What is a Bobtail Fee?
Trucking businesses can often operate on thin margins and are therefore required to optimize their routing and the number of trips each truck makes on a daily basis. This is where the bobtail fee comes in.
A bobtail fee is a charge that is issued by a trucker for delivering a container to a location, then returning to it at a later time to collect it. The bobtail fee is designed to make up for a loss of truck utilization for the empty trips that it isn’t carrying any load, in comparison to drop and hook or live loading.
In this article we’ll be exploring the concept of bobtailing and how the bobtail fee is designed to force shippers and consignees to optimize loading and unloading at their premise.
Why is a Bobtail Fee Charged?
A bobtail fee is designed to encourage shippers and consignees to maximize prime mover/semi truck utilization of trucking companies, by either live loading or through the drop and hook method. Dropping off a container and coming back at a later stage to collect it causes two empty trips, also called “empty miles”.
This means that the truck will return to the depot and back to the initial drop-off without any load. In this scenario, the trucker is not able to make any profit on those two empty trips. In order to compensate for the loss of potential revenue, a bobtail fee is charged.
Haulage or truck bookings are typically sent from the shipper or consignee to the trucker, meaning that they are the party requesting a particular movement of loads or containers. Therefore, the onus is on them to plan loading and unloading activities efficiently, in order to minimize freight wastage.
How Much Is the Bobtail Fee?
Bobtail fees usually make up about 50% to 80% of the haulage tariff. This charge is also inclusive of the costs that are associated with the fuel, driver and return of the prime mover or semi truck.
Depending on the business and logistics arrangements, it’s good practice to establish the bobtail fees with the trucking company beforehand. Simply get in touch with your preferred trucker and inquire about the chargers.
When Should You Consider Bobtailing?
There are certain scenarios where bobtailing may be required, depending on the type of business, as well as other factors revolving around space, loading and unloading activities, as well as cargo type and staffing. Below are some scenarios when bobtailing may be suitable.
- If the container cannot be unloaded immediately after arrival – In scenarios where the container arrives and cannot be directly unloaded, it may have to be parked. In that scenario, the truck will leave the facility without a load and return to pick it up afterwards. A bobtail fee may be invoiced in that instance, for the two empty transport legs.
- The goods need more time to be loaded/unloaded – A live load/unload has about a 2-hour window. If and when this exceeds the allocated time, the trucker may bill on a per hour basis. However, if the total time is unknown, the truck may go back to the depot and pick up the empty container at a later stage.
- If the warehouse does not have enough resources to unload the cargo – Not all warehouses have forklifts, pallet jacks or other types of material handling equipment (MHE). Similar to the other scenarios, a bobtail fee may apply if the truck returns empty.
- The warehouse has space issues – The moment congestion happens, even though just temporarily, it may be best to consider a bobtail option, and temporarily park the container until unloading can be facilitated again.
- If the cargo contains loose loaded cartons which may take longer to unload – Like the previous examples, depending on the cargo type and handling instructions it may take a longer time to unload containers. When this happens, the truck may have to return to the depot empty first and pick up the container later on, as idling trucks are costly.
Who Charges a Bobtail Fee?
The trucking company will charge the bobtail fee to the party it has a contract/agreement with. This party is often the cargo owner (shipper or consignee). The bobtail fee is typically mentioned on an invoice, if the empty return trips have already been accounted for.
If a live load or drop and hook was initially planned but could not be materialized, the trucker may either amend the initial invoice or create a new one for the bobtail fee.
Are Bobtail Fees Fixed or Can They Be Negotiated?
Bobtail fees are usually negotiable depending on the trucking company that you’re dealing with and the type of business agreement or partnership. Consider negotiating these fees based on your needs and plan loading and unloading activities in advance.
There are also cases where bobtail fees are not applicable simply because of the amount of shipping volume or when the trucker and the customer have made arrangements/agreements where empty trips may occur from time to time.
How to Avoid Bobtail Fees
There are two main methods to avoid bobtail fees and how this may apply to your business depends on several factors.
The first method is through live loading. Live loading is when a truck remains attached to the trailer and the truck waits until the loading/unloading activities are completed before moving the container out of the facility. Current live loading practice includes about two hours of free waiting time. Any excess waiting time is typically billed to the client on a prorated basis.
The second method is through a drop and hook method. Drop and Hook is when the trucker drops off one container then ‘hooks’ onto another and exits the facility. The trucker completes the pickup and return leg thus avoiding bobtail fees.
In both scenarios, the trucker has a load to move and no ‘empty miles’ occur. Therefore, it’s common for shippers and consignees to plan around live loading and the drop and hook technique.
How to Request for Bobtailing
A customer would normally know if a container delivery will require bobtailing. It would be practical to inform the trucker, in written communication, of the intention to bobtail and also confirm the charges. Once the trucker has completed the entire trip, it will then present the respective invoice for the service rendered.
Example of a Bobtail Fee on an Invoice
Below is an example of an exporter who has engaged the services of a trucker to perform a pick where a bobtail fee is applicable. In this scenario, the exporter has requested a pickup of an empty container two days after the initial delivery.
In this example, the trucker has to leave the location empty and return empty, therefore charging a bobtail fee of 50%.
|Company Name||Premier Exports|
|Pickup Address||903 Armory Road Los Angeles CA|
|Delivery||Port Of Los Angeles|
|1 x 40 KKFU678942 Export||$650.00|
|Bobtail Fee (50%)||$325.00|
|Pickup Date||August 1, 2021 at 8:00am|
|Requested Return Date||August 3, 2021 at 10:00am|
Co-Founder & Writer
About the Author
Andrew is a multi-business owner with over 10 years of experience in the fields of logistics, manufacturing, operations, training, and education.
Being the co-founder of freightcourse has given him the ability to pursue his desire of educating others on manufacturing and supply chain topics.