A few points on scoring better rates from owner-operator coach Kevin Rutherford

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Updated Apr 29, 2018

Small fleet owner turned owner-operator coach Kevin Rutherford presented three seminars in late March at the Mid-America Trucking Show on running a more profitable small trucking business, fleshing out over three hours of talks a litany of advice on landing better rates, building relationships with brokers and, simply, driving up bottom lines. Here are a few themes that emerged from Rutherford’s seminars. 

To score better rates, control what you can control: As in his seminars in years past, Rutherford noted that brokers nor owner-operators dictate rates. Rates are based almost exclusively on supply and demand, he says. “85 percent of a rate is supply and demand. The other 15 percent is your ability to provide value and to negotiate.” In the trucking economy, supply is the number of trucks available, and demand is the number of loads that need to be moved. More available loads puts upward pressure on rates, as does fewer trucks. Fewer loads — and more trucks — would then put downward pressure on pricing.

However, within that 15 percent lies owner-operators’ opportunities to score better rates and boost their profitability, Rutherford says. Operators should develop a keen understanding of the supply and demand forces for the lanes they run and the geographical areas where they are and where they want to go. “15 percent may not sound like a lot, but if you gross $178,000 a year, and you’re able to take advantage of the 15 percent that’s out there, that’s another $28,000 a year,” — much of which should go to your bottom line, he says.

Operators also need to learn to negotiate with brokers — and learn that brokers are their customers.

Know your customers — and provide real value to them: “Who are your customers?,” Rutherford asked. “Brokers.”

Like in all other businesses, owner-operators need to develop strong relationship with their broker customers, Rutherford said. He recommends targeting a few brokers and marketing yourself to them. “My goal when I had trucks was to work with five brokers a year — that’s it. Because now I can focus on those relationships and I can get to the freight that really is the stuff I want.”

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Truckers should make their value known to brokers — become a “problem solver,” for them, he says — and brokers will be more likely to throw the best loads your way. Operators should take their brokers out for coffee or lunch occasionally, he says, as a means to separate themselves from their competition. “How do [you] provide more value than anybody else? And what can you do that nobody else can do for their customer?”

Avoid deadheads at all costs: Rutherford, as in past seminars, harped on a common owner-operator refrain, “Say no to cheap freight,” arguing it can do more harm than good for owner-operators’ bottom lines. “It’s ignorant and you have to stop thinking that way,” he said. “It’s a horrible way to run a business.”

Instead, owner-operators should find loads, even if they just cover costs, that put them in position to score better loads and better rates. Operators should also stop balking at so-deemed cheap freight, which could leave them deadheading or sitting and waiting. “Deadhead is the ultimate cheap freight — you get paid nothing. You want to minimize sitting and waiting for things to get better, and don’t pass up loads that keep your truck moving and get you back into a better lane.”

Concentrate on the “really important stuff”: Many truckers who venture into owner-operator businesses think “being really good trucking is all it takes” to be successful, Rutherford says. “It’s not about trucks — it’s about business, and that’s where we fail in this industry.”

Owner-operators often get bogged down in what Rutherford called “the stuff” — tasks such as DOT registrations, IFTA, UCR filings, permits, signage, insurance and the like.

To run more successfully, operators should concentrate on “the important stuff” and “the really important stuff,” says Rutherford.

The “important stuff” includes setting up a good accounting system, knowing your businesses numbers (revenue per mile, net revenue per mile, fuel costs, etc.) and defining their business model.

The “really important stuff” includes marketing your business, identifying your broker customsers and working on what makes you the most valuable to them.

“You have to build your business around your strengths. Find out what your strengths are and start focusing on that. It’ll make you happier and far more successful,” he says. “Ninety-nine percent of people focus their time, energy and money on the stuff. One percent will focus on the really important stuff.”

More from Rutherford’s three-part seminar series at the Mid-America Trucking Show: