I would pay 40 cents for the apple but I would also have paid 45 cents each for yesterdays apple and todays on the average. Again, customers have to be trained to understand that like anything, pricing can fluctuate.
Cheap Freight of the Day
- Thread starter thebluffs1
- Start date
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Yes prices CAN go down over time... look at houses in Detroit! I too would rather have nice high rates across the board. My shippers would be happy.. I would be getting a lot more money.. my carriers would be high fiving me all the time and telling me I'm the bestest and the greatest broker of them all. Alas, reality is different.. shippers get pissed, everyone wants a deal.. sometimes I don't make any money, and that carrier high five is really a one finger salute. But we can always dream..
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... and Windsor ... LOL
@martinetav ... Everyone is a consumer in one sense or another, and all consumers think cheaper is better. I offer as witness Black Friday, Cyber Monday, and Boxing Day sales.
@whatiship ... BINGO !!! ... however, shippers are already well aware of the average. They have a budgeted annual transportation spend. As long as the total does not exceed the budget they're happy. And the guy or gal that's in charge gets a bonus if they come in under budget ... usually a percentage of the savings. It's carriers that need to embrace the average. Although it would be nice, not every mile can be a profit mile. All that matters is that the average mile is a profit mile.
If the freight is cheap, and you take it, you close the door just in case something else comes up. For $1600 I may be lucky to find something the next day in Atlanta but if I take the Orlando, for sure I will be running out of route, probably have to pay for the fax, weigh the trailer and other associated costs that just make it worse. You also take the risk of a freight claim, freight is not ready, the broker calls to cancel etc. Most carriers also pay the driver a pick and a delivery which eats into the revenue. It doesn't take much before its better to come home empty and bite the bullet. At least leaving Orlando empty, with that being the only option at the time, gives you opportunity later and you run with an empty trailer.
I assume that this broker posts it on a Monday and has all week to cover it so he will low-ball it and raise the rate if necessary as the drop dead date approaches.
Back in grade 9 accounting we learned about fixed costs and variable costs. We were told that if your business model had mostly variable costs, then your pricing should reflect that to protect yourself. If your business model had mostly fixed costs then pricing at a fixed rate had much lower risk and you stood a better chance of making money.
My accounting teacher must not have been too familiar with the Trucking business which has proven over the years to continually defy the laws of GAAP. (Generally accepted accounting principals)
( I miss grade 9, they were the best 3 years of my life!)
My accounting teacher must not have been too familiar with the Trucking business which has proven over the years to continually defy the laws of GAAP. (Generally accepted accounting principals)
( I miss grade 9, they were the best 3 years of my life!)
These are generalities and subjective. What would your accounting teacher say is a variable cost? Is fuel a variable cost? On one hand if you don't move the truck it costs you zero in fuel. If you move the truck, it costs a specific amount of fuel per mile or per hour or per day. In fact a run from point a to point b, which you are quoting on, uses a specific amount of fuel which can be calculated almost to the dollar. Now it sounds like a fixed cost.
What you didn't take in grade 9 accounting was economics. Its not GAAP that you should be worried about, because every company is bound by the laws of GAAP. Its Supply vs Demand, which @Michael Ludwig mentioned earlier.
The trucking industry simply works like this:
More loads than trucks = Freight rates go up
More trucks than loads = Freight rates go down.
It doesn't matter weather the costs are variable or fixed, the participants have to work within the available freight rate (revenue opportunity). If revenue goes up, then other monsters lurk within the industry to try and get their bigger portion of the revenue stream. Your job, and my job, is to manage the available revenue stream and costs. For this we use GAAP to report where we are in that cycle.
Must be slow out there this week...lots of time to "splain" stuff...
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Just offered $1700 Canadian for a load from Oklahoma to Mississauga from a well respected member who I do not want to throw under the bus but come on!!! A whooping $1.35 a mile..
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load out of the carolinas to the west coast, $1.5/mile..... not great...
how do you guys feel about freight rating software?
how do you guys feel about freight rating software?
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That is a joke also and would rot on the dock.
Why is that what freight rating software comes up with? If so have the freight rating software buy a truck because it costs more than that to run a truck.
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Good for you for paying a living rate. Shame on the pimps that are putting it too carriers.
Pssst spring is coming and the spring rush is starting in places like Iowa and Ohio already, Carriers are like elephants we never forget.
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My carriers aren't complaining either..
I agree Rob.. the market is the market, but it doesn't require people to work below cost.
I agree Rob.. the market is the market, but it doesn't require people to work below cost.