The Truth Behind Backhauls - Considering Time and Money in Backhauls

In the first article we defined what a backhaul is, as opposed to a linehaul.  The purpose of this was to classify a haul more by it's character than by what someone else might be calling it (in other words, just because someone tells you it's a backhaul doesn't mean that it is).

This article will build on that and get another layer deeper in breaking out the different components of a haul and help you to calculate your costs.  I understand that some don't want to break things up into pieces, run the numbers and see what they come up with.  I've found that it's a good way to pass the time and keep the mind sharp - but it will also help you either make better use of your time, or simply make you more money.

To begin, let's look at the different parts we will assess and evaluate.

1. Deadhead miles to home base (Std Deadhead = SD).  In RV transport from manufacturer to dealer, this is the second half of the trip.  This is the half of the trip that you don't get paid on.  You need to use this as a baseline for comparison purposes.  You'll need to look at time and costs to compare with your other options.
2. Deadhead miles to backhaul pickup (Pickup Deadhead = PD).  No matter the direction, this is the miles from your outbound delivery to the backhaul pickup point.
3. Loaded miles on backhaul (Loaded Backhaul = LB).  Again, no matter the direction or number of miles, our calculations will account for these appropriately.
4. Deadhead miles to home base after backhaul (Delivery Deadhead = DD).  This is self explanatory and may include back-tracking if you go past home base..

We are going to answer the following questions when it is all said and done.

• How much will be in my pocket - will it be better to deadhead or backhaul?
• Will it take too long - would I have made more money by deadheading and taking another load?

We will do this by considering the time and expenses involved in both options, calculate a break even, and compare that with what the job actually pays.  If it is more, then we might take.  If it is less, probably not!  That easy.

So, we need to first calculate the time and expense involved in the standard deadhead run.

Let's look at a hypothetical trip.

Goshen, IN to Lincoln, NE - 650 miles - 11 driving hours

 

You are getting fuel for $3.45 / gallon

   - you get 17 mpg empty (about $0.21 / mile)

   - you get 12 mpg loaded (about $0.29 / mile)

Your proposed pickup is in Kansas City, MO (200 miles south) and delivers Arlington Heights, IL (550 miles)

Then, you're back to Goshen, IN (150 miles)

Calculating Costs = let's look at the standard deadhead return compared to the routed  backhaul and see what our cost differences is.  This amount will tell us the minimum we need to collect from the backhaul to make it worth our while.

The SD (standard deadhead) on the trip would be the 650 miles back to Goshen.

• Fuel Cost = $0.21 X 650 miles = $136.50
• Motels (2) = one night before trip, one night in Goshen
• Meals = One day

Compare that with the backhaul:

• Fuel Cost Empty (PD + DD) = $0.21 X 350 = $73.50
• Fuel Cost Loaded (LB) = $0.29 X 550 = $159.50
• Fuel Cost Total = $73.50 + $159.50 = $233
• Motels (2) = One night before heading to Kansas City, one night before backhaul delivery
• Meals = One and one half days

So looking at the differences, you lost half a day in time from a miles standpoint.  That assumes all was reasonable on both sides of the backhaul (not perfect, just reasonable).  You had the same amount of hotels, but lost a half of a days time on the next outbound load by taking the backhaul.

Let's see what amount you would need to get to justify the backhaul during the busiest parts of the year (when you know there is an available load waiting in Goshen for you, not having to sit around a day or so waiting for the next load).

Added Fuel Costs = $233 - $136.50 = $96.50

Added Meals = 1/2 X Per Diem Amount (note 1) = $9

Added Motels = 1/2 X Motel Costs (note 2) = $25

Lost Margin = 1/2 day X Margin (note 3) = 300 miles X $0.25 = $75

Total Costs = $205.50

• note 1 -  Meals are variable depending on who's eating.  Many motels will have some sort of free breakfast, some use coolers for other meals, some use coolers for luch and eat a meal for dinner... etc.  If we plan on $18 a day that should be close enough for these purposes.
• note 2 -  Motels can be had for anywhere from $30 to way too much depending on your timing, planning and location.  We'll use $50 here.
• note 3 -  See Part 2 of  How To Make More Money articles to calculate your own margin - this is how we account for you not leaving with another outbound load for the extra half day it takes to do the backhaul.  This is something that can be difficult to consider unless you know your profit margin per mile.  We assume your run 600 miles per day and lost half a day with a $0.25 / mile margin when running above break even.

Ok, after swimming through these calculations, what do we know?  Well, we now know that if this load pays $205.50 and it takes us a half of a day longer than just coming back empty and leaving with another outbound load, that we are no worse off... we are at a break even.

We accounted for the additional fuel, the additional meals and lodging and the lost margin that we would have in our pocket if we had come back earlier and were already out on our next outbound run.  For every bit that we get over $205.50, we are better off than deadheading back.

Your Pay:

Let's say, for example, you got $0.50 / mile on this backhaul (or $0.75 or $1.00).

• You get 550 miles X $0.50 = $275 (or $412.50 or $550)
• Break Even = $202.50
• You pocket the difference of $72.50 as additional profit (or $210 or $347.50)

Remember, that is additional profit based on what you could have been doing instead.  This accounts for the extra 1/2 a day it took to do that backhaul and the fact that you weren't earning the full outbound rate.  This is pure profit.

Now, some say putting $70 (or $200 or $350) extra in their pocket isn't worth it.  There is risk of damage and risk of hassles or delays at either end of the backhaul.  Well - that is true, they are correct.

However, that is the case with any load - situations like that don't wait for a better or worse paying job, as much as it may feel like it when it happens (more like more expensive unit than how much the job pays... at least that's what it feels like to me).

Summary:

1. Find your break even point
• Calculate the deadhead costs (SD)
• Calculate backhaul costs (PD, DD, LB)
• Calculate margin on lost time (lost days X miles per day X margin per mile)
2. Compare your actual pay with the break even and make your decision
3. Be happy knowing that you are making the right decision on the backhaul vs. deadhead

Good Luck and Be Safe!