It is not a joke. It is happening out there. The fact that it is happening caused a tidal wave of comments on the LinkedIn “A Truckload, Trucking, Logistics, Supply Chain, 3PL, Distribution group” over the past week. Here is a sample of what the group members had to say.
“I have asked for and gotten almost $4.00 per mile on loads from the Central Valley in California to Portland/Seattle. These are reefer loads, not dry, but that’s a good rate…unless you know beforehand that IF you can find a load back out of that area you will be turned down for the load a lot of times if you want more than $0.89 per mile. On that lane you’ve got to get your money going in…you won’t get much out of there,” stated one trucker.
An Operations Manager at another trucker stated, “As someone who has been in this business a long time, I really don’t see how $ 3.00 – $ 4.00 a mile rates would be considered greed. The cost associated with transportation – insurance , fuel , equipment, taxes, maintenance have all increased about 4- 5 times over what they were 25 years ago while the rates in most lanes have remained pretty much the same. Brokers are taking a bigger cut in most cases, not all. Generally 8- 10%, used to be the norm”.
“I guess it depends on the load itself” stated a Transportation Planner at a Freight Agent. “Shorter miles equal higher rates. Some carriers are just plain greedy, but then some are working the negotiations, asking for higher rates knowing they will have to take less, but hoping to find a happy medium”.
A sales person/dispatcher at a logistics company provided these insights. “See, these are longer miles between 950 miles to 1150 miles. . . I am all about paying a carrier a fair rate, offering more than the bigger brokers, but to pay $3-$4 per mile is outrageous . . .
Certain people are just plain rude, say your rate isn’t good enough and just hang up. It is really becoming tiresome to a point. I want to know what you are thinking and the reasoning behind such a rate. The best part about this week is not ONE word about the Hurricane. I am about good reasoning and to say that a backhaul that pays the same as it always has for years is all of a sudden the reasoning for a $4 per mile outbound is just an excuse”.
“It depends on the trade balance on the specific O-D,” stated an executive with a Canadian freight broker. “Sometimes the freight going the other direction is scarce and/or really low paying. I agree that it’s not normal in many cases, but sometimes it’s the only way . . . To pay . . . $4 a mile when you know the guy has to run empty to get it is not unreasonable”.
An executive with an asset and non-asset based transportation company stated that “Carriers quoting these rates are basically surfing the boards looking for a broker in a bind and won’t book the truck until late afternoon. They get their driver when he is at home so if they don’t get a load he just sits and then they just start calling on posted loads and post their truck to markets where the most loads are posted. They just hope to catch you in a bind. The load boards have made it so that carriers can be profitable without dealing with a direct customer. It is the “Great Commoditization of Trucking”. Fifteen years ago you would never have considered operating a trucking company without direct customers . . . today you can succeed on broker freight. I’ll get off my soap box”.
“It’s interesting that this topic is up for discussion when the trucker has the upper hand in freight negotiating. I can guarantee that the moment the trucks to load ratios changes to favor the shippers there will be no concern shown when truckers complain about low rates and brokers “gouging” the trucks,” stated a trucking company owner.
The last word goes to a freight agent. “I think if the price gets too high it’ll come around to bite us all in the ass-ets. Here is the domino effect:
Too high shipping costs = shippers have to either pass the price onto their distributors and risk them going elsewhere, or eat the loss = distributors raise the price on consumers = consumers buy less = then shippers have to cut back on production = layoff workers = bad for economy.
It does depend on the miles, but I think the original post on this subject meant on a long haul lane. There’s nothing wrong with $2.50 if it includes fuel, but when carriers ask for more than that, then it’s just greed”.
Have a Happy National Trucking Week!
The 2012 Surface Transportation Summit is just a few weeks away. Click on the link www.surfacetransportationsummit to see the agenda and register.
Dan Goodwill, President, Dan Goodwill & Associates Inc. has over 30 years of experience in the logistics and transportation industries in both Canada and the United States. Dan has held executive level positions in the industry including President of Yellow Transportation’s Canada division, President of Clarke Logistics (Canada’s largest Intermodal Marketing Company), General Manager of the Railfast division of TNT and Vice President, Sales & Marketing, TNT Overland Express.
Goodwill is currently a consultant to manufacturers and distributors, helping them improve their transportation processes and save millions of dollars in freight spend. Mr. Goodwill also provides consulting services to investors, vendors to the trucking industry, transportation and logistics organizations. All posts by Dan Goodwill