Is it the ECONOMY? Or are we to blame for the low rates?

[bubblehead]

Did we create our own delima? After refusing an offer for an ASAP pu and non confirmed del paying .62 per mile for a class 8 33k lb truck and than getting that "can you help us " phone call, I pondered...is it really the economy, or has such a rosey picture being painted about this business creating a glut in trucks and drivers bringing down the price? Who screamed GOLD! I had the opportunity to talk to a old timer from Robert's and he expressed his disgust with those that espouse to others how rich they are getting. What does the economy really have to do with freight pricing...especially expedite? If it costs X amount to operate your vehicle and pay yourself a living wage and your equipment is the norm for the service/industry, then why give it away? Perharps the grumpy Robert's guy is right! When the information about how lucrative this business can be got readily accessible, the waters got muddied. Like the California Gold Rush, have we contributed? Do we have a Sam Brannan in our midsts? Just wondering. "... present-day Coloma, Calif., Marshall noticed several flakes of metal in the American River. “I stepped into it, near the lower end, and there, upon the rock, about six inches beneath the surface of the water, I discovered the gold,” Marshall described.

He took it to his partner, Capt. John Sutter, who swore the mill laborers to secrecy. The word got out, and others soon arrived. Mormon businessman Sam Brannan is credited with spreading the news of the gold; after visiting the mill, he ran down the streets of San Francisco shouting, “Gold! Gold! Gold from the American River!” On This Day: President Polk Sparks the California Gold Rush

 

[jaminjim]

So, did you "help" them out?

 

[bubblehead]

So, did you "help" them out?

Actually, as I was trying to explain the operational cost of this type of vehicle, the dispatcher interuppted me and said "Thanks anyways". Go figure. I never got to finish explaining to her why we can't operate at .62 per mile...perhaps she was just too busy.

 

[jaminjim]

Either that, or she had five other trucks asking for that "load opportunity".

 

[volunteer 1]

I think greed has a lot to do with it. Yesterday a broker offered me a load at .70 for a cargo van 480 miles to Mississippi, I politely said no thanks. Ten minutes later a partner carrier called with the same load at $1.37. Yes we took it. Sixtyseven cents a mile was a bit too much to simply broker a load.
Maybe some carriers are playing the same games, that is blaming the economy. While we have not seen freight prices go up in the last year, they have not come down.

 

[TeamCaffee]

Very interesting post Bubblehead and one we have had many times with out OTR friends. Henry has said often that Expediting and Oversize did the exact same thing told the world about all the money to be made in their prospective fields. The same thing is happening right now in the DoD world, the art world, and the special handling world. The competition each year is more and more with each company holding their hand out and finding creative ways to bid the job cheaper.

The question is how much do we enjoy this job and how low will we go? The super sleepers and the OEM sleepers make the same per mile, the paid for truck and the brand new truck make the same per mile. When does the balance swing back to it is all about the freight and not the comfort of the drivers?

 

[bubblehead]

Very interesting post Bubblehead and one we have had many times with out OTR friends. Henry has said often that Expediting and Oversize did the exact same thing told the world about all the money to be made in their prospective fields. The same thing is happening right now in the DoD world, the art world, and the special handling world. The competition each year is more and more with each company holding their hand out and finding creative ways to bid the job cheaper.

The question is how much do we enjoy this job and how low will we go? The super sleepers and the OEM sleepers make the same per mile, the paid for truck and the brand new truck make the same per mile. When does the balance swing back to it is all about the freight and not the comfort of the drivers?

Agreed on most points Team as we have followed your posts closley in chosing and improving our truck for safety and comfort. However since we are not common carriers, I think comfort (to a point) actually becomes more of a safety issue.I emphasize "to a point" because as with anything, there is always excess. Your articles have saved us money and avoid pitfalls...and we intend to keep these savings instead of accepting lower/cheaper freight. As long as we can anyways. But I find myself more inclined to the thinking of the old Robert's guy..."everything was going along fine until some hollered GOLD!"

 

[greg334]

"Is it the economy or is it the company?" may be a better question.

I mean while we are looking at these low offers as an industry wide problem, with a company like FedEx, there is some internal competition going on. The same goes for another company, they have other divisions and in some ways they compete with each other.

A company like FedEx as an example should never ever have an idle truck with their volume.

I think we haven't seen the big drop in trucks we need to see rates increasing but on the other hand I don't see the carriers really pushing hard to sell their services as I have in the past.

I don't know about ol' Henry, he may understand that this field is not all dictated by external rates but rather what the company wants the contractor to see. Oversize loads are a different thing completely and that part of the industry has seen the same drop as reefer freight and dry van freight, a trend I think is atributed to the economy more than anything else.

For that matter, some of the dod work is out on the boards for qualified carriers to bid on but a lot of it never sees any open bids except to a few carriers. As mentioned, Art, High Value shipments and even other pricesless items are not things you see on UShip, hence the value and quality of the service matters more than the price. I know that the guys at American National Standards Institute who need that peice of test equipment valued at $20m shipped to Livermore labs isn't going to call around for the best price or broker it out but rather depend on a single source for the work to get done - which may be FedEx because of the brand. Art is a funny thing, they have people who actually arrange transportation of the items descretly and they bill the customer for all the services - this stuff never sees any boards at all.

 

[davekc]

I believe several years ago way too many drank the kool aid with their rose colored glasses on and failed to look at the BIGGER picture. There were a couple of posters that constantly beat the drum of new found riches of "you can be a millionaire" and "I make $3.00 a mile", I'm always predispatched", and "sell everything and become a paid tourist". Many advised against this only to be told by these folks that we were "just being negative". Somewhat of a vindication in what the veterans said then is now where we are currently at. The biggest percentage of those kool aid drinkers now have their trucks in a repo lot. Do I feel sorry for them? Not one bit if they were reading these forums. They were warned time and time and again.
As for rates, I am surprised the Fed is pitching loads at .62 per mile for a straight. The $1.11 mile average may be a reality but way below par. The fools running at that rate consistently are dying a slow death. I would run a load at $1.11, but there better be two on the truck. The reality is freight rates have not really dropped much. If you are told that, you are getting fed a line of bs. What has happened is there is less freight. In order for some carriers to maintain their profit margins, they skim off the top off each load.
And you guessed it, the owner operator is going to take the hit before the carrier does. That is the actual reality verses the kool aid and flowery rose colored garbage that some were pushing several years ago.
On the upside, there is good money to be had, but not in the traditional way that some had become accustomed.

 

[greg334]

Thank you Dave!

On the upside, there is good money to be had, but not in the traditional way that some had become accustomed.

But that's something many don't get. The non-traditional way may not be there for much of the audience, a few companies will not give them latitude to think outside that box and they end up with the average $1.11 +FSC in the end. Making a move may not be possible because other fleets may not want them.

 

[davekc]

To some degree you are right. Some get stuck in that bubble (much like Washington politics) and just don't see anything else. They can and some do eventually, but for many it was way too late.
As for whether one can move, those options exist. From a carrier change all the way to becoming the competition of the carrier.

 

[Tennesseahawk]

I think greed has a lot to do with it. Yesterday a broker offered me a load at .70 for a cargo van 480 miles to Mississippi, I politely said no thanks. Ten minutes later a partner carrier called with the same load at $1.37. Yes we took it. Sixtyseven cents a mile was a bit too much to simply broker a load.
Maybe some carriers are playing the same games, that is blaming the economy. While we have not seen freight prices go up in the last year, they have not come down.

I hope you called the first broker up and told him/her what you got "their" load for. They really need to understand we're not idiots out here.

 

[guido4475]

I think alot of us are to blame for these welfare rates.I mean, if we didnt accept them in the first place, then they wouldnt offer them to us, right? Kinda like a kid bugging mom and dad for a candy bar in a store, after so long they give up asking.Alot of us don't realize the power we have out here, but we don't apply it accordingly.What we need is "PUSH !! " If you know what I'm talking about.It's an Italian thing.

 

[davekc]

Yep...in a nutshell that is the whole philosophy of sending a load out to multiple trucks and seeing who is the dumbest to run it for pennies.

 

[xiggi]

I think greed has a lot to do with it. Yesterday a broker offered me a load at .70 for a cargo van 480 miles to Mississippi, I politely said no thanks. Ten minutes later a partner carrier called with the same load at $1.37. Yes we took it. Sixtyseven cents a mile was a bit too much to simply broker a load.
Maybe some carriers are playing the same games, that is blaming the economy. While we have not seen freight prices go up in the last year, they have not come down.

Is it possible the first broker was just one of several middlemen and seeing if they could cover the load quick. Maybe they were only offered a $1.00 or a 1.10 and did not have the 1.37 to work with the partner did?

 

[Humble2drive]

Yep...in a nutshell that is the whole philosophy of sending a load out to multiple trucks and seeing who is the dumbest to run it for pennies.

Therein lies the problem. Those who stand up and say NO to cheap freight go unnoticed as the next guy will grab it.

 

[pelicn]

Each truck out here should know what it takes to run their business. If truck A can run a load with a profit but truck B can not, is that truck A's problem? Competition is a good thing, and makes businessmen think outside the box or go under.
We have quite a few of those businessmen on this forum, listening to them will benefit us all.

 

[greg334]

Alot of us don't realize the power we have out here, but we don't apply it accordingly.

But Guido, it is nice to have the power but a lot don't.

For example, you are part of that company that sends out notices for a load all at once (not trying to beat them up but they make a near perfect example). You don't have much of a choice in how you get loads, the system is setup to make you think you don't have any choice and jump at every load you get. However you get an offer via phone this time and refuse the offer because it is too low, where does that offer go then?

To the truck sitting next to you?

Maybe.

But just maybe it is handed over to a 3PL or partner carrier to deal with, you can't control that can you?

The company nows sees the advantage of outsourcing it to someone else because you refused what they may consider a fair offer but you don't. Just maybe it will become part of a "two or more loads" sitting on a single truck that some of us can do. You as a contractor for that company can't take multiple loads.

But you refused the load and got dinged for a refusal which means you are now sit waiting for another load offer in a system that will send it to a lot of trucks at the same time. When your acceptance rate gets high enough, they start asking you what's the problem and you tell them "cheap freight" so they tell you "we have to service our customers, not you" so now you are faced with a performance issue.

 

[guido4475]

Greg, I see where you are coming from, but what I was trying to say was that if we all would stick together and say no to cheap freight, then maybe things would change.But they won't.Because we all can't stick together.Or some of us are too broke because of cheap freight rates to refuse cheap freight.Sounds funny, but it's sad and true.

When I am offered a load, I am interested in the total pay for all miles,loaded and empty combined. I have a figure I don't go under, and it seems to work out well.In 2008, while I was at Polly, that # was $1.25 for all miles while in a s/t, and it worked out well.I made a poopload of $ that year.

 

[TeamCaffee]

We each own our business and each of us have our own CPM so your cheap freight will make me money and my cheap freight will make someone else money.

Knowing my cost per mile will keep me in business and I do not need to know what your cost per mile is.

As business owners there is no sticking together we are all our here to make money.