I’ve gone fishin’ this week, and for this guest dispatch we’re hearing from the cab and pen of Clifford “Dream Walker” Petersen, who argues for bringing employee company drivers under overtime and minimum wage protections, at a minimum, for the long-term benefit of rate growth for owner-operators. For more discussion of the perennially discussed issue, after you finish Petersen’s piece, follow the links at bottom.
The last time I wrote, I explained my tenure in the trucking industry and weighed in on some of the issues that seem to repeatedly come up in our business. I told you about me because there is nothing more aggravating than someone doing a piece on trucking that really has no idea what the heck they are talking about. Not only have I trucked now for 14 years, but in 2005, after 12.5 years on the road, I began to get burnt out so I quit and started brokering freight. In some ways, it was the best possible decision I could make at the time, and it offered me a chance to see the industry from another point of view.
As a broker living on straight commission, I soon discovered just how hard brokers work, and how many hours they put into their business. For the first three months I starved. Though I was able to find freight with a couple of companies I had previously hauled freight for, it was not easy. One thing I had going for me was the ability to relate to, and talk to, truckers, so finding trucks was not difficult.
Because of that, my boss hooked me up with another broker working for the firm who could not find enough trucks to cover his loads. With that, I found myself moving 15 loads a week out of North Carolina and Tennessee. I’m not going to go into the money I made, but let me say brokers make their money by covering numerous loads a week, whereas drivers tend to move one or two. I’m telling you this because, when I last wrote, I spoke of freight rates, and how there has been little improvement since I started driving in ’93, and how rates need to better reflect the current cost of living and doing business. Yet it will never happen until certain things in the industry change, and until more owner-operators understand how to negotiate rates.
When a broker finds freight that needs to be moved in a certain lane, the first thing he does is research. They will know before they bid the freight what the average rate is in that lane. Which means they will know what the highest rate is, and the lowest, to determine the average and bid it with the shipper accordingly. That bid is what they have to work with when negotiating rates with operators, and they take their commission from what is left over. So if the average rate in a lane is $1.50 they add the commission they want, plus the fuel surcharge, to determine their bid. Drivers who know this, and know the lane rate averages, can often negotiate better rates and boost their bottom end.
However, with competition as it is there is not always a lot of wiggle room for the broker depending upon the week they are having and how much they bid on the loads. A savvy owner-operator can, however, build relationships that will often pay off in the long run if they understand this and are willing to provide a service above and beyond what others are willing to do. Still, of course, you will always get the best rates by hauling direct and bypassing the broker or middleman altogether.
I am explaining all this to set up how I believe we can get to better rates all around, rates that reflect the current cost of business operations, and current cost of living.
Because of their size and capacity, larger carriers have an advantage and can cause the average rate per mile to be lower in any given lane due to their ability to move it at a lower rate. Which is just good business for them, the manufacturer and, ultimately, brokers. However, we can still have rates improved by simply allowing the Department of Labor to prescribe a cost of living wage increase for company drivers. Say they determine that driver pay is 30 percent too low, and dictate companies must increase driver wages to that point. Companies would have no choice but to increase their rate bid to offset it, and thereby increasing the average per-mile rate.
If they would in turn dictate an hourly wage for sitting at the dock, that amount would be worked into a rate increase as well. This could not be done all at once, of course, without throwing our economy into a tailspin, but it would be feasible spread out over several years.
This is just an idea, but the only sensible way I can see to eventually get rates where they need to be. Of course, that means the Department of Labor would have to be involved in the trucking industry, and they have been near completely hands off when it comes to fair labor practices and trucking given interstate truckers’ longtime exemption from overtime/wage protections.
And yes, in time this will cause the price of goods to rise, but that is how an economy grows instead of languishing and faltering. At the same time, as an owner-operator who dreams of building a small fleet (once I go beyond a one-truck operation), it would cause my cost of operations to increase as well, but I can live with that if it allows me to offer my drivers a better living and improve my own at the same time. –Clifford Petersen