When Revenue per Hour Beats Rate per Mile

Why short miles lie

Rate per mile divides money by miles. On a long haul the miles are most of the day, so the division roughly tracks how the truck made money. On a short haul the miles are the small part. The dock, the appointment, the traffic between two close stops, and the reload are the day. A high RPM is what you get when a modest check is divided by a small number of miles. It photographs well on a load board. It does not tell you whether the truck earned a day.

Local freight and multi-stop freight are the loads where this lie is the business. Local rates per mile still matter as a way brokers post the freight. Price the hour first, then look at the mile as a translation. If you only look at the mile, you will keep the pretty posting and give away the day.

Arrival at pickup through departure at the receiver

Start the clock when the truck is committed, not when the wheels roll. That is the arrival at the first pickup, or earlier if the appointment forced you to stage nearby and you could not take other work. End it when you are released at the last receiver and the truck can start the next job. Include the drive between stops. Do not start at the first bolt of the trailer and stop at the last, leaving the two-hour wait in a footnote.

If you deadhead into the local load, those hours belong to this commitment if you would not have driven them otherwise. The deadhead-miles page puts empty miles in a denominator of miles. Here the same reposition is hours. Use both when the load is short. A 40-mile load with a 50-mile deadhead is not a 40-mile story.

Dwell is inside the hour, not a footnote

Waiting is the product on a lot of local freight. The shipper is buying a truck that will be there while the dock works. If your hourly number ignores the wait, you priced a different product than the one you will perform. Put the dwell in the denominator before you accept. If detention is actually paid, put that detention in the numerator. If detention is waived, the dwell is unpaid time and the hourly figure falls. Extra-stop pay is the same issue when the wait is an added location. Do not assume a two-hour free-time rule. Use the rate confirmation.

A reload that fails, a door that slides to the end of the shift, and a lumper line are all inside the hour. They are not bad luck excluded from the math. If you exclude them, you will accept the same facility again for the same RPM and call the second wait a surprise.

A local day versus an OTR day, same truck

This is an example, not a wage and not a posted market. Suppose the local load is 40 miles at $4 a mile, so $160, and the truck is committed for 6 hours including the dock. Suppose you do not factor. Revenue per hour is $160 divided by 6, about $27. Suppose the alternative is 500 miles at $2.20, so $1,100, in 11 hours of driving and ordinary dwell. That is $100 an hour of committed time, before costs. The local RPM is almost double. The local hour is not close.

Change the hours and the ranking can change. If the local load is 40 miles, $4 a mile, and you are in and out in 2 hours, the hourly figure is $80, and a stack of those turns might beat a slow OTR day. The method is the ranking. The dollars are the example so you can see a high RPM lose. Put your load's dollars and hours in the same two lines. Break-even is where you learn whether $27 or $100 clears your cost. This page will not invent that cost. If you do not know it, you can still see which load collects more per hour. You cannot yet see which one profits.

Factor fees come out before the hourly number

If you factor, the money you will collect is not the face of the rate confirmation. Subtract the factor fee you actually pay before you divide by hours. A reserve withholding is not a fee. The reserve page explains why. Do not subtract the reserve from revenue per hour as if it were gone. Subtract the fee. In the example, a fee you assume at 3 percent is an assumption, not a market rate. Three percent of $1,100 is $33, so the OTR numerator becomes $1,067 and the hourly figure is still near $97. Three percent of $160 is about $5, and the local hour stays near $26. The fee did not reverse the ranking. A huge fee on a small ticket can. Use your contract's percent, labeled as yours.

Do not subtract the fee and also compare the result to a broker's RPM as if they were the same species. Say "after the factor fee" when that is what you computed.

When RPM is still the right tool

Hourly revenue is the wrong slogan for every load. Two long hauls with similar dwell, similar deadhead, and similar appointment pain can be ranked by all-miles RPM. The hours will not differ enough to change the decision, and the mile is the thing the shipper is buying. Use the true-RPM formula so deadhead is in the denominator, then stop. Forcing an hourly number onto two similar OTR loads adds a false precision about hours you have not measured.

Use hourly pricing when the loads differ in time: local versus OTR, one stop versus three, a drop-and-hook versus a live unload, a night wait versus a rolling lane. Say that limit out loud so the page does not become "always divide by hours." The truck sells both miles and time. The load in front of you says which one dominates.

No salary table belongs under that quotient. The quotient is the truck's revenue, and the cost per hour is a different page.

A day can hold more than one local load. Do not compare a single six-hour local ticket to an eleven-hour OTR day and pretend the truck goes home after the local. If a second local load fits, add its dollars and its hours before you declare the OTR day the winner. If the second load does not fit because the first dock released you at 4 p.m., the six hours were the day. Write the release time. The ranking is about the work you can actually stack, not about a theoretical second load that the appointment made impossible.

Team operations and hourly driver pay are outside this quotient. What you pay a driver is a cost inside break-even. What the broker pays the truck is the numerator here. Mixing a driver's hourly wage into the revenue line double-counts nothing useful and turns the page into the salary roundup it is not. Keep the broker's dollars on one side and the clock the truck cannot use for another load on the other.

If the second load is only a hope, leave it out. A hoped-for reload is the same fiction as hoped-for detention: it makes the hour look richer than the day you will actually run.

Frequently Asked Questions