RE: Hows the the new FedEx CC FSC program working
Hiya, Cheri
> Turtle, I have no doubt that what you say is accurate, but
>there comes a time when the trickle down effect of passing
>along "the costs of doing business" combined with the lower
>revenue to an individual contractor becomes the point of
>bankruptcy for the contractor.
That's very true. They key is finding the right balance. Operating costs for all phases of the trucking industry are always on the rise. And by that I mean, in part, the costs of paying dispatchers, insurance costs, administrative costs. Carriers have to find a way to cut their costs and increase their revenue, and they'll do it any way they can provided the long term goal coincides with remaining in business.
What they
should be doing is passing along these increased costs to their customers in the form of increased rates. But, Company B, C, D and all of the others will come in and undercut Company A's rates, resulting in Company A eventually going out of business. So, Company A looks for other ways to increase their bottom line.
One way is to cut the costs of paying their contractors. Contractos may either accept this "cost of doing business" or not. The ones who choose not to will go elsewhere, and as long as there are other contractors willing to come in and take on the lower rates, and enough of the current contractors choose to accept the lower rates, then Company A is doing just fine.
Some contractors will go bankrupt, because they are not prepared to handle the fiscal changes. But as long as there are as many or more contractors who can handle it than there are moving away from the company, then from the company's perspective, things are fine.
It becomes a problem when the company can no longer recruit or retain enough contractors to meet or exceed their financial goals. When that happens, the financial goals must be amended and the contractors will have to be paid more in order to maintain the needed fleet size. Companies wil do that by shaving their own bottom line, cutting even more costs, and by passing some of the costs onto customers in such a manner that it has as little impact as possible.
(Shaving and cutting their own bottoms. Now there'a a mental picture
)
>As you say, the company will
>remain solvent, and new contractors will take the place of
>those who leave, but isn't there an inherent wrong in such a
>business ethic?
Yes, and no. It depends on what your business goals are. If you're in business to provide and care for your contractors, then yeah, there's something inherently wrong with high contractor turnover and in passing these costs along to them. If you are in the business of making money, then no, there's really nothing inherently wrong in that. Businesses who pay their employees the Minimum Wage do so
only because they are required to by law. If they weren't required to, then they would be paying less. They would be paying just enough. Just enough to keep them in business and earning as much profit as possible.
>Has business become the American royalty, with a "let them eat cake" attitude?
Well, yeah. Well, no. I mean, well, duh!,
it hasn't
become that, it's always
been that.
Ever asked for more DH or a higher rate for a certain load? That's looking out for #1, and the rest of them can eat cake. It's the same thing.
