I recently read a few threads about brokers and the prevailing thought or consensus is that the brokers dont make as much % as they once did. I think this is karhma, so good....
I know the carrier that I just resigned from hauls a lot of freight for $3+ per mile AND in the short time I was there, I hauled several loads for $5+ per mile. (often, the freight charge was on the bills) If they had one of their OO haul the load, the OO would still get the measly .91cpm. Where is the rest of the $ going?
example: We recently hauled a load of cell phones for Samsung. We loaded in Carrollton and went to Louisville. We loaded with 2 Schneider, CFI, 2 Landstars, and a USX. One of the Schneider was an OO that is buying his truck thru Schneider. Our loads freight charge was $4430. The Schneider OO still got his reg contract rate that he's been getting for years, maybe .89 or .91cpm I forgot which one he said. One of the Landstar OO was paid "over $3500" for the load. His words. He said he doesnt get many like this but he was in the right place at the right time.
So my question is... Where is the money going when a big carrier pays .91cpm but they get more than $5 per mile? Why would a driver want to lease to a carrier for pennies on the dollar when there are obvious better choices?
ALSO, why do we hear so much bitchen about haulin cheap freight, when its an OO leased to a BFI hauling for cheap? I worked for Covenant, and they dissolved their contracts with the agents bringing crap rates, and now they dont haul it and will let a truck sit for 2 days and not run just to find the good paying load.
If every BFI also has their own in house broker to hand out loads that they cant cover, that pays the BFI $3-5 per mile, but through their in house broker only pays crap cpm.... I say the BFI took all the complaining the OO were crying about to heart, and raised rates, but wont share the good rate.
please shed a little light on this for me
edit: im a company driver
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from what i'm hearing most drivers only see it as being a shipper, receiver, broker and driver.. but that's not really it in most cases.. the way it was explained to me by my broker/agent/dispatcher is that most brokers (excluding a slim few) dont have direct shippers, or receivers as customers, they either have one or the other. and some dont have either.. and instead they get contacted by a 3rd party logistics company.. and that's where the money really stops at.. most loads i get from my agent's customers pay $2+ but the ones she gets from the 3rd Party is usually short by half a dollar for the same exact load.
she said if her customer has lumber in NM and wants it to come to them in GA then she tells them how much it'll cost. They agree to the rate and she lets me know she's going to start routing me towards NM for that load. The rates she quotes are set by her brokerage. So before the rate ever gets to me there's already two hands that have taken a piece.. the brokerage, and my agent, i've seen the paper work and it's only 10 and 10 so i'm not complaining. it's the same deal if one of her customers calls and says they need a load to go somewhere.. situations like those is pretty much all in house..
but then there are the times she gets the mass emails from a 3PL saying there's 20 loads leaving VA needing to get to TX by the end of the week. She gets her quote from the 3PL (and no one really know what the bottom line really was). The 3PL might have cut the rate by 40% before she even gets it..
but she says what normally happens is that they cut the rate so much that they can't get it moved, and as time draws down they end up having to give up most/some/maybe all of that 40% they took, and if necessary maybe even more or risk loosing that customer.
Bottom line, if it's too cheap to haul, then don't..
I told her as long as i can keep an average of 1.90 at the end of the week including dead head then she has a dedicate carrier and can run me anywhere but Kentucky, Cali, and Colorado.
so... it sounds like rates are going in the right direction. but it matters where you come in on the load where YOUR rate will be... sounds like timing and patience can pay off.
if an OO can be in a position to cherry pick his loads, then he will have the best utilization and the better margin... sound about right?
Lease operators to the big carriers have been getting screwed for years - that's the reason they bother keeping leased trucks when they have their own. Either the load has some crazy wait time at one end or the other, it's in the middle of nowhere, or there's a pile of dead head they don't want to pay a company driver to cover.
Lease-to-own trucks are just a rip-off waiting for a victim, I feel bad for people that get into this because they make it sound like a step up from their company junk. I've talked to too many people that ran 3k+ miles a week, and would get settlements in the red. One friend was near paying his truck off and his leased company demanded he pick up a new truck and start all over - yep it was in his contract somewhere....
It shouldn't be legal for freight to have 3 or more parties involved, and you shouldn't be able to charge more than 10% of the rate if you're not moving the load yourself - but it's a "free market" thanks to de-reg. In short, if you can find good rates and runs you can stay in business - providing your truck treats you right (and vice versa).
Freight rates should be AT LEAST $3/mile due to the cost of fuel and truck maintenance on emissions equipped trucks. Honestly I think the big co's are just running the O/O's out, and then they'll jack the rates sky high when they have a monopoly (anyone remember the long distance phone bills back in the day?!).
It was explained to me by a 3PL owner that rates like these are from long term contracts that have automatic increases built-in, have been renewed without renegotiation and have clauses stating what percentage they can keep. At some point someone will say that it is time to look at things but clearly what you saw was not at the stage.
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