Percent pay @ Landstar vs Schneider Choice

New to this site, not so new to this industry and all the various contracts and entities involved. If your O/Os are happy with 87% to 90% of 80%, of mostly brokered loads, more power to them. Although I don't know why someone would be thrilled with 72 cents of every dollar (gross rate - 20% broker fee - 10% carrier fee) and pay a weekly deduction for the carrier's responsibility of public liability and cargo insurance, when compared to 73.5 cents (direct freight - no broker - 26.5% carrier fee) plus fuel surcharge and any accessorials and no weekly deductions.
Just one of the mysteries of life, I guess!

 

I would have to believe LS is inbusiness to maximize profit. Brokering the "cheaper" freight thatthe BCO wouldn't take is profitable. So is brokering the higherdollar freight at a low amount.
Forgetting the FSC breakout at 100%and acc charges. LS like most larger carriers and many smaller onespay liability/cargo on a revenue % basis. Equipment not generatingmoney has no insurance cost. The 2% off the top covers insurance andthe discount you have to take on any government load.(all governmentloads and many large corporate accounts are paid through US Banks B2Bwhich has a 1% discount on the total invoice.)
A comparison:


1000.00 gross
BCO 73% of 98% 715.40 LS 264.60
Brokered 88% (agent makes nothing) 880.00 LS 120.00


Even with a FSC at 100% to BCO LS cutis far higher than if it is brokered. I find it very hard to believethat anyone at LS will leave that much on the table. If they need toincrease capacity in the short run it works. In the long run multiplyby the 10's of million's dollars they broker.

 

I don't consider your question to be "wise guy". However, yes, it can be confusing as heck. This is why I stress to people not to concentrate on the actual percentages, but the actual rates and revenues. Some people just can't wrap their minds around the fact that 65% of revenue CAN actually be more than 70% of revenue. It's like an Independent claiming to receive 100% of the revenue from brokered freight. Yes, they get 100% of what the Broker quoted, but that is not 100% of the freight bill that the customer is paying the Broker to move the load.

Many people, when looking at LS percentages, only figure the percentage of linehaul, forgetting the additional revenues paid to the BCO for that load. Kind of like going to the store to buy a product for a dollar and forgetting about the sales tax, in the total purchase price.

 

Did I mention something about zealots and contradictions?

You make assumptions about percentages. But guess you have. Because you don't know what my arrangement is with LS. Heck, you don't even know about any of the carrier programs LS is offering.

And you seem to think my drivers are only hauling for LS. Why would they do that?

 

Sure did, same as I mentioned about salesmen. I have nothing to sell, but you do!

What assumptions? It is a known fact that LS brokers most loads out in the 80% range. Your own O/Os posted their own percentage with you.

Unless you are very special, your arrangement with LS corporate is the same as other Broker Carriers. As to your arrangements with individual Agents, that can be very different.

Which carrier programs are you refering too? Quick Pay, Comdata fuel cards, Direct deposit, or one of the various other programs LS offers Broker Carriers?

Why would I think that? Of course they don't. Only about 75% of your freight is LS freight, as per one of your own posts.

 

autocar, you do a have a valid point. on the example you quoted above the 2 per cent ins surcharge is only on the linehaul, it is not part of the fuel surcharge or accessory charges.

also one thing to consider, when some guys talk about giving away 25 per cent to a carrier when you lease on its not accurate at all. if the load is a 1250 load , you wont get 1250 you will only get a percentage of that, at 10 per cent broker fee you would only get 1125, but more than likely a 20 percent off the top.

At mercer my fuel taxes are paid by mercer, i am not responsible for any shortage. however if i have a credit it is applied to my base plate for the next year. that is worth some value there. i have asked on loads what it would pay if brokered.

after having my own authority i myself see value in what i get from Mercer for their cut.

i see prices for insurance quoted on here that sometimes seem not to be what i paid for cargo ins. but then i didnt carry just bare minimum coverage to operate. at this point in my life i am quite satisified with the value mercer provides, all securement equip and tarps can be purchased at cost, tire discounts that are unreal, no fuel tax to pay, and a great group of folks in the office.

the value one gets from whatever lease he is in is dependent upon the individidual and what he desires, and what he is happy with. At one point in my life i thrived on running several trucks and lease operators, ordered all my o/s directly from the states everyday as all i hauled was oversize.

i also understand completely what autocar refers to when he says being at landstar is as close to having your own authority without having it, i feel the same way about mercer.

the fact is many guys get their own authority and are totally unprepared for drug test consortiums, keeping log books, on file, driver qual files, ifta filings etc tc. etc.

and you either get popped when audited the first time or if you hire a service for all that, you chip away at any money advantage is found from having your own authority.

i have been there and done that and got the t-shirts both ways, at this point in my old gray haired years i am just happy being leased on. i am doing over 2.00 a mile on alll miles even being leased.

i myself could give a rats behind what the company gets for a rate, as long as i get a rate i want and am happy and i make money. i dont care if what mercer gets off a load. right now i am running a power only , drop and hook, go out loaded , bring an empty back for 2.34 a mile to the truck round trip for the next 2 months, i could give a rats behind less what mercer is getting for the loads. no deadhead and all miles paid at 2.34 and not even using my trailer,, why would i worry.

but you can bet some guys would be on this deal and worry their butts off someone else was making a dollar.

 

Good analysis.
Of course the common perception amongst some LS BCOs is that LS makes more on freight brokered out than on freight hauled by BCOs.
You are correct about the profits. Got to keep the stockholders happy, without them there is no company.

 

Good post, you nailed it dead on. I've been the own authority route, myself, and it is definately not all it is cracked up to be, by some.

 

I understand, that there are accessorial and potential FSC IN ADDITION TO the 67%.

Does the Leasee get to SEE the actual contract/rate between LS & the consigner? Or are you just "taking the companies word for it"?

Is the FSC, at the CURRENT "prevailing rate" on EVERY LOAD - or just "100% of available FSC" (which goes back to 2 questions ago - do you get to SEE exactly what LS is paid by the party responsible for paying the freight bill).

I'm not intimating the LS "screws around" - well, not directly at least.

I understand they provide, what is essentially "no recourse factoring" and "quick pay". Along with advances, and payment of full balance due (without reserves). Which can end up being "worth" anywhere from 5-8%

Providing BMC-32 with 100K Cargo (which includes Non-TL/PD/BI) would cost me around $9K a year (from my location) - averaged out on 100K mile year, comes to about $.09 a mile. So my assumption would be, the largest %-age of the "LS up-front", is going to be insurance that the operator ends up "paying for" ANYWAY.

Does LS also pay for IFTA taxes (if any) - are these "passed back" or included in the base percentage.

But the REAL QUESTION - that I can't seem to find a definitive answer for, is really: what IS THE DIFFERENCE between a "Landstar O/O Lease Operator" and a "LandStar BCO"?

I have the "LandStar Brokerage" contract in front of me - so I know what that looks like. And while a little more "wordy" than the standard exchange of paperwork between Carrier & Broker in a "spot freight transaction", is essentially amounts to the same thing - and the rates there are the "standard flat rate" quoted - with apparently no accessorials (pgh 18 ).

Again, I'm not saying the LS thing isn't working for you, it obviously is. As you allude to - the gross revenue is still the bottom line for the operator. The curiosity still arises in the VALUE the arrangements provides FROM LS to the operator, to justify the "upfront hit" on percentage from the line haul rate. IN other words - WHAT ARE YOU GETTING for the difference between the 68% and the 98 (or 100).

It would be nice to see the "breakdown" of what's covered IN that.

I'm still balancing the options of MC versus leasing on. The compliance paperwork is not really that big of a deal - if you're keeping detailed trip-sheets, all the data that is required is there already. The drug testing consortium is available. And most of the other stuff, is of the nature of standard materials that you just have to keep in your filing cabinet (essentially - driver qualification files, maintenance records and PM schedules, etc., that the "conscientious O/O" would be maintaining ANYWAY). Unless you're getting pinged for logbooks or equipment violations, you're likely not going to hear much from the feds after your initial entrant audit.

I'm one of those types that has to know how "everything works", what ALL the "angles" are. Hence my curiosity in the "value" that LS provides, for the percentage it "takes back" from the O/O on freight - which is, essentially spot freight that it's agents/brokers are getting (from wherever they're getting it from).

Rick