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No-Detention Contracts: What Are They And Why You Should Be Wary Of Them

If you are working for a logistics company as a driver, a fleet manager, or if you own one yourself, the phrase “time is money” would be very familiar to you. Every hour in the trucking business costs money. 

Using fleet tracking software, drivers can predict traffic and determine alternate routes, thus getting deliveries made on time and boosting company revenue.

Regardless, depending on the contracts you sign, you either make money in any instance or lose money under certain circumstances. Detention is one such scenario. 

What Is Detention?

Delays are common in the trucking industry because of various reasons like loading of goods, traffic or bad weather. If there is a delay at the origin or pick-up point of the shipment, then it is called detention. This happens due to the loading of goods into the truck or because of unloading the shipment from the carrier at the receiver’s end.  

Detention impacts the economy significantly. A study suggests that companies stand to gain $6.6 billion annually if about 33% of the stops were to reduce their detention time by just 30 minutes.

According to the American Transportation Research Institute (ATRI), drivers reported that more than 70% of the delays in their pick-ups and deliveries were due to customer actions.   

What Is Detention Pay And Why Is It Necessary? 

Detention pay is the amount that the client or shipment receiver pays to the carrier company and the driver to compensate for the financial loss they incur due to delays.  

Generally, there is a mutually agreed free time. This refers to the time the client has to load or unload the commercial carrier vehicle (CMV) without being charged for delays or detention. 

Typically, the allowable free times are 2 hours at the origin and 2 hours at the pick-up point. If such delays were to happen, then the trucker and the company would lose 4 hours of working time for which they would not get paid.  

There have even been controversies over the free time offered. While customers and clients of a freight company claim that this free time is not sufficient, the drivers, on the other hand, protest that the time should be lowered in order to maximize their pay. 

Why No-Detention Contracts Are No Good 

No-detention contracts are generally signed for large shipments. The customer would claim that there will be no minimum delays at the time of loading or unloading the cargo in a port or dock and that the driver will not be detained for long. 

Hence, by signing the contract, you are essentially exempting customers from paying the detention fee.  

On a day-by-day basis, the revenue does not seem significantly high. But a report by the Federal Motor Carrier Safety Administration (FMCSA) and the U.S. Department of Transportation, the truck drivers’ annual earnings are reducing by about $1.1 billion to $1.3 billion!  

Each contract has different conditions and clauses that, sometimes, may even be beneficial to you. However, here are some reasons why you should be wary of no-detention contracts: 

  • Delays are often inevitable during pick-ups or deliveries. If you are not getting paid for them, then chances are you will lose a lot of revenue in the long run.
  • The Hours of Service (HoS) regulations allow for a driver to work for a maximum of 14 hours per day, out of which 11 hours are the limit for driving. If they were to be held up for very long in docks and ports, they would lose a lot of money.

Furthermore, when the drivers are detained for long hours without pay, they try to compensate for the loss with faster deliveries. This increases the rates of truck crashes, thus sabotaging the safety of the public.

The U.S. Department of Transportation further estimates that for every 5 percent increase in detention causes about a 4.7 percent increase in crash rates. 

How To Keep Detention In Check 

Follow these tips to keep detention in check and improve your drivers’ productivity: 

Fleet Management 

Using effective fleet management tools like GPS fleet tracking software, companies can effectively keep tabs on driver behaviors and routes. This helps fleet managers to identify the causes of delays and facilitates better router performance through route optimization.  

In addition to helping minimize delays and increasing productivity, fleet management software also helps to reduce operational costs by monitoring fuel consumption and vehicle idling.  

To learn more about fleet management and how it can benefit your business, visit this link

Using ELDs 

Electronic Logging Devices (ELDs) are very useful when it comes to doing justice to the driver as well as the company for their detention time.  

Earlier, all records were maintained on paper, providing a lot of room for errors that often put the drivers at a loss. For example, if a driver were detained for 6 hours, the records could show only 4 hours of work, thus denying the driver 2 hours of detention pay.  

A survey by DAT showed that more than 60% of the drivers are detained longer than 3 hours, while only a mere 3% of them received detention pay. This is a significant reduction in productivity and earnings, cumulatively.  

With the introduction of ELDs, all information is accurately stored digitally in a database that enables fleet managers to pay the drivers the amount they deserve. An ELD can be easily installed in any CMV in just a few minutes by plugging into the onboard diagnostics (OBD) port. 

Conclusion   

Detention is essentially time gone in vain during the working hours for both the driver as well as the company if the client does not compensate.

Drivers could have earned extra cash if they had hit the road rather than wait for so many hours. Moreover, trucking companies could have utilized the extra work hours to deliver more shipments to other clients.

These are the reasons why you should be wary of no-detention contracts and offer reasonable detention pay to your drivers for their service. 

With the help of revolutionary GPS tracking software solutions, companies can now approach no-detention contracts with caution and increase their overall revenue.

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