Rates and pay: Owner-operator challenge No. 4

| August 08, 2012
Freight rates

The solution to freight rates involves smart business decisions, not running more miles.

If you’re leased and paid by the mile, underlying freight rates may not always be a big concern for you. But for independents and those paid on a percentage of the load’s gross, they’re critical to profitability.

Complaining about low rates doesn’t do any good. Negotiating the best possible rates and then operating with efficiency can put you ahead, even in a soft market.

Pick loads carefully.
“Work smarter, not harder” is owner-operator Don Lanier’s motto. When working as a flatbedder, “I believed you made more money the more miles you drove,” he says, but today “that’s not necessarily true. Short, high-value loads can pay more than twice what the long haul does” in a percentage-based operation.

Be choosy about the freight you carry if you’re independent or self-dispatched. Picking a carrier partner where load choice is possible is the first step down that road.

Break up low-rate backhauls.
“I do a lot of triangular routes,” says owner-operator Jeff Clark. “Two of the legs have good rates. The one that doesn’t gets me to a place with good rates.” Balancing those low-rate lanes with better choices around them is key.

At the beginning of each week, TransCore DAT publishes its Worst Lanes in America report, offering triangulation suggestions for low-rate lanes. Visit DAT.com/Resources.aspx and navigate through the Trends and Reports link under Resources to get there.

A recent report highlighted the low rate from Columbus, Ohio, to Memphis, Tenn. Breaking it up by moving from Columbus to Evansville, Ind., and then picking up to deliver in Memphis would add just around 34 miles to the trip in total, but an average $341 to the worth of the load.

Know the average lane rate.
Knowing the rate for a given commodity in a particular lane allows you to negotiate effectively with brokers and shippers. Overdrive publishes rate averages for flatbed, dry van and reefer segments monthly in its Gauges report, and those averages are available nationwide in more timely fashion by subscribing to load matching services like Internet Truckstop (Truckstop.com) and TransCore DAT.

Respectful negotiation, where you bring a knowledgeable sense of the market to the table, will help you build the business relationships you need to succeed in getting rates than can make you profitable.

Develop a premium service.
“Sell yourself – your CSA scores, your professionalism and your track record,” says Truth About Trucking’s Allen Smith. “When we had our moving business, we would find out as much info over the phone as we could in order to get an idea of cost” before conducting a full move survey. “We dressed professionally, and before we left the office we calculated the minimum we would need to charge to cover all expenses and include our profit. We were usually the highest bid, but almost always got the job. Why? We had impeccable service with hardly any claims, and word traveled fast.”

Professionalism and good reputation can get owner-operators on the path to high rates. All of small fleet owner Tom Blake’s shipper customers came to him on referrals from others. “That helps me a lot with the new customers” when it comes to rate negotiations to cover “what I need to be able to pay my drivers and all the overhead and make it to where I’m making profit to reinvest in equipment as it wears out and everything else. For the most part, I’ve been able to sit down with customers and point all the numbers out.”

Owner-operator Challenge No. 3: Uncompensated detention

  • http://www.facebook.com/mike.edmonds.7564 Mike Edmonds

    One sure fire way to lower fuel costs dramatically is to install a hydrogen fuel booster. The Highline Wildcat is just the ticket!
    See here: http://www.hyimpact.com/

  • haller

    Truckers who works for brokers are STUPID.
    Brokers keep 60% of the freight charge…….

  • Dan

    how else to find loads then?

  • Anthony Bartolomeo

    Don’t listen to greedy truckers. .If you take home 6500 -9500 a month. .that’s good enough. ..

  • Anthony Bartolomeo

    Get your own m.c. and then advertise your company on goggle

  • Anthony Bartolomeo

    I can’t figure out how you make any money. .taking loads for 95 cents a mile plus f.s.c…that’s a dollar 1.30 a mile now..If the fuel prices are 4.00 dollars a gallon. .my truck costs 65 cent a mile to run loaded with 44,000 lbs or more..so that leaves me with 65 cent..plus take off at least 40 cents for fuel taxes, income taxes, road taxes, insurance, plates..what I have left?..25 cent a mile…why do I need to own a truck? ??

  • Mike Smart

    Mostly USA like China no money for trucking. Only goes to brokers and government whose politicians give it to railroads or other countless projects other than roads especially in CA.

  • Mike Smart

    Start with a 160,000 Volvo add fuel and road tax cause ya own something also add expense & pay tax. So now why new truck cause fuel and mechanic cost and ya get one no cost from the company but to make a little money ya got to cruise bout eight economically. Stop cause Uncle Sam is bout 19 trillion dim. If there is oil shortage haul water for oil only have to stop when a stop work authority is placed. It go way past 24 hours of service for healthy adult moving frac water. Doper always fail in the end and drivers know their own limits and money and stop work authority and experience ther is no turnover with huge dollars and stop work authority. The 700 in OTR after tax likely given to TA and Pilot. Oil starts at 100,000 at 19hr in a boom and a lack of drivers bring the wage to 30 hr plus all seven days to work and get decent money and no eight day rule in an oil boom.

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