Gross Per Mile Has Misled You: Work Out Net Per Working Hour

I started in dispatch, and the first number anyone taught me to look at was the rate per mile. It is on every load board, it is what drivers compare at the fuel island, and it is the number a broker leads with. It is a fine number. It is just not the one that pays you.

A truck does not run out of miles. It runs out of hours. The day has a clock on it, the driver's hours have rules on them, and every hour spent waiting at a dock is an hour the truck is not earning. The number that tells you whether a load was worth it is what it left you after fuel and tolls, divided by the hours it took. Net per working hour.

Why rate per mile misleads

Rate per mile divides the pay by the loaded miles on the rate con. That leaves out three things that decide what you keep:

• The miles you drove empty to get there. Deadhead burns the same diesel as loaded miles and pays nothing.
• What the miles cost. Fuel and tolls come out of the gross before anything reaches you.
• The hours. Waiting to load, waiting to unload and the loading itself all use the day. None of them shows up in a per-mile figure.

A short load at a high rate can look like the best thing on the board and still be the worst use of a day. You only see it when you count the hours.

The arithmetic for net per working hour

Two steps. Write them on the back of the rate con if you have to.

Step 1. Net for the load.

Net = gross pay − fuel − tolls − other costs that only this load causes

Fuel = (loaded miles + deadhead miles) ÷ your mpg × the diesel price you will actually pay

"Other costs" means things like a lumper fee the broker is not paying back, or a scale ticket. Fixed costs, the truck payment and the insurance, are not in this number. They are the same whichever load you take, so they do not help you choose between two loads. They matter for the question of whether you are covering your costs at all, which is what the cost per mile calculator is for.

Step 2. Net per working hour.

Hours worked = driving hours + waiting hours + loading and unloading hours

Net per working hour = net ÷ hours worked

That is the whole method. The work is in being honest about the hours.

The net per working hour calculator does this math for you, with gross per mile and net per mile side by side.

A worked example: two loads, one day

These figures are examples to show how the math works, not averages for any lane or any part of the industry. Your numbers will be different. Both loads use the same truck at 6 miles per gallon, diesel at $5.00 a gallon, and an average driving speed of 50 miles per hour including traffic and stops.

Load A, the short one. Pays $1,000 for 250 loaded miles. The pickup is 50 miles away, empty. It is a live load with a 4-hour wait at the shipper and a 2-hour wait at the receiver, and $50 in tolls.

Load B, the long one. Pays $1,800 for 600 loaded miles. It picks up where the truck already is, so no deadhead. Drop and hook at both ends, about 1 hour each. No tolls.

Step 1, net for each load:

Step 2, the hours:

Now put the per-mile numbers next to it:

Load A wins on rate per mile by a dollar. It even wins on net per mile. It loses on the number that counts by about $35 an hour, because half of its day was spent at a dock.

Where net per hour can mislead you too

Every number hides something. This one hides three things, and you should check them before you trust it.

1. The next load. Load B ends 600 miles away. If the only freight out of there means a long deadhead or a day sitting, the next load pays for it. Judge the pair, not the one.
2. Detention pay. If Load A's rate con pays detention after two hours and the shipper holds you for four, part of that wait is paid. Add what the paper says you will be paid, not what you hope. If it is not on the signed rate con, do not count it.
3. How you pay the driver. If your driver is paid by the mile, driver pay is a cost that changes with the load, so take it out in Step 1. If you drive yourself, net per hour is close to your own wage for the day, before the fixed costs.

None of this makes rate per mile useless. It is a fast first filter. Net per working hour is the second look before you say yes.

The checklist

• ☐ Write down the deadhead miles to pickup before you look at the rate
• ☐ Work out fuel on all the miles, loaded and empty, at the price you will pay this week
• ☐ Take out tolls and any fee the broker is not paying back
• ☐ Ask the appointment type: live load or drop and hook, and how long the dock usually takes
• ☐ Add driving, waiting and loading hours, honestly
• ☐ Divide net by hours and compare loads on that number
• ☐ Check what the signed rate con says about detention before you count it
• ☐ Look at where the load ends and what freight leaves from there

If you are weighing a bigger move, the same honesty about hours applies to when a three-truck fleet should add the fourth truck, and why I write about this at all is in Why I'm Turning the Dome Light On.

Freight Friend reads the rate con and shows each pay line it found, linehaul, fuel surcharge and accessorials, so the gross you start Step 1 with is the one on paper. You are still the one who decides.