New broker - need help understanding carrier rates

I'll help you out try and get the most money out of a shipper as you can take you % off pay the driver the rest, I have shippers I get $3/mi pluse fuel and others I get $2.10/mi pluse fuel also depends on how many loads a week you will move for them, if I can move 10 loads a day five days a week that's a $5,k week brokerage gets half (phones, computers, load boards, lights, paper, and so on) I don't try and pay for kids collage off ever load that's why I don't always take a percentage off ever load some times I just take a flat rate!!

 

yearly expenses are roughly
$7,000 - insurance
$2,000 - phone and internet access
$1,800 - plates
$550 - 2290 highway tax
$600 - load board subscriptions
$200 - drug consortium
$120 - online fax service
$1,000 - misc. (website, advertising, business cards, etc...)

that is $13,200, if you figure 100,000 miles a year it's $0.13/mile, we're just getting started........

Equipment, say you look to buy trucks with 300,000 miles for $90,000 and run it for 5 years then sell it with 800,000 miles for $20,000. That makes $70,000 depreciation on 500,000 miles or $0.14/mile. need a trailer ? depending on the type of trailer gonna depreciate at about $0.08/mile.

tires/repairs/tools - gotta figure a budget of $15,000/year or so = 0.15/mile

misc - clothing, cleaning and office supplies, truck washes, hotels, etc... - 0.05/mile

so now we have 0.55/mile, not counting fuel, which is running me 0.72/mile right now = $1.27/mile before I make a penny. I can get 0.40/mile as a company driver, so I need at least that much in addition = $1.67/mile. I do all my bookwork, load booking, filing taxes, billing, etc... What is that worth ? Brokers seem to think I have nothing to do but talk on the phone with them all day, the state thinks I have nothing to do but fill out endless forms. I better get paid at least 0.20/mile for that = $1.87/mile. So, I guess that' my break even number.

That said, I didn't invest over $100,000 of my money into equipment and hundreds of hours of my time to break even. How much do you have invested in your computer and fax machine ? What kind of liability do you accept ? If I screw up driving and kill some people it could be a multi-million dollar mistake and I have that to deal with every day. Do you expect to do better than break even ? So do I. So I really need to see close to $2.50/mile before I start getting too excited about a load. Then I have to ask is there tolls ? Will I have to scale it ? In addition to the miles ran, how much time will I be spending in the dock, how far do I have to deadhead, what kind of rates can I get out of the area this load is delivering ?

But luckily for you there are a lot of people in the trucking business that are bad at math, so you can probably get your freight moved for less than that, even for less than what it costs them to do it sometimes. But it's not sustainable or good business.

 

No it's just because I feel my company needs a $75/hr profit over and above costs. Most of our runs are under 600 miles and in the above case the company only profited $750 for picking up at 2:30 PM (shipper closed at 3) and delivering 11:00 the next day. I don't think $750 is out of line for 500 miles of driving.

 

that's hilarious how close that is to what I figure.....I use $1.65 with driver pay at $.38.

 

yah, my fuel/mile is up right now.

 

Hey Alex. Welcome back to the world of trucking!!

I'm ESAD, and I'm one of those brokers that make thousands just by picking up the phone and my chair is made from gold... but what am I saying? Are there any other type of brokers!! ba dam bam bam!! Thank you, ladies and gentlemen. I'll be here all week. Don't forget to tip the waitress!!

I'll give you my formula, and hope it helps you. I use 3Sixty TRI quite a bit. It gives you the national average over the last 12 months on any particular lane, so you can see where you need to be at. Once I got that, I either call carriers in the areas that I know handle that lane and ask them what are they getting paid for them. I also post it for a few minutes and get a couple of carriers calling in for it. I get some info from them as well. That is basically what I use when I have no clue what to quote on a lane.

 

Rule of thumb. Don't bid freight cheap. Bid it well and you'll have nothing to worry about.

 

Are you saying you post a hypothecial load to get drivers to waste their time calling on a load you don't have yet to give you a quote, then take it down and make your calculations off that?

Also looking at past years averages for a lane is not always very good. What if the averages are way too low, such as dry van out of the NE or Ca. Someone needs to be the first to start a trend up instead of down.

 

I don't have a problem with that so long as they put "looking for rates" in the comments. Otherwise I agree with you....they are just thieving the carrier's time.....again.

I think those averages are manipulated to keep the rates down because I have never been paid as little as they say. What are those averages based on anyway? Transcore says rates for a "flat" out of Baltimore in my lane are $2/mile....closer to $3 is more like it for my steps. Where do they get their data from, because it sure isn't me.....I don't even know how to tell them what I got paid.

Any average I have seen makes no real distinction between flat, step or DD. Some don't even differentiate between vans and decks. This is not to mention seasonal variations.