Commentary: Why Everyone Is Missing The Point On Convoy's Empty Miles Research

Empty miles are a billion-dollar problem for trucking fleets, but are they more of a problem than they were in 2002? Recent headlines indicate they may be, suggesting that one-third of trucks on the road are driving with empty trailers.

Estimates of empty miles – or more accurately, non-revenue miles – have settling in the 20 percent range for some time. Data inside FreightWaves' SONAR platform shows percentages a little below that, as of the end of June 2019. Among top-performing company and leased fleets, 14.23 percent of all miles are empty, the data shows, meaning they do not generate any revenue. These represent the best company and leased fleets in the nation. Dry van fleets overall are slightly worse, at 15.63 percent, while flatbed operators sit at 18.73 percent. Refrigerated fleets are slightly better, at 13.97 percent.

The American Transport Research Institute (ATRI) conducts an annual report on the operational costs of trucking. In its 2018 report, ATRI found that trucking companies traveled over 9.4 billion miles in 2017 and 20.7 percent of all those miles were empty.

At an operational cost of $1.69 per mile, that means fleets spent approximately $3.3 billion in 2017 driving empty trucks.

Private fleets run a higher percentage of empty miles due to their operational priority of supporting freight movement for their parent organization. According to the National Private Truck Council's (NPTC) 2017 Benchmarking survey, 26 percent of all miles were empty, but that was down from more than 30 percent in 2009.

A comparison of empty miles run over the prior 12 months by top performing company and leased fleets (blue line) with dry van fleets overall (purple line), refrigerated fleets (orange line) and flatbed operators (green line). (Chart: FreightWaves SONAR)

Convoy has now tried to quantify the numbers for 2019 by extrapolating data from the 2002 Census Bureau's Vehicle Inventory and Use Survey (VIUS) report, the last time such a government survey was conducted, the company said. That report estimated empty miles at 19 percent for the industry as a whole, 22 percent for private fleets, 23 percent for independent owner-operators, and 7 percent for mid-sized/large asset-based carriers.

The problem lies in using 2002 data. Convoy's premise is that the 2002 Census data is underreported. The Census survey relied on self-reporting and included respondents that said they ran no empty miles. Convoy decided to exclude those responses, which it called "implausibly low," and as a result it recalculated the government data to get new numbers. Those were 29 percent for the industry as a whole, 35 percent for private fleets, 32 percent for owner-operators, and 10 percent for mid-sized and large

Finding the true empty mileage percentage

In its analysis, Convoy's Aaron Terrazas, director of economic research, even acknowledged the trouble in compiling the data.

"Other data sources suggest a similar range," he wrote. "The public financial disclosures of several large public asset-based carriers report empty miles in the range of 9 percent to 17 percent in recent years. At the opposite extreme, self-reported empty miles estimates from independent carriers posted in trucker forums online can get as high as 50 percent. For private fleets, survey estimates from the National Private Truck Council range between 20 percent and 30 percent over the past decade."

But data collection efforts are better today than they were in 2002. Sourcing and even survey methodology has improved. Technology is vastly more sophisticated and continues to grow in its sophistication with each passing day. Companies like Convoy and Uber Freight, along with legacy companies like C.H. Robinson and J.B. Hunt, are hard at work using technology to eliminate these empty miles, while also working to solve a myriad of other problems that existed 17 years ago.

That should yield better data than 17 years ago.

Terrazas tries to dig into the 2002 data to draw a few conclusions. "On first glance, it looks like asset-based carriers drive far fewer of their miles empty than either private fleets or independent carriers," Terrazas wrote. "But there are also other differences between mid-sized/large asset-based carriers, private fleets, and independent carriers/owner-operators. They run different types of trucks, with different types of trailers, on different types of routes. All these differences matter for empty miles."

Life in 2002

Using the 17-year-old 2002 data, Convoy extrapolated that, based on route distance:

• Trucks that worked primarily long hauls (typically a range of operation greater than 500 miles) drove about 33 percent of their miles empty.
• Tucks that worked primarily tweener hauls (typically a range of operation between 200 miles and 500 miles) drove about 37 percent of their miles empty.
• Trucks that worked primarily short hauls (typically a range of operation between 100 miles and 200 miles) drove about 36 percent of their miles empty. 
• Trucks that worked primarily local hauls (typically a range of operation within 100 miles of their home base) drove about 33 percent of their miles empty.

The blog posting also noted that trailer type matters. It found that, in 2002:

• Trucks with dry van or reefer trailers drove about 34 percent of their miles empty.
• Trucks with tank trailers drove about 38 percent of their miles empty.
• Trucks with flatbeds, low boys, stake/platform, pole, logging, pulpwood, or pipe trailers drove about 44 percent of their miles empty. 
• Trucks with other specialized trailers drove about 43 percent of their miles empty. 

Even accounting for only Class 8 dry vans and refrigerated vans, Convoy said that the total share of miles run empty in 2002 was 32 percent for mid-sized/large asset-based carriers and owner-operators, and 35 percent for private fleets. These figures are much higher than the Census Bureau reported.

Convoy is simply making a best guess using 2002 Census Bureau data, and never specifically said these numbers are what they are today. Even as recently as June 2019, when Convoy launched its Automated Reloads feature, the company said empty miles were approximately 20 percent, citing ATRI data.

Do empty miles matter?

The real conclusions to be drawn from Convoy's research is simply that empty miles matter. The question is to what extent?

NPTC vice president Tom Moore noted this at the group's annual meeting in 2018.

"I don't look at [empty miles] as significant with the capacity constraints," Moore said. "It's more important for many of you to get that equipment back [and loaded again] rather than chasing loads."

This gets to the argument that not all empty miles are the same, a significant distinction in characterizing lost revenue. As Moore observed, some empty miles are more important than others. Relocating a tractor-trailer for a load paying $2.50 a mile for 1,000 miles may offset driving 100 miles empty if the alternative was to haul a load paying $1.50 per mile for 500 miles. Some fleets and owner-operators relocate vehicles on a regular basis for strategic and personal reasons. Those vehicles are not available to haul freight and may be not reported as running empty by survey respondents because the fleets didn't consider them empty at the time.

Context matters in these discussions. Convoy is using 2002 numbers and trying to reach 2019 conclusions. The problem isn't so much with Convoy's approach, it is the underlying dataset.

If we assume that Convoy is correct in its 2002 assumptions, then what are we to make about 2019 numbers? Are the empty miles significantly higher than what is being reported?

To believe that, we'd have to assume that fleets and owner-operators are less productive, and that technology has done little to improve operational efficiency.

While empty miles remains a significant problem and expense for fleets, I'm not ready to make that conclusion.

Image sourced from Pixabay