Gas Cost vs Rates

[PreacherRich]

Been talking with a few drivers and fuel is now running about $1.00 more than it was about 6 months ago. At 16 mpg every dollar increase in fuel cost is 6.25 cents more per mile to run our vehicles. Are you all seeing that increase in your pay?

We are told that when we go to the grocery store and buy a box of Corn Flakes that the increase in costs is beacuse it costs more to deliver the product to the store and it costs more to get the products to the plant to manufacture. Well the shippers are paying more and somewhere along the line, the drivers are getting the short end of the stick.

I really want to know your thoughts of why this is. I have a couple theories. Many brokers are enjoying an increase in pay by not having to pass the increase onto the carriers. But that is not in itself the problem in the expediting industry. Part of the problem is carriers that are not willing to stand their ground and fight for a fair rate even if it means losing a percentage of the loads they would normally get. I know there are a lot of drivers out there that are taking cheap freight on a consistant basis and carriers are afraid of losing a load to one of these "Rate Bandits". So, bid board freight continues to be ran at completely stupid rates. Cargo Vans should make at least $1.00 a mile in this market and Sprinters should be at least at $1.10. These are minimums. I wont even touch what straights and t/t's should be making.

Do you know why brokers are keeping more $$$$ in their pocket and carriers aren't standing their ground? The simple truth is that we, the drivers allow it. We enable it and feed it. We get so afraid of not getting a load today that we will say ok to a cheap load. I am not excluding myself from this, I have done it too. I just came off a 10,000 paid mile month and my rate per mile was considerably less than the month before.

So what do we need to do? Basically, say no to cheap freight. Yeah I know, not always that simple because you may sit an extra day while the "Rate Bandit" takes the 500 mile run your company was bidding on. If the professionals in this industry don't stand up and say enough is enough the "Rate Bandits" will continue to dictate how much you and I get paid. If you run for multiple carriers determine how much you will run for and stick to it. If you run for a single carrier, yell scream, email, call, visit and if the carrier wont move in rate, change companies. For those major carriers that have their own customer base, they have the margins to adjust your rate on those loads. (maybe some have with fsc and the like) It may be a painful process but if you and I are willing to stand our ground, broker and carriers will know that we are serious and we can set the new normal and help one another be successful.

I know I may be dropped from a couple carriers on Monday when I call and tell them what my new minimum rates are, but I gotta do what I gotta do.

Be Blessed All!

 

[Monty]

FSC, last week, was .50 a mile .... of which I get 100% ...... find a carrier, or broker, that does not skim it. After all, THEY do not buy the fuel!

 

[paullud]

Well said. I think the brokers are holding onto the money because they can. There are also the companies that own a brokerage as well that funnel loads through it to skim extra money from drivers.

Sent from my ADR6400L using EO Forums

 

[blizzard2014]

FSC, last week, was .50 a mile .... of which I get 100% ...... find a carrier, or broker, that does not skim it. After all, THEY do not buy the fuel!

You have to work for a larger carrier to get a really good fuel surcharge. All of you guys out there running for the multiple carriers are getting the left-over loads and those are usually bid all inclusive which is just one rate and then you get a percentage off of that. There are too many people who are running cheap right now and it ain't gonna stop until these jokers go out of business because they can't afford to maintain their equipment. I can weather some of these lower rates because (4 months ago) I did over 5k worth of maintenance on my van - All I need is a new alternator and water pump and my van will have been completely overhauled. I am good to go on maintenance for at least 120k miles.

But that does not change the fact that the rates are way lower compared to last year. I hope people will start to ask for higher rates even though this will probably cost you the load. I recently called on a broker load from a large carrier and they wanted between 360 and 390 dollars to cover a 350 mile load going from Los Angeles up north. I would have charged them 500 dollars for that load in 2009 and I would have gotten it too. They told me they got it covered for the rate that they were asking.

I probably would have taken that load if it was in the direction of a better freight area, but to take it from Southern California to Northern California for a little over a dollar a mile would have been a bad business decision for me. Now imagine if I would have been offered that very same load through a carrier at 85 cents per mile. It's just bad right now as far as too many vans sitting around and everyone running for cheap!

 

[aquitted]

I wonder what would happen if every o/o including those not in expediting shut down for 3 days? Im not an expediter yet but still working on getting my ducks in a row to start later this month (Lord willing) I have 2 semi's that were leased to a local nationwide scrap yard for the past 5 years I was getting $55.00 per hour per truck I drove one and paid the other driver $15.00 per hour as a sub contractor he paid half of his workmans comp i paid the other half. I paid truck and liability ins and limited liability. We worked 10 hr days 5 to 6 days a week. After the 1st of the year they said all subcontractors had to cut their rate by 50% I said the only way I could afford to do that is if they paid for my fuel they agreed. This past thurs I got my check for the month and they took out for fuel when i questioned the matter they said Oh as of last month we quit paying for fuel but apolagised for not telling me sooner at that point I had to take my trucks and leave aleast my trucks are paid for the other sus said they had to stayin order to pay their notes. one guy has 5 off road articulating dump trucks he paid $90,00.00 apiece they cut his rate after he bought them. I keep my expenses low so i was able to bank a. good amount of my earnings so i can last a year if i had to

 

[skyraider]

Its really not the gas, the cheap freight is the problem. In 1966 in Pensacola , gas was 28 cents a gallon, now in 2011 , gas in Chattanooga is $3.69 a gallon. Its been 45 years gang. Makes ur wallet feel empty.

 

[chefdennis]

on most runs i am still making money on the FSC, IF, i slow down and drive at 63 mph and no faster then 65.....and yes my carrier payes 100% of the FSC to their O/O's....

 

[turritrans]

Brokers are not making all this money as assumed.

Rates are very slow to react to fuel price increases. Brokers are also fighting it out for these shipments as well. You win some and loose some just like owner operators.

The biggest cost factor and always will be is supply and demand for equipment when it gets busy.

Sprinter rates are down because the market is saturated with them.

Thats at least what we see going on out there.

 

[ATeam]

on most runs i am still making money on the FSC, IF, i slow down and drive at 63 mph and no faster then 65.....and yes my carrier payes 100% of the FSC to their O/O's....

With most carriers, the fuel surcharge is paid on loaded miles only. With some, the fuel surcharge may be paid on deadhead miles depending on the arrangement. But the thing to watch is your personal, non-dispatched miles; the miles to the grocery store, truck stops between loads, home, tourist destinations, etc. Nobody pays fuel surcharge on those miles.

So when the price of fuel goes up, yes you may do fine if your carrier pays a good fuel surcharge, but your personal fuel expense will go up, and with it your cost per mile to operate the truck. Personal short trips or an infrequent trip home do not get thought about as much as loaded and deadhead miles to a pick up do. But pay them some mind. As fuel goes up, so do your costs, regardless of what is happening with your fuel surcharge.

 

[chefdennis]

Lets see, the thread and OP was about "RATES" , discounted rates and the FSC paid to run the freight, none of those have anything todo with "personal miles driven"....But beyond that, If i worried about what it cost for my personal miles, id probably sell my personal car and i certainly wouldn't drive hundreds of miles to go dinner on a fri/sat night.. Those are just that, "personal" and have absolutely nothing to do with my business....oh and i don't worry about the wear and tear on the truck while driving personal miles either and i don't put money away for the next truck either....

 

[tumbleweeds]

With most carriers, the fuel surcharge is paid on loaded miles only. With some, the fuel surcharge may be paid on deadhead miles depending on the arrangement. But the thing to watch is your personal, non-dispatched miles; the miles to the grocery store, truck stops between loads, home, tourist destinations, etc. Nobody pays fuel surcharge on those miles.

So when the price of fuel goes up, yes you may do fine if your carrier pays a good fuel surcharge, but your personal fuel expense will go up, and with it your cost per mile to operate the truck. Personal short trips or an infrequent trip home do not get thought about as much as loaded and deadhead miles to a pick up do. But pay them some mind. As fuel goes up, so do your costs, regardless of what is happening with your fuel surcharge.

We are guilty of driving way too much on our own dime. If we decide to look at the nearest lake, find a great restaurant, go to Costco for something we could get at Walmart. But where is the fun in just watching the grass grow. As long as we can save enough each month, we go where we want. As the loads get slimmer and the offers are lower. We sit more. Like a coyote we adjust to our environment. If we can just slow down on each run, we can make a huge difference in our mpg's. We control what we can, and enjoy what we can afford.

 

[davekc]

I do agree that supply and demand are certainly in play. In more so on the smaller ones. But there are a few other things in play as well. Many nameless carriers are skimming the FSC. It is just a fact. Since it isn't regulated, they will keep doing it up until those loads start to sit on the shelf.
Bargain haulers are the others that simply drive down rates. It is amazing just how low some will go. They are driving everything imaginable and aren't regulated. Ushippers and or Shipping Wars people come to mind. Either way you look at it, they are still a form of competition.

 

[BobWolf]

THAT IS BULL CRAP!
Your customer will pay for a service that the L.T.L. company can't or won't deliver. I Know, I do it, all the time. I refuse to compete with "Some Guy" I point out that $2.50 pluss per mile is one hell of a deal because it is paying for a dedicated truck I drop what I'm doing, I put thier freight on my truck, I burn my fuel, the wear and tear is on my truck, mind, and body, I spend my time away from my family,and use all my skills and knowlege, and I deal with all the hassles. Do I realy have to list them? And the freight will be there when it is needed.
Not to mention "Some Guy who can hot shot for half the price" is probly not properly insured what if "Some Guy" rolls his truck will your freight be covered. I get what I want or I dont roll. PERIOD. I might loose the oportunity to make money because I dont work today however I refuse to take a total loss and pay for somone elsess delivery.

 

[BobWolf]

My point is other "Expiditing borkers" need to get with the program pay the drivers a real rate and if needed, CHARGE MORE so you can pay the drivers who actualy have more on the line than a laptop and cell phone.

 

[ATeam]

I get what I want or I dont roll. PERIOD. I might loose the oportunity to make money because I dont work today however I refuse to take a total loss and pay for somone elsess delivery.

With rare exceptions (very rare), Diane and I run that way too.

Just the other day an agent called wanting a bid on emergency freight going to Colorado where wild fires were burning and the freight was urgently needed. I gave him our price. He called back and said the customer decided to ship it LTL to get it there one day later. The shipper decided that freight was not so urgent after all, the agent reported.

Another agent called for a bid on a different load. I gave him our price. He said the customer would not go for a price that high. I said customers have to get used to paying higher prices because truckers have to make a profit to survive. The agent agreed but said every time he goes higher than a given price, he loses the load to Panther. I thanked him for thinking of us.

Then an agent called and said she would pay $2.50 a mile to the truck if we took a certain load for a certain customer. I said we were 400 miles away from the pick up. She said she would pay us $2.50 a mile to relocate and then $2.50 a mile to haul the freight much further than that. We agreed.

The shipper who got this truck and the equipment and team that comes with it was the one willing to pay. We remained available for the paying customers and let the others go.

How long can we afford to to that? How long will it be before rates collapse to the point where it will be better for us to exit the business than run at LTL rates? Ultimately, that's for the customers to decide.

The good news for us is that there are still enough good paying customers out there for Diane and I to earn a living (not just run miles) as expediters. How long that will last I cannot say. We have other options and falling into the ranks of the working poor is not one of them.

 

[Moot]

Rates are very slow to react to fuel price increases.

That's why carriers enact fuel surcharges. A fuel surcharge can be adjusted weekly to reflect any change in the price of fuel.

 

[davekc]

That becomes the million dollar question. If the truck gets say 2.50 per mile, then it could be assumed that the carrier is getting something in the $3.00 range. Those loads certainly do exist as we have ran them. But is there enough of them to support the trucks consistently that are out there?
Out of the freight I see, I don't think there is enough of it. If so, more carriers would be bidding or hauling at those numbers. That was my point.

 

[turritrans]

That's why carriers enact fuel surcharges. A fuel surcharge can be adjusted weekly to reflect any change in the price of fuel.

Shippers use more then one carrier.
Some carriers won't raise the rates and capture the business. If the shipper is still getting serviced for the old price, why pay more?

This is not always the norm, but it happens more then you think. Shippers at times don't think they should pay more for a .10 per gallon price increase.

It's not always that easy.., just raise the price. In some cases you can if you have a good relationship, sometimes you can't.

 

[chefdennis]

I get soooo tired of this "stuff"....if you can't afford to run at the rates that are there, then get out of the business...oh and am over $5000 dollars ahead of last yr with less miles and less loads..and last yr was my best in the business...but then again, Iam just a "Vacation Expediter"...can you all find another whine....

 

[Moot]

Shippers use more then one carrier.

I'm with you on this one.

Some carriers won't raise the rates and capture the business. If the shipper is still getting serviced for the old price, why pay more?

This is not always the norm, but it happens more then you think. Shippers at times don't think they should pay more for a .10 per gallon price increase.

It's not always that easy.., just raise the price. In some cases you can if you have a good relationship, sometimes you can't.

Now I'm lost.