saying NO to cheap freight

The primary difference between a one truck/one driver operation and a large company is that the large company can "average out" their revenues. If you have 1,000 trucks and 900 are running a profitable load and 100 are losing money, you're still making money overall. It goes back to JB Hunt's idea when he started his company; "If I have 1000 trucks running 500 miles a day and I make .01 profit for every mile, eventually I'll be a millionaire."

Dry van companies will haul out of Maine, for instance, for dirt cheap rates in order to re-position their equipment to better paying lanes. It they haul from Chicago to Maine for $2.20 and get .90 mi coming back, they still average $1.55/mi, and, again, they don't have every truck in their fleet losing money every day or week.

If you read the 10-Q filings from the major carriers, most of the biggies average over $1.50 per mile as a fleet. They have developed metrics that show whether a load is profitable or not, taking into account return freight possibilities and rates, and if it isn't they will drop it if they're watching their operations closely. It's the Arrows of the world, who need cash flow whether it makes a profit or not just to keep their Ponzi-like operations afloat, that screw up the overall equation.

In bad economies, those companies that have sufficient cash reserves will increase their exposure to the bad lanes in order to maintain customer relationships and cash flow requirements. Also, when bidding highly profitable freight lanes a shipper will sometimes require a carrier to also accept some of the crappy stuff they have, just to make sure it's covered. If the profitable lanes are profitable enough, a carrier will accept this as a part of doing business.

One of the bigger myths in the trucking industry is that it's the big carriers that depress rates. Wrong. It's the smaller carriers that just need money flowing in that usually put downward pressure on rates, especially in the dead areas.

The big guys didn't get that big by being stupid. They got there by being prudent. And, whether we like it or not, sometimes being prudent means hauling for less than cost.

So, if cheap leads you to highly profitable, was it really that cheap? Or was it prudent, keeping the wheels turning and allowing you to make an overall profit that is acceptable? That's the question we all have to answer for ourselves and our own operations.

 

A question for you reefer guys... Are you receiving any compensation for your time, say waiting 12 hours in your scenario above?

 

REMEMBER
You will not lose strugling, you will lose when you let fear drive you
Trust in God, God brings bread to you not Landstar, Schneider, CHRW or CR England. When bad luck strikes they will leave you rightaway
Always make profit! Even it is 1% or 1 cent a mile - Know your cost (long term cost remember 5 years down the road your truck will be vanish)
If you are not making at least 20 cents over your driver's pay then you stick to company driving. At least you will have EIC or Child Tax Credit end of the year
Know what lane rates are, rates are based on volume of freight moving in and out of the area. There is no rate less than the cost

 

Myself! I pull a fatbed and $3.00 per mile is my rate!

 

i can not get that cpm caculator to work it want so my cpm

 

Had a broker tell me that if ten's of thousands of O/O that are leased onto carriers can make it for $.91/mile plus fuel then all of us independents that want $2+/mile are crazy.

Said, A- that is why I will not lease onto someone, no money in it. B- At least the carrier is providing additional services for the 50% that they keep. You don't have insurance, trailers, safety, maintance, etc. Why should you consider keeping the same as a carrier?

Told me I was greedy.

Must of had my zen on that day as I wished him a good day and good bye.

 

The current freight rate index has the cpm at $2.43, my cpm doesn't come close to that but I do request a rate in that range for truckload in the area that I run.

 

Here's a link to the freight rate index.
http://wwwhst.com/freightrateindex/index_files/page0012.htm

While I don't agree with all their figures, it is a good benchmark for where rates should be.

 

The word BACKHALL has made its way into my industry an made everything a mess for the o/o LOAD is a LOAD stick to your lanes an get yours chase a dollar an pay for it later,im one of the 2-400 mile guys i have to check my book to see when my truck needs next service..hang in there may get worse before better...