Cheap Paying Freight!!!!

blizzard2014

Veteran Expediter
Driver
What really is the future of the expedited market? It seems like the expedited sector of the freight industry has peaked out. After all, it wasn't all that uncommon for a hard working B-Unit owner to net 100 thousand dollars a year in the late 80's. That was back when Roberts Express, Santana Transport, and a handful of other small companies had the expedited marked cornered. You have to remember that the expedited sector is a highly specialized sector of the transportation industry. So, keeping this fact in mind, the rates should always remain competitive. We dedicate ourselves to excellence in service and we take great pride in delivering our freight on time (or early) as well as in tip top condition. This makes our work unique and challenging. And as someone once said "Big challenges deserve even bigger rewards." We're not fat-lipped-donut-gobbling-fresh-off-the-truck-driving-school assembly line like JB Hunt drivers. We command more; simply because we dersrve more. Because we provide an invaluable service to our customer base.

All of this being said, the main problem is (newcomers to the expedited industry)! What I mean by "newcomers" is people like myself. Drivers that have never seen the kind of money that perhaps the original "roberts express" drivers did when the expediting market was in its prime. A loss of revenue will lead to a loss of quality. This means that more drivers will be willing to haul freight for cut-rate prices because we do not know any better. Now, personally, I think a fair rate for a cargo van driver in todays economy is about a buck a mile with a 20 cent fuel surcharge. Which leads us to the old cliche that expedited freight rates need to be cut in order for individual companies to remain competitive in a slow economy. And an even more ridiculous notion that the days of "Roberts Express" will never be seen again.

Well, this is what happens when one company gets greedy and wants to cover all of the freight that is available in the marketplace. They come in (I will refrain from mentioning names here) and cut the rates so that they can steal away customers from other companies. This in turn leads to a new pay standard. The customer gets used to one carrier hauling the freignt for a set amount of money and thus feels that all of the other carriers should haul their freight at the same price. This then lowers the industry standards and the rate at which we as the driver get paid for our invaluable service.

Ok, fine, let the rates continue to be slashed by cut-throat carriers. It's just going to get to the point where expedited freight pays the same rate per mile that general freight pays. This will then lead to a mass exodous of good drivers and an influx of dysfunctional drivers into the expedited industry. I've seen this happen (once again, i'm not going to name companies here) but it is becoming more commonplace. When you fail to pay the driver what he needs to make a decent living, you then begin to lose intelligent drivers (drivers that are reliable and who take their jobs very seriously) and get drivers that could care less if a critical shipment is delivered on time.

It is when we fail to maintain our status of excellence and service, cut rates, and hire less than desirable people, that we then sacrifice customer service and lose our sense of purpose. Our customer base demands quailty! They demand that our service meets or exceeds that of most of the large truckload carriers. The bottom line is that we provide "super_service" for many of the automotive companies that conduct business in the United States and we should be compensated accordingly.

Raising the rates is not going to effect business that much (as assembly lines are highly dependent upon the expedited carriers to get the critical shipment where they need to be at the exact time that they need to be there)! Thus the large expedited companies need to go to bat for the individual drivers by requiring the customers to pay higher rates in order to have their freight hauled.

Further contributing to this problem is the (contracted rat per mile). By signing a contract that requires you to work for a specific rate per mile, we limit our earning potential. If our carrier gouges the customer (which happens a lot) and generates an exorbitant amount of revenue from a load, we will not get a fair piece of that pie. This rings true because we have sold our soles for such and such amount of money per mile.

Now, lets talk about the last two major companies that are still struggling to keep the rate per mile in the expedited marketplace competitive. The first company is Fedexcc. Fedexcc will not move cheap freight, and even though their drivers have to spend more time sitting around at truck stops waiting to get loaded, they still get some miles. They still make as much, if not more than many of the drivers who work for cut-rate companies. This is because (there will always be desperate customers that will need their freight delivered and the cut-rate companies "as large as they are" will never be able to retain enough units be able to cover every load that is availavle). It is a simple law of averages. The second company is Landstar Express. Landstar Express is another company that refuses haul cheap freight.

OK, let me now clarify a few things here. I'm not trying to bash anyones carrier or to create a revolution within the industry. All i'm trying to do here is get everyone to participate in a civil debate about the future of the expediting industry. I'm also asking that you keep an open mind when you read this post and that you respond in a meaningful and civilized manner. Please, let me know what you think about the rate per mile vs percentage of the load and what you think about the two last major expedited companies that continue to fight for higher rates.
 

RichM

Veteran Expediter
Charter Member
Very good thought provoking post. It should be interesting the responses that will come. Hopefully it will remain for what is.
I have some thoughts on the industry and what has happened but will wait a day or two to say my piece.
 

x06col

Veteran Expediter
Charter Member
Retired Expediter
US Army
Well written and presented. I've been in the business for too long watchin the evolution (or lack of it). Back in the "good ole days" we made very, very good money plying our trade. Some figgured they made such good money (at a time when this service was really catching on) that they would take weeks or months off the road, insteda working till they "cracked the nut" so to speak, and retired and made room for someone else. So... the Carriers had worked very hard to expand this service, and there were no trucks available, because..... So... the recruiting began, with what seemed lower requirements to fill an immediate need. And, resulted in a dimiished quality of service because of the attitude, ability, motivation to "git r done" , and, the expectations of the "new generation". I totally agree we have a large piranah in our midst, but, I feel your predecesors shot YOU in the foot and made way for the piranah. Where will it go?? Dunno. However, if you like what you do, find a fit that complements your motivation, and you will prevail with or without the piranah, and have fun doing it.
 

davekc

Senior Moderator
Staff member
Fleet Owner
The days of Roberts was the "good ole days". The industry has changed and has become more competitive than other. It has brought a totally different business model in order to be successful.
Our ways of operating now, are much different than ten years ago. That in itself isn't a bad thing, it is just a matter of adapting to a ever changing market.
With regards to cheap freight and or carriers, it depends on what market you are looking at. On a regular basis all of the carriers whether Fedex, Lanstar, Panther, or whomever, bid some pretty cheap stuff at times. That is a supply and demand issue, rather than a carrier issue. Look and review some expedite load boards and you will see exactly what I mean. You might be surprised just how close the numbers are between companies. You likely will also notice picking up at each others customers frequently as well.
I don't see anyone with a "lock" on the higher rates.
Nice thought provoking post.








Davekc
owner
23 years
PantherII
EO moderator
 

greg334

Veteran Expediter
I agree with some of this but not everything. This read really familiar, humm.... well never mind.

My point is this, you as a contractor go into this business with eyes open, meaning that you understand that you will get X per mile when you sign that contract and if the company charges far more then X plus cost, well too bad. They are in business for the same reason you are, to make money and times change to the point that there may be a long stretch between those good paying loads and the cr*ppy loads. If you are a contractor where you get X per mile and they don't give you X, well what can I say?

This post also validates something I have been saying, Brand Matters, thats why they can take higher paying freight as stated in the post.
 

Packmule

Expert Expediter
Greg said:

"This post also validates something I have been saying, Brand Matters"

ABSOLUTELY!!

I have been witness to this in 3 other industries. I have always tried to position myself with the highest quality products in the market place. With a quality product comes a higher price tag, which creates a more difficult sell, but once the customer has used a superior product and reaped the satisfaction and benefits the price becomes a minor factor. And yes I have lost business to a lower priced product many times, but with time the business always came
back. Why? Because a wise business man soon realizes that a lower priced product may have a higher cost due to an increased failure rate.

This can also be associated to our industry;
If a company is charging a low rate for a service, and has to pay a lower wage to the work force, will he be able to employ the cream of the crop workers who will be performing the service? NO! Therefore with a lower quality workforce, the service provided will have a higher failure rate. Soon to the customer a low price will mean nothing and he will return to the higher quality (and higher priced) service provider that he knows he can depend on.

Will we see this happen in our industry? I think so. It may be some time before this happens due to a slow economy and other factors which create a need for our customers to seek the lowest pricing possible. But this is a temporary situation and I am sure changes will come as the economy cycles around.

This is in no way directed to any person or Carrier, but a personal conception of the market place in general.

Danny
 

markafd

Expert Expediter
Nice post, would it be great if all the expedite carriers got together and set a rate they all stuck to. UMMMMM sounds like the oil industry. We would all be happier and money falling out are butts, Is it time to wake up yet.
 

LDB

Veteran Expediter
Retired Expediter
>...a lower priced product may have a higher cost...

A point I have made many times, including in my fuel tax thread. Don't look at what the price is. Look at what it costs you. Shippers should equally follow that advice.

Leo Bricker, 73's K5LDB, OOIDA Life Member 677319
Owner, Panther trucks 5508, 5509, 5641
Highway Watch Participant, Truckerbuddy
EO Forum Moderator
----------
Support the entire Constitution, not just the parts you like.
 

x06col

Veteran Expediter
Charter Member
Retired Expediter
US Army
Well Buckeye, if'n you'd like to fess up, i'd like to read about how those "low rates" caused your exit.

Was it in fact "low rates" or, like many others:
Enter underfunded?
Enter under equiped? (meaning wrong equipment)
Enter not matching your motivation to your carrier?
Enter not having any motivation for windshield time, just income?
Enter wanting to see the world, and, not seeing much?
Enter not having TOTAL support of your significant other?

WHAT?
 

buckeyewildman

Seasoned Expediter
like i said it was one of several reasons if you expect me to bad mouth the company that treated me good for 3 years then your barking up the wrong tree maybe there is a reason i did,nt give all the reasons
 

AnneM

Recruiter
Recruiter
I can clear this up!

An accident (not his fault), his van was down for nearly a month then a slow July. Sam was one of our best drivers, never turned down freight, took everything we offered him and ran with it. So his leaving the industry had nothing to do with his performance or work ethic. Just some bad luck.
 

dhalltoyo

Veteran Expediter
BRAND MATTERS!

When I was a sales manager for Toyota, my desk was filled with applications from folks wanting to change brands.

In fact, when it comes to Toyota there is not any selling at all; it is simply a matter of product presentation. The brand sells itself and clients knew they were going to pay more a Toyota.


PS. Regardless of who is in office, the economy is always doing well.
 

raceman

Veteran Expediter
This is a very good post and presented very well.

I do want to say DaveKC, greg334, x06COL said some evry important things and one asked some very good questions.

I have told some and yet I have kept to myself for the most part about what I did to adapt, or should I say continue to to make money. I have no plan to spill my guts here but I will say greg334 and x06COL and asked or stated the most obvious of points/questions.

The bottom line is this is still a good business it just is not so simple anymore and the things we all need to run a truck have become more expensive. Heck there is currently a post on here about insurance going up. All I can say is that folks that got in this business with some of the issues that x06COL mentions will hurt no matter what the freight. The pain will just set in at different times.

I have no problem admiting I screwed up trying to be a fleet owner. If I had not realized my mistakes I would not be setting here waiting to be loaded in my truck. I stopped asked myself some very important personal and business questions, made the changes needed and set out to find a way for this business to work for me. I did that and I am happier now more than ever in the truck and in the business.

My advice, be a business person thinking in a business manner be willing to make changes, open to ideas and listen to those who are successful but more importantly, listened to those who failed. If you truely listen and digest and realize what you hear and you have the ability to then act on that, you will make it. It is those who don't put all that together that have to move on. The freight is out here. I used to say finding a carrier was like finding a shirt. You have to find one that fits. I now offer it a bit differently. Finding something to do with you truck to earn money is like finding a shirt. You have to find one thats in style. In other words stay current with changes.

Raceman
Dedicated O/O
OOIDA 741748
www.trickortruck.com
 

x06col

Veteran Expediter
Charter Member
Retired Expediter
US Army
Buckeye and Anne, I would'nt expect or, care if you typed a Carriers name. 99% of the time a Carrier has nothing to do with a exiting in this business, or, anyone whom is super successful. Luck is quite anuther thing. For most it depends on how soon you get unlucky. And, how you have prepared for you're new venture. Tho i'd bout as soon be lucky as good any day, my deffinition of luck is "when opportunity meets preparation". There should be some downtime payment comming for the "bout a month", if the accident was not his fault. If i'd been that close in the pocket for that "bout a month" ida found something else to fill in while I was down, steada wait'in till too late, and go away. It's just me, but, I certainly don't understand this new math.
 

fastrod

Expert Expediter
Let me see if I have this right. The rates are being slashed by cut-throat carriers who now employ less than desirable people. Every major carrier except fedex and landstar haul cheap freight. Fedex and landstar can charge higher rates because they have the cream of the crop drivers that the other companys can not afford to hire. This means the other carriers will have higher failure rates. Customers that now use the lower priced carriers will go back to fedex and landstar because they can depend on there higher quality service. This sounds like carrier bashing to me. I do not think fedex or landstar are any better than any other carrier out there.
I also think that these low rates are because of increased competition and are not going back up. Maybe the business has changed to the point that it is better suited for retired people and part-timers.
 

nightcreacher

Veteran Expediter
Every carrier has their discounted rates,it's been going on for ever.Back in Roberts hay day,freight would slow,they would raise their rates,funny thing,we would get busier,then the other expedite companies came along,these companies eventually started to cut the rates to get in the market place,well thats evolution,but these rates didnt need cut,but since they are,we are all going to have to live with it.I dont know about staight truck rates,but last year our tractor rates increased,for the short mileage loads and dropped a little for the really long ones,of course that was't for the contracted customers.As was written many times, our fuel sur charge changed,and I was one of those that was ready to jump ship,but I gave them a month,and low and behold,my pay is still better than I can get anywhere else.I dont have to run my truck to death to make a living,Even with the higher costs of everything,my bottom line,is better now than it was in the 80's and 90's.Not to brag,last week I needed to be home. I took a load from Memphis Tn to Cleveland Tn for $877 365 miles,then reloaded 30 miles away for city about 40 miles from home 650 miles paying $1299,both being D loads,1100 total miles and over 2100 bucks,not bad for wanting to go home.
 

joebob1_30132

Expert Expediter
Marty....what economy!!! its slamming ..where you been buddy..if your going to wait for the government to tell you whats up .. then let me be your daddy..i tell you where to send your money !!!!! to me...i bet i will give you more for it. The Government since LBJ has failed at educating our kids,cant sovle poverty (and never will) and cant secure retirment..and they want you money for health care ..they are loosers..and you cn have bush and make him a money stealing nonperforming let me take from you and give it to some else democrat....oh yeah the post...times are changing ..the black smith didnt like it when nobody neede horse shoes any more either. you want o go back to horses be my guest ..ill sell some horse shoes..Ill make money.....remember the gold rush.. I dont.. but for arguments sake.."theres gold in that there expediting"..
 

OntarioVanMan

Retired Expediter
Owner/Operator
Whats this crap??? I am out here to put my competition under if one of you don't make it in a van...good riddance! One more bites the dust! Iffin ya can't run with the big boys...look out!!

Truck drivin is truck drivin....call yourself a professional or what ever name....still a gear jammer...Figurin out all the angles? Got a handle on it??? *LMAO* yeah you and all the millions that have busted before you....better go to Vegas..your odds are better.
Stick together??? *LOL* yeah only flys stick to you know what!!!
If I can turn a penny I'll beat your bid to keep my tires turning. Feel for ya...not a chance.

Question? How many have seriuosly checked out the Airtabs? Why not? I get 3/4 MPG better...YOU can't compete with me!!!

Look out the Mehicans are coming and nothing you can do about it...Are you ready to compete? have you done everything to get better mileage? Check out every possible edge you might need to fend them off???
 
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