I see why trucking is going the way it is...

So my question is what do the broker get for his services? Does the broker just suppose to play matchmaker for free? Or is that suppose to be negotiated separate with the load tender?

 

The broker should take a set percentage, around 10% of what the shipper is paying. The trucker never knows what the shipper is truly paying the broker, and the shipper doesn't know what the trucker is getting. So many brokers often screw both sides by taking much more.

The broker only links the shipper with the trucker. He doesn't need to make the product or buy an expensive truck.The trucker will usually net less income on a load than what the broker gets with just a 10% commission, but the broker still wants to make more.

 

if you really want to make the money. i've seen ads for brokers that make more money then an O/O. as far as net income goes.
some of them ads advertise $100G a year.

 

By "fixed cost" I was referring to the overall industry. Meaning, how can we say "a truck must earn $1.93 per mile"...? Thats like saying that all plumbers nationwide should earn $ 43.72 per hour.
Your fixed cost for parking while you are home may be zero (if you can park in front of your house) but a guy in Southern California has to pay $400 a month for a spot at a storage yard (New York city area could be $900). Your cost for oil changes might be $200 but with all the environmental taxes its $300 in California. IRP for a California based truck is $5K but Oklahoma is $1,500.
My point was, it is impossible to say that a truck must earn $__.___ per mile to be profitable. So when you hear a guy say "I'm happy to get $1.30 per mile" remember, he may live in that truck, be registered in Oklahoma, and do his own minor repairs and service.

 

Reading the majority of these posts, everyone is mutual with not wanting anything under 1.80/2/etc... But some times those are the only thing offered that you need to get you where your big ticket load is. I've hauled plenty of loads where all in was around 1.00/1.10 a mile and I didn't care because I just needed to get to my money load and didn't want to DH 1,200 miles. Now granted I've only been trucking for 14 months, but I've seen these past 14 months from the boss perspective (helping my dad with paperwork, getting loads, and keeping track of the numbers, all that stuff that I'll be doing in the future as an O/O). In the end we average 3.25/mile and the business has little expenses IE: no truck/trailer payments, tolls are minimal, and fuel cost is minimal as last calendar year the fuel avg on the truck went up 1.2 MPG.

Now I agree that it would be nice to always get that 2/3/4 per mile load, but some times you just have to take what you can get. Now granted it's been months since we've done anything at 1/mile, but like I said, sometimes you just have to.

Now understand that I am not OKAY with a 1.00/mile load, so no running me out of town with the pitch forks or burning me at the stake lol.

 

Yeah but you need to do the math on it all Big D. 1200 miles is a long ways to haul that 1.00 a mile freight... What is the additional fuel expense, wear and tear, ect ect on hauling that load that puts you around 80K pounds. Why not try to piece a LTL together instead, or just get a load out of NY( figure that's where it came out of since you live up there) that goes over to say Ohio or Indiana and then get a much better paying load and work your way to that big money load instead time allowing? I don't see any point in putting a buck a mile freight on your truck to go 1200 miles. That's 2 days of expenses for 1200 bucks?

Even though you don't have much overhead, I don't see why you wouldn't be putting that money away still for say a new trailer eventually or a newer truck? How about rebuilds if you want to keep the old truck? I couldn't stomach pulling that, got to make it worth going into bad areas and just bounce out.

 

And the notation next to his name in the broker's computer: "$1/mi"

 

Paying for the equipment with cash is smart because you can always park it and go do something else if rates really suck. With a payment, you are forced to drive for no wages just so the bank won't take the truck.

However, you invested cash in that equipment and you should be paid for that investment plus you must recoup the asset as it loses value so you can afford to replace it or put the initial cash invested back into your account.

Having a paid for truck doesn't mean you can afford to run for cheap. Unless you like giving your equity over to the shipper or broker by way of hauling cheap.

This concept is very hard for too many truck owners to understand for some reason.

 

I think almost everybody here is talking about fixed costs versus variable costs as the terms are generally used in accounting. And you are correct, everyones fixed costs will be different, as will their variable costs. That's why it's so important for everyone to know "their" numbers. The amount an O/O "must earn" per mile is will vary widely depending on their operating costs, capital costs, desired return on their investment and the amount they expect to pay themselves as wages.

One concept people seem to have some trouble with is that the more miles you run per month, the lower your fixed costs will be per mile.

Another basic concept I learned in college is that if your revenue covers your variable costs and makes a contribution to your fixed expenses, you at least have a chance to succeed. If your revenue doesn't cover your variable expenses, you need to end your operations asap.

Trucking is a very fluid business model. Some guys like Bayou & Skateboard seem to have figured it out and do well. You have to have good analytical skills & be able to think on your feet to truly succeed long term in this business. On the other hand I know guys that are total morons that have stumbled along for decades, seemingly against all odds. I think I'm probably somewhere in the middle.