I saw a ton of vans rolling up and down I75 the past few days. If they aren't making money oh well...
the problem with rates ????
- Thread starter Dynamite 1
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purgoose10
Veteran Expediter
Decent for one but not the other. But if it was decent there would be to many trucks, everybody would want to do it.
Jefferson3000
Expert Expediter
Definitely the short answer. The freight market has changed. If you search any 3PL forums, the whole selling point is reducing cost, eliminating supply chain inefficiency, so that the customer needs to call for expedite LESS. The model of Just in Time freight being more cost effective than warehousing is gone.
However, I don't just think that rates are reduced merely because of the middle-man created by these logistics clearing houses. If the supply of available units were lower than the current demand, rates would continue to remain high.
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!
Thank you very much! Now i've got thst song stuck in my head.
greg, you stated we had the ability to bargain the loads after we sign the contract and how much latitude we give the carrier is up to us. would you explain that a little more in depth ?
you also mentioned that brokers and 3pl's supply access to most not all of the freight. i believe that most would agree, years back the % of freight coming directly from customers on the computer or phone calling carriers was a little more even than it is now and that worked fine. why is it better now to allow the brokers/3pl's to have what could be looked at as control of a majority of the freight, just another hand in the pot between customers and carriers. which all know that the more hands in the pot the less there is to go around. has the shift had an affect ? thanks !!
you also mentioned that brokers and 3pl's supply access to most not all of the freight. i believe that most would agree, years back the % of freight coming directly from customers on the computer or phone calling carriers was a little more even than it is now and that worked fine. why is it better now to allow the brokers/3pl's to have what could be looked at as control of a majority of the freight, just another hand in the pot between customers and carriers. which all know that the more hands in the pot the less there is to go around. has the shift had an affect ? thanks !!
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greg334
Veteran Expediter
It is really simple - no one forces anyone to sign with a company, they have the choice to either take the offer, negotiate the lease or walk away. The same goes for rates. Many are locked into the rate thing, others are on a percentage but in both cases they are subject to all kinds of variables.
For example FedEx (THIS IS AN EXAMPLE) will post a load to a van for 65 cents per mile even though the contracted rate is 75 cents a mile. No one has to take the offer but on the other hand FedEx can eat the loss and move the van while being conducive to the business relationship between the contractor and the company. Although they won't do eat a penny, the contractors are allowing FedEx the latitude to make that offer, not telling them when they get the contract that this won't work and FedEx is allowed the upper hand in the relationship. It comes down to the fact no one makes anyone sign the contract AND many don't get the idea this is a business.
It is called the free market.
I feel that the thing that is missed isn't the additional communications systems that we have become used to using but rather the laziness of the sales staff or a lack of. If you look at the system and the carriers, many of them don't even bother with sales outside of some simple cold calling to get into another system.
Why is it better?
Well it is better for a number of reasons.
It works for the customer.
It allows the customer to get serviced quicker with a lot more capacity.
It allows flexibility from the customer's point of view - they normally call for a van but now can have a truck on demand.
It allowed access to work that many would not get access to in the past.
It opens up the entire industry to competition and with that, it adjusts the rates that the customer pays to a level that is fair for all involved.
When you come down to it, the fact remains that if the system wasn't structured this way, the people who were taking the calls - the carrier - would not pass that difference onto the contractor because we as contractors in the majority don't treat our business as a business but as a partnership with the attitude that we will take what they give us.
ok, so we now understand that there are several things that can happen in the normal flux of things that will impact rates. with supply & demand being one of the deciding factors. supply & demand being related to our economic conditions. we also can negotiate our contracts and load offers before we accept either or simply walk away. which if an agreement could not be found could reduce the # of trucks and affect the supply of trucks. after we accept the contract we can negotiate the load and not accept anything that does not fit our business models, therefore this also could affect the carrier side and business owner side. both of which could affect the supply of trucks and maybe the # of carriers. we also know that the economy itself can have an affect on the supply of trucks and carriers. i think in simple terms that i explained it correctly if not chime in. this isnt my opinion i am just trying to simply sum up this part.
next subject on the list is the broker/3pl side of the story. this one i will state my personal feeling about, not an opinion. i dont like the broker/3pl side of the industry. by far there were not enough comments on this subject. i would like to hear more about how the rest of you feel about this side of the business.
last thing is, since by law carriers cant be a part of any type of collusion. what could carriers do to help the industry, not rates, just the general conditions between business owners and themselves. keep rates out of it since carriers can do nothing to better them.
just some more things to respond to that hopefully will continue to help others understand . i know some may be repetitive i am just trying to get a deeper explanation on some of the answers that have been posted. thanks in advance.
next subject on the list is the broker/3pl side of the story. this one i will state my personal feeling about, not an opinion. i dont like the broker/3pl side of the industry. by far there were not enough comments on this subject. i would like to hear more about how the rest of you feel about this side of the business.
last thing is, since by law carriers cant be a part of any type of collusion. what could carriers do to help the industry, not rates, just the general conditions between business owners and themselves. keep rates out of it since carriers can do nothing to better them.
just some more things to respond to that hopefully will continue to help others understand . i know some may be repetitive i am just trying to get a deeper explanation on some of the answers that have been posted. thanks in advance.
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greg334
Veteran Expediter
I would normally agree if all things being equal but they are not.
The supply issue is a multifaceted issue, having to do with more of an oversupply of drivers and owners causing a glut of capacity. IF one was to equalize the supply, it would start with limiting the carriers then their ability to lease owners as general haulers.
The problem with negotiation stems from the fact that many owners do not really treat this as a business, letting the carrier dictate terms, even minumal rates.
My personal feelings are simple, they give me access to the freight hence I can easily pick and choose the work and make money. The problem with this is like the IT industry and contracting houses, they are in it for the money and only the money but they also hold the customers.
Actually there is a lot of collusion going on behind the scenes. Just the partnership programs that some carrier have may be considered a collusion of sorts, damaging the contractor by setting unrealistic offers for the work then turning the work outside to another carrier on a agreed rate. I feel the biggest issue with collusion comes from internal billing of loads, which should be illegal and more abusive to the owners than people realize.
letzrockexpress
Veteran Expediter
That's it, plain and simple. If there are 10 trucks for every load, the price is going to go down...It ain't rocket surgery..