This is the final in Shelly's 3 part series. She gives a nice shout out to EO'ers.
Read it:
Multis - The Good, The Bad and the Uglies - Both Sides
Read it:
Multis - The Good, The Bad and the Uglies - Both Sides
Part 3 Final: Should You run for Multiple Carriers?
- Thread starter Lawrence
- Start date
I don't see how rates are ever going to go back up to 1.10 per mile for cargo van drivers. I don't even think carriers are getting those kind of rates anymore for the entire load. I'm not going to pay 394 dollars a month for primary insurance just to make 85-90 cents per mile. Even if you are running your own carrier operation and making 1.10 to 1.20 per mile all in on every load. You will be making maybe 30 cents per mile more than a driver who is leased on with one carrier.
At least five cents per mile will go to factoring fees, another 8 cents per mile will go for your insurance premiums, and another 8 percent or so will go for the Sylectus fees and other yearly fees that go into keeping a carrier legal and operational. Then you have to add in the extra time (hours of sitting in front of a computer looking for loads) the dispatching, and all of the check calls, paperwork, billing, and invoicing your factoring company for an extra 10 cents per mile at best. Then you have to worry about whether or not a broker will skip payment and the factoring company charge-back your carrier oprtation and you go in the red.
If you are running for the multi-carrier model, you are always at risk of that company folding or not paying you for weeks and months on end. Why would anyone want take on all of that additional risk exposure, the high insurance costs, and the additional time and effort to track down loads just for an extra few cents per mile?
I don't see how you are progressing by having three companies bid on the same load for you? False competition and false capacity. I got out of the carrier business because I couldn't pay my drivers the amount of money that I feel they need to make. When I did pay them a dollar a mile or more, I was barely making 25 dollars a load, and that was barely covering my administrative costs.
I went low a couple of times to get my drivers moving, but I didn't feel right about it. Why would anyone run time sensitive, deliver direct, critical time service freight for .70 cents per mile? Why would you sell yourselves short? It's hard work to drive 1000k miles in 24 hours. You're putting your mental and physical well being on the line for peanuts. This job is customer service oriented. If shippers want this sort of service they need to pay for it. I just don't see it getting better anytime soon.
At least five cents per mile will go to factoring fees, another 8 cents per mile will go for your insurance premiums, and another 8 percent or so will go for the Sylectus fees and other yearly fees that go into keeping a carrier legal and operational. Then you have to add in the extra time (hours of sitting in front of a computer looking for loads) the dispatching, and all of the check calls, paperwork, billing, and invoicing your factoring company for an extra 10 cents per mile at best. Then you have to worry about whether or not a broker will skip payment and the factoring company charge-back your carrier oprtation and you go in the red.
If you are running for the multi-carrier model, you are always at risk of that company folding or not paying you for weeks and months on end. Why would anyone want take on all of that additional risk exposure, the high insurance costs, and the additional time and effort to track down loads just for an extra few cents per mile?
I don't see how you are progressing by having three companies bid on the same load for you? False competition and false capacity. I got out of the carrier business because I couldn't pay my drivers the amount of money that I feel they need to make. When I did pay them a dollar a mile or more, I was barely making 25 dollars a load, and that was barely covering my administrative costs.
I went low a couple of times to get my drivers moving, but I didn't feel right about it. Why would anyone run time sensitive, deliver direct, critical time service freight for .70 cents per mile? Why would you sell yourselves short? It's hard work to drive 1000k miles in 24 hours. You're putting your mental and physical well being on the line for peanuts. This job is customer service oriented. If shippers want this sort of service they need to pay for it. I just don't see it getting better anytime soon.
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What you write here is true but there is one business model you overlooked and that is the one I use. You see I work exclusively with shippers. No brokers , partner carrier or Sylectus crap for me. By doing it this way I can make over $2.00 a mile on every load. I have a small customer base within a 75 mile radius of home and deadhead home after every delivery. I don't look for loads, the shippers call me. I run old Dodge vans which are dependable and keep insurance costs down. I do use a factoring service which costs me 5% of what I charge the shipper. After I deduct this and all other costs including deadheading home after every run I still make 60% profit on every dollar I take in. Not everyone can expedite this way but for the ones like me that can it is a true gold mine.
No dissecting needed. Fastrod and a couple others are doing a good job of running independent. Nobody has a problem with those who are running at decent rates.
At one time Fastrod claimed he was getting 1.50 per mile, now it's over 2.00 per mile? Did the rates go up for you all of a sudden? That is a pretty good business model even with the deadhead, but I don't think Fastrod is getting 2.00 or more pre mile on cargo van freight, not unless the shipper is completely unaware of the other expediting companies. Now on some really short loads that can be the case because it's hard to find drivers to cover them, but I don't see cargo van freight paying that much for the longer loads. I might be wrong though because I have never worked with a direct shipper.
The trick is in their ability to get those decent all miles rates out of an older, cheaper van...cheap to maintain, cheap to purchase. If they were to go out and buy a new Sprinter, those rates would still keep them afloat, but not nearly as profitable.
When I started in 2006 I was charging a lot less than today. I raise my rate every year on Jan 1st and this year it went up more than normal. When I say $2.00 a mile that includes a hefty FSC. And yes these shippers know of companies like Panther and FedEx but I get the runs because I am a local guy and built a good reputation with them. These shippers trust me to deliver there freight safely and on time and that more than offsets my higher rate. As you have never worked directly with shippers I have never worked with brokers or Partner carriers but from what I read about brokers and partner carriers on here it's two completely different worlds.
That is the point that I've tried to make many, many times. Most of these multiple lease carriers are running brokered freight on the cheap...very, very cheap. These guys would do well to understand how much money is being siphoned off those rates before they get them. It's not so much the single carrier...or the size of the carrier. It's how much of their freight is direct shipper freight, the rates being paid and whether your on percentage or flat rate. A carrier with a lot of direct shipper freight that pays on percentage will have some really good rates, some not so good and some in between. The reason for the really good rates is not that they are charging more than the next carrier, it's because the rates aren't being skimmed through the brokering process. The not so good rates from these carriers come from when they have to resort to the bid boards to get a truck moving.