Brokers, Please explain the plummeting rates these days.

Yes, the market will dictate what I can get.
The same way in which they will tell me how much I have to pay for a used truck and trailer, for a labor hour at the shop near me, for the parking spot I rent etc. Thats, despite my best effort to get the best rate I wish for.
I am one of the many thousands of dry vans calling the same sources of freight. An average independent owner operator with a dry van relies on the spot market and in vain they may try to find something beyond.
It would take someone special or some bizarre geographical freight oasis to withstand the excessive supply of capacity on the spot market.
It does not mean that I don't believe in special, talented individuals, with better powers than I, so that they would get, for instance, $40 000 on 10 000 monthly miles, while I could only accomplish $25 000 in times like these.
But they are hardly any proof to refute the theory of market forces in trucking business.

So far, I can afford to stay more at home. I don't do 10 000 miles a month. I run maybe 7 000 total miles in the last two months and booked more selectively so the rates on average may look higher but that's at the expense of much lesser revenue. On the other hand, sitting at home, avoiding working for less by not working at all is hardly any proof that freight market forces don't bother me.

 

Lamborghini and Ferrari don't lower their rates. That may be true. I don't know if their sales volumes ever fluctuate at all.
I don't know what service within a general freight of the dry van segment can be even remotely comparable and so desired as those two products but in case of trucking, it can be easily compared to being a neighborhood barber. Yeah, princes and princesses will not use a barber but rather a hairdresser and they will pay dearly but good luck running a neighborhood barber shop and start charging your clientele $60 per hair cut while anybody else does it for $20.

 

This is hilarious. You should have paid better attention in your Ag Econ classes. You got just enough right to be dangerous, but not enough to indicate you actually know what you're talking about. I bet your professors hated you.

I think you are trying to state that supply in truckload market is price ELASTIC (you said inelastic, but I think you meant elastic), because you are right in that supply will begin to fall out of the market as prices drop, as truckload supply is ELASTIC. Traditionally, that will happen (assuming demand remains flat) until the market reaches equilibrium and demand = supply. The problem is that demand in the truckload market is very price INELASTIC, shippers need to move their product to market (or bring in raw materials, etc) and if demand outweighs supply will pay a premium to do so. But on the flip side, if prices drop, there isn't a surge in demand to help the market reach equilibrium quickly. The only meaningful way to drive the market towards equilibrium is by adding or removing capacity, which unfortunately means when demand drops like it recently has (due to the reasons discussed elsewhere in this thread), there needs to be less trucking companies competing for business to drive rates back up.

And before you respond with some anecdotal experience involving the 4 loads you haul a week that you think refutes what I'm saying, understand that every major credible data source (DAT, Freightwaves, Wall Street Journal, Journal of Commerce, etc) agrees with what I'm saying. No matter how good your customer relationships are or how good your service is, overtime you have to bow to the market just like the rest of us.

 

Jimmy, if you're going to do a dissertation, then you need to focus on the actually said, versus what you think he said. Quite plainly, your emotions started to cloud your perception well before you wrote about what you think he said. As an example, you said he said the price is elastic. Wrong, He said the costs of running a truck costs as much one way as the other. That is what he was referring to, and it's accurate. This now leaves you with egg on our face for either not comprehensively reading what he said, or should embarrass you for trying to twist what he said to your purposes. Not all of us went from 6th grade to being a trucker, and I dare say college isn't as good as it once was, either. If you're going to debate an issue, at least know what it is you're debating. In this instance, you didn't. I dare say this conversation is starting to get into religious war territory, rather than enlightening discussion and debate.

 

Well this just proves it Econ degrees are worthless.

all I know is if if shippers are competing for trucks then rates go up, if trucks are competing for shippers rates go down.

that’s basic business.

 

No, it shows what happens when mirco economics meets Marco economics.

"I set my rates independent of what others do!"
"No, the market dictates what you can get!"

Is the equivalent of:
"You got chocolate on my peanut butter"
"No, you got peanut butter on my chocolate!"

They're both right. Drivers are a market force, just like freight volume, operating costs, and the availability of strawberry pop tarts. Yes, a person can set their rate above the market average, but it's going to probably be within a standard deviation of the 20 day moving average.

 

Supply demand capacity blah blah blah blah..

The carriers set the rates. Nothing more nothing less. You brokers can scream supply and demand and capacity and any other b.s. to make you sound smarter then us dumb as truck drivers until ur blue inthe face... but at the end of the day, if your #### doesn't move off the dock the rate goes up... your #### moving off the dock is determined by the carrier and what price they will move it at.. if carriers are willing to work for cheap then the "market rate" is cheap.. the market rate is nothing more than the average rate of all carriers willing to haul your #### at a certain price for anyway of the week... if no carrier is willing to haul your #### for the rate you set then your junk will sit there and sit there and sit there until your raise your price...

So please save your b.s smart talk for the water cooler in the brokers office.

 

I literally quoted him in my post, he mentioned supply being price inelastic. Not sure how my post confused you so much, or made you think I was typing in some weird scholastic rage.

 

This is a great post and is dead on.

 

Funny enough, you just basically described the fundamentals of supply and demand using cave man talk. Hopefully this was helpful to some of the other occupants of this forum.