Flat mileage fee vs % of Compensation

[JSudlow]

I recently closed my business (wholesale meat delivery). I own a 2012 Nissan Hi-top van (reefer unit with bulk heading). I am not necessarily looking to always stay close to home (East Coast). I would like to occasionally go South and to the West Coast. I also want to go to Canada. I will be driving solo. I want to stay out at least three weeks at a time.

I am looking at two of the major carriers, having been accepted by one already. One carrier pays .80 per mile loaded, with premiums to New York City and Canada, as well as a Hazmat premium. Since I am very familiar with the five boroughs of NYC, I have no trouble working there. The recruiter said to expect 1000 miles per week which won't cut it at all. I need a minimum of 2000 miles per week. I drove 2500 miles per week (5 days) with my own business. The other major carrier pays 67-70% compensation and advertises consistent backhauls.

Based upon my equipment and my mileage goals, can experienced drivers offer their thoughts as to which is the better compensation?

I thank you all in advance for your thoughts and advice!!!

 

[LDB]

How many weeks per year? If you are talking 2000 miles a week 46-48 weeks per year you may be significantly disappointed. The recruiter suggesting 1000 miles per week sounds much less unrealistic than some recruiters. Good luck.

 

[techaholic]

Cargo Van/Sprinter Vans have saturated the industry. If you wanna survive in this type of business get a straight truck 22ft w/ sleeper minimum. GL

 

[JSudlow]

I would get a larger vehicle if I could. I have 17 months left on the van lease.

 

[xiggi]

Stop thinking miles and start thinking money. Driving 2000 miles per week might not pay anymore at one place than 1600 does at another. Like ldb said averaging 2000 per week might be tuff.

 

[danthewolf00]

The % rates are usually better than flat rates because in a hi roof van like a sprinter you can take both tall loads and standard cv loads and get paid more.
a flat rate means the carrier makes more on the sprinter loads because your getting a flat rate no matter what you haul. If your going to do a cargo van get enough space for 3 pallets and a space for you to sleep at the same time and keep the gvw under 10k.

 

[JSudlow]

I have been getting great feedback to my question! Thank you. However, there are currently 1,356 members online. Please get in on the action. Let's make this thread a knuckle-duster smack-down of opinions!! We can all hug it out later.

 

[Moot]

Let's make this thread a knuckle-duster smack-down of opinions!! We can all hug it out later.

Based on the limited info you provided how can we offer a meaningful opinion? We know that Carrier A pays .80/mile and extra for NYC and hazmat. Is there a fuel surcharge to go with the .80/mile? Do they pay deadhead to the shipper and/or empty moves?

Carrier B pays a percentage. What is the percentage they pay and what exactly is that a percentage of? The total linehaul?

We need more information from you if you really want informed opinions. Why not name the two carriers?

 

[Ragman]

Let's make this thread a knuckle-duster smack-down of opinions!! We can all hug it out later.

 

[JSudlow]

I wasn't sure if I should name the two companies, but what the hell! We're all friends here (I hope)! I am comparing the Fed-Ex CC flat rate versus the Load-1 67-70% compensation (their term from their website). Both offer fuel surcharges (CC @ about 1.25/mile vs L1 @ 100% pass thru) and all tolls paid. L1's website is more descriptive in benefits than the material I have received from CC so far. L1 describes consistent backhauls, a layover program (?), and nationwide breakdown assistance. I am not sure what CC offers that is comparable. Does this help?

 

[cheri1122]

I don't believe CC [or any other carrier] offers a layover program like Load 1's: if you are available for 24 hrs without an offer, you get paid. This motivates dispatch, and the penalty for turning down an offer is loss of the layover pay, so it also motivates drivers to accept - or at least to seriously consider the ramifications. Win/win.

 

[JSudlow]

I LIKE that cheri1122!

 

[LDB]

I think you may need to recheck some numbers. I don't think $1.25 fits in anywhere, unless maybe as a grand total per mile somewhere, and that won't be at CC with .80cpm plus fsc. At current fuel prices you are probably looking at more like .95cpm all in.

 

[cheri1122]

I LIKE that cheri1122!

We like it too, lol. I also like the "100% of fuel surcharge passed on", because that's how it should be, and the carriers that don't do it are cheating those who pay for the fuel, IMO.

 

[cheri1122]

Also: pay close attention to what Xiggi wrote - if you have to, write it down and stick it where you will see it! Driving more miles for the same money is actually driving for less, because the wear & tear on the vehicle [and the driver] adds up to a big difference in the long run. "Drive less, make more" is an excellent motto.

 

[TeamCaffee]

On FSC and getting 100% I have to disagree with some on this issue. We have been on the 100% plan and it depends on the customer, FSC is a mandatory charge and not all customers pay FSC. When the sales people are pushing a sale one of the ways they discount the load is to tell the customer they do not have to pay a FSC or the others is tolls and that comes right off the back of the contractor not the company. Win Win for customer and company and lose lose for contractor. Once we went to being paid a FSC on all authorized miles the FSC leveled out and we saw our FSC overall jump to more money. Same situation with being reimbursed for tolls it worked out better in the end for the contractor. The question to ask a company is how often do they discount the FSC or do you get paid FSC no matter if the customer is billed FSC or not? When on a percentage rate or a flat rate if you get paid enough to run the load then run the load and who cares if the money came from FSC. Miles = Revenue and know your realistic number of what you need to make money.

I addressed this in my current blog which might give you something to think about with flat rate vs. percentage

Next step to become a Successful Expediter

 

[Turtle]

There was a time, in the days of yore, when FeCC was THE place to be.

These are not the days of yore.

 

[jjoerger]

On FSC and getting 100% I have to disagree with some on this issue. We have been on the 100% plan and it depends on the customer, FSC is a mandatory charge and not all customers pay FSC. When the sales people are pushing a sale one of the ways they discount the load is to tell the customer they do not have to pay a FSC or the others is tolls and that comes right off the back of the contractor not the company. Win Win for customer and company and lose lose for contractor. Once we went to being paid a FSC on all authorized miles the FSC leveled out and we saw our FSC overall jump to more money. Same situation with being reimbursed for tolls it worked out better in the end for the contractor. The question to ask a company is how often do they discount the FSC or do you get paid FSC no matter if the customer is billed FSC or not? When on a percentage rate or a flat rate if you get paid enough to run the load then run the load and who cares if the money came from FSC. Miles = Revenue and know your realistic number of what you need to make money.

I addressed this in my current blog which might give you something to think about with flat rate vs. percentage

Next step to become a Successful Expediter

Looking at this from an owner operator point of view all that matters is the all miles rate.
But looking at this from a contract drivers point of view the FSC is of major importance.

On the typical 40/60 split the driver gets 40% of the linehaul and the owner gets 60% plus the FSC. The owner pays for fuel.
If the load paid $1.10 per mile and the FSC was $.32 the driver would get $.44 per mile.
If the load paid $.90 per mile and the FSC was $.52 the driver would get $.36 per mile.
Lower fuel surcharge equals higher pay to the driver.

On the 60/40 split with the driver receiving 60% of the line haul and the FSC the driver would make out better with a higher FSC and lower line haul rate. The driver pays for fuel.
If the load paid $1.10 per mile and the FSC was $.32 the driver would get $.98 per mile.
If the load paid $.90 per mile and the FSC was $.52 the driver would get $1.06 per mile.
Higher FSC equal higher pay to the driver

 

[Tennesseahawk]

The $1.25 per mile fuel surcharge was in the information packet from FECC. Of course, I would verify where it is now. Who knows how old the packet is and gasoline prices (I am not a diesel unit) have dropped dramatically in the past few weeks.

I'm wondering if you misunderstood the pamphlet. I believe the $1.25 comes in with it being the amount the FSC is supposed to bring fuel costs down to.

 

[LDB]

Now it makes sense. The $1.25 is the base rate, what you are expected to pay per gallon for fuel. Unless things have changed it is based on the price of diesel fuel. It is based on 6mpg for a tractor, 9mpg for a straight truck and 15mpg for a van.

As I type this, if you look at the top of the page, the average price for diesel is $3.41gal. You take the price, $3.41, and subtract the target, $1.25 and you get $2.16. That's how much the fsc needs to pay so that you pay $1.25. You divide the $2.16 by how many mpg the vehicle gets. For a tractor $2.16/6 is 36cpm. For a straight $2.16/9 is 24cpm. For a van $2.16/15 is 14.4cpm.

I think they usually round off so the fsc for the 3 classes would be 36/24/14cpm. Unless things have changed gasoline vans get the same fsc as diesel vans. The national average for gasoline is $2.55gal. Gas engines don't get the mileage but say a gas van gets 14mpg. At 14cpm times 14 miles the gas van is getting $1.96 toward $2.55 fuel so the operator is paying 59cents per gallon.

Of course, when not under load there is zero fsc and the operator is paying $2.55 or $3.41 per gallon of fuel depending on type. I hope that's clear and useful.