Are empty miles caused by poor planning or just a lack of freight? This has been an issue long before Covid-19 but now the problem is magnified.

On the face of it empty miles generate negative revenue. Some carriers will take any freight, at any price to “cover the fuel”. It seems to make sense that anything is better than nothing. This is very short term thinking. On rare occasions this can be a strategy to employ but it isn’t sustainable in the long term.

The long term damage caused by this is subtle, but very real. Look no further than what we have today. Companies that have employed these strategies will fail. Carriers that cut rates to get freight are hurting.

Why are we out here? Why, especially in these times of no adequate facilities for drivers, are we out here hauling freight? For the greater good? To help others self – isolate while we are at risk? I’m out here to make a living.

Shareholders at large companies don’t care about trucking companies as long as they can make money. Trucking companies whose only goal is to be bigger than the next one, come groveling, begging to haul their goods at any price, because they can’t afford to do any empty miles. All the excuses get made such as “we don’t want our drivers sitting”, “sometimes that’s the cost of doing business”, “that’s the rate from that area”, “we have truck payments to make” etc.

Some noble words for sure. Some questionable. But all seem valid and excusable.

Shippers now know that carriers will bankrupt themselves to move the trucks. Drivers don’t care because they’re getting paid by the mile. Until their paycheck bounces and the fuel cards don’t work. Then they holler!

Drivers that do care, hate hauling cheap freight because they know it’s not sustainable. They also know that their time is not valued by their company as well.

Let’s take this as an example. Before Covid-19  a rate from Calgary to Winnipeg was priced around $600.

$600 for 830 miles = a revenue of $0.72 per mile.

Out of this let’s assume the driver gets $50 to pickup and deliver.

$550 for 830 miles = now our revenue becomes $0.66 per mile.

Fuel cost fluctuates between $0.50 & $0.75 per mile so that it is essentially covered as carriers would say. The driver is going to spend at least an hour at each point plus the extra drive time for which they won’t get any extra pay. For the hassle, the driver comes away with less than minimum wage. (Remember most drivers get paid city to city miles, not actual miles). Shippers get their freight hauled below cost and in turn, carriers punish the drivers by not respecting their time. Drivers that realize this don’t like hauling freight for the fuel cost. Companies seem to want drivers who don’t realize they’re being taken advantage of and who will just allow themselves to be pushed around.

What is the solution? At the beginning the question was asked “… Do we run enough empty miles?”. Empty miles, negative revenue generating miles are a huge problem in our industry. In regulated times freight was valued at a minimum cost. You weren’t allowed to undercut the set rate. You had to get freight by providing better service as long as you were allowed in that area.

Deregulation has allowed subpar companies to survive and for shippers and load brokers to take advantage of that issue.

The solution is pretty simple in theory. Stop hauling cheap freight. Run empty miles rather than line someone else’s pockets. When I ran my own company I was told too often that “XYZ will do it for $ less”. Sometimes the difference was literally a few dollars per load! I reminded them that they just finished complaining to me about that other company. I provided a better service at a sustainable cost. Usually they went with me, sometimes they didn’t but I couldn’t afford to work for free. Margins are tight. Don’t make it worse.

We also hear the argument that prices will rise for consumers. Really? How much? Do you think the hundreds or thousands of companies going bankrupt right now won’t cost us? The cost of goods shouldn’t come at the price of one group, be it truckers, warehouses, whoever, of not making a living. After a bunch of companies are gone, the shippers that expect goods to move for cheap will suddenly find themselves unable to deliver to their customers.

This isn’t a big or small carrier issue. We just saw one of the largest USA carriers, Celadon, take down a carrier with a long history in Canada. Hyndman was profitable but it couldn’t make up for the debt-riddled parent company. Celadon, by all accounts, was heavily invested in cheap freight, namely auto parts.

For thousands of trucking companies it is too late and they will go bankrupt and many will blame it on Covid-19 disrupting the supply chain. Covid-19 is just magnifying a systemic problem in our industry. Now more than ever it’s important to stand your ground on rates. Run empty if you need to, but service your customers at a sustainable rate.

We have the software, hardware, and the intelligence to limit our empty miles in the long-term. Are we willing to make the changes?