Taming the beast

| December 12, 2008

Towny Sparks, a longtime broker now with Speed Logistics of Kennett, Mo., which specializes in military freight, says setting up took his team eight months. “It’s pretty intense,” he says.

After approval and obtaining the bond, the tender process has to be learned. Carriers and brokers set up their rates, usually according to lane, in SDDC’s Global Freight Management database. Learning that system requires more than a little practice, if not actual training, Sparks says. “And after you factor in all the time we spend on getting the load, it doesn’t seem like something an owner-operator could easily keep up with while he’s out on the road,” Sparks says.

In the 1980s, procurement authority shifted from SDDC to the individual shipping sites as electronic traffic management databases were established, says James Gilmore, chief of Domestic Carrier Services for the command. This Reagan-era decentralization process increased competition and owner-operator opportunity. Now the Global Freight Management system is fully automated and uses an online interface.

“The transportation officer puts in his requirements – the origin, the destination, the nature of what he has to ship, whether that be a can of dog food or an M1 tank,” Gilmore says. “The system massages all that information and spits out a list of carriers that have rates and services on file that he can choose from.”

Competition is heavy. The rules allow you to reduce your rate at any time, but you can raise it only once every two weeks, Sparks says. “Nothing is secret, either,” he says. It’s not uncommon to see similar loads coming out of the same site vary by 50 cents or more per mile from week to week.

“You can see all the other guys’ rates,” says Sparks, “and so it can be extremely difficult to get a good one. I saw some stuff recently that I’d bid much higher on had gone for 70 cents a mile. And we’re not talking about short haul here. This was truckload freight going from Connecticut to California. That won’t hardly even cover your fuel.”

Sparks enters his tenders into the electronic system with a benchmark of no less than 40,000 pounds and a specified per-mile rate per 10,000 pounds from “anywhere to anywhere,” he says. Specifying certain lanes also is possible, if you’re working regionally, which also reduces the value of the performance bond you’ll be required to post.

Whitten took this route. Today he sets up his own tenders and operates mostly in Alabama, Florida, Georgia and South Carolina. The performance bond required of an owner-operator running in up to three states is only $25,000. For up to 10 states, it’s $50,000. But getting a surety company to work with you remains difficult even at the lower levels, Whitten says.

Owner-operator Don Porter of Freistatt, Mo., who’s hauled loads brokered by Sparks and others, says he considered registering with SDDC on his own, but once he saw what was involved, he told himself, “Hell, there’s no way I could do it with just one truck.” He adds, however, that a small-fleet owner-operator with an office to post and adjust tenders could succeed.

Any marketing of services should be directed to the transportation office at installations where shipments originate, or to the contractor who handles the service. At Fort Benning, for example, transportation services are managed by contractor Shaw Infrastructure. Shaw’s Julie Schulz says locally based carriers often have the best rates, but even if they don’t, they sometimes have the edge in reliability.

In Hall’s 30 years with SDDC’s predecessor command, he learned the lowest-cost carrier isn’t always chosen. “Most shippers will select a carrier based on two things – level of service required and cost,” Hall says. “Depending on what the commodity is, there will be a wide variance in the carriers’ rates that are on file. And if they have a high-value piece of equipment they’re really concerned about, they may shy away from going with an extremely low-ball carrier.”


MERCER, LANDSTAR PART OF PENTAGON’S STABLE
Leasing to a carrier registered with the Department of Defense or working through an authorized broker are the two easiest ways into the network for owner-operators looking for business opportunities outside commercial freight, particularly those booking their own loads.

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