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The Logic Behind Short Haul Trucking Rates

Posted by Aaron Keller on 6/21/17 7:00 AM
Aaron Keller
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The world of hauling short haul freight, defined as lanes of 250 miles one way, is certainly one that can be lucrative and command a high revenue per mile if executed properly. At the end of the day, it is the goal of leadership, operations, and professional truck drivers to run as many miles per day as quickly, efficiently, and safely as possible; after all, the money is made when trucks are on the road.

Pricing of short haul lanes all comes down to utilization. The dynamics involved with hauling short haul freight can be challenging and costly in labor and equipment if it isn’t utilized properly.

From a revenue perspective, truck lines have a goal for each truck; which can varies depending on the trucking company. If your revenue goal per truck is $750.00 per day, then you must deliver 2 loads per day to achieve that goal on short haul lanes. Utilization of the truck on a short haul is only part of the battle. Who drives the truck, hours of service regulations, and the driver’s home time expectations are all included in the equation to determine short haul trucking rates.

With truck drivers in high demand and trucking companies altering their freight networks to attract drivers, it’s understandable for a carrier to add short haul freight into their mix to help fill those empty trucks. After all, in survey after survey the biggest factors for drivers is home time, and short haul loads can get them home several days a week, if not every day.

Most professional truck drivers are paid by the mile, so it is in their best interest to cover as much distance in one day as safely as possible. Additionally, there are hours of service requirements for all professional truck drivers that limit the amount of time the driver can be driving or on duty before needing to take a short 30-minute break or a 10-hour restart. If the driver is local, and drives a day cab, it is imperative that he/she make it back to the terminal before the available hours for the day run out.

Typically, in a short haul situation, for simplicity sake, the driver will head out very early in the morning, make the 1st delivery sometime before 12 noon, and either drop and hook or live unload. Then, in a perfect world, the driver will pick up his or her next load within a relatively short distance, make their 2nd delivery close to their terminal, and return home and be done for the day. However, perfect scenarios such that, are few and far between.

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Other administrative factors play a role in the expense of a short haul trucking rate as they are more “operations intense” is increased. Interaction between the driver, customer, customer service, and the dispatcher due to more pick-ups and deliveries in a day; compared to long haul freight where a driver may pick-up a load and not deliver for 2-3 days.

The dispatcher spends more time managing the driver on a short haul lane than long haul. The driver must report to their dispatcher on their pick-ups, deliveries, status updates, etc. Then, the dispatcher needs to update the TMS so the CSR can update the customer with pick-up and delivery times either via email, phone, EDI, or whatever type of software the customer utilizes for notifications. Other administrative costs include more bills of lading to manage and more invoices sent out to customers.

Problems snowball when your load strategy doesn’t go as planned, which is a common occurrence in the world of trucking.

For example, expanding on the driver’s sample day above; on the 2nd leg of the trip they get held up at the loading dock for any number of reasons: it could be they missed their appointment time due to traffic, or they got stuck behind an accident, or they were held up at the last delivery and had to wait for an open dock, or simply the freight wasn’t ready yet. Either way, it happens every day.

So now the driver is stuck at the dock for 3 to 4 hours as their hours of service are ticking away while they wait to get loaded. Which means, they must make it to their 2nd delivery before 4pm to get unloaded then back to the home terminal, all before their hours of service clock runs out.

Once it becomes clear that the driver will not make it to their 2nd delivery, they must either stop to take their 10-hour break before making delivery, thus making the load late, or go back to the terminal and have the load re-powered with another driver to make delivery, hopefully on time or the next day.

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In either scenario, the revenue that truck is now out approximately half of the revenue needed for that day, the driver’s miles for the day are low, and the dispatcher spent an over abundance of time re-dispatching that load to a new driver so it can arrive on time. If scenarios like this happen twice a week, then we have missed out on a full day’s revenue by the end of the week.

Another obstacle is that not every shipper or consignee has the same shipping/receiving hours or follow the same procedures. The more research customer service can do into the shipper and receiver ahead of time can help mitigate those variables. This can be very difficult to do; as getting information from shippers/receivers in order to understand their procedures is not an easy task, it can pay off in the end; in helping the bottom line and eliminating a few headaches for the entire team.

While I didn’t cover all the scenarios that make short haul freight expensive, I covered the bigger issues as to why short haul moves command a higher rate per mile, and why even the best laid plans sometimes don’t work out. With so many variables involved in trucking, it’s difficult to price this type of freight to account for all of them.

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Topics: Transportation

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