Feature Article: Beyond the Rate
“While price negotiations are part of business transactions in most environments, best-in-class brokers focus on clear communications, doing what they say they will do for the owner-operator,” says Mark Christos, vice president of Matson Integrated Logistics, a large third-party logistics provider. “We often find our best relationships and confidence are with owner-operators who will ask us two to three more questions to assure they know they can perform on the load well.”
CRST Logistics’ Fouts concurs. “Clear communication and being honest and being on time trumps price,” he says. “Carriers that communicate well, that are on time — they’re going to get better offerings, better rates and good calls.”
Karen Albert says she often asks questions about special requirements. “Does it need a tarp? What size tarp? If it does, well, we need to look at more money,” she says. “So I start saying, ‘This is what I need.’ In good times, I was able to get all of it, but now it’s tough.” Still, she says, “Ninety percent of the time, I’m coming in $50 to $100 more than what they offered originally.”
By asking questions, you’re improving your conversational skills, which is key to negotiation. “You’ve got to listen more than you talk,” says Rutherford. Don’t ask yes or no questions. Leave the broker space to talk, to describe himself in detail, tell you what loads are available and assess whether you’re a knowledgeable operator carefully considering a potential business relationship.
The final rate/contract must be a win-win for both parties for a long-term relationship to develop. It’s why “driving a hard bargain” is not necessarily a good approach, says Rutherford. If your broker is always losing, “he’s not going to want to do business with you.” n
Will the real rates please stand up?
It’s hard to know what to shoot for when negotiating rates. Studying real market averages can help, though services that provide such data vary in what they offer.
For current and past rates on particular lanes, Transcore DAT’s Rate Index Pro ($29 monthly) is a powerful tool, says radio host and small-fleet owner Kevin Rutherford. The inclusion of maximum and minimum payments allows you to know a potential maximum rate in a given negotiation. The service also shows the ratio of loads to trucks posted in any given area. National average market data with historical comparisons are published at transcoretrendlines.com.
Internet Truckstop’s Fuel Desk function in its load board services offers average rates, including historical trend data, on particular lanes and regions and likewise live loads-to-trucks ratios in areas. Its weekly ITS Trans4cast Letter ($59 yearly for IT subscribers) provides “market analysis of the industry fluctuations week to week,” says IT user Karen Albert. “You can see freight demand this week versus last week. If demand is up, you might have more negotiating power with a broker.”
In November, Fairtran.com began offering the free National FairTran Rate service, specifying in flatbed, dry van and reefer segments average short- and long-haul benchmark rates for what trucking companies should be making to maintain an appropriate level of profitability. FairTran (www.fairtran.com) also can provide customized rate and cost data to customers at $36 to $55 a month, updated daily.
The broker says…
“People think that as brokers all we have to do is pick up the phone and call someone or e-mail someone and we have freight to move. It is not that easy.”