Percentage Pay Versus Mileage Pay

Topic 10485 | Page 3

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Bravo Zulu's Comment
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I've been told by an experienced driver that there's about a 5-10% difference and that I shouldn't use that as a determining factor in choosing a company.

He suggested to ignore potential quarterly bonuses because those are possibilities, not guarantees. He advised that over the long term, CPM , benefits, avg miles/wk, and company stability should be the major factors I should consider. He also advised it's nice to have a comfortable truck, but not at the expense of his pocket at the end of the week.

I value his opinion because he has done OTR solo, team, line haul , and worked on a percentage with a small company. He has a lot of varied experience .

This conversation came up because I was discussing hauling reefer for a food company vs hauling flat bed for 3 CPM more. He reminded me that people will still be eating chicken when the steel business slows down from November through January.

OTR:

Over The Road

OTR driving normally means you'll be hauling freight to various customers throughout your company's hauling region. It often entails being gone from home for two to three weeks at a time.

Line Haul:

Linehaul drivers will normally run loads from terminal to terminal for LTL (Less than Truckload) companies.

LTL (Less Than Truckload) carriers will have Linehaul drivers and P&D drivers. The P&D drivers will deliver loads locally from the terminal and pick up loads returning them to the terminal. Linehaul drivers will then run truckloads from terminal to terminal.

CPM:

Cents Per Mile

Drivers are often paid by the mile and it's given in cents per mile, or cpm.

Reefer:

A refrigerated trailer.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.

OOS:

When a violation by either a driver or company is confirmed, an out-of-service order removes either the driver or the vehicle from the roadway until the violation is corrected.

Errol V.'s Comment
member avatar

B. Z.'s wisdom:

[An experienced driver] suggested to ignore potential quarterly bonuses because those are possibilities, not guarantees. He advised that over the long term, CPM , benefits, avg miles/wk, and company stability should be the major factors I should consider. He also advised it's nice to have a comfortable truck, but not at the expense of his pocket at the end of the week.

The big picture is where it's at. All the chasing miles and pennies per mile is not worth the effort. Think of finding 4¢ on the ground. Is it really worth it?

CPM:

Cents Per Mile

Drivers are often paid by the mile and it's given in cents per mile, or cpm.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Old School's Comment
member avatar
My question is what about practical mileage pay. Like for example, Roehl pays miles based upon zip code to zip code while there are a couple of other companies that pay practical route miles. What is the difference between the two? Is one better than the other or does it all kind of depend?

I think it is unfortunate that so many companies have decided to implement all these different ways of paying their drivers, mostly because the folks doing research into the career get all wrapped up in these discussions and wranglings, trying to figure out which way of getting paid will yield the the most income. I'm hoping I can cut through all the B.S. and help you understand how you make the best money at this.

First off, there is a number out there that makes it practical for these trucking companies to pay their drivers and still be able to turn enough profit to will help them stay in the game without putting too much into the payroll expense column. They may take different approaches to coming up with that number, but that number basically stays the same.

Secondly, when you are taking a look at your pay you really need to measure it in terms of your monthly income, or even in your total income for the year. Pay in this business is inconsistent, especially for the beginners who don't yet have the skills or experience to consistently churn out the miles necessary for making the top wages.

For whatever reason, the "percentage pay" seems to lure a lot of people in by making them think they are going to make more money getting paid a percentage of the load. There are several problems with percentage pay. Let me break it down and show you what I mean. As beginners, the folks doing this research into how they want to get paid probably don't realize that freight rates vary quite a lot depending on many different factors. If you happen to be in an area where the freight rates are low your pay is going to reflect that - 26% of $1.25/mile is considerably less than 26% of 2.30/mile. Now, you are not always going to be stuck in area where the rates are low, so hopefully it will all balance out in the end - which is why you want to measure your pay by the month or the year. Another problem is that when you are getting percentage pay you will run dead head miles that will literally come right out of your pocket, that is, you will not get paid for them - 26% of zero... yeah, you see where that is going - South! When I was researching this industry at the beginning, I wanted to be an owner/operator. After calculating my operating expenses, I was able to come up with an acceptable rate that I needed to be able to charge for my work - that number was about $1.75/ mile just to break even. Then after doing my homework I discovered that many of the big league players in this business were doing work for in the 1.30 - 1.50/mile price range! When getting percentage pay there are going to be times when you really hit some gold, but mostly you'll be averaging out the same as the guys earning mileage pay. With mileage pay the company will take those hits when they come, but with percentage pay the driver takes the hits when the rates are low.

As far as the debate between practical miles and HHG, or zip code miles, it really is a wash. People have been complaining about HHG miles for a long time. It's funny, because you always hear them get all excited about how bad HHG miles are when they realize they drove an extra fifty miles on a job over and above what they got paid for, but they never hoop and holler when it goes the other way, and it does at times, but they never seem to notice that. I try to look at it like this: When they send me a dispatch order it is a contract between me and the company. That contract tells me how many miles they are paying for the load - that is how they negotiate it with the customer. Sometimes they will take a few miles off the price to the customer, it is better to give them a deal that way than it is to set a precedent of decreasing your freight rates. It is much easier to add those miles back in to your next contract with that customer at later date than it is to increase your rate.

I'll continue in the next post on how to make the best pay...

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Old School's Comment
member avatar

Okay, now to help you understand how you do this so that you are maximizing your income, here is the formula that you want to get paid by. The formula is... get out there and excel at your trade. Expect your first year to be one long learning experience - don't expect to make a killing, because you won't - you are a rookie, and rookies don't have what it takes yet to be making the big money, no matter how your pay is calculated. The way to make some really good money at this is to be the best there is. Believe it or not this is a competitive environment, something many drivers seem to never understand. You have got to distinguish yourself in the eyes of your dispatcher , and the load planners. It really isn't that hard to do, because there are a lot of slackers in the game. Be on time. Be safe. Be polite. Do what you say you will. Never give them a reason to doubt your abilities. Unfortunately you will be most likely remembered by your last screw up - so don't let it happen. Always accept personal responsibility, don't be a constant running list of excuses. Assert your self when needed, but do it as a professional, not a loud mouthed know it all. Manage your time well, and keep dispatch in the loop of communication. Use your Qualcomm for communication, don't overburden your dispatcher with phone calls, they are extremely busy, and they can view and respond to an amazing amount of communications via that Qualcomm as compared to being bogged down on the phone with you. If you can conduct yourself at this job like a professional you will stand out big time, and you will get all kinds of favors and preferential treatment - that is where you start realizing the best pay - it is not in the calculation, it is in the performance of the driver.

Qualcomm:

Omnitracs (a.k.a. Qualcomm) is a satellite-based messaging system with built-in GPS capabilities built by Qualcomm. It has a small computer screen and keyboard and is tied into the truck’s computer. It allows trucking companies to track where the driver is at, monitor the truck, and send and receive messages with the driver – similar to email.

Dispatcher:

Dispatcher, Fleet Manager, Driver Manager

The primary person a driver communicates with at his/her company. A dispatcher can play many roles, depending on the company's structure. Dispatchers may assign freight, file requests for home time, relay messages between the driver and management, inform customer service of any delays, change appointment times, and report information to the load planners.
Tractor Man's Comment
member avatar

Old School, You have become a mentor of sorts to me. I absolutely value your insight and suggestions on being a top tier driver. You and I are about the same age and appear to share many of the same values. Only a short 6 weeks into this game and beginning to learn all of the things you speak of. Thanks for being an inspiration to me, and I'm sure many others on this forum!

thank-you.gif

Old School's Comment
member avatar

Old School blushes as he heads back to his truck for another long day on the road...

Thanks Tractor Man, glad to know somebody's listening. I've been following you - and very happy for your new found success - keep at it - it only gets better!

OWI:

Operating While Intoxicated

Bravo Zulu's Comment
member avatar

Thanks Old School!

Bravo Zulu's Comment
member avatar

And thanks to you Errol. I appreciate all of you experienced drivers taking the time!

Errol V.'s Comment
member avatar

And thanks to you Errol. I appreciate all of you experienced drivers taking the time!

Errol also blushes, kicks some sand with his shoes and says "Aww shucks. I didn't think 18 months in this business made me 'experienced' like Old School!"

Victor C. II's Comment
member avatar

Ok hold the horses! I too really value you Old School and Errol V. but what you said Old School has got me now in doubt of who I want to go with because TMC pays by percentage and then .20 cpm for every mile after 150 so my question is, is TMC still worth going with or would I as a future student grad be better off going with a company like McElroy than TMC or another company? Cause if it is ALL based on my performance, and I am a rookie how am I supposed to make even decent money the first year? Right now I really need to make a lot more than $10/hr because at that rate I am not even able to maintain my car without going into debt. Do you have some wisdom on how I should go about picking a company. I am like TURTLE I am awefully fearful of going into a new career and not doing well. This trucking career has been a dream of mine since 10 and I want to make sure I have a great time working it and making decent if not great pay especially after the first year. Errol V. I would not mind some advice from you to!

Thanks ahead of time Old School for your wisdom and advice cause I know you must be one of the wises truckers I have ever read advice from!

confused.gifembarrassed.gif

CPM:

Cents Per Mile

Drivers are often paid by the mile and it's given in cents per mile, or cpm.

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