The Cost of Empty Miles for Carriers & What to Do About Them
One of the most costly issues in the trucking industry is when a heavy-duty truck drives empty, without goods. It translates into less revenue for carriers – and ultimately negative cash flow.
In the United States, 36% of heavy-duty vehicles on the road are empty. According to the Bureau of Transportation Statistics, one out of every four trucks in service in the United States in 2019 was empty, two were nearly empty, and one was 51% filled.
In this article, you’ll discover everything you need to know about empty miles and what you can do to reduce their impact on your trucking business.
Without further ado, let’s dive right into it! (click here for the cost of empty miles calculator!)
What are empty miles and how do they happen?
Empty miles are the most common type of freight waste. One of the most prominent instances of waste in the freight industry occurs when truckers take empty trips.
This usually happens because there are no nearby loads accessible from load boards for the driver to pick up that are heading in the same direction as the driver – otherwise known as a backhaul. These miles are known as empty miles, non-revenue miles, or deadhead miles in the freight business.
These miles, regardless of how they are marked, indicate that drivers are not getting money for being on the road and that the economy as a whole pays more to transport stuff.
The problem of empty miles
Empty miles pose several problems to businesses in the freight industry.
First and foremost, driving empty trucks means that the company loses money. There's no money coming in, but expenses going out. Empty miles mean additional expenses for shippers and trucks for gasoline, driver salaries per hour, and truck upkeep.
The environmental consequence is straightforward: more trucks on the road equals more CO2 emissions.
What empty miles mean for carriers
When determining how much they charge for any given cargo, carriers account for their own expectations of empty miles. So everyone from shippers to end-users – including the environment – pays the price for empty miles in the end.
As mentioned in the previous section, empty miles mean less revenue for carriers. It means increased costs because an empty truck on the road still consumes fuel, still needs a driver, and still requires regular maintenance. If the carrier isn’t making money, it means the carrier is losing money – and a lot of it.
As a carrier, it’s crucial to understand what expenses are related to fulfilling one shipment – including the return transit, i.e., backhaul. The following are some of the expenditures associated with empty miles:
- Total distance of the transit
- The cost of fuel per gallon
- Average MPG
- Driver’s compensation
- Maintenance costs
Company drivers are typically not concerned about this, but independent contractors are. As a result of not being compensated for empty miles, some drivers would have to pay for their gasoline out of pocket, rendering that route unprofitable.
Wear and tear costs
When a truck driver drives a vehicle, they're subjecting it to natural wear and tear from the road and weather. However, there is no revenue to balance the damage price if you drive empty miles on your backhaul.
Drivers might get compensated for deadhead miles by carriers, but carriers are not required to compensate independent contractors or owner-operators for miles driven without loads. As a result, for a variety of reasons, empty miles are unproductive.
Time and efficiency
Time is money, and if you are driving with an empty truck, you’re wasting time rather than earning it. Imagine how much more money you could be making during that time?!
Increased safety risks
Since the empty truck is too light, driving with an empty cargo can be hazardous and truck drivers must take extra precautions when doing so. Furthermore, difficult weather conditions create significant road hazards for truckers. Drivers must be cautious of any kind of hazards, such as black ice and strong winds.
Estimate your costs
While empty miles is a big issue in the trucking industry, luckily, there are a few things you can do to manage your bottom line and keep a positive cash flow.
First, it’s important to estimate your costs and earnings. For most carriers, empty miles are non-revenue miles, yet, many of them are aware that there are several forms of empty miles. Some businesses prefer to run empty for 100 kilometers before picking up cargo that will pay them $8.5 per mile for 620 miles, then pick up nearby freight for $4.3 per mile for 310 miles.
Understanding the cost related to each truck is critical to maintaining a profitable business. However, it’s challenging to keep track of everything with all of the fixed and variable expenditures. Break down your trucking costs to determine your break-even threshold for each truck, which will allow you to set fair prices and never lose money on a shipment.
Help is here! We have developed a tool that can help you calculate your break-even point depending on the number of miles you want to drive that month and at what rate. Learn how many miles you need to take each month to meet your earnings potential.
Request a demo of Kamion powered by Loadsmart, a truck management system, to drive more efficiently, reduce empty miles, and make the most out of your backhauls.