Ready, Set,....Fail

Ok this bears a mention in this forum.
While home this past week I finally got to sit down with a shipper that we never seem to be in town on the same day. He has expressed that he is unhappy with the local guy he is using. Always breaking down, late for appointments and has started using a factoring company that calls every other day looking for payment.
After laying out my business and giving local references we get down to rate. Of course I floor him. I quote between $2-$2.50 + fsc. Have to explain FSC and he sees why that is a good way to run my business. But not at my rates. He is paying current guy $.91/mile.
Turns out that current driver could not figure out a rate so this guy stopped at a truck stop, grabbed the for hire rages and found companies paying O/O's between $.85-.95 a mile. Offered the guy $.85 to start and after 3-months would bump it to $.91. No fuel surcharge. And the guy took it.
I was tempted to stop by the drivers house and give him a calculator. But then I would just get frustrated when I would have to show him how to use it.

 

Oh come on, this was when fuel was still below $3.50 a gallon. How was he to know that it would go up.

BTW, guy must have installed over $500 in new lights about a month ago. Must have stumbled across a load paying $1.25/mile and thought he hit the lottery.

 

At 1.5% that is an ANNUAL rate of 18% assuming a 30-day pay cycle.

At typical 5% factor you are looking at an APR of 60% for 30-day and 40% for 45-day pay.

You have to understand that you are paying that percentage to borrow the money for 30-45 days.

I actually talked with my wife this morning about looking into starting a factoring company that is more O/O friendly. This market is huge and HUGELY profitable. I think I could differeniate myself from others by not abusing drivers the way most of these companies do.