Paying percentage vs CPM

If rates are good obviously everyone makes out good. Majority of drivers out there will always hopelessly be stuck in a miles mentality though. An employee will never be much concerned with out of route miles regardless how they are paid and will be inclined to treat the truck as a personal vehicle at the drop of a hat. Heard of percentage pay from 20-30% just depends on what your costs are,what the freight rates you're getting are,and what is acceptable profit to you.

 

If you pay on percentage, you'll do best by finding drivers that are somewhat business savvy and are interested in the success of the business. That way, they'll be conscious of keeping expenses down and maximizing profit. Being paid on percentage, they will likely want (and should have) a say in what loads should be booked, which ones should be rejected, and what the minimum rate should be.

 

Trouble with that arrangement is they need to have 100% trust in dispatch. Cause when you give employees freedom like that they will end up rejecting loads for various reasons, some ridiculous,some not. Point is they are driving in their own world never once trying to find loads and don't have a clue about markets. This would be difficult with spot freight.

 

You should have an easier go of it with predictable solid rates then. But obviously some contract loads will be your not so good ones that no-one wants but they still have to get covered. In the big picture it works but drivers are so short sighted in the here and now. You need good people skills. Screening process for prospects will have to be good. Not saying it can't be done but I sure don't envy anyone who has to hire drivers.

 

Well, my arrangement is just the way I've described. We haul spot market exclusively, and my relationship with the owner is more of a partnership than an owner / employee situation. When he's busy and I'm empty, I search for and book the loads. We've decided on what our absolute minimum rate is, and we stick to that as much as possible. A flat percentage is paid on the total revenue from the load. If the load pays $1000 to the truck, then percentage is paid based on the $1000. It's the same with accessorials such as detention and layover pay. We haven't had a need to discuss driver load / unload charges, but I'm thinking that would be 100% to the driver. I have the responsibility to operate efficiently to maximize the company's profit, so I'm trusted to choose the lowest cost routing and keep the left door closed to get the load delivered. Many drivers aren't as overly conscientious, therefore they require mileage pay and fuel economy bonuses as an 'incentive' to get their job done.

 

I have heard of some situations where the companies were not being honest about what the actual line haul was....thus shorting the drivers.