Percentage of Load vs Mileage system - a battle without winners

Updated on:
08.08.2022
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Percentage of Load vs Mileage system - a battle without winners

The content of the article:

  1. Percentage of Load - is it really better?
  2. Mileage system - not all that glitters is Gold
  3. Digitalisation and accessibility
  4. Conclusion

The proportion of load and mileage are factors considered in owner-operator pay systems. StayMetrics surveyed 4,000 self-employed truck drivers who were paid based on their percentage of kilometres driven. The revenue generated by download programs ranges from 25 per cent to 85 percent of total download revenue. You take home a sizable portion of the high-paying cargoes, whereas the low-paying deliveries affect you and your company. It isn't easy to create a budget when the load payment percentage varies.

Your mileage pay will not change regardless of how much profit trucking companies gain from loading cargo. When it comes to loading, truck drivers who have families prioritise consistency over profit margins. We will talk about the benefits and drawbacks of each payroll system, the distinctions between them and the essential provisions of each.

Percentage of Load - is it really better?

The employment of a percentage of the load system may have both positive and bad effects for the driver as well as the firm. These outcomes are possible because of the nature of the system.

Pros

Mileage is well covered

Mileage is well covered

Whether a new driver or an old pro, you don't want to fight with your company over your mileage and pay. Pay in the form of a percentage is fair and easy to understand. If the owner/operator goes into a lot of trouble to use their preferred routes, the company is not responsible. Even if a trailer is full, it may not be able to hold the whole shipment. Because he makes more money, a driver who gets paid by the percentage is more likely to take trailer fills.

High pay

High pay

Based on the freight rates, company drivers make an average of $55,000 a year, which is 25% of line haul revenues. Drivers' pay goes up as they gain experience and years of service. Because there is a lot of demand for experienced drivers, shipping costs will likely increase. This year

Statistics show that more drivers are happy

A Stay Metrics study found that truck drivers who are paid a portion of their clients' bills are happier with their jobs. Stay Metrics asked 4,000 truck drivers from 31 companies to complete a survey. Drivers paid by percentage were 31% happier with their jobs than drivers paid by the hour and 29% happier than drivers paid by the mile.

Cons

Only for huge loads does percentage compensation prove to be effective. Extremely few people would be willing to work for the amount of money offered to large fleet owner-operators as a fraction of their earnings. Even with enormous fleets, certain shipments should not be delivered but must be to keep customers happy. This is necessary to maintain customer satisfaction. If you want your work to be seen as "charitable," you can't just hand over a certain percentage of your earnings to charity.

Mileage system - not all that glitters is Gold

Mileage system - not all that glitters is Gold

Most workers are aware of how much time has passed while they are at work. On the other hand, truck drivers closely monitor their miles per gallon. Mile-by-mile pay is often used in the trucking business, but it is also used by some companies that deliver packages and take people from one place to another.

Pay-per-mile compensation can be helpful in several ways for truck drivers. When figuring out how far something goes, it's important to consider how much it costs to get there. Knowing that almost every mile you walk will pay off makes you feel like you've done something good.

The biggest problem with this choice is how much time will be spent idling on the road. Traffic jams, cleaning up after an accident, and roadwork can all make it so that truck drivers work but don't get paid. It's good to know that trucking companies hate idle time as much as drivers do and are always looking for ways to cut it down.

It's bad for the environment and cars because it wastes gas and damages the engine. If a company has dozens of cars and needs them to drive tens of thousands of miles yearly, the costs can add up quickly. Because of this, truckers would rather be paid by mileage than any other way.

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Digitalisation and accessibility 

Because the time it takes to get to and from the employer's office equals lost money from extra shipping, the driver should know exactly how much he will be paid, when he will be paid, and how he will be paid. This is true whether he is paid by the load he carries or by the number of miles he drives. It doesn't matter how you get paid, either by the number of miles you drive or by the percentage of the load you carry.

There are a lot of logistics companies that have built their own TMS and mobile apps to streamline their processes. Regarding the fact that Shvartz's TMS includes the following modules:

  1. Accounting and statistics equipment owner
  2. Payroll Ownership
  3. The order history of drivers has to be reported
  4. Driver Activity Report

There are a lot of logistics companies that have built their

A user-friendly app that includes all of these parts helps the logistics company and the truck work together openly and honestly, which helps build a long-term relationship between the two.

Conclusion

There is a lack of openness in the communication between employers of independent contractors and those contractors' clients across all forms of payment, even though each form of payment has its own set of benefits and drawbacks. In the end, the likelihood that a partnership will be successful and continue is directly proportional to the degree to which the participants in a discourse are honest with one another. 

The truck driver's self-assurance and financial security are advantages that help not just the truck driver but also his company, which benefits from having an employee who is less likely to leave for a competitor at the first available chance. By investing in the essential software, a transportation firm of any size can completely satisfy this criterion.

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