This is for the Landstar community, but I am posting this for the world at large because I am asked about this at least twice a day. From here on out, I will just post a link to this blog. Since this is for everyone, I will explain some details the Landstar community takes for granted.
Landstar agents and truck drivers are paid by the load. There is no “company” to pay us by the hour or give us a salary. While there is a lot of money involved, we also absorb all the risk. We have no sick time, no benefits, no income whatsoever when we are not working. We have about $200 per week in expenses, even the weeks we do not work. These expenses are primarily taxes and insurance (a form of tax).
The most important part of economic survival is control of expenses. In fact, the choice of equipment, the choice of loads and the expenses are the only things a driver has any control over. I am not going to mention anything about the choice of equipment here. That is a multiyear decision. I am only going to compare two different loads.
These are two mythical loads, not available on any load board anywhere. But the data is based on loads I have actually hauled. I am less interested in realistic numbers than making in an easy to understand illustration.
Load A picks up in the AM in NJ, goes down a toll road, crosses a toll bridge and delivers in Philly, PA. It pays 50 miles. Load A pays $600 line haul and $25 Fuel surcharge. Fuel surcharge is based on $.50 per mile for 50 miles. $625 for 50 miles will post on the Landstar board as paying $12.50 per mile. It is floor-loaded, live load and live unload. You drive a half hour to the shipper to pick up at your 7:00 am appointment. You leave the shipper at noon. Traffic jams slow you down and you arrive at the receiver at 14:00 for a 25 mph average. The receiver tells you that you had a 1300 appointment and they will try the “fit you in.” It is cold (or hot), and neither the shipper nor the receiver has a driver’s lounge. You are forced to idle you truck at both locations, even though it is against the law. You leave the receiver at 1930, with only an hour to drive and the only truck stop in range is a pay truck stop back in NJ where you will have to pay another toll to get out of NJ. Since you do not have another load scheduled after this one, you do not want to risk running out of hours trying to reach the free truckstops in Elkton, MD. Expenses for load A: tolls in NJ, bridge toll to PA, driving 90 miles @ 3.5 mpg (a lot of idling in traffic) and 4 total hours idling at shipper/receiver. If you have a $10,000 auxiliary power unit (APU), you will have no idling at shipper/receiver and a total fuel cost at shipper/receiver of about $1.50. You will also be legal.
Fuel is calculated at $4.00 per gallon. Breakdown of immediate expenses are; $55 for tolls (estimate), $120 for fuel (approximate-includes driving to Petro in Bordentown, NJ after load delivered), $20 overnight parking. Total immediate (short term) costs for load A are $195.
Income for load A is 66% of $600 (old contract) and $25 for Fuel surcharge. Total income for load A is $400 plus $25 for $425 gross income minus $195 immediate expenses for a total net income of $230 for one day and no load the next day. You had little wear on the tires, but a lot of wear on the clutch and the engine had as much wear as a 600 mile run.
Load B picks up in Washington State and delivers near Atlanta, GA with one stop. It is a 3000 mile run. The fuel surcharge is $1500. The linehaul pays $4375. Stop pay is $125 (includes light driver assist). Landstar will post this load as paying $2.00 per mile. There are no tolls. Total mpg, including all idling, is 7.5 mpg. This is the only number which is not made up for this article. We actually get 7.5 mpg including idling. On this trip, there are no additional expenses. 3000 miles takes 5 days, including loading and unloading. You have a total 150 miles deadhead. The only immediate expense is $1680 for fuel.
Income for load B is 66% of $4375 plus $1500 for fuel surcharge and $125 stop pay. Total income for load B is $2887.50 plus $1500 plus $125 for $4512.50 gross income minus $1680 for fuel. The only immediate expense is fuel. The total net income is $2832.50. Since this load takes 5 days, the per day total is $566.50.
The wear on the tires is much greater on the 3150 mile trip compared to the 90 mile trip, but the wear on the rest of the truck is comparable per day.
While this is a purely mythical example, it is based on trips we have run. In this mythical example, the trip Landstar lists as $2.00 pays the driver more than twice what the trip Landstar lists as paying $12.50 per mile. Which is why I do not care what the “per mile” rate is. All I care about is how much the load pays.