Percentage Based or Flat Rate?
- Thread starter lenny52682
- Start date
I did, with this:
"A lot of percentage people come back out of south Texas on the cheap, whereas flat rate people generally come out at their contracted rate."
Back whenever it was, three, four years ago when the economy and especially the expedited rates went into the toilet, I ran loads for my contracted rate. At the time, in a van, it was 77 cents a mile plus FSC, which at the time totaled about 98 cents a mile, generally speaking. I know for a fact that many loads I ran were booked by the carrier at below 95 cents, many at 90 and lower. But I still got my contracted rate. If I were on a percentage, say, 70 percent, I'd have gotten considerably less than my flat rate contracted rate. That was a situation that lasted many months.
So, flat rates may very well be cheap, but it's all relative. Sometimes percentage is, in fact, cheaper.
The only motivation they had to move at a loss was for their established customers, some with contracts, most of whom they didn't want to lose when rates went back up. They offered many loads at reduced rates to prevent from moving at a loss, as well. I rarely took the reduced rate loads (like 65 and 70 cents plus FSC), but many did. But as I've noted in the past, the key there was knowing the system and working it to my advantage, staying away from the other vans and sticking to the fringes where they paid better, even at a loss, in order to satisfy that customer for the long term. Those drivers who wanted to stay in Midwest Hеll were at a distinct geographical and competitive disadvantage.
Of course, things are very different at my current carrier.
zorry
Veteran Expediter
Back in 2004, during a layoff from GM vehicle hauling, many of us went to a carrier that paid flat rate and the fuel tax.
3 cars/ $1.25 all miles
6/7 car. $1.65 all miles
Full car hauler I think was $2.15 all miles.
Loaded and empty. Full rate for your vehicle even if you hauled one car.
Two of us ran a Mi to Dallas. Delivered Fri. Called in and were told, nothing there, be back in Mi to load Mon.
The only time we sat was a required 24 hrs in Ca. That may have been to slow down some guys on logbooks. Or they didn't look for backhaul til the day we unloaded.
We all seemed to prosper.
3 cars/ $1.25 all miles
6/7 car. $1.65 all miles
Full car hauler I think was $2.15 all miles.
Loaded and empty. Full rate for your vehicle even if you hauled one car.
Two of us ran a Mi to Dallas. Delivered Fri. Called in and were told, nothing there, be back in Mi to load Mon.
The only time we sat was a required 24 hrs in Ca. That may have been to slow down some guys on logbooks. Or they didn't look for backhaul til the day we unloaded.
We all seemed to prosper.
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jaminjim
Veteran Expediter
Yeah. yeah I know but that is a far cry from saying:
He has everything included in there except for the kitchen sink. I know that a small portion of the household expenses can be deducted for tax purposes, but the remaining (vast) majority of those expenses along with health/dental insurance, retirement. That should be paid out of the drivers wages.rollincoal said:
jaminjim
Veteran Expediter
Then quite simply you were running for the wrong owner.
jaminjim
Veteran Expediter
Well no, not really. Because he is writing in such absolute terms, and breaking everything down to include health care, retirement, and household expenses, and drivers pay. it is/was logical for me to assume that he meant household expenses. After all he was in the middle of telling someone else that they didn't understand what constituted profit. Someone who then goes on to explain what profit consists of would surly say that a portion of his household expenses would be tax deductible.
jaminjim
Veteran Expediter
Yes but in one of your posts you also had included drivers pay. Drivers pay should pay for the non business related expenses, right?
I agree, it just means that you don't know what their rates are or what their expenses are, or their pay package is.
I have no experience with big trucks, but I think it's safe to say A trucking company is a trucking company be it big trucks or small...
That is the rub, at least for me. You don't know for a fact that all big truck carriers pay that. If you left out the word fact, and said most instead of all, I would agree with you.
You say that with reasonable certainty, but admit you know nothing about the rate or packages. You said that they are all along the same line, that is an incorrect assumption
That was agreed to very early in this thread.
There is that absolute thingy again.
Your success in your current endeavor seems to be the booking of your own loads for a fair price as much as it is for being paid on a percentage basis.
zorry
Veteran Expediter
When I incorporated, I was told the corp could pay ALL my utilities,and car expenses as part of my corp compensation package.
Profit is profit.
Good profit is very subjective. A guy with a paid off vehicle and able to live on $200 a week would say $250 is good profit.
A guy with a $3000 per month house payment would say that's an absurd concept.
You may make enough to cover your expenses,and you may be happy, all without making what I think is a good profit.
Actually any profit is good. More profit is better.
I always figured if I was among the most profitable in my group, I was doing as well as I could.
To improve, I would change to a more profitable group, and work hard to do my best.
Profit is profit.
Good profit is very subjective. A guy with a paid off vehicle and able to live on $200 a week would say $250 is good profit.
A guy with a $3000 per month house payment would say that's an absurd concept.
You may make enough to cover your expenses,and you may be happy, all without making what I think is a good profit.
Actually any profit is good. More profit is better.
I always figured if I was among the most profitable in my group, I was doing as well as I could.
To improve, I would change to a more profitable group, and work hard to do my best.
Yes and no. For a smaller carrier or one that primarily bids on loads your analysis is correct. With the larger carriers it can be different. As Turtle described, a carrier will move trucks out of an area at break-even or at a loss when other areas run out of trucks and there is a need. Some contracts require a carrier only truck so the carrier can't broker that freight out to say a partner carrier.
They also recover that loss from running that freight with their own trucks verses paying a potentially higher rate to a contract carrier just to cover the load.
Many other loads like DOD, HM, speciality and pharmaceutical loads fall in to that category. That is where you hear of a 1000 mile deadhead to cover a 100 mile load. All miles paid of course.
I think it depends on the carrier and what kind of customer base they are operating with.
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Yes and no. For a smaller carrier or one that primarily bids on loads your analysis is correct. With the larger carriers it can be different. As Turtle described, a carrier will move trucks out of an area at break-even or at a loss when other areas run out of trucks and there is a need. Some contracts require a carrier only truck so the carrier can't broker that freight out to say a partner carrier.
They also recover that loss from running that freight with their own trucks verses paying a potentially higher rate to a contract carrier just to cover the load.
Many other loads like DOD, HM, speciality and pharmaceutical loads fall in to that category. That is where you hear of a 1000 mile deadhead to cover a 100 mile load. All miles paid of course.
I think it depends on the carrier and what kind of customer base they are operating with.
I agree but I think unless you had an excessive deadhead a contract customers rate is going to be sufficient to move the truck at contracted rate without a loss.
We have been on both percentage and flat rate at FedEx. On percentage we make more per mile but run less miles. Surprisingly at the end of the month our net profit was about equal on both plans. We are now on percentage and like it better because we drive less to make the same amount.
In most cases yes unless an area is totally saturated. Which in turn produces cheap freight prices. Laredo and say Florida can be like that. One week very nice rates and the next you have loads going out for just fuel money. I believe the thinking is to move the needed trucks out at the rate they think they can move them verses paying a deadhead rate. Both could be a loss. Just a matter of one being a lesser loss.
BigCat
Expert Expediter
Now why do you say that? He wasn't stiffing me and certainly isn't the only owner with that contracted rate. He is a 2 truck owner not 5 or 10 so he really doesn't have room to negotiate because panther has a line of fresh out of the mill inexperienced drivers ready to go in a straight truck. Any other company he could probably negotiate with but his dealing with panther when I was there didn't pay off.
I see I see BigCat you let the Cat outta the Bag so to speak.
Skelator & Panther go together.
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jaminjim
Veteran Expediter
I'm not saying that he was doing you wrong, but if I can sign on with a fleet owner who is running for PII at $1.30 - or $1.40 and pay me the same percentage then I would run for him. Same goes for the Fleet owner. There are several Carriers that pay more than $1.10.
BigCat
Expert Expediter
Now I'm not saying they are a bad company but they could pay better rates. Especially since they wanted to keep us loaded with elite service loads.
Regardless i feel like a better gig now. Yeah I get dirty and have to do laundry twice a week now but it too me is worth it.
Regardless i feel like a better gig now. Yeah I get dirty and have to do laundry twice a week now but it too me is worth it.
If you getting a Percentage now and there you were getting Milage U know whos pocketing the money. The Company. Knowing what pays better like on the East Coast you want to go with Percentage. Long runs Milage may pay close but still not as much as percentage. Any Case if your milage you most likely be moving more than a percentage.
Apples and Oranges Apples get the Percentage Oranges get the Miles and keep moven.
