Unveiling the Miles MysteryMarch 12, 2015
Over the years the question has come up from time to time from drivers regarding payment based on computer miles versus actual or hub miles. Recently this question was posted to our Facebook page:
“Got a question for Tom and everybody. With today’s technology being adopted by the trucking industry as soon as it becomes available ie: gps tracking, qualcomm, elogs, cameras, roll over sensors, distance detection systems, social media etc. As these technologies are beneficial for the carrier and driver, probably more so for the carrier in the beginning for safety and truck location, here’s the question: WHAT TECHNOLOGY HAS BEEN IGNORED, SWEPT UNDER THE RUG AND BASICALLY NOT TALKED ABOUT FOR THE LAST 30+ YEARS BY THE TRUCKING INDUSTRY THAT HAS BEEN AVAILABLE FOR AT LEAST 15 YEARS THAT WOULD BENEFIT THE DRIVER UP FRONT? This is an industry question, not ACT specific.”
I’ll address this best I can. Have you ever been in a cab where you wondered if the cab driver was taking you on a long route to make a bigger fare? We and all carriers are paid by the mile and our drivers and most drivers in the industry are also paid by the mile.
So how do you compute the miles? Drivers talk a lot about “hub miles” which really means the actual miles driven. How would that work? Let’s say we place several drivers on a run from Kansas City to Chicago. One driver decides to go up to St. Joseph and then over on US 36. Another driver decides to take I 35 up to Des Moines to see his girlfriend and then over on I80. A third driver decides to go over I70 to St. Louis, stop and see his family, and then up through Illinois. The fourth driver has his son with him who wants to see the Omaha zoo. So he goes up to Omaha and then over I80. All drove a different amount of “hub” miles. Yet, the shipper pays the same miles on each load based upon computer generated miles. Obviously, paying by hub miles is absurd and does not work at all. Companies who tried this approach would likely be out of business soon, unless they paid drivers at a much reduced rate of pay.
Therefore, shippers and truckers use computer generated miles. These are programs which state what the miles are for each shipment. In some cases, they are favorable and in other cases, they are less favorable. But on the balance they do work well.
We are in a highly competitive business. There are hundreds of thousands of carriers competing for our business. When a shipper goes out to the market to find carriers to haul its freight, they have a contract, a computer mileage basis, a fuel surcharge and rates to bid on. Shippers are who we get miles from. All of these contracts use either Rand McNally or PC Miler to determine the miles which will be paid. Carriers then submit prices for the business on this basis. They take into account the terms of the contract, fuel surcharge, the miles calculations and other matters in deciding a price. Usually the lowest price will get the business.
The shipper, not the carrier, determines which mileage formula and which surcharge formula will be used for the carrier. They have hundreds of carriers and are not about to do a different mileage formula for each one. Nor will they pay based on hub miles. They also do not pay for deadhead miles or out of route miles. This is the real world of trucking. If any of our drivers decided to start their own company by getting their own authority and insurance, they would price the same way.
All carrier/shipper contracts state the basis upon which miles are calculated. The carrier then in turn determines which computer system to use to pay its drivers and contractors. The rate reflects this. If we used PC Miler instead of Rand McNally, drivers and contractors would be paid less per mile. All of our owner operator contracts state the basis upon which miles are paid. The rate reflects this as well. This is a contractual deal that all parties know going in. All company driver employees are hired based upon the understanding of how miles are calculated as well.
The computer mileage system is a basis point for determining pay and has been used for decades. Could technology track actual miles? Sure. Will the industry adopt this? No.
Thank you for asking the question and for giving me the opportunity to respond. I am sure this is something everyone wonders about.