the problem with rates ????

[chefdennis]

I have only been doing this for 3 yrs so i can't speak to what the rates use to be in the "old days"...but the fact is that the rates are what they are at any given point in time. With the "current" state of the industry, I won't look for rates to go back to what they were yrs ago...it ain't goin to happen for all the reasons listed.

Now, from my prospective, I am running less miles for more money per mile on average then i was the day I started 3 yrs ago...the rates that are paid vary from week to week, month to month, so yea i have driven the same run more then once and been paid different amounts for that same run...

We all know that your "carrier" is the one that is controlling what you are getting paid and their expenses come 1st....so add that to the stated reasons already given and you will see that, until you qoute your own bids, the rates we as "contractors" get will be what they are at the time we get them....personally I think it is more about working with a good carrier....

 

[Dynamite 1]

i will restate, who is initially accepting the rate or bidding the rate for the load ? you cant raise the pay to the driver if you are bidding or accepting cheap rates. what i am trying to point out is there is a relevant process that takes place before the freight is offered to the driver.

 

[chefdennis]

And again, in most situations, nit all but most...the companies interest are the 1st consideration, then the O/O's....So the company makes the decision on what they are going to take as far as "cheap" freight..

 

[Turtle]

s&d definitely affects the amount of freight available but does it have to affect the price ?

Well, I don't know that I'd say it has to effect the price, but the end result is, yeah, it has to, unless there is price-fixing and collusion going on. That's how supply and demand works. The amount of freight available is the "demand" for shipments, and the supply of trucks to haul it is what determines the price, as long as the supply of trucks is greater than the demand for them. If the supply of trucks dwindles, then the demand for them would increase, and so would the line haul rate.

who is accepting the price initially and do they not play a role in the pricing

It depends on who "who" is, whether it's the customer or the carrier. Generally, the customer puts a load out there that they need shipping, and carriers will tell the customer what they will haul it for. The customer then accepts whatever price they like the best. In that case, it's the customer who is accepting the price initially, and yes, they absolutely play a role in the pricing. When the supply of trucks is greater than the shipper's demand for them, it's a shipper's market and they can set the price.

If you're talking about the carrier as being the "who" in whoever accepts the rate initially, then it's largely irrelevant as long as the customer has even one additional option to find a cheaper rate.

If there is a sudden rise in expedited shipments for whatever reason, there will be a slight increase in pricing because the demand becomes greater than the supply. It will be short lived, however, because additional supply will appear as if by magic, either because carriers begin to aggressively recruit additional units, or because the word has gotten out that rates are on the rise and everyone who can drive thinks they can get into this business and make easy money, and before too long the supply outstrips the demand, and used truck lots begin to fill up again with straights and vans.

There will always be that rock bottom rate which can sustain the industry. And there are two rock bottom rates. One, the rate at which balances the numbers of drivers who cannot make a living out here and thus leave carriers left and right. Carriers (and shippers) will pay just enough to keep people out here and keep the ones from leaving to a minimum. But the other rate is the rate at which carriers themselves are sustainable, taking into account the turnover ratio of their drivers. As long as carriers can recruit at a pace that keeps their fleet number relatively stable, they can sustain themselves even at the expense of high driver turnover. If they cannot keep up with recruiting, they will fail, just like individual drivers will fail because of decreased rates. When carriers fail, supply drops, demand and rates rise, and it all starts again until supply meets and exceeds demand.

It's a never-ending spiral down to cutting your costs to keep pace with the decreasing rates. There are always stoopid people out there who will take loads for stoopid money, even though they can't sustain themselves. As soon as they are gone, there are 10 to take their place. As long as carriers and customers can find stoopid people to haul loads for stoopid money, and carriers and customers will likely always be able to do that, then the rest of us simply have to cut costs where we can. Carriers can refuse cheap rates, but another carrier will simply step in and accept the cheap rate.

Other than price-fixing, collusion or regulation, there's really nothing that can be done. As a owner/operator, or even a carrier, you can take a stand, but you'll just get run over by some goober who needs lunch money.

 

[Moot]

what i am trying to point out is there is a relevant process that takes place before the freight is offered to the driver.

I guess it depends on your definition of a relevant process and your position in the food chain. From where I sit I see very little relevance with the process of a brokerage/logistics arm of a carrier securing loads then brokering these loads to that carrier.

 

[Dynamite 1]

good post turtle, im not voicing an opinion here. more so just asking what i hope are questions that will cause those of you with experience to explain.

you did bring to point another of these questions or should i say an idea. you mentioned a bottom price that keeps things, lets say flux. would it not be somewhat of a help if we could get that price up ? any ideas on how that could be done ?

 

[Turtle]

good post turtle, im not voicing an opinion here. more so just asking what i hope are questions that will cause those of you with experience to explain.

Thanks, and I know.

you did bring to point another of these questions or should i say an idea. you mentioned a bottom price that keeps things, lets say flux. would it not be somewhat of a help if we could get that price up ? any ideas on how that could be done ?

Regulation, price-fixing and/or collusion is the only way I know of. Carriers (and by extension, shippers) will only pay drivers juuuuust enough to keep them on the road to serve the will of the carrier. That's the meat and potatoes of the trucking industry. They'll pay you enough for you to make a living, keep the truck repaired and maintained, but little more than that. If the rate of pay drops below a certain level, too many drivers leave the business, carriers cannot maintain capacity and customers can't get stuff shipped. The rates of pay will not increase as long as that sustainable rock bottom rate is there, or unless capacity supply drops to sufficient levels.

It used to be expediting was a niche market, where the supply wasn't even close to the demand. Rates were very good then, far and above the rates for general trucking. But because too many people flapped their gums at loading docks, every auto worker with a set of van keys saw big and easy dollars waiting for them when they got laid off or retired. They don't neeeed the money, they've got a pension, so they'll take a load for stoopid money just because they're bored. The glut was on, and now the glut has reduced the rates to the point where we are in the same situation where carriers (and customers) have to only pay us enough to sustain their own supply chain.

So, the only way I know of to reduce rates would be to just start bumping off former auto workers who are now expediters.

 

[purgoose10]

What you are asking is impossible to answer without noting the 2 no no questions ,as they are the base to any answer regarding cheap rates .
here is a nice example from only this week.
right here on EO a respectful member stated this week that he will go broke hauling freight at Vans rate . i was laughing my melons off ,cause as i was reading those lines ,i was on the phone with an expediter telling me how happy he was ,making twice the expected income hauling a $ a mile freight in his St. truck .
another point i would like to make ,is that 'shout downs' and boycuts are actually working very well ,and all the times .
a good example is what we see this week in So.Cal.
after weeks of extremely cheap rates ,truckers are actually refusing to go there ,hopefully in the short run it will lead to rates increases .
regardless of how many are dipping into the loads pay,it will always ends up being a supply of available trucks Vs the demand for freight to be moved .

what drivers can do about this ?
2 things .
2: join OOIDA ,and demand them to continue the fight to regulate the brokerage industry .
this is one field in which OOIDA had success in the past ,and more needs to be done .
as you mention in your opening post, the float of brokerage was not around 10 years ago. we simply made it too EZ for everyone with a cellphone to become a broker, without any liability.
2: understand YOUR cost of moving the truck ,and donot pay your costumers to move their freight.

what carriers can do ?
simply : shrink the orientations class .
it used to be that carriers will pay well for exceptional service ,mainly coverage, but with the orientation class spilling newbies in an ever increasing numbers ,they simply float the markets with sitting trucks.
we are our own enemies.
one more thing ,is that Expedite will always have a revolving door. it is being effected by national employments ,and the ever increasing trucking regulation .as long as the Gov. will continue to over regulate the trucking industry ,more experienced truckers will vent into expedite seeking a compliance shelter.

I agree with everything said and the other question how can carriers work with the bidding. I think the Sales departments need to get off their duff and get in front of the customers more. Everything now is hands off and done wireless and over the phone and nothing personnel at all anymore. There are some old brokers or agents (whatever) that still operate that way and do it successfully. If they are honest sales people, not trying to out BS the other guy then it can be done and done successfully.

 

[moose]

Which brings us to one of my all times expediting questions : why work for a large carrier ?
here an example ,(i need to stop doing this) ,
a driver relocate to Atlanta ,it's a 7th place at an 11 a day service center .
but when he get's there ,there are actually 45 other trucks from 'partner carriers' competing for the same freight.
It's going to be a long weekend...
it used to be that high rates needed to pay for service .
that service is the 40%DH , the long whitings, trucks that are well located at areas where freight might comes out from .and to pay for the good o'l 'carriers deductions' ,that are actually needed to provide that same service.
in today world ,leasing on to a small well connected 'partner carrier' will allow the truck to move that same freight for way less ,which is the rezone the freight from Atlanta will be placed on the 'partner carriers' trucks.
or did i get it right?...

BTW, your Gregness ,
i was not recommending regulate the whole Brokerage industry .that's will be insane . i did said more regulations needed to impose liability .
in my last expediters expo ,i was approached by an Indiana broker . this clown did not had even an office yet he was claiming to hold many expediters accounts , and you know what ,i kind of believed him...spent some time talking to the guy. the conversation ended when i asked him if he posted a bond !
talk about free market , those guys could cheat out carriers of freight bills without ANY law keeping them from doing so ,and over and over under new names .
Well ,thanks to OOIDA they can't do this anymore now can they?,yet more still needs to be done.

 

[nightcreacher]

As long as there are people that are more interested in going homw t,than making money,there will be cheep rates.Do you realize how many trucks are out here ,meaningtractor trailer guys that are working for 1.20 a loadeed mile,including the fsc,or how many broker loads don't get fsc.
A story from my past
When I was a produce hauler ,you would deliver your dry freight in California,find a truckstop and go park.Early in the morning you would see the brokers drive around the parking lots tpo see how many reefer trucks were around.If there weren't many there ,that day the rates would be good,fill the lot with reefer ,rates would drop.
when the brokers selling dry freight new the produce lods payed well,the loads back to California sucked
I use to pick up Air freight ,JFK on friday,deliver monday and geta little over 4000 bucks,that was 1983,my produce would pay any where from 3500 to 6500 ,Ca to NY,just depended what you were hauling.I had an air ride trailer,did lots of strawberries,they paid the most.Now going back to the air freight.the companies that were hauling the Air freight,kept cutting the rate,making it difficult for the independent.
This is whats going on with Expedite
Robetrs Express never told anyone what we did. It was in our contract that we couldn't either.My first load to California paid $4320 for 2880 miles.Zebulon Nc to San Leandro CA.7000 lbs of Zantac.Was a tractor load,loaded on Monday,Delivered on Thursday,running solo.Tuesday loaded at the same place I unloaded,A C load of Pharmaceuticals going back to Zebulon,paid a little over 3100 bucks.
Today,with the competition in the expedite business,those same loads would not be paying as much,
Back in the 80's when fuel was cheep,in fact everything was cheep,you could operate a tractor for 65cent per mile.When I started at Roberts,Sunday night I'd load Euclid Ohio and deliver Linden New Jersey 1st thing Monday morning,reload a B load Monday afternoon in New Jersey' and take it To Flint Mi for tuesday morning.Tractor paid 1.50,B paid a C rate
I did this twicE A week,then some other expedite companies came in,and everyone was gewtting a discount.Roberts discount was 15% to any one that would ship 5 loads a week.TYHese companies learned that of they just ent out 2 loads and dry ran the rest,giving the JB Hunts of the world,they were still saving money,even paying the dry run pay
There is no way to stop cheep freight,it's supply and demand.As long as a shipper can call CH Robinson,or anyother Logistics company,they can get their freight hauled for what ever price they want to pay.
When Deregulation came in,prices went in the tubes.Now your property brokers and Logistics companies dictate the trucking future
See waht happens when you start turning your companies discounted loads down,or what happens when you make them pay what the load should pay.You to might hit a deer and find yourself driving for a better company

 

[Dynamite 1]

these have all brought up some very interesting thoughts. i wish there was an easy way to fix this problem. i do believe that most of the responses have alot to do with why rates are in the tank. some i dont think are as prevalent as others. it would be nice to see the masterful powers that oversee our industry let us have the same option of collective bargaining that others in the industry do. that however would be a step towards regulation.

with the word regulation brought up, do any of you think that some forms of regulation should be brought back and would they help ?

next question that comes to mind is what would happen if one wonderful day all expedite carriers would decide, on their own, to set minimum rates. what i mean by this is the carriers decide there not bidding or accepting any offers of freight below lets say 2.25 per mi.. i mean by what would happen, what would it do to the expedite industry ?

question 3, should the rates go back to a % only basis and a fsc be mandated on every load along with proof of said linehaul and fsc given to the driver at the shipper along with bol ? what impact if any would this have ?

last ? for now, should brokers, 3pl's and all other 3rd party hands, with the exception of crating or packing services used to ready freight for shipping, be taken out of the trucking industry all together ? what impact would this have ?

 

[greg334]

these have all brought up some very interesting thoughts. i wish there was an easy way to fix this problem.

Hate to bring this up again, there is never going to be a fix. IT is the free market and like it or not it works.

i do believe that most of the responses have alot to do with why rates are in the tank. some i dont think are as prevalent as others.

Which are those that are not prevalent?

it would be nice to see the masterful powers that oversee our industry let us have the same option of collective bargaining that others in the industry do. that however would be a step towards regulation.

What?

Seriously?

You as a business owner/contractor has the ability to bargain with your contract and each load you take after you agree to sign that contract. The amount of latitude you allow the company in order to gain the work is between you and the company, no one else.

It is the free market working.

By adding a layer of regulation to allow us access we already have is well not in our best interest as business people.

BUT with that said, how would it work?

What would allow us to have leverage over say the carrier?

Striking?

I think this delves into a bigger issue, are you willing to give up the right to be an independent contractor with a carrier for the security of having the government oversee and interfere with a private contract between you and the carrier?

with the word regulation brought up, do any of you think that some forms of regulation should be brought back and would they help ?

My point in my post is it would hurt the market, cause problems that are beyond the control of the individual and stop most of the evolution that has been taking place.

next question that comes to mind is what would happen if one wonderful day all expedite carriers would decide, on their own, to set minimum rates. what i mean by this is the carriers decide there not bidding or accepting any offers of freight below lets say 2.25 per mi.. i mean by what would happen, what would it do to the expedite industry ?

Well first things first. I don't think there is an expedite market that can be clearly defined any more. I think there is no qualifications to be an expedite carrier and much of the freight that is hauled under that banner isn't really expedite freight. I think the carriers are servicing a niche market - capacity on demand, just like other specialized companies like heavy haulers service their market.

THIS is important in defining what can be done.

The same goes for the number of authorities in trying to solve the problem, my sarcastic idea to limit the amount of carriers who can take expedited freight was used to illustrate the enormity of trying to get them all together to fix rates - which is illegal by the way. BUT nevertheless it can't be done. Too many independent levels of revenue to allow one rate to prevail.

If it can be done, then you have the issue of how the access to the freight and the lack of real sales being made which brokers and 3PLs fill that gap.

question 3, should the rates go back to a % only basis and a fsc be mandated on every load along with proof of said linehaul and fsc given to the driver at the shipper along with bol ? what impact if any would this have ?

I think it would confuse those who don't understand how it works but the FSC thing is another subject altogether which I think hurts the free market.

last ? for now, should brokers, 3pl's and all other 3rd party hands, with the exception of crating or packing services used to ready freight for shipping, be taken out of the trucking industry all together ? what impact would this have ?

NOPE, not at all. They serve a purpose for everyone by handling the access to the freight, not all of it but a lot of it. If we remove that element, then we are messing with the free market and that will hurt us.

The solution is to understand that the rates are relative to the individual, not the industry.

Other solutions would include understanding that there is competition within the carrier, within the market and within the industry - with this idea that this is an exclusive market being served by those who only advertise on EO is a fatal mistake.

This industry, like it or not is evolving. We are seeing the return of rail to move freight across the country, we are seeing the restrictions of drivers due to 'safety' concerns and medical issues, we are seeing carriers being more diversified than they ever were to capture revenue and we are seeing a saturation of labor resources that cause a number of abuses and problems like below market pricing competition.

 

[layoutshooter]

Rates are going down? Our rates continue to go UP!

 

[highway star]

next question that comes to mind is what would happen if one wonderful day all expedite carriers would decide, on their own, to set minimum rates. what i mean by this is the carriers decide there not bidding or accepting any offers of freight below lets say 2.25 per mi.. i mean by what would happen, what would it do to the expedite industry ?

That sounds like the collusion I mentioned before.

 

[Dynamite 1]

i didnt say they were not relavent but not as relavent. this is my opinion only. the one is, i dont think the market is as saturated with trucks as some others do. as i stated before, i am not saying these are my beliefs just simply questions and scenarios i am asking and putting forth trying to help others get a wide variety of opinions to issues that have been brought up before. i do not want anyone to think any of what i might ask is my person belief. just trying to think what other people might wonder by the responses made. not all have as much insight or experience as others.

 

[nightcreacher]

Rates are all over the place.ust depends where you are and where you want to go.The loads going to any place no one wants to ,the rates are better.My last 2 times in Laredo,I sat for couple days ,as the rates were to low for Tri State to accept them,as they have to pay me $1.53 plus fsc,so they are not about to take a load and loose money.
There are more truck load carriers doing expedite,and that is also keeping the rates low

 

[Dynamite 1]

highway, you are exactly rite. thats what they would call it. but more so the point was to get some responses as to if it did happen what would the effects be. purely hypothetical. would more educate as to why it wouldnt happen by the affect if it did.

 

[highway star]

C'mon, everyone join in...

"Imagine all the brokers, paying a decent rate..."

 

[Tennesseahawk]

C'mon, everyone join in...

"Imagine all the brokers, paying a decent rate..."

Imagine all the dispatchers not being so full of hate.
Imagine all the companies doing what they say. Hey heyayayay.
You may say I'm a dreamer, but I'm not the EO one.
I hope one day to get paid, so I can buy a truck that'll run.

Oh yeah! American Idol here I come!

 

[chefdennis]

Well my dispatchers aren't full of hate, and my carrier does what they say they will do..

I don't see low rates or a lack of miles...

We have post asking who is slow? Where are the loads? the problem with rates...People saying its a slow time of yr...

Well I just ran my numbers since going back in service 1/3...These are the numbers from fleetvision off my settlement sheets.

Loaded miles......5706
Deadhead miles....875

Pay per loaded mile....$1.14
Pay ALL miles.............$.99
Total Gross pay....$6529.19

And there is still a week to go..and I am in a lowly CV....

Not bragging, just showing the numbers...and questioning the questions as to miles and rates . I am running less miles and making more money...and I am by no means doing the best at Load 1....

So maybe you all need to be looking at yourselves and or your carriers....With this being the slow time of the yr, and the rates having no where to go but up since they are bad, I am really looking forward to making really good money this yr....

Thanks John E and load 1....