Team Caffe has the exact attitude that carriers hope for, actually. The comparison to a restaurant or a retail purchase is a common one, as the percentage paid versus the profit margin of the item is irrelevant.
But to use that as a comparison in trucking only works when you compare it with a flat rate scale, since that's what you're doing when you buy a burger. If you want the burger, you'll pay for it, and could care less what kind of profit the restaurant makes. However, if the restaurant tells you that you will only have to pay 40% above their food cost, then you're gonna want to know what their actual food cost is. If you buy a $5 burger because the price looks OK, you're assuming that the restaurant paid a certain price. What happens if it turns out they got those burgers from a different supplier and only had to pay $1 per burger. Now you're paying significantly more than the stated 40% markup that was agreed to.
But, that's OK, because the restaurant created an ih-house company called Restaurant Distributors and it's that company that buys the $1 burgers and then resells them to the restaurant at an inflated price. You're then paying 40% above what the food cost is to the restaurant.
What about when companies start eliminating FSC charges to the customer and just increase the line haul, instead? There is no FSC for you to get 100% of, as it's now incorporated into the line haul. You get 61% of that, so in effect you're getting 61% of the FSC now. Or like with Panther, for example, who pays a flat rate per mile, who gives some customers a huge break on the FSC. They don't cut the line haul, cause that would cut into their money, so they cut the FSC. It's the contractors who are actually giving them the price break, not Panther.
So, rather than deal with all this, people look at the load and if they're happy with it they take it, not caring that they are being ripped to shreds by their carrier. Transparency is key. Insist upon it if you are paid a percentage. There's nothing illega about running line hauls through several companies to water it down before you get your cut, unless, that is, they tell you that it isn't done. They can do it, but they have to be honest and upfront about it, including how much is siphoned off. (that's one of the few things you can actually thank OOIDA for).
But to use that as a comparison in trucking only works when you compare it with a flat rate scale, since that's what you're doing when you buy a burger. If you want the burger, you'll pay for it, and could care less what kind of profit the restaurant makes. However, if the restaurant tells you that you will only have to pay 40% above their food cost, then you're gonna want to know what their actual food cost is. If you buy a $5 burger because the price looks OK, you're assuming that the restaurant paid a certain price. What happens if it turns out they got those burgers from a different supplier and only had to pay $1 per burger. Now you're paying significantly more than the stated 40% markup that was agreed to.
But, that's OK, because the restaurant created an ih-house company called Restaurant Distributors and it's that company that buys the $1 burgers and then resells them to the restaurant at an inflated price. You're then paying 40% above what the food cost is to the restaurant.
What about when companies start eliminating FSC charges to the customer and just increase the line haul, instead? There is no FSC for you to get 100% of, as it's now incorporated into the line haul. You get 61% of that, so in effect you're getting 61% of the FSC now. Or like with Panther, for example, who pays a flat rate per mile, who gives some customers a huge break on the FSC. They don't cut the line haul, cause that would cut into their money, so they cut the FSC. It's the contractors who are actually giving them the price break, not Panther.
So, rather than deal with all this, people look at the load and if they're happy with it they take it, not caring that they are being ripped to shreds by their carrier. Transparency is key. Insist upon it if you are paid a percentage. There's nothing illega about running line hauls through several companies to water it down before you get your cut, unless, that is, they tell you that it isn't done. They can do it, but they have to be honest and upfront about it, including how much is siphoned off. (that's one of the few things you can actually thank OOIDA for).
