No more detention half measures: Time is now to charge for it, and collect

Todd Dills: What would this freight economy look like, with 15 billion extra dollars?

Bit of a thought experiment there around the headline-grabbing number of dollars the American Transportation Research Institute estimated trucking writ large lost to detention at shippers and receivers in 2023. Thats $15 billion. Yes, 15 billion with a b. If you consider the American Trucking Association's annual revenue figure for the entirety of the trucking industry at nearly a trillion -- the 2023 estimate set at 987 billion -- that $15 billion is worth a full percentage point and a half of the entire revenues generated by trucking companies through the entire year.

I'm Todd Dills, your host for this Overdrive Radio edition, where we'll walk through the ATRI organization's new research report on the detention problem with Overdrive news editor Matt Cole. Cole wrote about the report last week and brought some further insights to our talk. In the aftermath of the report's release, we'll break down that headline grabbing $15 billion number and how ATRI got to it for its 2023 detention impacts estimates. Likewise, what owners and operators can do to put a dent in their particular detention problem, such as it may be. Some of it's obvious.

Matt Cole: If you can get in a position with a customer to where, you know, a customer that does drop and hook freight, you're a lot less likely to get detained.

Todd Dills: A lot of it could be quite difficult to achieve.

Matt Cole: Try to negotiate detention pay into your, into your contract. But you know, they also kind of, threw up a caveat with that, that a lot of carriers don't want to rock the boat with a good customer, if it's one of their top accounts.

Todd Dills: And I’d wager you'll be shocked at the sheer missed opportunities to truly make problem entities among shippers and receivers when it comes to detention, to really make them feel the burden of their own inefficiencies.

Matt Cole: Only 55% of those invoices were paid.

Todd Dills: So we are as an industry tackling this problem only by half measures.

After the break for a word from Overdrive Radio's sponsor in the Howes company, we'll dive into ATRI's brand-new Costs and Consequences of Truck Driver Detention report again with Overdrive news editor Matt Cole.

So keep tuned.

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Todd Dills: That's HOWES, Howesproducts.com. Here we go.

We could talk about this forever, Matt, I think, and we have been talking about this forever, you know, like, this is. So I see this ATRI report coming out. I was not exactly expecting it. Maybe I knew about it already and just had forgotten about it. Given there's a multiplicity of studies and looks at this, that seem to be going on all the time. I know the FMCSA back in the early part of the last decade, I think, was mandated by Congress to study this. And I think that basically they're continuing to do that, going on now for about ten years. Give us a little context for where this new ATRI report comes in. You know, what's going on around detention, just from an analysis and attention aspect, because it's always an issue that really gets under the skin of owner-operators, when they have to deal with it, of course. But this kind of high level, very close attention from regulators and other organizations that study and attempt to quantify this is, I think, another way to just kind of put more attention on the problem.

Matt Cole: I guess back a decade ago, I know there was a study, FMCSA may have been involved in it, but it came out from Virginia Tech's transportation institute. I think that was kind of the first deep dive into, you know, into detention. There was another study in 2018, and then ATRI has been looking at it through the years as well. And earlier this year, they put out a call to carriers and truck drivers to weigh in. and that's where this most recent report came from. Last summer, it's been right about a year now, FMCSA signaled their intent to open up a new study on their end, to look at detention impacts on safety and operations. And they've got another study going on that looks at driver compensation that I think they're going to try to tie those two different studies in together at some point. FMCSA had that comment period open for 60 days, late last summer. And then in February, they published another notice, compiling the theme of a lot of the comments they received on that first request and signaled that they were going to send that information to the office of management budget with the White House for review and approval to actually conduct the study. But that's the last we heard. It's been since February.

Todd Dills: So there's some safety and operations information when it comes to the impact of detention in this ATRI report as well.

Tell me about the origins of it and what it's based on. I think it's based on the surveying of motor carriers and owner operators and drivers out there. but yeah, just lay the groundwork for, how did it come to be,

Matt Cole: Every year, their, research advisory committee lays out some. Some key priorities for each year. And detention was one of those for this year. So, they got the surveys going pretty early in the year, reaching out to carriers, truck drivers, owner-operators, kind of the full spectrum there. And just asked people to weigh in on it, so they could try to quantify the costs of detention in terms of, you know, lost productivity, driver income, carrier revenue, different costs.

Todd Dills: It's a big headline number on the cost right? I don't think we've seen something quite like that, but it is certainly attention grabbing. What was that number?

Matt Cole: $15 billion was the grand total. 11.6 of that was actual lost productivity. and then 3.6 was more hard costs of unreimbursed expenses where customers, where carriers had charged customers, sent them an invoice, but were never paid on.

Todd Dills: It kind of boggles the mind, right? You start to think of ways to break that down. Like, okay, wait, how many trucks on the road today?

Let's divide 15 billion by 3 million. So what do we get? Like a thousand a truck or something like that. Yeah. Anyway, my math is probably off there.

But indeed, on that math, try $5,000 a truck. As Cole noted, most of that in lost opportunity to haul or lost productivity, as he put.

They get to that in a variety of ways. Talk to me about some of the key findings, some of the statistics that they break down in the report.

Matt Cole: I think they come to the cost number. The big figure they use is their own operational cost of trucking report, which kind of lays out an average, how much it costs to operate a truck. And that's how they came up with the dollar figures there. But as far as actual time lost, the industry as a whole lost 135 million hours in 2023. So obviously a huge number.

Todd Dills: Is that all time spent at loading docks or at shipper locations or is that, are they calculating that only after the 2 hours? Detail that a little bit for me because I’m just trying to get a sense of what figures they use. What definition of detention they used, or dwell time as it’s sometimes called.

Matt Cole: Yeah they used, they used both in the report. They looked at total dwell time and then I. For actual, actual detention time, they use the general 2 hours, over 2 hours at a facility. So yeah, one thing may be surprising to some of the owner operators out there, may not be, but they looked at previous detention studies and compared them to what they found for 2023. The frequency of detention is actually going down and and the time detained is going down over the last decade. So some good news there. They did look at the zero to 2 hours, which often people don't charge for, but still time that you're sitting at a facility. The frequency and the time in that range has gone up as the two-plus hours has gone down.

Todd Dills: Right. That's interesting. That, that's probably, maybe one of the most interesting things about this is that they're able to kind of document, document over time some improvement. when you look at the average, I mean, like you said, some owners are in particular situations where they probably deal with this on a daily basis. This doesn't feel that way.

Indeed, again, when we polled owner operators about a year ago on the recent history improvement in detention, or lack thereof, along their routes and at their customers, a huge majority said simply that it hadn't improved to any noticeable degree. 40%, in fact, said it had gotten actually worse for them. That question was about improvement since implementation of the federal electronic logging device mandate, which some trucking prognosticators viewed as having the potential to result in at least greater respect of a driver’s time at the docks. But just 15% of Overdrive readers responding to our State of Surveillance survey last

If ATRI's accounting is correct, though, detention is getting at least marginally better for the average driver out there, if not the majority of Overdrive’s largely independent owner operator readers. In some ways, improvement would at least seem to make some sense given how high profile the detention issue has been for the last couple of decades.

On the whole it seems like all this attention that we've been paying to detention for … I mean golly, we've been, we've been talking about this and looking at this in depth since I started writing about trucking about two decades ago. And I think the attention might be helping? Like In some ways I mean it's not, it's not like the problem is solved. 135 million hours lost in 2023 is a lot of hours that is uncompensated and unduly lost by American truck drivers. They did point out the obvious which is that detention is worst for those in refrigerated goods, particularly in the food industry.

Matt Cole: The average number of hours a driver pulling a reefer trailer was detained last year was 209.4 for the entire year. So you know that's each, that's every reefer driver out there on average. So that's, that's a lot of time that they're spending at facilities. But you know for the owner operators out there working the spot market they're not doing a whole lot better. you know they did find that carriers with contract freight didn't experience detention as much as owner operators or any carrier working the spot market.

Todd Dills: It kind of points to the efficacy of putting detention in contracts. Our owners that work with brokers out there as they know, it's very seldom that you're going to talk to a broker on the front end of a load negotiation about detention and actually get them to put it in writing. You might talk to them about it but a lot of times the assurances are only verbal on his part in terms of compensating for delays such as they might happen. We talk about that a lot. The importance of trying to get this stuff into contracts. But I know on the ground it doesn't really work out that way because brokers don't really think about it too much. But maybe with further attention that could help if it can become an industry standard practice to charge for and collect this stuff for owner operators in the spot market working with brokers, because that's one of the things that actually, one of the top things that they recommend, I think, at the end of the report is to standardize this in your contracts. What's the rate for detention? What do you charge? That kind of thing. And that's probably, the biggest vehicle for improvement, I think, that we've got.

Matt Cole: You know, if you've got a small fleet or even up to a large fleet, you know, obviously, finding good drivers is always a challenge. And they found that retaining drivers, if you have a lot of detention time, is difficult. In the driver survey, more than a third of drivers that responded said that they had left a job because of excessive or undercompensated detention time. So that's a big deal in the market. keeping the good drivers that you do have can be more challenging. If you've got a lot of time spent at customer facilities.

Todd Dills: It’s got to be the worst experience for an employee driver in particular, that is not being compensated for that time. Some are, for sure and they talk a lot about that in the report, but oftentimes that compensation doesn't even really, it doesn't even reach the level of just the basic per mile that they would get if they were moving during that time, right?

Matt Cole: Looking at reefer drivers, since they're the ones that are impacted the most, the company drivers are paid an average, usually it's per mile, but when you average that out, over hours, they found it's about $26.13 an hour. But the detention pay that they're getting from carriers is only around $20 an hour. So even if they are paid and it's usually, I'm sure after a two hour mark, just like anything else.

It's not up to their standard of what they would be earning if they were actually on the road making miles. So there's, there's a big issue there.

Todd Dills: And that goes for owner operators leased on as well. And maybe even more dramatic there. The difference between owner operators, the fixed costs that continue on always. The variable costs are less if you're just sitting there waiting to load. But we've done the math on this, time and again. And we most recently looked at it last year, based on sort of the average ATBs client, which, you know, most of those guys are leased. We took the fixed costs that continue on and then, added in the lost income opportunity cost based on average per mile income for those ATBS clients.

And came up with an average figure for the average owner operator. And I think that figure came out to right around $80 an hour. Owner operators leased to motor carriers. I don't know, I've never heard of anyone being compensated that much by a motor carrier for detention. It may exist, but I just always put that out there. When we write about this, I put that bug in people's ears because it's just not happening. A lot of times, carriers approach their leased owner operators and compensate for detention kind of like they do their company drivers. It's not much more, but the, the lost opportunity is huge. Is much bigger for owner operators, it is a bigger deal for an owner operator that's just not recognized.

Matt Cole: And detention breeds more detention. you know, if you're, if you're detained at your first customer of the week, that probably sets you up to be late to your next appointment. And if you show up late, they're going to detain you longer to fit you back into the schedule at some point. So, it's just a, it's a vicious cycle, really, and that kind of blows into the safety side of things. from ATRI's report, they found a correlation between detention time and faster driving. Probably no surprise to most people out there. They used truck GPS data that they've got a database of, truck GPS information.

Todd Dills: It comes from a lot of large fleet I'm guessing.

Matt Cole: Detained trucks drive faster than non-detained trucks, before or after or before and after their stop than a non-detained truck would. You know, the reasons for before they gave were either familiarity with a customer already they know that, you know, they're going to this place, they're probably going to get detained anyway. Or like we were just talking about, you know, if they were detained at a previous stop, then, you know, in the 24 hours before their next stop, they're trying to make up that lost time.

Todd Dills: Makes sense. And speed, greater speed doesn't necessarily, equate to a detriment to safety, but it's certain that the faster you're going, the more severe any collision is going to be for sure. Right. And obviously, you can't control people around you, and if you get involved in something, it's going to be, you're going faster, it's going to be that much worse. So safety wise, I mean, that is a detriment. That could be a detriment. I suspect FMCSA is going to look at that, in their, in their current look at those kinds of things in their current study, I would imagine.

Matt Cole: The study that they've requested approval for, they're looking to talk to carriers and drivers and, you know, the value of these ATRI reports, though, I feel like FMCSA probably values the information that comes out in these.

Todd Dills: Right. They pay attention to it.

Matt Cole: For sure. It's a good supplement in addition to their own research that they can use.

Todd Dills: So as FMCSA has continued to look at this for so many years, most of the owners that I have talked to about this over the years don't necessarily feel like they want a regulatory solution to this problem, necessarily. I think back to the Obama administration prior to what became the FAST Act.

Which finally became law in late 2015.

They released a draft highway bill that included a requirement to pay employee drivers at least minimum wage for all on-duty time, regardless of whether they're moving or not, which was a way to basically address the detention complaints of that time period. That, of course, that's, I don't know what, what's minimum wage today, Matt?

Lots of states have minimum wage rates higher than the federal one, but the federal minimum is a paltry $7.25 an hour today.

When they proposed this idea, it was like every owner operator out there is like, don't do that. I mean, that sets a floor. And guess what they're going to pay. They're going to pay the minimum wage. They're not going to pay the $20 an hour they pay now after 2 hours. There was a lot of sort of pushback against that at the time, because it didn't even attempt, because they feel like they don't have any authority over shippers and receivers out there who are the responsible parties for the detention problems in a lot of cases, anyway. But it did at least serve to put some more attention on the problem. With FMCSA's attention to this, does this ATRI report get into any kind of … is there regulatory, is there a regulatory solution to this issue or is it just, I don't know that they bring that up in the report, do they?

Matt Cole: No, they really didn't get into the regulatory side. I think that they were just trying to lay out the numbers and show the actual hard costs related to detention.

Todd Dills: There's been a move toward putting, taking employee drivers out of the … motor carriers, rather, out of the exemption that's in place for the Fair labor Standards Act, which, I mean, it would basically put all the overtime requirements, actually, on motor carriers. And that, that might help some It might incentivize motor carriers to pressure their customers to move things along here, because they don't want to pay extra time, or extra wages for time, over 40 hours a week. There's a lot, a lot of interesting ways to think about the problem generally.

But, you know, I think for individual owner operators and small fleets and folks in our audience, it does kind of comes down to when you think about a customer with a detention problem, you’ve just got to have the conversations with them. I mean, stress the importance of improving the situation and putting an agreed upon rate in the contract.

Matt Cole: Yeah. That was one of ATRI's suggestions which they, kind of, they asked carrier, survey respondents, any suggestions for improving detention? And that was one of the things that they came up with was try to negotiate detention pay into your contract. But they also kind of threw a caveat with that, that, you know, a lot of carriers don't want to rock the boat with a good customer. If it's one of their top accounts, you know, they don't want to do anything to, to mess that up to make the customer think, well, maybe I can go back, go to the next guy and they won't be hounding me about detention. So I think there's a fine line there that fleets have to tow.

Todd Dills: But didn't ATRI also make note of the fact that a lot of the problems that are being experienced by drivers out there, the carriers are, they're sort of paying lip service to it. They're negotiating these contracts where detention is a line item. They charge it but then they never actually collect it. Wasn't there like some large percentage of carrier survey respondents that they found that just don't receive the detention fees? They charge them, but they don't get them. which seems to be, I don't know, just a total missed opportunity.

Matt Cole: ATRI's report said that 94 and a half percent of the carriers that they surveyed charged a detention fee in at least some instances, whether that's after 2 hours, after 4 hours or whatever. but there a lot of times those invoices aren't being paid by the customers. So I think their overall numbers was carriers bill for 75% of all detention, 0 hours, no time to any time, basically. And only 55% of those invoices were paid.

Todd Dills: So paid only half of the time. So we are as an industry tackling this problem only by half measures, right? 55% of the time. Only in 55% of the instances of detention are the shippers made to actually feel it and/or receivers, I should say, made to actually feel it. That I mean that seems to me to be other than the, just the reality out in the spot market for owner operators where it's, you know, it's not a standard thing to talk a lot about detention with brokers or to actually get it in writing with brokers. Other than that, I think that's kind of the biggest finding here where we stand to make a great deal of improvement, if we can make the other 45% of charged detention really felt by shippers and receivers that most often are responsible parties for causing this problem.

Matt Cole: I totally agree. Once you invoice somebody. ….

Todd Dills: It's customer management, right? Yeah. What else?

Matt Cole: You know, back to the, to the strategies for reducing detention. It's kind of all just mostly common sense type stuff. You know: show up early so hopefully you can get in line sooner than some of the other drivers, communicate with your customers, whether that's while you're at the facility, just continuing to kind of hound them, I guess. When are you going to get me loaded or unloaded.

Todd Dills: Gary Buchs talked about this in our webinar recently. It was in the context of salesmanship, but if you're working with a broker, sometimes the broker might get mad at you. But it's a great idea always to at least introduce yourself to the place, to the people that you're delivering to and/or picking up from. and I imagine those kinds of conversations, those conversations with shippers and receivers are a great time to really get a feel for what you're going to experience when you get there. To avoid potential delays, just by being communicative and proactively communicative with whoever you're working with, beyond just, you know, calling the broker and telling him how close you are. Just take the opportunity, take the initiative and go beyond it. Go beyond them. And you're not, you're not out there trying to steal somebody's customers or anything, this is logistics here. This is basic, a basic duty of your owner operator business.

Matt Cole: If you can get in a position with a customer that, does drop and hook freight, too, you're a lot less likely to get detained, if you're just moving trailers around for somebody. Basically, at that point, you can get in and out a lot quicker than if you're doing a live load or unload. Most of this stuff is nothing that people haven't heard before ,,,

Todd Dills: Find a link to Matt Cole's coverage of the new ATRI detention costs report in the show notes for this Overdrive Radio edition for Monday, September 16, 2024, wherever you're listening. Overdrive Radio is on Spotify and Soundcloud, Apple Podcasts and YouTube, Overdrive's Facebook page and any listening platform, really. Leave us a review there if you're enjoying these. And big thanks in advance for that.

Big thanks to Matt Cole today for his insight on the report, and look for more from him on this subject in the near future at overdriveonline.com.