Before contracting to drive a tractor trailer for a motor carrier company, you should know the types of compensation offered and the specifics of that carrier’s compensation rules.
Long haul or over-the-road (OTR) truck drivers are most typically compensated for their work according to four criteria. Three of these methods use varying definitions of mileage traveled as the basis for the compensation. The fourth method is based on the percentage of load carried. There are advantages to being paid by mileage. The most obvious advantage is that your compensation is based on a specific measure of accomplishment. However, there are also disadvantages. One disadvantage is that some hauls require more effort than mileage would adequately compensation for. Another drawback is the relatively low pay that mileage compensation offers when compared to the number of hours actually worked.
Compensation by Household Goods (HHG) Miles - The basis for Household Goods Miles came from the “Household Goods Mileage Guide.” This guide standardized motor carrier freight rates for moving goods. The Guide contains mileage distances between cities, zip codes or highway junctions for more than 140,000 cities. Drivers in the industry believe that HHG miles are shorter than actual miles driven because truck miles are usually driven point-to-point, not from city to zip code or highway junction. In fact, some drivers estimate the difference between HHG miles and actual miles can be up to 12% shorter. Motor carrier companies, on the other hand, claim that the miles driven vary both shorter and longer using HHG miles. So, over time, the actual mileage will even out. The companies also point out that drivers are paid more per mile to account for these variances.
Compensation by Practical Miles – The criteria for this method of compensation has no standard definition across the industry. In general, Practical Miles is used as a more realistic distance estimation than HHG miles. Check with the motor carrier company to determine the specific criteria used if they compensate drivers using this method.
Compensation by Hub Miles – This method links compensation to odometer miles. A mechanical odometer or hubometer is usually mounted to an axle. Motor carrier companies using this method of compensation pay drivers for every mile tracked by the hubometer. Companies sometimes place limits on total mileage not to exceed 5-10% of the estimated mileage for the haul.
Compensation by Percentage of Load – This method is the only one that does not use mileage as a factor for compensation. Instead, a motor carrier company using this method will pay the driver wither a set or variable percentage of what the motor carrier company determined to be the quoted value or rate of the load.
Now that you have more information about compensation, you can more thoughtfully choose the motor carrier company that will help you best attain your income goals. Remember also to contact a reputable trucking insurance company that can offer the insurance you need within your compensation limits.