Do You Sit or Do You Move? Try This Decision Aid
By Phil Madsen, Contributing Writer
Jan 11, 2012 - 9:48:23 AM
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Situation:
You deliver a load on Friday
afternoon in a slow freight area. If you stay put and wait for freight,
it is not likely that you will get a load out until sometime next week.
It may be Monday. It may be Wednesday. You do not know.
You do know:
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You have fixed costs to pay every day of the year,
whether your truck is moving or not. These include insurance, Qualcomm
fees, truck registration, truck payment (if you have one), depreciation,
etc.
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You have variable costs, over and above your fixed
costs, every time you move your truck. These include fuel, tires, oil
changes, tolls, etc.
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In other words, you know it costs you money to sit and wait for freight, and it costs you even more money to deadhead to a busier freight area.
What Do You Do?
How do you decide? Of your available options, which is the most profitable? Or, if all available options are money losers, which is the least costly?
Sit vs. Move Decision Aid
Diane and I have developed a spreadsheet to use when faced with the sit/move decision. It is pictured below. A live version is available free of charge online at www.uexpedite.com. You can download and modify it as you please. If you mess it up, don't worry. You can download another copy and start fresh.
Your Cost Assumptions
Two key numbers in the table are the $100 cost per day and $1.00 per mile cost to drive. The $100 per day number was taken from industry literature. It is commonly used to describe the cost to sit. The $1.00 cost per mile number is more of a place holder.
I have heard credible people argue costs per mile ranging from $0.44 to $1.35. We do not need to have that debate here. Simply substitute whatever number makes sense to you for the $1.00 placeholder shown. So too with the cost per day number. The table will instantly recalculate using your numbers you enter.
Other Considerations
There are of course other considerations that go into a stay or move decision. If you have family in the slow freight area or feel you need some time off, you may be content to stay for a week. If you have had better luck in an express center 400 miles away and choose that over one that is 150 miles away, the tables will show the financial consequences of each move but that is as far as they go. Additional considerations, like luck or family, lie beyond their scope.
© ExpediteNow.com
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