The Changing Economics of Expediting

[ATeam]

As if $4.00/gallon for diesel fuel was not bad enough, $5.00/gallon is now being charged in some areas. Fuel surcharges trend upward as a result, but not on the personal deadhead miles expediters do.

At the moment, we are 900 miles from home. At 9 mpg for a straight truck, that is 100 gallons of fuel or $450 @ 4.50/gallon, just for the fuel for a trip home. The rest of the truck operating costs must also be included.

A friend told me today of a 10 mile trip for an errand one way and 10 miles back. He reckoned that's a little over 2 gallons of fuel or $11 at California fuel prices, where he is.

When I am at home, I sometimes take the truck in to a trailer shop for work. It is 40 miles away. At 9 mpg and $4.50/gallon, that is $40 for the trip up and back. The $100 I might have paid them to fabricate and put a custom bracket on the truck just became a $140 expense.

The truck wash we use at home is 30 miles from the house. The truck wash that used to cost me $50 now costs $50 plus $30 for fuel.

Of course the increase is not all of that $30. We paid for fuel before prices soared, so the difference is more like $15. But with fuel prices high like they are now days, we are paying closer attention to incidental deadhead runs like these, on which no fuel surcharge is paid.

I'm wondering about expediters that go home more than most. Will they decide they can no longer afford to go home often and get out of the busines for that reason? Will they continue to go home as often as before and choose to take the profit hit? Or will they decide to stay out on the road more and make home less of a priority than it used to be?

What about maintenance? I can save $30 by washing the truck myself at home. Maybe I should do that. Do I really need that bracket? Maybe I should wait until I am closer for another reason and have it done then. After a run, do we really need to dash 10 miles off to a grocery store? Maybe we can wait until we are closer to both a grocery store and laundromat before we run up more personal miles.

But what fun is that? Pinching pennies so we can afford to work seems backwards to me. The idea is to work and make enough money so we don't have to pinch pennies.

When the truck is dirty, I don't want to wash it myself and I don't want to have to think twice about the cost of driving to the truck wash. But look at me now. I see fuel selling at $5.00+ and I see myself washing the truck.

 

[arrbsthw]

Phil, I have helped was a tractor before so I know from
experience...you will spend $40.00 worth of effort and
then some to wash your truck..

 

[pjjjjj]

This isn't really regarding truck fuel per se, but along the same lines. Someone called one morning recently, wanting to borrow our $20 tile cutter. They live roughly 30 miles away. They needed it NOW, so didn't want to visit, just pickup the cutter and run.
As much as I would've liked to have seen them, we suggested going to the Lowes nearby, since it would probably cost more than the price of it, just for the gas, and nevermind the extra hour of time spent driving here and back, the bother of returning it, and the fact they would then have one to keep for themselves.
While I was still on the phone, the hubby ran out to Lowes and back, and the thing only cost $17 plus taxes. Even in a small car, it wasn't worth the drive to save the price.
It's kinda sad to think you have to weigh out silly things like this nowadays, when before they were done without a second thought.
If something's on sale at a grocery store you don't normally go to, instead of running out to pick the sale item up, you have to now figure out if it's really going to save any money after making the trip.
Hopefully people will think about which stores to shop at, and maybe the local merchants will do better as a result, rather than the big box stores and the fuel companies.

 

[Broompilot]

I use to really enjoy spending AN ENTIRE DAY washing my truck. I have done this TT once myself AND NOT ANYMORE. Stop only by the one on the way home, we cannot afford to go out of way anylonger, unless it is for enjoyment.

I have the same problem, all the repair facilities in Charlotte N.C. are on I-85 I live approx 24 miles, so I haved a great local Mechanic and if he cannot fix it and it can wait on my next trip in than I rent a car and make an appointment. No more DH if at all possible.

Last poster got it right, washing these things is a Pain in the XXY, and as detailed as you are you would be spending the same or more time than I do, ITS NEVER GOOD ENOUGH, well those wheels would be a whole lot brighter with some polish, how about the shinny stuff on the wheels, and how about Rain X on the windows, and than there is the dirty carpet and the carpet cleaner, and and and and and......

Its a fact Trucking is Changed, not just changing it has CHANGED... the Ole way as I hear on CB or the so called OLE SCHOOL is out the window. I have a friend who refuses to drive less than 70mph and braggs that his low rear end #s that the truck luggs and gets just as good as MPG at 70 than at 55. NOW GET THIS,,,, He Drives a 99 W-9 and says he avgs 6.5 at 75mph. OK yeah, I believe that REALLY if he says it it has to be, could not be any otherway. Sure wish the faster I drove the more MPG I would get, just the opposite.

One question though Phil, you really only get 9? How much does your truck weigh? I really thought you could get 11, kinda dissipointed in that number or it cause of the add ons that weight it down? And I am not meaning to be sarcastic I really thought you would get better than that. Mine is a 770, Cummins and it Avgs 7.5 with a heavy load and almost 9 with a light load if I keep it down to 55 and avoid steep grades. Otherwise steep grades take .05 away from those #s.

 

[nightcreacher]

I'm in Camarillo california,cant load til monday,so sitting here in a motel six.Cheaper to stay here than to run 90 miles to the nearest truck stop and back here to load.Have resturants in walking distance.High fuel prices have stopped all those non paid miles.Cheaper to walk than drive.

 

[dhalltoyo]

Arrived in Bedford, PA last Wednesday at 2:30am.

Parked in front of the gate, crawled into the bunk and slept until 7:00am.

Unloaded, pulled back through the gate and parked in open area out of everyone's way.

Sat there until the next load offer came.

Many companies that have extra parking area have been quite understanding as to our increased fuel costs resulting from DH miles.

Truck wash. I like doing mine when at the house. Great exercise and it affords me a closer look at the finish. I can then touch-up any stone chips.

 

[greg334]

The Changing Economics of Expediting??

Ok, this is more about everyday life than anything to do with expediting. Whether you are in a car that gets 40mpg, or an RV or a truck, cost has risen enough to make people think twice.

Not picking on Phil but...

Phil can't wash his truck on the road when he fills his tanks?

There are a lot of ways to save on money whether it is expediting or just going to get food.

One thing that seems to be left out of the equation is what is the actual overall cost for those who get that great amount of FSC on 'authorized' miles? Does that 30 mile trip get adjusted for what you paid for in the tank or what you will end up from the company as an adjustment or am I way off with my thoughts?

 

[Broompilot]

How I read it Greg, is he (we) use to think nothing of it, the price well, really part of doing business. Now it is no longer. Even ideling as we all know at one gallon an hour forces one to freeze, or sweat, should there be no anti idleing devices, or otherwise spend over $50.00 a night to not do either of the above.

I no longer just do things like I use to, take for granted I am in a Hotel right now 170 from my house. Would have gone home a year ago but not today, things changed and so does the way we all need to do business or ELSE.

 

[ATeam]

One question though Phil, you really only get 9? How much does your truck weigh? I really thought you could get 11, kinda dissipointed in that number or it cause of the add ons that weight it down? And I am not meaning to be sarcastic I really thought you would get better than that.

We average 9-10 mpg depending on speed, wind and terrain. The truck weighs 34,000 lbs. empty.

We are not disappointed in the mpg numbers as we had no predefined expectations when we built the truck, though 7 mpg would have been a disappointment.

In calculating its fuel surcharge, FedEx Custom Critical assumes that the fleet average for straight trucks is 9 mpg. With our truck being one of the heavier straight trucks in the fleet, we feel pretty good getting slightly better than average mpg results. We have driven fleet owner straight trucks that weighed 10,000 lbs. less than our truck and produced mpg numbers significantly worse than 9 to 10.

Items on our truck that degrade fuel economy include two drive axles (parasitic loss), ten wheels on the ground (increased rolling resistance), side fender mirrors (increased wind resistance), two 100-gallon fuel tanks (increased weight), and a large sleeper (increased weight). There are probably more items that do not come to mind at the moment. All of the above were included for the benefits they provide. They were some of many trade-off decisions we made as we spec'ed this custom-built truck.

For those who may be interested, our truck spec reasoning is detailed on my web site. After two years and 275,000 miles in the truck, we remain thrilled with "Little Putt Putt," the name we gave it. It rides like a dream and runs like a top. The floor plan and features are perfect for our chosen style of life and work on the road.

 

[ATeam]

Back to the original post, another item that comes to mind is fleet owners that pay for fuel. I would think they are feeling pressure like never before.

On one hand, the driver has no financial incentive to minimize incidental deadhead trips. Driving say fifty miles to a truck stop to get a shower would seem like a normal, reasonable and logical thing to do, since the fleet owner would buy the fuel to do it with. So too with the occasional trip home. On the other hand, if the fleet owner starts telling the driver how and when to move, even for things like showers, the independent contractor relationship may come into question.

When fuel surcharge money became significant, we saw movement among some fleet owners away from the 60/40 split (60% to driver, driver buys fuel and gets 100% of the surcharge) to the 40/60 split (40% to driver, fleet owner buys fuel and gets 100% of the surcharge). Now that deadhead even for short distances has become costly, I wonder if we might see movement back to 60/40, or other compensation arrangements rise?

 

[CharlesD]

I used to think nothing of a 200 mile deadhead, now I'm more likely to think twice before doing that. I've also been looking more at LTL loads just to cover fuel costs for relocation or deadheading for a good pickup. Those LTLs don't pay much, but if you have a good load picking 200 miles away and you can find an LTL going to where your pickup is and it covers your fuel, it can ease things somewhat. I've managed to do this a couple times recently.

 

[fastrod]

I deadhead home after every run now and will continue to do so. Since I write my own fsc the cost of fuel will not change this, as the cost of fuel goes up I just increase the fsc. Pinching pennies to be able to work is backwards but that is just part of the price you pay for leasing to a carrier.

 

[iceroadtrucker]

Back to the original post, another item that comes to mind is fleet owners that pay for fuel. I would think they are feeling pressure like never before.

On one hand, the driver has no financial incentive to minimize incidental deadhead trips. Driving say fifty miles to a truck stop to get a shower would seem like a normal, reasonable and logical thing to do, since the fleet owner would buy the fuel to do it with. So too with the occasional trip home. On the other hand, if the fleet owner starts telling the driver how and when to move, even for things like showers, the independent contractor relationship may come into question.

When fuel surcharge money became significant, we saw movement among some fleet owners away from the 60/40 split (60% to driver, driver buys fuel and gets 100% of the surcharge) to the 40/60 split (40% to driver, fleet owner buys fuel and gets 100% of the surcharge). Now that deadhead even for short distances has become costly, I wonder if we might see movement back to 60/40, or other compensation arrangements rise?

Give Credit where Credit is due.
I ran across a fleet ower last Tuesday, He was servicing his trucks I asked if he was driving it himself he said no. The Drivers come in and he takes them and gets them serviced while the driver is on home time. I was impressed, I asked fruther well did he stay home and run the business he said no he drives as well but his was a dedicated route and 2 run a week which gave him ample time to take care of his other 8 trucks when they came in. I asked how he paid them he said he gave them 40% to run the Truck he paid the Fuel and the Tolls and the Maint. I asked what was the secrete to his success he looked at me smiling and said. What Im doing here now lets the driver concentrate on the things that are important when at home they are on home time and on the road they are working not sitting. I asked do all the Trucks have Generators and that he said Yup sure do and they are serviced regulary along with the Trucks. I asked the big question did he buy his trucks new or used. He said most of the trucks he had were bought used with 150,000 to 200,000 miles on them and warrentys he said when the warrentys are about up or about 500,000 to 600,000 he dumps them and gets another Truck. So U never pay them off I asked he said nope as they will just nickel dime ya to death. I said there are alot of OOPs that will run the trucks out alot more miles than that. He said Yup and they have a lot of breakdowns and are in the shops alot. I said new Trucks can be the same thing. He said yes thats true but the outa pocket cost is less and if his trucks break down he pays the drivers 100.00 each day they are in the shop and if need be a hotel is paid for as well. I said if that is real thats a good deal. He said well that is why I am able to keep my drivers.. Good equipment, no driver Upkeep Headaces and fair pay. I said well sounds about too good to be true. He said well no body is perfect but the little things and good equipment, and hometime and the maintance program he has is whats kept his drivers happy and of course the Pay. I asked what was another key to his success he said he didnt run cheap Freight. If the frieght dont pay he dont run it.

 

[x06col]

Very, very good chance you'll price yourself outa the market with that kind of attitude. Interestingly, i've advocated the things y'all are trying these days for years. Seems it really don't matter what the price of fuel is/was, a penny saved is still a penny earned. A little discomfort will build character, and save a few bucks. Many will think they are suffering tho, "when you are stuck in a truck".

 

[iceroadtrucker]

Very, very good chance you'll price yourself outa the market with that kind of attitude. Interestingly, i've advocated the things y'all are trying these days for years. Seems it really don't matter what the price of fuel is/was, a penny saved is still a penny earned. A little discomfort will build character, and save a few bucks. Many will think they are suffering tho, "when you are stuck in a truck".

I have run across a few Fleeters with that type of attitude most of them have lost there Fleets mostly. For one the Equipment goes south and 2nd they cant keep drivers. There are those that lurk here that went down that road. Somthimes runnning a flyby night operation close to home if you got a mechanic near by will work. but here on the open road that mentality just dont work these days. If ya got a fleet then take care of it. Ull go far with a good attitude.

 

[Turtle]

Yer killin' me, Marvin. Just killin' me.

 

[CharlesD]

I deadhead home after every run now and will continue to do so. Since I write my own fsc the cost of fuel will not change this, as the cost of fuel goes up I just increase the fsc. Pinching pennies to be able to work is backwards but that is just part of the price you pay for leasing to a carrier.

I deadhead home quite a bit more than the average person, but it depends on how close I am to the house and how much I made on the last run. I add the deadhead miles onto the miles I just did on the last run and if the revenue I got on the last run is enough to cover the deadhead miles, then I'll do it. But right now I'm sitting in Dallas and I live in Cincinnati. Deadheading home would just be too expensive. If I really need to desperately get home, I'll find an LTL heading in the general direction to cover some of the costs.

 

[davekc]

If I was paying only 40 percent to the driver, I would have a lot left over to pay 100 dollars and hotel a day while a USED truck is in the shop.
I can't figure out how the guy (fleet owner) does all the maintenance? Hard to believe he is right there at everyones house when they are on hometime to take their truck and get it serviced?
Maybe all the drivers are his kids?

Ummm....I think Marvin's post just might be a fairy tale?

 

[x06col]

Don't know about THAT fairy tale or not, but, here is one for you.

Sold my Company, and tomorrow i'm going to take a run that we have completed many times over the years. A while back when we were going thru revenue performance for the biz I ran onto a run I made when fuel wuz $1.25. Fuel cost for this run then wuz fourty four dollah. Revenue for the run then wuz three hunnert eighty four dollah. A difference of.... three hunnert an fourty dollah. Tomorrow, fuel will cost me bout $4.80. Fuel cost for this run will be bout a hunnert seventy dollah, revenue is seven hunnert fitteen dollah. A difference of five hunnert an fourty five dollah. An times are bad eh? As has been posted, fsc SHOULD NOT, WAS NOT, devised to pay for your fuel. If it don't pay, don't take it. If you can't make a living, I suggest you tighten your belt a bit, and look at costs other than fuel for your problems. You just can't support a champaign taste on beer revenue. There are no roast goose.

 

[arrbsthw]

If I was paying only 40 percent to the driver, I would have a lot left over to pay 100 dollars and hotel a day while a USED truck is in the shop.
I can't figure out how the guy (fleet owner) does all the maintenance? Hard to believe he is right there at everyones house when they are on hometime to take their truck and get it serviced?
Maybe all the drivers are his kids?

Ummm....I think Marvin's post just might be a fairy tale?

Just maybe all the drivers are from his area. And just maybe
they don't all come in at the same time. My husband maintained our trucks at one time (when we had 4)
He ran local and when trucks were there on weekend he did
the upkeep that was required.. Drivers went home.