To be a successful owner-operator, you can’t do it alone. Whether you want to lease on to a carrier or hang out your own shingle as an independent, who and what you know will help make the pursuit easier.
Developing business with shippers and brokers often takes time and perseverance. Sometimes you can find small, local manufacturers or growers that need transportation on a set schedule but are too small for major carriers. “You can dedicate yourself to that shipper to move that freight,” says J.D. Campbell, an agent who finds loads requiring pad wraps and other special handling for about 30 owner-operators.
The downside is you are putting all your eggs in one basket. If that shipper goes out of business, you’ll be forced to look for other customers. If that shipper expands, you may be too small to handle more of his loads. In any case, always be on the lookout for another shipper as backup.
Campbell says an owner-operator might need to develop a relationship with an agent or broker, whether it’s for all your business or just an occasional backhaul. “The thing that will kill an owner-operator is the downtime,” Campbell says. He recommends building a network of load-finding sources that are reliable and honest. He also says an operator needs to develop a reputation for dependability. “If you don’t perform, we have no patience,” he says.
In dealing with brokers, know your costs. The load should pay enough to cover all fixed and variable costs and include deadhead miles. Determining how much profit you want above that should be settled before you enter negotiations with brokers.
Know your broker. The basic packages of both RTS Credit Service (www.rtscredit.com, $35 monthly) and the RedBook service (www.redbooktrucking.com, $160 yearly) offer the ability to obtain reliable ratings for many brokers.
Know your market. In negotiating with brokers, you can tap into a huge amount of information about markets. Rate indexing allows you to compare national average per-mile rates with rates over time on particular lanes. One such tool is Transcore’s Rate Index Pro.
Know how to ask questions. An owner-operator who asks about load details is negotiating smartly by establishing confidence he or she can be counted on to move the freight.
How to win on the call
Paul Todd of T&G Dispatchers prefers to deal with brokers he knows, but he has tips for negotiating the best rate when he’s dealing with someone he doesn’t know.
1. Never reveal your home location. Brokers seem to want “every load they dispatch to be a backhaul because they can keep more money.”
2. Avoid sounding “desperate or excited about the load or the rate, regardless of whether it is a good rate or not.”
3. Call when you’re parked. “If the broker can clearly hear that you are driving,” he’ll know you’re not immediately able to look up average rates, mileage and other information, Todd says.
4. Never answer the question “How much can you do the run for?” unless you know the maximum the broker will pay. “Do not be afraid to quote high and counter-quote high,” Todd says.
5. Try to load when rates are good, such as Friday or late in the day, as shippers’ doors close and brokers get desperate on certain loads.
Relationship building questions
Kevin Rutherford“Negotiating is really all about relationships,” says ATBS Trucking Business & Beyond host Kevin Rutherford. “To be successful with your own authority, you need to find the right shippers. But if you’ll be using brokers, you need to focus on a lane or an area — maybe a triangular or round area — and keep it down to the minimum number of brokers you can use to keep the truck moving.”
Try to work with brokers you know. Listen for problems, Rutherford says, “and become a problem-solver.” Here are a few of his recommended questions to ask toward building a profitable relationship:
”What is your worst load?” Everybody has the load “that is a thorn in their side,” Rutherford says. “Find out what makes it so bad, but then find out what might make it good enough for you to handle.”
”What can I do to bring more value to you and your customers? You have to start looking at the broker as your customer if you’re going to rely on them.”
”Do you have regular freight you’d like to negotiate a long-term solution for?” Though this freight might not carry the best rate, it may provide access to an area important to you. “Look at it for the big picture,” Rutherford says.
”Would you be willing to work as my sales agent in an area?” This question focuses on the middleman’s role to help the broker land a consistent source for his shipper. “You negotiate maybe one time for a fixed percentage and let that broker go out and work for you,” Rutherford says.
