What is cheap freight??

[LDB]

Cheap freight has to be one of the biggest debates in our industry but exactly what is cheap freight? It's easy to see and say what it is on a large scale or when looking at someone else's operation. What is it when you look at yourself? How many of you even know your numbers to have a baseline for making a decision on what's cheap and what isn't?

I'm about to go into a van so I've been gathering information, data, numbers, etc. related to vans. I've put together a spreadsheet so I know what it costs per mile to run the van, provided my annual miles are what I am guesstimating. I've purposely estimated low because that means if my miles are greater my costs are lower than estimated. That said, there are fixed costs that do not change regardless of how many miles I run. They don't change if I'm OOS at home. It's a daily cost no matter where I am.

Let's look at cheap freight based on daily fixed costs. For grins we'll say the carrier pays 77cpm to a van at full rate. I'm not including fsc in any of this, just loaded cpm. Let's say the van is sitting in Podunk, Podunk being a fair to poor location for your carrier so you can fill in whatever actual place you want but it's somewhere way out there. It's Friday. You unloaded at 0800, grabbed a snack and got a 6 hour nap. At 1530 you get an offer of 500 miles ending in a good area and the lousy bums offer it at 60cpm! You very indignantly say NO to cheap freight. The day goes by as do Sat. and Sun. leaving you sitting in Podunk Monday still waiting.

My daily fixed costs amount to 7cpm on a 500 mile run so I could figure the 3 days sitting in Podunk as the equivalent of 21cpm on a 500 mile run. That means the load was paying a bonus of 4cpm to me compared to sitting 3 days in Podunk and then running 500 miles at full rate. Oh yeah, there is one other option to take a 500 mile reposition from the company at 18cpm. Granted, you can't know when that 60cpm offer comes over that you won't get another offer in an hour at full rate but you have to weigh that possibility against the 3 days at 0cpm.

So, looking at your own balance sheet only, what is cheap freight?

 

[fastman_1]

any load where I only break even on, I got a number and anything below that dosen't go on my truck.

 

[greg334]

So fastman if my cost is say 40 cents a mile and the load is 50 cents a mile, by your standards is it cheap freight?

 

[piper1]

As you said before Leo, it can depend on where you are and what your prospects are.

I do know...that at the end of the month when I tally it all up, to meet my goals I need to average 60 cents for all miles including DH. The difference I have maybe to some is I paid cash for my van, so my "payment" that I save for the next one is based on miles. I was doing that as a fixed cost but it really made it tough in some of the very lean months this year and would really cloud my judgement on how things were going. For tax purposes it is still a fixed depreciation.

 

[OntarioVanMan]

Funny thing about cheap freight ..it's only cheap to other people...

If a carrier offers what you consider cheap...it is your option too turn it down...

 

[LDB]

My main point is that full rate can be cheap freight if you wait long enough to get it.

 

[fastman_1]

So fastman if my cost is say 40 cents a mile and the load is 50 cents a mile, by your standards is it cheap freight?

for me that would be cheap, my break even number is 50 cents a mile, everybodys number is diffrent. so its up to you whats cheap or not. and I've never been offered less than 80 cents a mile

 

[TJ959]

Anything below .75 per mile in a van or Sprinter is cheap freight to me. I could afford to run for less and my break even was less but frankly I thought .80 was a fair rate for all concerned. It's not just whether or not you will break even or make a little money that's the real issue. What are you worth? You have invested your money in equipment and fuel and you are investing your time. How many of you will work for less than minimum wage out there in the world of the hourly wage and pay your employer for the job?

When you take a run for break even or less to get to a better location or just to get running, dispatch sees that and decides this guy will run real cheap so we'll bid real low. You have just established the level that you are worth. Hey guys TJ is in Davenport let's bid .50 on that load to Livonia. We'll be sure to get it and TJ will take anything. I have to wonder if relocating or sitting there and loosing a little money would't make you more profitable in the long run.

I'm not saying I have never taken cheap freight and I know we are not playing on a level playing field. I'm just saying there is more to it than break even or cheap rates. There is a point where expediting is a very poor investment of money and resources. We are in business to make a decent return on our investment. If we are business people then we need to think like business people. I can assure you most of the carriers are thinking that way.

 

[LDB]

If your company is very small and you always work with the same person your scenario may be correct. In a large company where one room full of people is selling/booking and another room full of different people are dispatching it isn't going to happen. They are just way too busy to remember which driver took which load a few weeks/months ago and bid low because of it.

That's still missing the main point that time is money. I'm talking about how saying no to a reduced rate load and sitting an extra day or three before getting a full rate load means the full rate load you finally took is really also a reduced rate load and you may have missed another load during that waiting time that you would have gotten had you said yes to the original reduced rate load.

 

[OntarioVanMan]

There are so many scenerios Leo...one could go on almost endlessly....in fact this thread and many like it illustrates this...

If it works for me and MY business model that is all that matters....

I am NOT concerned about what you or anyone else might need to make the pay grade..that is your business and you'll make the choice that is appropriate for yourself...

 

[chefdennis]

Fixed cost don't go away, that is true. BUT, each treat them in different situations. I don't even consider them for the most part, to me they are just the cost of doing business. I go out of service to go to a dirt sprint car race , a football game, or baseball game...i go out of service to just drive rt 66 from flagstaff to st louis, just because i want to. I certainly don't worry about my fixed cost when i am doing things for myself..which is more times them most here.

I have said before, I don't run my business as most here and what most consider an expense never sees my spreadsheet.

Yes the longer you sit , the less a full rate load becomes, but that is for each to decide. Now again that doesn't work for me...once i drop, dispatch has 36 hrs to find me a load and 72 hrs over a weekend on i am moving on my own dime....i don't sit for anyone or any reason, no matter where i am. it just doesn't happen for the most part, the exceptions being holiday weekends or if i drop late fri night or sat morning...then most of the time, dispatch has 24 hrs on from 12 am monday to find me a load or i am moving. I DH'd 106 miles this morning after dropping at 2000 last night, i left at 0830, after sleeping....

As to what is cheap freight, no i would not take $.50 a mile even if i was going to move on my own dime 20 minutes later...i won't do it period....and that is over what it takes to move my van....I know there are people that can't or wouldn't do that, but i will and do, don't believe me, stop by, ill show you the fleetvison turndown screen...its all there....

 

[OntarioVanMan]

As to what is cheap freight, no i would not take $.50 a mile even if i was going to move on my own dime 20 minutes later...i won't do it period....and that is over what it takes to move my van....I know there are people that can't or wouldn't do that, but i will and do, don't believe me, stop by, ill show you the fleetvison turndown screen...its all there....

For the general viewing public...

IF you were about to move on your own dime

WHY would you not take the .50 load?

 

[chefdennis]

OVM wrote:

For the general viewing public...

IF you were about to move on your own dime

WHY would you not take the .50 load?

For the same reason i continually bust on barry day in and day out on the web, because i can!!! Its all about making a point.. and besides, i am a "vacation expediter!"

PS: I never take paid moves either, they can keep there $.10 a mile.....i'll keep my dwell time and move ahead of whoever my be sitting where i am moving to...and i always know that ill be #1 in the area i am moving to before i move......

 

[greg334]

And the Saga continues.

The funny thing is I keep hearing this "cheap rates ruin our industry" and I counter that with "poor truckers do more damage".

I think it all can be summed up in this statement;

There are so many scenerios Leo...one could go on almost endlessly....in fact this thread and many like it illustrates this...

If it works for me and MY business model that is all that matters....

I am NOT concerned about what you or anyone else might need to make the pay grade..that is your business and you'll make the choice that is appropriate for yourself...

I keep trying to tell some who ask me what my success is based on that you have to have it together because this is a business, not a vacation (no offense chef) and unless you are prepared, don't complain about the unfairness that takes place in the industry.

 

[OntarioVanMan]

And the Saga continues.

The funny thing is I keep hearing this "cheap rates ruin our industry" and I counter that with "poor truckers do more damage".

I think it all can be summed up in this statement;



I keep trying to tell some who ask me what my success is based on that you have to have it together because this is a business, not a vacation (no offense chef) and unless you are prepared, don't complain about the unfairness that takes place in the industry.

Was that a compliment?

Fair? In this biz?
Doesn't exist and never has...It is, what it is...

 

[chefdennis]

LOL, no offense taken Greg. I don't do this as a "Vacation Expediter", i have just been referred to that by a few bolt drivers as well as being called the "Choosen son!".. It all goes back to me doing business my way and not what others consider the norm and running as hard as a can, when i chose to, and then taking time off when i want to and still making this business profitable for me and mine......but then again, we all have different wants and needs.....

I want to go to the Penn St / U of Mich game sat...so if i don't get a run taking me to the se mich or nw ohio area today, ill be going out of service in the morning and not working until monday....what i want to do comes before business, always has, always will...but when i work, i work to be profitable...but vaction too!! LOL!!! I will say i hadn't been up 23 along the Saginaw bay in along time, last night it was dark, this morning it was nice to see the area again and stop at 2 of the small "diners' and eat.... Just like Jack and Gracie enjoy Panera's and visit them as often as possible...we all do what we want and need to get by and make the best of life, while still being as profitable as we can....i guess thats is way we don't work as "employees" somewhere...its about the freedom to choose and do what works for us on our terms, in life and business....

Wow, that was a long drawn out bunch of b/s to say nothing !!! LOL!!!! Maybe i should have posted it in the "Soapbox!", Then Letz would have something to whine about....lol

 

[OntarioVanMan]

i have just been referred to that by a few bolt drivers as well as being called the "Choosen son!".. It all goes back to me doing business my way and not what others consider the norm and running as hard as a can, when i chose to, and then taking time off when i want to and still making this business profitable for me and mine......but then again, we all have different wants and needs.

Isn't that the way it is supposed to be done?

If I am not going to run hard and hustle...why bother to be out here at all?

We ARE Independent operators so I also take whatever time off I desire.

 

[RLENT]

For the general viewing public... IF you were about to move on your own dime WHY would you not take the .50 load?

To communicate a message: "I won't run for dirt cheap ....."

I generally prefer to try and be a resource for my carrier, and would like to service them for all I am worth. However, it is also important for me to occasionally let them know that I'm not a resource for being fed just dreck loads or being abused ..... just so they don't forget ..... case in point:

Earlier this year I dropped in Cumberland, MD on a Friday afternoon, about 200 miles from home. Just prior to dropping, a Load Planner called and said they had a perfect load .... I was only 70 miles from the pickup, and the load went around 500 or 600 miles - right past the house - with a Monday delivery. Sounded pretty good .... until we got to what it paid - 65 cpm.

I probably could have taken that load and ran it, and when I averaged it in with my other loads for the week (or month) my numbers for the week (or month) would have been alright. But I declined to run it - even though I already decided that I was going to deadhead home on my own dime, if I didn't get another load that afternoon - a fact I mentioned to the Load Planner when we were discussing pay.

At that point, she stated: "Well, you shouldn't be beating me up on pay (and I really wasn't) .... it will pay for your fuel home .... and then she made the fatal mistake by saying:

".... afterall beggars can't be choosers ..."

Oh really ? ....... beggars, eh ?

Is that right ?

It was actually a fairly innocent comment, without any real malice intended I suspect, on the part of someone who was having a bit of difficulty trying to get me take the load at the rate she was offering. But it pretty much killed things right then and there as far as getting me to take the load.

And it became fairly clear during the course of the conversation who was actually doing the begging ....

I really, really hate doing this sort of thing ..... I'd rather be a solution, rather than a problem ..... but sometimes you just have to say " sorry, but no ........"

Sadly, the individual mentioned above is no longer with the company .... which is too bad ..... as I sorta liked her.

In hindsight, I'm sure that I would have been better financially had I taken the load .... at least for that one trip

 

[Bruno]

We try to avg $1.20 for all miles. You have to remember that there is drivers pay to think about too. If your giving the drivers 20% each they only make .10 a mile on deadhead. That only comes out to be $6.00 an hour based on 60 mph. So many different ways to look at this. Each person has their own ways of doing things. If your making money and your happy that's great. What I call cheap freight is anything under a $1.00 a mile for all miles for a C, D, or E unit.

 

[TeamCaffee]

There is no such thing as cheap freight for us.

There are many things that come into play when you are offered a load. Keeping in touch with other drivers and your company will keep you in the loop on how freight is moving. What day of the week is it? Freight for us moves better the first of the week. Will this less then desirable load get us to a better area on a better day?

Moving on your own dime is expensive. Sometimes when the less then desirable load comes in you have to consider the time the load is offered. If we get a cheaper load offered in the morning, on Monday, and in a decent area we will pass. Offer us the same load Friday afternoon or on the weekend and we will look at the load differently. When the load is actually offered really comes into play on how seriously we will look at it.