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Expediter Wannabees and Newbies: Note These Quotes
- Thread starter ATeam
- Start date
One thing for certain with new folks trying to come in, it is a much tougher gig than years past.
Equipment has more than doubled and is less reliable, fuel costs are basically doubled, quality repair work is spotty at best and the list goes on. That is even assuming you have the capital to start. The biggest issue is many of the rates are basically the same and or less for many which translates into slow financial hemorrhaging.
In good conscience, I don't know that I could advise a new person to buy a vehicle and just jump in based on the current conditions.
Equipment has more than doubled and is less reliable, fuel costs are basically doubled, quality repair work is spotty at best and the list goes on. That is even assuming you have the capital to start. The biggest issue is many of the rates are basically the same and or less for many which translates into slow financial hemorrhaging.
In good conscience, I don't know that I could advise a new person to buy a vehicle and just jump in based on the current conditions.
I can't say for sure that Diane and I will not buy a new truck in the future but I can say that there is no way we would attempt to replace our present truck (full-featured, $251,000 new in 2006) in today's market. I would not dare finance a truck of any kind today.
It seems that the Great Recession taught shippers and carriers very well how to squeeze the money out of the trucks. While the recession is over, the lessons learned seem to have stuck. Owner-Operators are squeaking by while carriers post high earnings.
We have been waiting patiently for the alleged driver shortage and capacity crunch to affect the market in a way that will raise the money paid to the trucks but nothing much has happened on that front.
We're holding our own and maintaining price discipline, but our competition today consists of drivers who are circling the bowl without knowing it. They don't keep track of their numbers. Their money gets tight. As the slow bleed continues, they become increasingly desperate and agree to lower and lower paying freight. They skimp on their truck maintenance and either get driven out of the business by a major breakdown or eventually leave the business for other reasons; while the shippers and carriers laugh all the way to the bank and recruit and exploit the next bunch of financially ignorant suckers to replace those that just left.
Not all carriers take this approach toward their drivers but enough do that the rates get depressed below levels at which it is possible to operate a truck of any kind in the black.
As I said, Diane and I are holding our own by maintaining price discipline. We can do that because there are still enough loads to be found that pay well, and because we are debt free and have other sources of revenue. To a point, we would rather pay the cost to sit. Better to do other productive things with our time than to spend that time running at breakeven or money-losing rates.
Different from the past, it is clear from the offers and bid requests we receive these days that there are a whole bunch of trucks out there, with a whole bunch of carriers, that are running at money-losing or breakeven rates.
When shippers and carriers are willing to bed zombie expediters, it's hard to get asked to the prom.
Does it still make sense to get into expediting? Perhaps. But, more than ever, you better do your homework and do it well. The margin for error that existed in the past does not exist today.
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You make a lot of valid points and made the steps early to endure some of the current madness. As a fleet owner, we experience kind of the same thing with past owner operators now driving for us. Every team that was a O/O in past years says they make out better than they ever did running their own truck. Certainly a reason for that. Credit and costs are the big ones. As a fleet owner we can insulate ourselves to some degree just because of size. Spreading costs over many trucks including better purchasing power that must be leveraged when possible. Size also to some degree can provide better carrier rates all the way to insurance rates.
When taking those numbers and discounts out, it is easy to see how some are getting squeezed with some of the rates they run at. It baffles the mind actually.
I do agree, really understand what you are jumping into.
When taking those numbers and discounts out, it is easy to see how some are getting squeezed with some of the rates they run at. It baffles the mind actually.
I do agree, really understand what you are jumping into.
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Phil and Dave;
Great points. Bottom line is most important, whether a new Owner-operator, or a start up company. Know your expenses, learn to manage them. Be a businessman first, and a driver second.
Great points. Bottom line is most important, whether a new Owner-operator, or a start up company. Know your expenses, learn to manage them. Be a businessman first, and a driver second.
Con Way rocked Taurus wagons? Cool
Scott you have keen eyes! Although Con-Way did offer an A rate, cargo wagon, I don't believe they ever had any leased on. I never saw one.
The rate sheet is hard to read and since Scott didn't translate the rates for those of us with less than perfect eyesight, I will.
B Unit Cargo Van
Minimum charge $93
1-99 miles $1.85/mi.
100-199 miles $1.75/mi.
200-299 miles $1.69/mi.
300+ miles $1.67/mi.
C Unit 12" Straight Truck
Minimum Charge $125
1-99 miles $2.76/mi.
100-199 miles $2.53/mi.
200-299 miles $2.30/mi.
300+ miles $2.09/mi.
D Unit 20' Straight Truck
Minimum Charge $171
1-99 miles $3.08/mi.
100-199 miles $2.79/mi.
200-299 miles $2.55/mi.
300+ miles $2.28/mi.
E Unit Tractor/Trailer
Minimum Charge $321
1-99 miles $4.27/mi.
100-199 miles $3.97/mi.
200-299 miles $3.55/mi.
300+ miles $3.03/mi.
A few years later the rates were increased as follows. I started out at 57½ percent of the published tariff and after 5 years got a raise to 59 percent.
B Unit Cargo Van
Minimum charge $127
1-99 miles $1.95/mi.
100-199 miles $1.83/mi.
200-299 miles $1.75/mi.
300+ miles $1.73/mi.
C Unit 14" Straight Truck
Minimum Charge $169
1-99 miles $2.97/mi.
100-199 miles $2.73/mi.
200-299 miles $2.42/mi.
300+ miles $2.21/mi.
D Unit 20' Straight Truck
Minimum Charge $225
1-99 miles $3.32/mi.
100-199 miles $2.99/mi.
200-299 miles $2.69/mi.
300+ miles $2.39/mi.
E Unit Tractor/Trailer
Minimum Charge $321
1-99 miles $4.27/mi.
100-199 miles $3.97/mi.
200-299 miles $3.55/mi.
300+ miles $3.03/mi.
Before Con-Way went to a flat rate of .80/mi. I was making a $1.02/mi on loads over 300 miles. Currently I am making .77/mile. Today I turned down 2 loads, one at .72/mi. and the other was .68/mi.
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B Unit Cargo Van
Minimum charge $127
1-99 miles $1.95/mi.
100-199 miles $1.83/mi.
200-299 miles $1.75/mi.
300+ miles $1.73/mi.
C Unit 14" Straight Truck
Minimum Charge $169
1-99 miles $2.97/mi.
100-199 miles $2.73/mi.
200-299 miles $2.42/mi.
300+ miles $2.21/mi.
D Unit 20' Straight Truck
Minimum Charge $225
1-99 miles $3.32/mi.
100-199 miles $2.99/mi.
200-299 miles $2.69/mi.
300+ miles $2.39/mi.
E Unit Tractor/Trailer
Minimum Charge $321
1-99 miles $4.27/mi.
100-199 miles $3.97/mi.
200-299 miles $3.55/mi.
300+ miles $3.03/mi.
Before Con-Way went to a flat rate of .80/mi. I was making a $1.02/mi on loads over 300 miles. Currently I am making .77/mile. Today I turned down 2 loads, one at .72/mi. and the other was .68/mi.
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So, to be fair and balanced, it is true that rates have gone down in recent years and that expenses have skyrocketed, making it increasingly difficult to run a profitable, one-truck expediting business.
It is also true that by comparing 1997 Con-Way NOW rates to present-day rates (and comparing rates only), straight-truck pay is higher today than it was in 1997. (Con-Way NOW ceased to exist when it was sold to Panther.)
Diane and I run a 16-foot truck, which would put us in the 12-foot category on the Con-Way chart. For a 500 mile run, the customer would be charged $2.09 per mile. Using the 62 percent of the gross figure we get today, that would be $1.30 paid to the truck all in. While there are drivers out there who will run for that rate, Diane and I will not. With rare exceptions, we require more than that to commit our truck to a load.
But comparing rates in this historicly interesting way does not negate what was said in the quotes in the post that started this thread. You can no longer enter this business and prosper from it if you do not stay continually focused on your business and run it as one. The easy money has been wrung out of the business and the margin for error is gone.
It is also true that by comparing 1997 Con-Way NOW rates to present-day rates (and comparing rates only), straight-truck pay is higher today than it was in 1997. (Con-Way NOW ceased to exist when it was sold to Panther.)
Diane and I run a 16-foot truck, which would put us in the 12-foot category on the Con-Way chart. For a 500 mile run, the customer would be charged $2.09 per mile. Using the 62 percent of the gross figure we get today, that would be $1.30 paid to the truck all in. While there are drivers out there who will run for that rate, Diane and I will not. With rare exceptions, we require more than that to commit our truck to a load.
But comparing rates in this historicly interesting way does not negate what was said in the quotes in the post that started this thread. You can no longer enter this business and prosper from it if you do not stay continually focused on your business and run it as one. The easy money has been wrung out of the business and the margin for error is gone.
Moot, to clarify..that was the price paid to the carrier, correct? What % of that price went to the o/o ?
oops...beat me to it
Yeah, I should have stated that in the first post.
My mistake! I didn't realize along with the rate change in post 9, the C Unit definition changed from 12' to 14'. Please quit with that "all in" crap! Sorry to unload on you. I believe this is the first time I've seen you use this term, but I'm sick of that term. It is way over used here and confusing. This isn't some televised poker tournament. The rates I quoted are the base rates per mile, that were charged to the customer, excluding f.s.c. and any other charges like lift gate, inside delivery, detention, etc.
We can do an apples-to-apples comparison off your chart if we assume that a hypothetical load had no accessorials. I was under the impression that no fuel surchages were paid in 1997 because fuel costs were not the issue they are today.
I did my comparisson including fuel surcharge in the present and assuming there was no fuel surcharge in 1997. If there was a fuel surcharge in 1997, that would change the comparisson such that rates paid then may very well be higher than rates paid now.
My comment about carriers was driven by earnings reports posted by big, publicly-held companies in which strong profits are stated in recent quarters.
Con-Way Now had no fuel surcharge program in place in 1997. Sometime shortly after the turn of the century it was implemented along with the second rate increase. Con-Way's 3 LTL carriers had fuel surcharges as far back as the late 80's or early 90's as did most LTL carriers.
In 1997 I was making .96/mile on loads over 300 miles, more on the shorter loads and there was no fsc. Today my rate per mile is .77 and the current structured fsc is .26 or a grand total of $1.03/mile. Wow, .07/mile more over 15 years. I should stop whining. Unfortunately the cost of living is outpacing my raise.
In 2003 I was making $1.02/mile and getting an fsc that varied with the customer. Now I feel like crying!