mercer transportation

True, but that's capitalism. The bigger the company, the crappier the service tends to be. It's hard to manage so many moving parts. Some customers are willing to pay more for better service, some just need the volume. Ultimately, competition drives down prices in any industry and now as easy as it is to communicate with anyone or any company in the world, there is more competition.

 

The barriers to entry to obtaining authority are so low that "everyone" is doing it. We all know the majority of single truck operators do NOT run their operation as a business, they are just paid a little more than a company driver. A revenue check to them is a paycheck and all of it is available immediately to spend on all the new toys. When something breaks they cry how it is everyone else's fault that they cant afford to fix their truck. I like how people lease to a carrier (such as Mercer) and when they have a major mechanical problem just expect the carrier to front them the money for the repairs. Especially when it happens their first week. There are multiple problems throughout the industry that likely will never be fixed to the satisfaction of those who truly run things in a businesslike way. Rates have become a constant race to the bottom, there is always someone willing to do a load for less.

Shippers play one carrier against another, they do it every day with our loads. Those CBD loads are usually cattle calls, go out to multiple carriers and load boards. Sure you can get dispatched on one, then they know its covered. but as calls come in they also "confirm" the first guy that will do it for less, then the next, and the next. Then at 4.50 pm you get a call your load has "cancelled" and you were dispatched on it at 10am and already went 150 miles toward the pickup point. Incompetent and unethical people abound in this industry, they always have. We get the majority of the blame for anything that goes wrong, and we get the scraps that are left over after everyone takes their cut of the rate. We have near zero bargaining power anymore. I'll gladly take the days before deregulation when rates were governed and a fair rate was paid to do this job.

I think I'm wearing out my soapbox this week .........

 

Bargaining power is a big issue. Another factor is that you are theoretically in a perfectly competitive market which is characterized by allowing other things, low barriers too entry. It also in a good representation of the invisible hand. As Ratts go above equilibrium more drivers enter the market driving rates down which in turn causes those less efficient drivers to exit the market, causing rates to go back up and on and on. It is always going toward equilibrium.

Price fixing by the government would cause a surplus of drivers and a shortage of freight. The only way to counteract that is for the government to also increase barriers to entry, which is good for those already Inn the market, but not so good for those wishing too enter the market and having a better chance of having more control of their destiny.

To correct the bargaining power problem, we need someone that would faithfully represent a majority of the independent operators that can control the supply of labor, short of like a union. This would not fix the barriers of entry though so again you would end up with a surplus of drivers and a shortage of freight. It would also take an organization the will not be greedy and make it hard for the shoppers and receivers tho remain competitive or to look for other alternatives.

 

sorry for the typos. This thing was being a pain to go back and correct things.

 

There is an indirect form of government price fixing, the training and workforce displacement subsidies most of the megas take maximum advantage of, with no real regard for the welfare of those they train. There are smaller companies that do use this wisely to help recruit and train long term drivers. There is no incentive for drivers to stay at most of these companies once they are trained, from the companies point of view. If they leave that opens a slot for another subsidized driver. So "qualified" drivers are churned out every day that are dumped into the industry and then leave. The thousands of dollars per driver just keep rolling in. There are many truck driving schools operating under similar benfit programs, federal money pays for a majority of the cost and there is no oversight of the quality of the training. Schools usually do the bare minimum to get someone a CDL and provide them no knowledge of the industry, including in many cases knowledge of hours of service and log books, which all would agree is something every driver needs to understand. That is not a required item for any CDL exam so it is ignored, drivers will learn that when they go to their company. So these systems put drivers into the industry with no real skills and companies are able to pay ridiculously low wages and offer customers rock bottom pricing that cannot be matched by someone paying a quality wage to a safe and experienced driver. This hardly makes for a true free market situation or a truly competitive situation.

Contrary to everyday news in this industry there is an excess of drivers not a shortage. I'm talking about the number of CDL holders not the number employed. We see people leaving the industry every day for reasons other than retirement. Experienced drivers leave many times due to increased regulation or other outside pressures, not because they do not want to do the job but it is just not as profitable, conducive to the lifestyle they want, or are just fed up with government oversight and the intrusive micro-managing of their day to day existence.

Company drivers are not covered under the Fair Labor Standards Act and are subject to the abuse of the pay system particularly for OTR drivers where the majority of entry level drivers come into the industry, and where the majority of the carriers receive the subsidies for training drivers.

I do not see freight sitting on docks waiting to get moved. I do see hundreds of trucks parked at mega carrier lots. The driver shortage conundrum is that the mega with 15,000 trucks only has 10,000 drivers, thus with all those empty seats the industry must have a shortage. The fact that they are the least desirable companies to driver for and concentrate on churning drivers through their training system and replacing them never gets taken into account in the reporting.

If any of us were to run out and buy fifty more trucks this week, and by the end of the week did not have drivers in every one of them, then we too could cry there is a driver shortage.

Price fixing, a.k.a. the former regulated industry as all too few of us can remember, never resulted in an excess of drivers and a shortage of freight. It did allow companies to pay fair wages and operate at a profit. The owner operators made a good living and were able to maintain their equipment without the worries of "one or two more trips and I'll see if I can afford to get that fixed." If something broke you dropped the truck at your shop, or the dealer, price really didn't matter. You said "call me when it's done" and took off for a few days.

The other issue is brokers, or as many now call themselves 3PL's. In the regulated days and for about 10 years afterward there were a very limited number of brokers. Now almost every motor carrier also has broker authority and the 3PL's increasingly control the freight. They too have their megas, CH Robinison, XPO Logistics, TQL, and Coyote Logistics are the biggest. They offer some of the lowest rates and least desirably freight to be found.

Today's owner operators as I stated prior, largely do not operate as business but as company drivers that have a truck payment. Most keep no books, have no idea of their cost of operation, and will take loads form these cheap brokers in an attempt to make the next truck payment. There is a prevalent more miles mentality, look at most recruiting for drivers, they talk in terms of how many thousands of miles a we they say you (might) will average. Many of us here think in terms of how few miles we can run a week and get the most amount of revenue.

Between unscrupulous carriers and brokers, and a driver force largely ignorant of any true business knowledge, aided by almost never using GAAP (Generally Accepted Accounting Principles), the owner operator model is rapidly declining not so much from the forces of the megas, brokers and the government, but from within. There is almost no source of business education for drivers, and in my opinion most would not opt for it even if it was free. Without the knowledge of how to truly run their truck as a business, which the IRS certainly expects to see in the record-keeping and reporting, most O-O struggle week to week to survive, one breakdown or emergency away from going under. Those that operate with business savvy and an eye toward maximizing revenue and decreasing costs can still thrive as they have shown through the market's downturns of the last few years.

 

All these long post make me sad lol

 

Sorry Pete. I tend to get carried away.

Interesting. Economic models typically only look at two or three factors and hold all others equal. How hard was it to become an O/O back then?

Another factor that you mentioned was that you guys took more time off. That in and of itself would reduce the quantity of labor supplied decreasing the gap (shortage of freight/surplus of labor) between the quantity of labor supplied and the quantity of labor demanded. The law of diminishing returns applies. After you guys made enough to pay the bills and live comfortably, the incentive to carry another load would have to be greater. At that point, your time becomes more valuable than increased revenue. Just a thought.

 

they should have. They are very clear about no alcohol in the premises.

 

So talked to IT today to try and fix my app.. My Mercer app shows a load from Last year on Aug Still under my dispatch.. IT doesn't know why they keep saying my cord needs to clear it but he told me to talk to Contractor relations they sent me to IT.. Its a weird bug lol

 

Before people blame the big carriers for low rates, they should look at the rate those big carriers are charging.