Percentage or CPM

I'm not an o/o but I've thought about leasing to my company and running percentage. I was told the average cpm loaded was $1.57/mile and that included fuel surcharge. On mileage pay I would have made more and been paid for deadhead miles.

So ask them what their average is overall, if they can't give you an average well then...I'm not sure id risk it.

 

They are correct, to a point. You have the potential to generate more profit to the truck with the percentage plan, but you do have to learn their lanes before that starts happening. For instance, you may find that the loads that pay the highest are the loads that go where you don't want to go, and vice versa.

Take a look in the Prime forums; talk to some of their L/Os that post there. Their lease is percentage based, and the successful L/Os can tell you about how that works for them.

 

Do you have the option to switch plans later ? If you run CPM will you still know what the linehaul rate is ? Why not try one or the other for six months, keep track of your pay and at the same time keep track of what your pay would be under the other plan. Then you can decide.

 

From what I've heard, load percentage pays better for longer runs,SOMETIMES. Cpm pays better for shorter hauls. If you're going to lease with a mega carrier, you lose either way, because no matter what, you're going to get less than 20%, give or take, of the revenue for the load and pay for everything. You're better off looking for a smaller company that offers a lease,cause less than $1.30 or so a mile or less than 35% means you are working harder for less money. There are smaller companies that can do much better for you than the .84 cpm deals out there. Start digging around and good luck.

 

I would argue the other way. Shorter hauls usually pay more. It is not uncommon for a short run to generate $3-$4 a mile, and you get the percentage off of that. Longer runs, depending on the customer, usually pay less than short hauls. It really comes down to how much time is spent not hauling (a downside sometimes to the shorter runs), and the dead head between loads that is not compensated for.

windsmith was pretty well on though, you really have to know how the freight moves and what the customer base is to make percentage work in your favor. Ideally, if you can determine a core group of shippers/receivers in a tight area (500-600 mile radius) that you can run back and forth each day between all of them, that would be the cat's meow. Those runs would pay higher, you would get a load to run each day, and your time is not wasted. I have pretty much targeted that type of thing since '99. Works out well. I make a decent living, I am by the house once or twice a week, and am home on weekends and holidays. I can plan downtimes for personal or truck maintenance. And if things got screwed up once in a while (which they will), losing a day in that doesn't kill ya, since you are getting higher revenues from those shorter runs. If you can keep your deadhead average below 10%, like I am able to do, then it can work good. And a bonus, is that almost before I head out with one load, I am already booked on the next one. Sometimes booked a few loads in advance.

If it can be done, start on a per mile basis for a while till you figure out how things work in the area you are targeting, then move over to percentage to maximize what you are getting to do it. And it isn't always the mega carriers that have a good deal going on, including drop and hook and other easy ways of doing things. Don't overlook those 100-300 truck size outfits. They are usually, though not always, more efficient.

 

cowpie is providing some great advice. Generally speaking percentage pay is better. That being said, any percentage on cheap freight and you will still go broke. His advice on developing a network is spot on.

In my opinion, if a company is offering you a choice it is usually going to come out pretty close either way. The differences/advantages will occur as you move to the extremes. If you haul a lot of short runs, you will probably fare much better on percentage. If you run very long runs, go to poor freight areas (West Coast), or run a large percentage of empty miles, then mileage pay may be better.

Many companies that offer drivers a pick off the load board hesitate to provide useful numbers and I can understand their justification. Drivers have the right to choose poorly. You might choose to take the load to Texas because it is warmer in the winter. You get down there and there is no freight. You sit a few days. Then you decide to deadhead to Oklahoma City to pick up a load to NC that doesn't pay very well because you want to visit your Mom in TN. Your rate per mile looks like crap even though there are other drivers for the same company that made good decisions and made good money. When drivers are individually choosing a companies lanes it gets tough to provide meaningful averages.

You might ask if they could show you some examples of drivers results for the year. Maybe they would give you some drivers to contact and talk about their results...just be careful...every company will give you guys that are happy. You might also ask if you can have access to the load board to get an idea of the loads offered in the areas you want to run and what kind of RPM you would be looking at.

Be sure you really do your homework. There are plenty of companies out there where contractors do very well. Unfortunately, there are just as many that use you and your truck like an indentured servant.

Good luck in your search!

 

If I had access to choose my loads and the information of the rate the company is getting and where and when it picks up and delivers, I'd lean more towards percentage since you'll be able to choose the better paying loads. If loads are assigned you run the chance of constantly getting the lesser paying loads and mileage might offer better pay.

 

I would go the percentage pay route. Be ready to roll a lot of miles to make a profit in that environment though. Also, figure what your min. all miles average needs to be for the amount of actual miles you plan to drive for the year. Also figure a minimum net revenue per day average target. If you aren't exceeding your minimums, you need to be able to park it and go do something else or jump to another carrier. Don't sign any time commitments.

 

You don't have to run a lot of miles to make money on percentage. You can make very good money hauling shorter, higher paying loads. If you are on mileage, you have no choice but to run more miles to make more money.