When I first entered the world of trucking in the 1990s, an industry standard for routing and miles pay based on an outdated "short miles" system -- a legacy of the old "Household Movers Guide," with origins in the 1930s -- was well entrenched.
Nearly a century later, it goes overlooked how carriers utilize this system to line their own pockets at the expense of drivers. Trucking companies that use short miles have to be well aware of the impact: a systematic underpayment of drivers.
Let me offer a simple example. Recently, I picked up a load going from Wisconsin to New York. The suggested routing was based on the "short miles" system, which sent me on an impractical route through Canada. When I took the correct, "practical miles" route, the actual miles came out a hundred miles farther than the paid miles. What did that mean? I didn’t pocket $250 I might have otherwise. I am paid a percentage of the line-haul, but miles still matter. Had the rate on that load been based on the miles I actually ran to deliver it, an extra $250 would have been the result.
This isn't an isolated case. I’d wager that if a driver has been paying attention, they’ve probably noticed their odometer miles are consistently 8%-10% more than what they’re paid for. This business practice means that, by the end of the year, a driver might have foregone an entire month's pay.
Still, it may not be just the driver getting the short stick. It is entirely possible that the shipper or broker is dealing in “short miles” with the carrier in rate contracts; the carrier then is simply passing the shorting of miles on to the driver. Of course, that doesn’t make it right; in my view, it makes it all the more egregious, with all parties in the equation in essence capitulating to a system that artificially discounts a rate at every step down the chain.
[Related: Argument for an hourly-pay standard for truckers]
The economic implications of a carrier's choice to use "short miles" are staggering when you start extrapolating across the entire industry. My company, for example, is contracted to a much larger fleet of 10,000 trucks. Say each of the company’s drivers is paid $0.50/mile and is paid for an average 100,000 miles per year. That’s $500M worth of driver pay spent by the 10,000-truck fleet. If the "short miles" system consistently discounts miles by 10%, an extra $50M in driver pay fails to reach the truckers doing the work. That is a massive incentive for a company, whether shipper or carrier, to continue using this system.
I know those are big numbers, but this 10,000-truck fleet boasts more than $4 billion in annual revenues. Again, if the company itself bases rates on short miles, they are also forgoing millions.
More troubling is that trucking companies now have access to plenty ways to measure miles run precisely. Not least among them are mandated ELDs. ELDs provide companies with a definitive, real-time and accessible record of the exact miles a driver has covered, eliminating all ambiguity. Yet many companies continue to base driver pay on outdated routing software with short-miles options embedded. They have the ability to pay drivers for the exact miles they've driven, just not the willingness in many cases. This deliberate failure to use the most accurate data available demonstrates for me that this isn't a simple oversight; it’s a conscious decision to maintain a flawed payment system.
It is no wonder that mega-carriers seem to care very little about excessive turnover rates. I’ll wager short-miles gains they experience far outweigh the costs of training and onboarding new drivers, and losses aren’t felt solely by the truck driver. They pile up in the states in which truckers reside, their federal income tax, their purchasing power, and the Social Security they've paid into.
I'm not sure if there is anything we can do about it. Perhaps it is something we need to discuss with our representatives, but it’s time for a change for companies who haven’t adopted practical- or actual-miles systems of compensation and in rate contracts.
What approach does your company take to miles accounting for compensation? Weigh in below:
[Related: Did DOT Secretary Duffy just kill the 'driver shortage' narrative once and for all?]
