saying NO to cheap freight

There are too many truck drivers who own trucks and not enough businessmen who own trucks. As long as there are those who are willing to haul for a cheap rate, the low rates will continue. It is the truck owner who really has the control when it comes to rates. But, few exercise that control. As with any commodity, rates rise and fall because of market demands. In this case, it is capacity. When capacity is high, rates will drop. When capacity is low, prices rise.

 

But, it doesn't take into account that, one person's "cheap rate" is another persons decent rate. Depends on the cost of the operation. Walmart sells cheaper stuff, yet they are the largest corporation of it's kind in America because of it. Apple sells very high ticket items, but has a substantially lower market share on many of it's products than the competition. True, one should be setting their rate to meet a sound business model, but not a rate that is inflated to cover lousy business practices. If I were a shipper or receiver, I could give a rip about whether you are able to buy a new bass boat or fancy RV from the rate you are charging me. If you can't operate your business profitably, that is not my concern. If you choose to live in an area of the country, where a modest home costs $200,000 instead of where a home costs $60,000 is not my concern. That is your choice and don't expect me, paying the rate, to be able to cover your expense on that. If you have a Chrome Shop Mafia customized Pete 379, that is your choice, again, don't expect me to pay a rate so that you can keep your ego inflated.

True enough, there is enough blame to go around. But sometimes it is best to take a long hard look at what oneself is doing before crying about things being unfair or rates are not what one think they should be. As an example, if one decided to operate a convenience store out of the Taj Mahal and wanted to price their goods and such to cover those costs, I would bet that they would go out of business long before the other convenience store owner, with a more modest building and setup, does. I as a consumer am not concerned with how you set up your operation, only the best price to get the service that I want.

On the other hand, the best service will usually get the best price, and the attract customers. I, for instance, always choose UPS for my order delivery over FedEx. I usually have to pay a little more to do so. Why? Because I get quality service with UPS. The driver always leaves my packages inside my garage where they are safe from eyes and weather. He looks out for my concerns. The FedEx folks have consistently left automotive parts on a picnic table or deck by my garage, in the rain and snow, because they don't want to walk a few more feet to put it in the garage or shed. They are only interested in getting the package there, and then they could give a rip about my concerns.

 

There is always someone trying to get home.

 

No such thing as cheap freight. Just businesses with different operating cost.
If you choose to drive a 20 year old fuel guzzling truck and your cost of operation is $2 a mile so you need at least $3 how is that the shoppers problem? Now if I chose to upgrade my truck and my operating cost is $1 a mile I can charge $2 a mile and still make as much as you but at a much lower cost to the shipper. Who do you think he's gonna pick? Should I charge $3 a mile just because it costs YOU more to run? I'm not in business for you im in it for me and my family.

 

The spot market is based on supply and demand. If there are too many trucks in an area rates will be low. It looks like cheap freight but it really is jsut a product of the market condition. There are a lot of factors going into the current rates, one of which is greed by brokers. Once those pressures ease i.e.:greed turns to need, trucks leave the area, or more freight hits the market rates will come up...they have too supply begins to outweigh demand...

Dont get me wrong one of the pressures on rates can be a broker trying to move freight as low as possible and keep more of the rate for himself. But one broker is not enough to make a market and one trucker will not create enough pressure to bring rates up.. So mostly its supply and demand.

 

One of my smaller competitors has much lower operating costs (I assume based on the junk he runs and the cheap rates he charges) , so he charges less. I charge market rate plus, because my service cannot be matched with that customer. I don't race to get the lowest paying freight to keep a customer. I run sharp looking equipment (I know I know that doesn't matter "only the rate matters": except I've gotten clients based on the presentation of my equipment, and they call me because they want their customers to know that a high class product gets shipped on high class equipment. Got cheap freight to move? Call someone else) and make no apologies for the rates I charge. I'm in business to make money, not move anyone's stuff for pennies on the dollar.
My business model incorporates offering exemplary service to my customers, with satisfaction of a job well done for all parties involved. I want the market rate and then some. "O god ruthless someone will undercut you and take the work!" Say all the undercutters. I turn down more work than I take on, and do all the stuff other outfits don't want to do, and charge accordingly. The low bidders come thru now and again, I don't lose sleep nor work over them. Different customers have different needs: you can buy coffee at a gas station for $0.89 a cup; but Starbucks charges $3.75 and they have a line around the building for the drive thru. All about "what the customer wants"

If you can only sell on price:you're selling yourself short.

rant over

 

The problem with your theory is the only one benefiting from you buying that newer truck that enables you to operate cheaper is the shipper. If the market will support $3 a mile why work for $2? Charge $3 a mile, work half as much, and spend more time with your family. Then you and your family reap the benefits of your lower operating cost not the shipper.

 

that's why I quit hauling freight and went into the oilfield industry

 

Just because it will support it doesn't mean it will pay it. I'd rather not back myself into a corner and be sitting waiting for that $3 a mile load if I can make my money and keep moving on $2.

 

If you were ever able to consistently book it at $3+ mile you'd come back reading this and think how crazy you were to have worked so hard when you didn't have to. Learn your markets and quit jumping on any $2 mile load that comes your way.