Saying "no" to cheap freight!!
- Thread starter mdpettrey
- Start date
Mike P, Steve B, John E - you just had to drag me in to moderate this out of control post started by Pettrey and fueled by Elliott and Barrett. Steve had to call me out to moderate cause he wanted to put a bad word in the forums. Why couldn't Steve and Mike just be "LURKERS" like they always were? 
Everyone - drivers and carriers included, should say NO to cheap freight. With that said we have to remember the laws of supply and demand remembering the low rates we are sometimes forced to run for, AND also remember the extremely high rates when we might have used those same laws of supply and demand to our favor. Last year I think we carriers and our drivers got pretty fat and happy - things were booming. We made money, and got used to that money. Now that freight has slowed through the historically slow periods of January and February we are upset by lower rates. You have to remember those darn laws of supply and demand. What do I know? I don't work in operations.
A real issue with cheap freight are those carriers able to bid cheaply because they do not operate legally and/or are not insured properly. Their ability to bid lower on freight gives them an unfair advantage. Say no to their cheap freight.
Look for VOI - Verification of Insurance. If a carrier is VOI you can be assured they have correct insurance and policies.
It's great to have Mike and Steve getting involved on EO. If you don't know them they are truly great folks just as John Elliott is.
Thanks,
Everyone - drivers and carriers included, should say NO to cheap freight. With that said we have to remember the laws of supply and demand remembering the low rates we are sometimes forced to run for, AND also remember the extremely high rates when we might have used those same laws of supply and demand to our favor. Last year I think we carriers and our drivers got pretty fat and happy - things were booming. We made money, and got used to that money. Now that freight has slowed through the historically slow periods of January and February we are upset by lower rates. You have to remember those darn laws of supply and demand. What do I know? I don't work in operations.
A real issue with cheap freight are those carriers able to bid cheaply because they do not operate legally and/or are not insured properly. Their ability to bid lower on freight gives them an unfair advantage. Say no to their cheap freight.
Look for VOI - Verification of Insurance. If a carrier is VOI you can be assured they have correct insurance and policies.
It's great to have Mike and Steve getting involved on EO. If you don't know them they are truly great folks just as John Elliott is.
Thanks,
I don't know about everyone else, but I am enjoying a little banter between carriers. It is good to hear the prospective from the carriers point of view. Of course they have to be careful. One a year or so ago referred to drivers "as only a commodity" and he hasn't been seen on here since.
Tennesseahawk
Veteran Expediter
I don't know about everyone else, but I am enjoying a little banter between carriers. It is good to hear the prospective from the carriers point of view. Of course they have to be careful. One a year or so ago referred to drivers "as only a commodity" and he hasn't been seen on here since.
Wouldn't it be neat if that owner from A Blair could come back on, and teach us all about the secrets of running cheap freight and flying monkeys?
I agree with DaveKC. It is always good to see different perspectives. I don't think every carrier sees it as an us vs them situation with the owner operator. I have always looked upon the health of the fleet as a vital long term element to sustainability and growth. Some may view their fleets as a commodity, but that is not the view of every carrier. I was a fleet owner, and I have company tractors so I have lived and see both sides of the fence. A healthy company from top to bottom is much stronger than a company that is heathy only on one end.
Now with falling fuel prices, trucks need to remember that when FSC rates fall by almost half they are not going to get the same rate per mile they were. FSC adjusts based on cost of fuel and depending on the carrier it is a pass thru item. I have seen some drivers that think they should get the same rate as when fuel was twice the price.
I also agree with John Mueller. Supply and demand works both ways. Many carrier and owner operators saw the benefits of this last year for example. Well those on percentage pay did. Again why I prefer the percentage system. It is fairly shared pain and gain. But at times everyone forgets that pendulum swings both ways. It is not a system for those looking at the short term view in my opinion.
Now with falling fuel prices, trucks need to remember that when FSC rates fall by almost half they are not going to get the same rate per mile they were. FSC adjusts based on cost of fuel and depending on the carrier it is a pass thru item. I have seen some drivers that think they should get the same rate as when fuel was twice the price.
I also agree with John Mueller. Supply and demand works both ways. Many carrier and owner operators saw the benefits of this last year for example. Well those on percentage pay did. Again why I prefer the percentage system. It is fairly shared pain and gain. But at times everyone forgets that pendulum swings both ways. It is not a system for those looking at the short term view in my opinion.
Wouldn't it be neat if that owner from A Blair could come back on, and teach us all about the secrets of running cheap freight and flying monkeys?
You Bad Hawk.
If only it was that clear. When contracting with FedEx Custom Critical, and as criticism grew here in the Open Forum of the yellow Penske trucks that were being seen more and more on the road (junker trucks with no sleepers hauling expedited freight), we once got a load offer to cross dock with a truck whose solo driver could not go into Canada.
Expecting to meet another FCC truck, we were shocked to meet a yellow junker truck operated by a driver who spoke little English and kept no log. His load was not secured in any way and the truck, sagging deeply on its springs, was clearly overloaded. The truck was not dock high and the freight was placed too deep in the truck to fork-lift it out (shifted forward after loading?). Had we not had our White Glove freight handling equipment that load would not have been quickly transferred such that the delivery time could be met. We asked and the driver made it very clear that FCC had dispatched this load to his truck. Indeed, a FCC dispatcher said the same thing when we asked where such a truck came from. This practice was seen more and more as name-brand, "high-quality" FCC made use of "partner carriers."
About supply and demand, FCC muddles the picture there too. We once did a great business hauling TVAL freight for FCC. Then the supply and demand equation changed, not because of an industry shift but because FCC purchased and began operating company reefer trailers in direct competition with its owner-operator fleet.
Not only did the supply-and-demand equation change when FCC injected more reefers into the TVAL marketplace, the negative effects on owner-operators were magnified when FCC trashed a once-fair dispatch system to put loads on company-owned equipment ahead of the owner-operator trucks.
True, it was owner-operator tractors that pulled those company-owned trailers, but it was at rates much lower than what veteran contractors accepted before. When you can keep a driver busy and keep a truck rolling with a preferential dispatch system, you can find many willing to drive at a lower rate.
There is more to declining rates (paid to trucks) than simple supply and demand economics. The supply and demand analysis becomes more complex when you find large expedite carriers playing games as described above.
Technology is perhaps the biggest factor in declining rates. The utterly astounding changes that have developed in communications in recent years makes it that much easier for such games to be played by multiple players (including drivers and owner-operators).
Notice that the old salts, who made the fabled big expediting bucks of long ago, did so with a load of change in their pockets and a refined ability to locate a phone booth.
Perhaps it was not the trucks that were in short supply but the ability to communicate with them.
Now days, any shipper can shop thousands of trucks by using the internet. Clever shippers will look for the hundreds of drivers who, at any given moment, need "backhaul" freight to get home or get into a busier lane. In the old days, shippers had no choice but to contract with a carrier who alone had the ability to talk to a driver, if and when the driver called in.
Back then, it was not "backhaul," it was "please call."
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If you could find a way to sell a backhaul any time, every time then you'd get rich. Really it can't be done if the conditions for it don't exist. IMO circumstance is always the biggest factor in any given rate.
I have refrained from posting a comment on this topic other than a little humor for Mike & Steve, cause they are funny guys. If you have not had the opportunity to spend any time with them i suggest you put it on your bucket list, great, great guys. With that said, I agree they are rite on the money with their comments on cheap freight, even though I dont like the " cheap freight " symbolism. I would rather call it, " you should know better" !!!!!!
We operate our fleet pretty much on two single parameters. We have an average per mile rate we set in place for the trucks to keep us profitable and we have a "you should know better " minimum. While we dont mind averaging load rates to meet the minimum from one load to the next there is a bottom line. That bottom line is where the industry has went crazy. This is also where the "you should know better " comes from. Taking a reduced rate load from time to time to do what makes sense is just good business. At the same time there also has to be a bottom that doesnt hurt the industry has a whole. There are way to many that do not put that thought into mind these days. They run whatever rate they are offered just to get that backhaul or get back in the freight lanes. These are both needed options but you have to be smart enough to realize that there has to be a bottom where you say no to the rate know matter what you are trying to do. It becomes detrimental to the industry has a whole. We as members of the industry do need to realize that. We all have to make a living and run our businesses as needed but we also have to keep an ever present mind on our futures and the industry that provides our future. We are the ones who can control what those bottom lines will be and with the help of people like Mike, Steve, John and the rest of the mid sized carriers who realize this along with us it can be controlled.
Supply & demand dictate that we are never going to run consistently for the high rates we saw when expedite first started but with good business sense we can run for good rates that with good management skills will support you business well into the future.
Yes, as has been mentioned many times there are tons of low ball carriers and independents out there that will haul for any rate just to put miles on the truck or van. But, i see a point in the future with regulations where this will become impossible for them to do. The business is changing and hopefully this will be some regulation that will actually help us by weeding out the non compliant low ball carriers.
So, in summary, Thanks to the carriers that put forth the effort to bid a decent rate and strive to keep a decent rate and thanks to all the owner operators and drivers who realize this is an important task for us to keep pursuing. Keep your business mind about you and keep ever present in your business plan that it is ok to take a reduced rate that makes sense, or to average loads together to make that minimum. Most important though, is to keep in mind that there is a rate cutoff line for all size units where it is detrimental to the industry as a whole. Also keep in mind that that bottom line is not your operating expense. Some operating expenses are way below what the rate for the industry should be and those that go way below just because they can hurt the industry also There should be a profit on every load of some percentage and that should be reflected against what is a reasonable industry rate.
We operate our fleet pretty much on two single parameters. We have an average per mile rate we set in place for the trucks to keep us profitable and we have a "you should know better " minimum. While we dont mind averaging load rates to meet the minimum from one load to the next there is a bottom line. That bottom line is where the industry has went crazy. This is also where the "you should know better " comes from. Taking a reduced rate load from time to time to do what makes sense is just good business. At the same time there also has to be a bottom that doesnt hurt the industry has a whole. There are way to many that do not put that thought into mind these days. They run whatever rate they are offered just to get that backhaul or get back in the freight lanes. These are both needed options but you have to be smart enough to realize that there has to be a bottom where you say no to the rate know matter what you are trying to do. It becomes detrimental to the industry has a whole. We as members of the industry do need to realize that. We all have to make a living and run our businesses as needed but we also have to keep an ever present mind on our futures and the industry that provides our future. We are the ones who can control what those bottom lines will be and with the help of people like Mike, Steve, John and the rest of the mid sized carriers who realize this along with us it can be controlled.
Supply & demand dictate that we are never going to run consistently for the high rates we saw when expedite first started but with good business sense we can run for good rates that with good management skills will support you business well into the future.
Yes, as has been mentioned many times there are tons of low ball carriers and independents out there that will haul for any rate just to put miles on the truck or van. But, i see a point in the future with regulations where this will become impossible for them to do. The business is changing and hopefully this will be some regulation that will actually help us by weeding out the non compliant low ball carriers.
So, in summary, Thanks to the carriers that put forth the effort to bid a decent rate and strive to keep a decent rate and thanks to all the owner operators and drivers who realize this is an important task for us to keep pursuing. Keep your business mind about you and keep ever present in your business plan that it is ok to take a reduced rate that makes sense, or to average loads together to make that minimum. Most important though, is to keep in mind that there is a rate cutoff line for all size units where it is detrimental to the industry as a whole. Also keep in mind that that bottom line is not your operating expense. Some operating expenses are way below what the rate for the industry should be and those that go way below just because they can hurt the industry also There should be a profit on every load of some percentage and that should be reflected against what is a reasonable industry rate.
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It always amazes me how we can make the simple so complicated.
IT'S ALWAYS SUPPLY AND DEMAND.
There are more expediting vehicles, carriers, brokers, load boards, etc., etc., than the market needs. Rates will not go up unless the balance shifts back to when the opposite was true. I.e., 25 years ago.
Somebody surfing the web looking for an "easy and cheap way" to start their own little business can find websites that will teach you the best way to enter into this already saturated business. (Not to mention the huge tax benefits that apply to this type of endeavor).
EOL is a prime example. Good people with good ideas encouraging even more drivers. Will even show you where the land mines are hidden, where the best waiting ponds are, etc., etc.
I've been a long-time member of EOL and have gotten immeasurable advice to make my business much more easier than it would probably have been.
Thanks Lawrence and EOL !!!
IT'S ALWAYS SUPPLY AND DEMAND.
There are more expediting vehicles, carriers, brokers, load boards, etc., etc., than the market needs. Rates will not go up unless the balance shifts back to when the opposite was true. I.e., 25 years ago.
Somebody surfing the web looking for an "easy and cheap way" to start their own little business can find websites that will teach you the best way to enter into this already saturated business. (Not to mention the huge tax benefits that apply to this type of endeavor).
EOL is a prime example. Good people with good ideas encouraging even more drivers. Will even show you where the land mines are hidden, where the best waiting ponds are, etc., etc.
I've been a long-time member of EOL and have gotten immeasurable advice to make my business much more easier than it would probably have been.
Thanks Lawrence and EOL !!!
Be carefully you don't confuse some here,its real easy.The next thing you know they run over your foot and then tell you you were standing to close to there tire.This what happens when they not having fun.Cheap Freight is what happens when driver lower there standards,our job use to be special pick a load drive all nite drop it the next morning on the customer door step.The bonus was good pay.Now its how cheap can we get it done for! I've never been a Union guy but those boys on the West Coast shows what happen when everyone pulled together and slowed the ports down.It never get any better until we fight back and say no.Remember that guy that called you,he home every nite eating good food,sleeping a warm bed,he works maybe 8 hrs a day.We get the crumbs they get the whole pie.Its like they used to say Buy American thats hard to do,everything is made some where else.Case and point do what you have to do.Work Smart no hard.An, Army of one is a good starting place.God Bless America.
Supply and demand are a large factor, but not the only one. I do agree with Phil on this one. Carrier antics and plain silliness tips those equations. You are correct. "No need to complicate the simple". If rates are falling to operators, and balance sheets are climbing for carriers, a quick trip through the calculator tells me it is a different type of supply and demand issue.
Absolutely nothing wrong with that unless there is a lack of transparency to their operators or deceptive practices are used to achieve that result.
Then it takes on a different prospective as to industry problems.
Absolutely nothing wrong with that unless there is a lack of transparency to their operators or deceptive practices are used to achieve that result.
Then it takes on a different prospective as to industry problems.
paullud
Veteran Expediter
This industry is different because it is far more than just simple supply and demand that can change rates. If you have a company driver or owner operator that gets their own authority you haven't changed the supply or demand in reality because it is a lateral move. What happens a lot of the time though is that they start running cheap freight or bidding things down to unreasonable rates just to get the load. It's done by the clueless that think $1.50/mile is a lot compared to the $1.30/mile that they were getting or because brokers don't want to deal with new companies. Once those low rates are there once the brokers will keep pushing to get the load covered at that lower rate. Then the next new guy comes along and the process repeats.
Certainly plays a part. No doubt about it.
Thats exactly what i was trying to get across in my post with the " you should know better ". We all have to make some decisions, but common sense has to come into it at some point instead of desperation !!!!!!!!!!!!!!!!
trobertson
Rookie Expediter
Some years ago I posted with regularity on EO. My post were based on my many years of experience in the industry and meant to present a realistic view of our chosen profession. At that time, there were very few Carrier/Owners participating. I have continued to browse the site from time to time to evaluate the topics of discussion. It appears that several of my peers are now involved from time to time and I decided tonight to weigh in once again.
Mike Pettrey, Steve Barrett, John Elliott, John Mueller and their companies are all members of TEANA, an organization that promotes ethical practices and professional attitudes within our industry. Their are many other members of TEANA and those members (for the most part) share many common beliefs. Mike posted regarding a topic that has had much discussion within the TEANA organization, and furthermore gave the members of this forum one of the reasons that many of our lesser known competitors are able to handle the "cheap" freight. Any O/O forum members that drive for these companies know that the costs of insurance is one of their highest expenses, because these companies require each and everyone of their O/O vehicles to provide a minimum of 1M 100K in coverage.
A recent rash of accidents and cargo claims by Carriers allowing O/O to operate without proper insurance coverages and falsifying insurance coverage for vehicles operating in their fleets have given those Carriers and their CUSTOMERS more headaches than anyone would want. Furthermore Broker's interested in maximizing profits who fail to vet the carriers insurance CAN BE held responsible for a portion or all of the loses the carriers insurance does not cover.
TEANA is promoting a service provided by Shelly and John Benisch ( owners of CIS Insurance) that verifies proper insurance coverage on ALL vehicles listed ( whether O/O vehicles or company vehicles) with each member carrier.
VOI - stands for Verification of Insurance and is granted to those TEANA members who are properly and legally insuring each and every vehicle in their fleet. VOI is also granted to Brokers whose insurance is vetted by CIS.
If the company you are associated with, requires less than 1M 100K for your insurance coverage of your personally owned equipment, your company cannot attain VOI certification.
That of course does not mean that your company is participating in the hauling of cheap freight, however I can assure you that those companies that do have the VOI certification are NOT hauling cheap freight.
Cheap freight is not only the product of 'fly by night" Carriers but perpetuated by less than professional Brokers who attempt to cover loads by any Carrier bidding the lowest price.
So...
t-hawk...
that's what I can teach you about cheap freight
(hello to many of my old friends at EO...on this thread daveKC, OVM and others!)
Tom Robertson
A. Blair Enterprises
TEANA - VOI
Mike Pettrey, Steve Barrett, John Elliott, John Mueller and their companies are all members of TEANA, an organization that promotes ethical practices and professional attitudes within our industry. Their are many other members of TEANA and those members (for the most part) share many common beliefs. Mike posted regarding a topic that has had much discussion within the TEANA organization, and furthermore gave the members of this forum one of the reasons that many of our lesser known competitors are able to handle the "cheap" freight. Any O/O forum members that drive for these companies know that the costs of insurance is one of their highest expenses, because these companies require each and everyone of their O/O vehicles to provide a minimum of 1M 100K in coverage.
A recent rash of accidents and cargo claims by Carriers allowing O/O to operate without proper insurance coverages and falsifying insurance coverage for vehicles operating in their fleets have given those Carriers and their CUSTOMERS more headaches than anyone would want. Furthermore Broker's interested in maximizing profits who fail to vet the carriers insurance CAN BE held responsible for a portion or all of the loses the carriers insurance does not cover.
TEANA is promoting a service provided by Shelly and John Benisch ( owners of CIS Insurance) that verifies proper insurance coverage on ALL vehicles listed ( whether O/O vehicles or company vehicles) with each member carrier.
VOI - stands for Verification of Insurance and is granted to those TEANA members who are properly and legally insuring each and every vehicle in their fleet. VOI is also granted to Brokers whose insurance is vetted by CIS.
If the company you are associated with, requires less than 1M 100K for your insurance coverage of your personally owned equipment, your company cannot attain VOI certification.
That of course does not mean that your company is participating in the hauling of cheap freight, however I can assure you that those companies that do have the VOI certification are NOT hauling cheap freight.
Cheap freight is not only the product of 'fly by night" Carriers but perpetuated by less than professional Brokers who attempt to cover loads by any Carrier bidding the lowest price.
So...
t-hawk...
that's what I can teach you about cheap freight
(hello to many of my old friends at EO...on this thread daveKC, OVM and others!)
Tom Robertson
A. Blair Enterprises
TEANA - VOI
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So...
t-hawk...
that's what I can teach you about cheap freight
(hello to many of my old friends at EO...on this thread daveKC, OVM and others!)
Tom Robertson
A. Blair Enterprises
TEANA - VOI
Long time to hear from you my friend....and is SteveO still with ya?....
mrgoodtude
Not a Member
I don't know about everyone else, but I am enjoying a little banter between carriers. It is good to hear the prospective from the carriers point of view. Of course they have to be careful. One a year or so ago referred to drivers "as only a commodity" and he hasn't been seen on here since.
This..
Strength in numbers after all. Or is there? We are competing with the truckload companies at this point. The Walmart's of the trucking industry, where the "volume" not the "rate" is key. I wish I had answers or even better 4100 power units, that a nitwit will lease whilst I force dispatch. Value added service is an old cliche.
Glad to see the carriers participate. I believe tho, if we don't reinvent ourselves and I mean fast, we will become the next Sear's/K-Mart. Prolly be punked by some cat named Rob Low, Dan England or Jerry Moyes. Keep your friends close and your enemies closer.
These links are informative/educational and are helpful to anyone in transportation (even vans down by the river, grooming chinchillas to look like wheel chocks).
Landline/OOIDA is on XM every night @ 23:00 est
Everyone (almost) is on FB search and join "Rate per Mile Masters" "Revenue Knowing Rates and Lanes" ----Heart Smart Highway (shameless plug).
BTW great thread Mike, hope to see ya down the road.
bubblehead
Veteran Expediter
Wish that was true. It seems there is some similarities as the Hunt brothers did to manipulate the market in silver. Nelson Bunker Hunt - Wikipedia, the free encyclopedia I don't see much actual change in rates the customers pay as compared to what carriers are trying to pay contractors. So much taken away including lodging, fuel surcharges, D-time, labor, tolls... and the list goes on. It would be interesting to see some of the old timers gather their thoughts and provide a comprehensive 'then and now' summary of this industry. Real numbers and real facts.
Tennesseahawk
Veteran Expediter
Some years ago I posted with regularity on EO. My post were based on my many years of experience in the industry and meant to present a realistic view of our chosen profession. At that time, there were very few Carrier/Owners participating. I have continued to browse the site from time to time to evaluate the topics of discussion. It appears that several of my peers are now involved from time to time and I decided tonight to weigh in once again.
Mike Pettrey, Steve Barrett, John Elliott, John Mueller and their companies are all members of TEANA, an organization that promotes ethical practices and professional attitudes within our industry. Their are many other members of TEANA and those members (for the most part) share many common beliefs. Mike posted regarding a topic that has had much discussion within the TEANA organization, and furthermore gave the members of this forum one of the reasons that many of our lesser known competitors are able to handle the "cheap" freight. Any O/O forum members that drive for these companies know that the costs of insurance is one of their highest expenses, because these companies require each and everyone of their O/O vehicles to provide a minimum of 1M 100K in coverage.
A recent rash of accidents and cargo claims by Carriers allowing O/O to operate without proper insurance coverages and falsifying insurance coverage for vehicles operating in their fleets have given those Carriers and their CUSTOMERS more headaches than anyone would want. Furthermore Broker's interested in maximizing profits who fail to vet the carriers insurance CAN BE held responsible for a portion or all of the loses the carriers insurance does not cover.
TEANA is promoting a service provided by Shelly and John Benisch ( owners of CIS Insurance) that verifies proper insurance coverage on ALL vehicles listed ( whether O/O vehicles or company vehicles) with each member carrier.
VOI - stands for Verification of Insurance and is granted to those TEANA members who are properly and legally insuring each and every vehicle in their fleet. VOI is also granted to Brokers whose insurance is vetted by CIS.
If the company you are associated with, requires less than 1M 100K for your insurance coverage of your personally owned equipment, your company cannot attain VOI certification.
That of course does not mean that your company is participating in the hauling of cheap freight, however I can assure you that those companies that do have the VOI certification are NOT hauling cheap freight.
Cheap freight is not only the product of 'fly by night" Carriers but perpetuated by less than professional Brokers who attempt to cover loads by any Carrier bidding the lowest price.
So...
t-hawk...
that's what I can teach you about cheap freight
(hello to many of my old friends at EO...on this thread daveKC, OVM and others!)
Tom Robertson
A. Blair Enterprises
TEANA - VOI
Was it the mention of cheap freight, or flying monkeys, that brought you out of the woodwork, Tom? Either way, welcome back. It took several owners arriving on scene, for there to be some good talk about the industry. To me, not enough of the drivers/owners care enough to weigh in.