brokers

Normally OO should be taking the $2.50/mile loads. However, if you're in a spot that doesn't have any loads like this, it helps to know that the minimum you should take is something that will give you $1.60/mile or more on a dry van. This will at least get you some money and won't put you into negative territory. If there's nothing else available, it's better to take this and go somewhere where better freight is available than sit in your truck and wait for the $2.50 load that may never materialuize.

I agree that $1/mile loads offered by many brokers are insulting. If you take loads like this, you may cover the fuel expense but you're working for free and losing long term because of repairs etc.

On the other hand, if you can get $3/mile going to the destination and $1/mile going back, you're doing OK.

$.36/mile salary rate is simply a reference point below which you should never drop. If you do, you should sell your truck. During off season times you may have to take it. This way you make some money during the off season and cash in during the season.

 

I know what it costs to run my truck and make a profit. I won't run for less. I also won't haul in to those so called "dead areas" unless the load pays enough to deadhead to better freight.

 

Unfortunately there are a lot of numbers and scenarios being posted in this thread that show why the rates are so low. It is sad that this mentality is so widespread in the industry.

I wouldn't haul freight for 1.00 per mile if I came in at $4.00. I would DH to the nearby lanes that paid more. If you will work the numbers you will see you make as much or more. I will not make someone else money while I lose money......I am never that desperate. As long as someone will move it for a dollar, no matter how they justify it, it will pay a dollar. Even if you take off return on investment, driver's wages and benefits and income taxes and Social Security you are still slightly over a dollar a mile to maintain a business-like operation that can sustain it's self.

So many say they know their cost of operation but fail to include driver wages, benefits, income tax and Social Security. Many with paid off trucks aren't putting anything back to replace the truck. Nobody seems to include a return on investment.

I still challenge anyone that thinks they can operate for less than 1.55 - 1.70 CPM to go back to the spreadsheet and look at your numbers. If you have no payments, you should be putting back an equal amount for replacement. You should be paying yourself above average wages which will cover a driver should you be unable to run the truck. You should be providing yourself with health insurance and workmen's comp. You should be including income tax and Social Security which can run 0.08 -0.14 CPM. You should be getting a return on your initial cash investment to start and run the business until it is paid back which means payments on that investment too.

I fear this will not change as long as people will borrow, mortgage their homes and/or enter into lease purchases with weekly payments. Then they only hope to pay the payments and pay themselves wages equal to starter companies with fewer benefits, if that is possible. They don't even include income taxes and Social Security as costs. Usually they put somewhere between nothing and half what they need in a repair/maintenance escrow.

In these situations they are usually doing worse than a driver and are slowly putting themselves out of business unless they have a major breakdown or no money to pay their taxes and then it is a rather quick demise. As long as there are owner operators that run their operation like a truck driver and not a businessperson we will continue to have the same rates we had in the 80's.

 

We can all complain about the O/Os that accept low rates. However, this is reality and we need to deal with it. Free market attracts a lot of stupid people.

You mention $4/mile loads. It's great for you if you can get them. So far, booking freight since 2004, I have never seen one unless it's 100 mile run. Maybe you're a genius salesman and can retain direct shippers that can pay you these rates. If so, my hat's off to you. However, shippers like this don't last long because someone else will usually come in and undercut you.

I usually buy very cheap trucks ($15K) and repair them as I need to. So, very little is needed for depreciation. When I average all my repair costs, insurance, fuel, maintenance, driver's salary etc, I come up with $1.56/mile. So far this has included 2 inframes and 2 transmission rebuilds, so I think I'm allocating enough. This number comes from estimated spreadsheet data as well as real empirical data. I've actually bought a new Freighliner in 2005 and this has been a complete nightmare. Yes, you're covered for the first 100K miles 100%, but that doesn't mean you waste any less time at the shop getting repaired. After the first year, you're paying for all repairs just like on an old truck (AC, alternator etc etc etc).... all this in addition to truck payments AND the $15K you put as a downpayment. After 400K the drivetrain warranty expired and as a cherry on the cake, at 430K, the truck had to go for an inframe because of Mercedes's head gasket issues. So, no thank you, no more new trucks for me.

There is NOTHING on a truck that can't be fixed. If the driver does inspections as he should, problems can be caught early. Yes, you will get hit with a large bill from time to time, but if you average $1.60/mile including deadhead and have enough reserve from not having the monthly truck payment, you should be OK. This AVERAGE rate is bread and butter. Higher rates are dessert.

 

I did not say I could get $4.00 per mile. The point was that even if I could, I would not haul $1.00 per mile freight on the return side. I'm all for looking at average rate on a turn but I still won't make someone else money on a load that I can't break even on. There are always other options that don't move freight at a loss.

You are right about a free market.

 

I tend to think more in terms of what's most profitable for me, not what's best for everybody. Going empty to a destination with high paying loads as opposed to getting at least something to cover fuel expenses is silly. I did that once a long time ago out of frustration and then I felt like an idiot. I'm not here to change the world. I'm here to set up my round trip strategy in such a way that I will make the most money. The skill is in selecting the route. Entire trip has to make sense, not only one leg. My job is to get the most money from the time the truck leaves until it comes back. If I don't make a good average, I'm not doing my job and I pay. Driver never pays because his compensation is not tied to profitability of the company.

 

Yep and brokers know this and as long as there are cheap haulers out there the rates will keep dropping and it will turn to a two way street you'll be running for fuel money in and running for fuel money out and then you will wonder why but before you wonder let me tell you its because drivers that haul cheap freight. I dont care if iI get $100 a mile going there is no way as long as I own it anyone is going to put freight on my trailer unless its paying at lease $1.85 a mile and that under certain conditions light/dry ect. And weather you know it or not in this business you are everybody else not less you special. Thats the problem with some drivers (I'm gonna look out for myself screw everyone else) Well you screwing yourself and the trucking industry too but to dumb to know it

 

I respectfully disagree. Free market means you have a choice of routes, choice of loads and choice of prices. If there is a glut of trucks in an area with nothing to haul out, that glut was caused by high rates going in. The reason you're in that area is that YOU took the truck there. So, do your research before going there. It's a process of natural selection. If the drivers run for fuel only, they go out of business quickly. The route can't turn into "two way street of cheap freight" because then nobody will go TO the destination. Look at the big picture.

Anyway, I think the best way to regulate this industry is to issue truck medallions, like the city cabs get. The problem is not low rates, it's too many trucks.

 

Too many trucks is a contributing factor to low rates. Owner operators that will haul for 1.00 per mile is the cause of low rates.

Your backhaul or midhaul is someone else's fronthaul. This is why I hate this terminology and mentality. When you haul for fuel, you look out for yourself and screw the industry.

 

You and me both. Closest thing I will ever call a back haul is when getting paid for a round trip and I have to bring something back to the shipper (like over or damaged product)