Pants On Fire Expediting, LLC.
"Hot wings for breakfast just to get the day started right!!"
"Hot wings for breakfast just to get the day started right!!"
purgoose10
Veteran Expediter
If he pulled that load for a broker out of LA area then that's the going rate for that area. Southern Cal's rates are bad and have always been bad. I'm not referring to expedite loads just plain old T/L's. Refer loads brokered out of LA go for about dime more per mile unless its fresh produce. So if that truck was from southern Cal then that's a normal rate for him.
At 1.22 a mile I would question as to whether it is a expedite load? But I would probably go with my original thought of considering that kind of load IF I can shove it on with another one and they are both going the same direction. Sometimes cheap freight can be your friend.
I'm not asking for a formula that determines whether you should take a load or not. I am asking for the formula (that should work the same for everybody) that shows, after the fact, what your true revenue-per-mile results are for a number of loads you completed over a given time frame.
Let me round the question out a bit more:
Three hypothetical loads (team scenario but the formula will be the same for solos):
Load 1:
Rate per loaded mile: $3.50
Number of deadhead miles: 200
Number of loaded miles: 200
Deadhead pay: $0.00
Load 2:
Rate per loaded mile: $1.65
Number of deadhead miles: 500
Number of loaded miles: 2,000
Deadhead pay: $500.00
Load 3:
Rate per loaded mile: $2.10
Number of deadhead miles: 240
Number of loaded miles: 2,100
Deadhead pay: $0.00
Number of personal miles on truck with these three loads is zero. These loads were run back-to-back (with sufficient time sitting between them to make the hours possible. HOS is not an issue in this hypothtetical example).
QUESTION 1: With these three runs combined, what was the average revenue per mile (all miles)?
QUESTION 2: What formula do you use to calculate it?
In other words, how much money did this team make, and how do you know?
By the way, if you have been in this business more than 30 days and do not know how to calculate the answer, now would be a great time to learn.
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First you have to find out your total pay and then divide by all miles to get the correct pay per mile, loaded and empty.
I believe all the needed numbers are there. Do you care to take a crack at providing the answer?
Where you wind up does not matter regarding the question being asked. The question is about the money made on three runs combined that were completed in the past. But to take the "where you end up" issue off the table, in this hypothetical scenario, let's say you end up in a busy freight area that can usually be counted on for a quick dispatch out.
Lord sometimes things are more confusing because of over thinking. Any group of loads can be figured taking total revenue divided by total miles. It doesn't take a page to say something so simple. No pop quiz Monday everyone take a deep breath.
Sent from my Fisher Price ABC-123.
Sent from my Fisher Price ABC-123.
Not sure what the team made (is it owners or drivers under contract w/owner), but the truck generated a total revenue of $8910 making an average of $1.70 per mile - all miles. But revenue is just the starting number...what did it cost to run those runs? Without factoring costs/expenses, you don't know how much was actually made. You have to also know your expenses both fixed and per mile. A truck that gets 9.5 mpg can certainly run for a lower per mile rate than one that gets 7.5 mpg. Is the truck paid off or does it come with a huge bank payment. How many of the 5240 miles ran were on toll roads. Just saying revenue without expenses is not how much money someone makes, it's money generated only.
Actually, there is a pop quiz every day you are in the business. The answer may seem obvious and simple to those who know how to calculate it, but pause to note that not everyone does. One of the down sides of experience is forgetting what it is like to not know the things you now know.