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- Thread starter CharlesD
- Start date
Tennesseahawk
Veteran Expediter
Methinks he has a contractor who likes to go home a lot.
Some folks think cheap freight is ok, when the driver wants to go home, because 'something is better than nothing'. The problem is, there's always someone, somewhere, who wants to go home, and it keeps the rates down.
I just noticed that showers now cost $12.00 @ P/FJ - rates need to be moving up, because the costs sure are!
I just noticed that showers now cost $12.00 @ P/FJ - rates need to be moving up, because the costs sure are!
CharlesD
Expert Expediter
We have a large straight with a team sitting in Midland, TX. It's the only straight posted within 100 miles of there. I have been getting calls this morning from brokers wanting to book the truck on nice long runs, and they're expecting a discount because the miles are more or the load is heading "back into the freight lanes" etc. A mile is a mile, no matter the direction it's headed in or how many there are, and I'm not going drop the rate per mile just because a load is headed toward Ohio, Michigan, or Indiana, or the load is a lot of miles when I've got the only truck in the area. Supply and demand.
Define cheap freight for me? Im not sure it is possible with any realistic figure. One person might see the same profit from a 1.40 a mile that another sees from a 1.25. Unless two people have the exact same costs and bills at home can we really compare rates?
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CharlesD
Expert Expediter
Could we all agree that under $1 a mile to the carrier for a cargo van load is cheap? A lot of carriers are bidding that low on van loads right now.
Literally impossible.....as some of us are independent operators each with their own unique cost per mile.....my costs aren't yours and so on.....
the competitive advantage is to keeping your costs low so you can run those loads and make your profit margin....
I could do a $1.00 a mile.....
I could do with some folk that understand that deadhead miles aren't exactly give-away either. Dash and back is probably about as cheap as you get, a lot of guys think 1.15 a mile is a lot for a van. So it is, if you're not coming back the way you came. Now it's just break even on the vehicle itself, and you haven't paid tolls, insurance, eaten or anything else yet. Round trip, maybe .55 a mile-- if you're lucky.
AMonger
Veteran Expediter
That's what I'm wondering about load board rates. With the cost of fuel what it is and its effect on everything else, when do we see that reflected in those rates? I already know the answer, really--when drivers won't run for them.
There is no mystery to this. Shippers and brokers need to hire transportation (trucks) to move goods. The lower the price at which they can do so, the more money they get to keep for themselves. From experience they know that truckers will often take a reduced rate to take a load that takes them home or to a better freight area. Other truckers are happy to run at a lower rate because they are doing the volume thing ... the price is lower but the miles are greater so they take the load.
If the freight is not truly urgent, brokers have time to shop around for the many truckers who maintain that reasoning. These truckers are not as focused on profit margins as you are so they will agree that every mile is one mile long but that is not a fact that matters to them as much as their perceived need to get moving for whatever reason.
A while back I was sitting at a dinner table with a broker and other business people. He did not know I was an owner-operator when I asked him to tell me about his business. He described his business and then went on to say that if he has a load going from Georgia to California, he will pay $1.75 a mile. But if he can find a driver who will take it as a backhaul load, he can book the very same load for $1.35. "That's where the money is," he said, "backhaul freight.. That's why we specialize in backhaul freight."
They will pay a higher rate if no cheaper truck can be found, but before doing so, they will look for the cheaper truck.
I was working a non-Landstar load board the other day. A load of interest appeared and I called. The broker's price was too low and i told him so. He went on to tell me how I coiuld turn this load into a $5 a mile load by doubling up and getting better prices on that freight. He wanted me to take his cheap freight because with a tacked-on fantasy I could make more. The sad thing is, a lot of truckers would have bought into it and taken the load.
Brokers are not being unreasonable at all when they offer you a price that is below your costs. They are being shrewd. They know from experience that they can cover many loads that way. There is an army of truckers out there running at breakeven or worse and they can move freight as well as you or me.