How Intermodal Trucking Affects a Carrier’s Net Revenue
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Not only can carriers drive fewer miles with their trucks and spend less on fuel when hauling intermodal loads, they can make more money while doing so.
How is this the case? It all comes down to net revenue, which is what a carrier takes home after factoring in all their expenses. Even if a carrier is grossing more doing over-the-road trucking, they are also driving more and accumulating expenses with fuel costs, especially when diesel prices continue to climb.
With fuel typically being the largest expense for all power only truck drivers, each additional mile on the road is going to increase their expenses. However, the price per mile on the OTR side historically doesn’t increase with additional trip mileage. This is why carriers like Steve M., a DrayNow app user from Atlanta, prefer regional loads. He tells us that his truck can go 1,000 miles on a tank of fuel, and because of intermodal, he can run multiple trips on that one tank. When diesel prices increase, it’s important for carriers to make sure they’re taking trips that don’t increase their expenses and bring in less revenue.
What does this difference in rates for power only loads in intermodal and OTR trucking really look like? For example, based off our conversations with carriers, a driver could have an intermodal load from Chicago to Detroit at ≈600 miles and see rates anywhere between $2-2.20 per mile. If a driver were to stay in the Chicago area and haul loads within a 60–100-mile radius, they would be seeing much higher prices per mile depending on the mileage of each trip, with shorter runs getting even better rates per mile.
Using current diesel prices and the average mpg of a semi-truck, a driver taking the 600-mile round trip could net ≈$900-1,000 after fuel expenses. In comparison, a carrier doing intermodal drayage runs could drive 400 miles over multiple trips at higher rates and net ≈$1,000-1,200 all while staying local. That’s fewer miles, fewer expenses, and more money that a carrier would take home from intermodal loads. The difference in net revenue between intermodal and OTR will only be greater as more miles are added to the equation.
Looking at the gross numbers for a month of work, the difference between intermodal and OTR can be even greater. As Bonnie Castillo, president of a factoring company, tells us, “On the intermodal side I can see one truck generating $25-30K a month in billing, where on over-the-road dry van, they may only be generating $15K a month, or $20K if they’re running hard.” Since these are gross numbers, the profitability of intermodal is more obvious when also factoring in the lower fuel costs that an intermodal carrier accumulates on these trips. This is a direct testament to the fact that even though intermodal trips are shorter, when added all together, intermodal carriers will make more money than if they were doing over-the-road trips.
The hard data is there: carriers can bring in more revenue doing shorter runs on the intermodal side of trucking. Lower fuel expenses combined with higher rates per mile will always make intermodal trucking an attractive alternative to staying out on the road for days on end.
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