I'm not inclined to take reduced rate loads. Shorter ones, maybe, depending on deadhead and where it's going, but on the longer ones, 500, 600, 700 miles or more, the reduced rate becomes a much bigger hit to have to absorb.
Most of these reduced rate loads are NMLI loads. I do know that Panther bids quite a bit less on these loads than normal, or than they have in the past, and I also know that the resulting .70 per mile plus 10 cents FSC (for cargo vans) ends up being a much greater percentage of the total load bid than it used to be. Meaning, Panther's take-home percentage is far less than you'd think. They're actually taking the bigger hit.
For example, in the past one of these loads might have been bid out for $1.25 a mile, and then Panther paid out $.77 plus $.13 FSC, for a total of 90 cents paid out, leaving them with $.35 per mile on their end. Now, they may bid the load for 95 cents, and pay out 80 cents, leaving them 15 cents. So they're actually taking a bigger hit than the van drivers are.
They are doing this for a couple of reasons. One, while reduced rate loads aren't as profitable as regular loads for both Panther and the driver, most drivers (owner/operators, at least) can run those loads and not do so at a loss. It's less money going into your pocket, but at least it's not money coming out of your pocket in order to run the load. For many, some profitability is generally preferable to the zero profitability of sitting empty.
The other reason is competition, both short term and long term. They could continue to bid high, and would get far fewer loads, thereby enabling other carriers to better establish themselves with NLM, to gain a better foothold within the NLM system and obtain higher load ratings. When rates do go back up, those other carriers will thus get preferential bid treatment from NLM even in cases where their bids may be slightingly higher than Panther's. So the more reduced rate loads Panther can run now will mean more loads in the long term.
It's just a case of buckling down and having to work harder for less money until this economy turns around. But the same rules still apply insofar as profitability on our end goes. Reduced rate means you have to be more watchful regarding deadhead percentages. Where 20% to 30% overall deadhead was within the norms, now it has to be much closer to 20% or less, otherwise the reduced rate becomes unprofitable. If you're in a not-so-great area and get a reduced rate that takes you to a better area, and the deadhead isn't excessive, then it might be worth taking. If it takes you from a good area to a bad one that will require a lot of deadhead on the backend, it might not make sense to take it.
