Holy Rate Cut !!

Pablo, are you enjoying this ???? These are the same people you have built your business with. Without truckers you can utilize all the marketing bells and whistles you can find and still be dead in the water. I suggest you think back to when #E^%$&$ SN started. It was carriers such as these that put you on the map. Face it there is a reason why you don't own a fleet and never will. It takes a special person to operate a fleet of trucks and deal with drivers day in and day out. Give em a break will you. Do you think this business attracts highly educated folks. If so then the last laugh is on you.....
 
In my humble opinion, Pablo is partially correct, provided that what you are trying to sell is what your target audience is looking for....if you don't know who your target audience is, then Pablo is absolutely correct.
I've heard it said that you are either a "cost leader" or a "differentiated value" carrer.....more true words have rarely been spoken. However, the current economic situation means that these two positions have become much more closely linked.....
regrettably for those of us who are carriers who attempt to focus on being the "differentiated value" carriers.
 
Correct me if I am wrong, but Pablo didnt you just close your doors and re-open. Apparently your business plan is not working.
 
From a broker's perspective, a "Niche" is everything that can move via whatever mode that services the customer and still makes you a profit. At this point we can't afford to work just Flatbed or LTL or any one type of shipment. Our Niche is to be a one stop shop for any given customer. The biggest issues right now are rate cutting by brokers and carriers alike.

Brokers are in tough as they really can only sell the "service" they provide, they can't rely on "saving the customers money" because for the most part we can't, at least not in freight costs. Not saying it's impossible, but it's pretty difficult to compete with some of the prices out there based only on cost. This is, of course, based on competing with direct carriers and some cheaptastic brokers.

If your sales people aren't playing the numbers game and your operations aren't touching current customers as much as possible, things won't get accomplished. 1 Sales person goes out and sees 10 possible clients (Cold Calls) and leaves information, Another goes out and sees 100 in the same week doing the exact same thing, who's going to get the most business or a chance at the business?

Right now, in my humble opinion, if potential clients don't have some kind of touch from any given company, when thier carrier goes under, they aren't going to be calling on that carrier/broker for obvious reasons.

At this point it's a sales game, and if your salespeople aren't out there cold calling as much as possible, you're not going to be upping your profit margins in any way. A little persistance and determination goes a long way. The ability to shrug off the negative side of things (Rejection) will allow sales people to keep on task and stay out there doing everything they can to bring on new clients.
 
It just pisses me off how this thread just went the other way around.

Pablo is a fine vacuum cleaner salesman, because if you think that offering more for less is the way to go well you will never go very far. I'm all about accomadating customers, but there is a price attached to it. Mr. Pablo probably doesn't run a transport company to be saying what he is, or does not know that a transport company makes 5% of profit per load with the high prices of everything around that domain. And that most of the time, a single blow out on a tire on those machines can cost you the entire profit of the load. He sits behind his desk thinking that he's selling weathies.

Some people out there do not know the circumstances why one transporter might be more expensive than the other. Brokers, not all of them but alot of them, are playing the Ebay game upside down, who can make it the lowest, then take the highest,and place theyre quote in between there.

Why would one transport be more expensive than the other?? Very easy. Mutiple facts come to mind easily. Plus you will see different factors that define the word service.


Is the company operating with recent equipement? what does it change?
Where I work, we own all our trucks, those units are worth 150k$ and come with a waranty, that waranty is there for in case of mishaps on the road that can be attended quickly without looking @ estimated price of repairs.

Can you compare that to that small owner operator that buys a 1990s truck for 10k$ that by pure bad-luck blows his engine in the middle of no where? I don't think you can. So thats one of the reason why costing might differ from one company to the other.

Don't tell me that you can compare the costing just with this point.

Insurance wise?
We've been inquiring about hiring owner operators these days, to get a feel from the market and etc, and not to be disrespectful, because I have the more respect for those people than any other in the industry today. But more than once I have encountered owners that do not have more than 100k$ of cargo insurance and such, we run with a 500k$ cargo inssurance to suit everyone's needs, that adds up to your costing.


One major lesson that everyone should know about, and you should really keep that in mind is that, you get what you pay for.

Overall, offer cheap rates, get cheap services.

And today you can't say that service doesnt count, because theres nothing else we can base our prices on. You and im especially pointing this at you Mr. Pablo, cannot tell me that you serve your customers interests by accomodating him by getting the best price out there. You cannot honestly tell me that reputation does not come into play when choosing a carrier. If you have Nanak Express for a price, and lets say Challenger motor express for 100$ more, that you would choose nanak express.

And reputation comes from the choices a company makes to make their transportation more efficient and reliable, that has a price to it.

A big problem we have is that we are not regulated by the goverment like alot our line of work. No fuel surcharge law like the europeans have, no rate by kilometers like the towing company have on provincial highways.

We like it was mentionned before, are the bottom feeders of the industry now adays.

Someone can come under me and say they will cut my rate all they want, and that I am too expensive sometimes. But think about this, when I need to send 1 or 2 tow trucks in the middle of winter because i have a truck that stuck in the snow, and they charge me 2200$ for the towing, I don't have the LUXURY to negociate the rate.

So I feel you guys, trick is, stick together, don't undercut, pay your owners by percentage of the invoice, and get what its worth.
 
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Sorry, I was out seeing customers.

Sorry, I was out seeing customers the last two days. I certainly won't back down from a good discussion. P.S. Just got a new customer at rates double what they were paying a common LTL carrier for a value added service proposal I made on their LTL business.

For the record, I'm a broker. My intent is not to poke fun at carriers, my intent is to open their eyes to the possibilities of how to get higher rates for their services. I'm tired of seeing alot of good carriers go under because they have little or no plan to market. I'm also tired of seeing carriers dump rates in the market hundreds of dollars lower than the customer is used to paying.

ATTENTION CARRIERS! You don't have a cost problem. You do a good job at minimizing costs. You have to. Most carriers run really cost effective and efficient organizations. YOU HAVE A PRICING PROBLEM.. One more tidbit of wisdom....PRICE HAS NOTHING TO DO WITH COST

Stop thinking this way! Price is completly dependent upon what someone is WILLING TO PAY FOR IT. Does the price of a house in Toronto have anything to do with the cost to build it??? Not really.

My challenge to you is to start thinking about how you can:
1. Increase your sales effort
2. Add value to your customers
3. Differentiate yourself from your competitors
4. Increase visibility through web marketing
5. Increase prices through value add services.

If you as the owner of your business are not "educated" as someone put it in one of their posts (not my words), you don't have to be, but find the talent that is and hire them as a consultant or put them on your staff.

This is Sales and Marketing 101 stuff guys. Why isn't everyone doing this now a days? Especially in such a competitive market.

I ask again, are you running a business or a hobby.
 
I have to agree with Pablo that "value added services" can get you the freight for the price you want. If I'm asked for a rate, I will always tell the client what they can expect & then close with the rate. It works 9 out of 10 times
 
You are for some reason mixing up totally different subject. You are talking about how to serve and take care of a customer and/or how to get new customers.

Most of us are talking about people chopping down price and not getting the money that they should be and forcing hungry transporter to put their backs against a wall to choose in between leaving a truck parked, or running at a very minimal price, subject to a disaster.

Pablo, I do respect the way you are trying to open us carriers way of doing business, but since you do not own a single truck, I don't know how you can advise us on anything regarding the cost of transportation nowadays.


The price of a 11R22.5 tire for a truck has doubled since 5 years ago, yet we are doing business at lower rates from years back.

There is no magical recipe, there is none. The only remedy is everyone sticking together and staying with our normal rates. But I do think that alot of this bad behavior is caused by brokers just trying to strike deals and make quick cash.

The problem with the industry is for one, the customer goes around and shops for prices from one place to the other. So when someones goes and gives them lower and lower and lower rate just to move a truck, they ruin the pie for everyone.
 
Stop focusing on cost

Stop focusing on cost. Everyone has the same costs as you. So a strategy of being the low cost provider is destined for failure.

You all pay pretty much the same for fuel, insurance, trucks, drivers, etc. How is it possible that one carrier will have substantially lower cost than another? It's not. If it is, please enlighten me where one buys fuel for 30% less than everyone else.

Again, your problem is pricing not cost.

How productive is it to sit around blaming the market and rising costs. Everyone faces the same market conditions and rising costs. The real problem your facing is how to charge a premium for your service and make a profit. All the complaining about costs isn't going to get you there.

You don't have a cost problem. You have a SALES problem.

Let me tell you a little story about how to get above market rates.

Once upon a time there was a large shipper who hired a freight consultant who put all their business out for bid. All of the transborder LTL business went to a large common carrier for common carrier rates.

The freight consultant made out like a bandit showing how they saved the company hundreds of thousands of dollars on paper. And let me tell you, the rates were cheap.

Then along came a sales rep who sells on value. Instead of talking to the Logistics Manager, he started talking to all the customer service reps who service the company's customers. They were experiencing long transit times, damage, lack of service and they were frequently having to expedite shipments either TL or air to avoid shutting their customers down. The sales rep created an insurrection within the customer service department. Within days all the customer service reps were lined up at the logistics managers door complaining about the new arrangement and wanted a solution to service their customers.

The sales rep proposed:

1. Any shipment that required faster than common carrier LTL service should be shipped with him at a premium.
2. Any shipments between 20,000lbs to 32,000 should be shipped with him because his type of LTL service is faster and more economical for larger LTL because everything over 20,00lbs shipped as a TL.
3. The common LTL carrier didn't provide heat, just blanket wrap, so all liquids should be shipped with him at a premium.

Guess what, the sales rep got the business.

He found a problem, provided a solution and got the business. Price was not an issue.
 
You lost me at your costing is the same as everyone. Clearly you have no idea what your talking about. You obsioubly like to get picky on terminologies and are saying the question today is not money/rates.

You think someone who is operating 2 axles have the same operations pricing has a guy that pulls on 4 axles, Bi-trains, super Bs? Do you even know the how big of a price range there in between each equipment?

So brokers/customers today want you to run with a extendable RGN 3 axle with flip dolley that are worth 80k$ for the same price as a 20k$ flatbed. Its just irrelevant.

So no, rates are not where theyre suppose to be, equipment is costing is different from one to another, theres alot of variances, and to run a successful business you need the $$.

So if you think the cost of operations is the same for everyone else then you do have a missconception of the matter.

Administration fees differ depending on the size of the fleet etc etc.

Don't kid yourself, more and more transport company are going to crash down and burn, and afterwards, I will be in the 1st row enjoying how freight brokers like you just start running around for carriers.

Its because of stuborn and thick headed people like you that things aren't going to change.

Last question for you Pablo, are you a dry van oriented broker?
 
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Pablo said:
Stop focusing on cost. Everyone has the same costs as you. So a strategy of being the low cost provider is destined for failure.

You all pay pretty much the same for fuel, insurance, trucks, drivers, etc. How is it possible that one carrier will have substantially lower cost than another? It's not. If it is, please enlighten me where one buys fuel for 30% less than everyone else.
Click to expand...


If you REALLY believe this, then you have no clue what you are talking about.

Fuel/Oil/Additives - Let's see, how about buying in bulk or buying a jug at a time when you are low. Those two don't cost the same.

Insurance - Hmm... I guess everybody pays the same regardless of their CVOR or past claims history. Of course not, you would have to be pretty dumb to believe that. Those who have better safety programs, CVOR, past claims history will get MUCH better insurance premiums than the idiot who has claims like crazy, no safety program, and a bad CVOR. Besides that, there is the simple idea of shopping around, some people are being raped by insurance brokers and just don't know it. I saved about 35% on my insurance costs this year by shopping around to other brokers.

Trucks - Well, you can buy a piece of crap for $15,000.00 or you can some something fancy for $115,000.00 but you know what? Both trucks will earn basically the same amount, but the guy who bought the fancy truck now has large monthly payments.

Drivers - Again, you can pay them whatever they and you will agree to. In the same company I have seen two drivers doing the same job with one being paid 8cents per mile more than the other. But they both bring in the same revenue to the company.

Oh yeah, and I really had to laugh about your post that said "Just got a new customer at rates double what they were paying a common LTL carrier"... HAHAAHAAAHAAAAHAAAA... Absolute BS!! If anyone else in here believes that a company will pay this guy DOUBLE what they were paying someone else for the same thing, well, "I've got some swampland in Florida to sell you" !!!
 
I agree with you, I have been in this business on both sides, broker (otr and rail) and trucking for 30 years and seen many changes and cycles....we just need to be patient and hope the economy helps our industry soon.
 
this post is going down the toilet

Honestly, this whole thing is hypocritical. Pablo shouldn't have to justify himself to the carriers ... us brokers (and yes, I am one too) survive because we by and large do a better job of marketing ourselves to our customers. And I can tell you 100% for sure that while one can't be out to lunch on price, you don't have to be the cheapest. Those who live by the sword die by the sword.

As far as this 'holy rate cut business', let's face it, transportation rates flow with supply and demand. Rates are falling outbound ... yes ... but not on inbound. When all is said and done, the rate per mile on a round trip is relatively constant.

Why are carriers falling apart? Mostly for the same reason I decided 10 years ago to switch to the broker side ... poor capitalization, weak marketing skills, etc. Sorry to sound harsh but this is my honest opinion.
 
The man is right

I agree with your comments. Although I must add that the rate crush is spreading to the inbound lanes as well.
For example this morning there are two shipments out there on link that we have picked up several times for various brokers over the past 6 months.
We have now quoted 5 different freight brokers for the same freight in less than 24hrs.
Just a few minutes ago another freight broker posted the same freight from a different city 150 miles a way to a destination 100 miles further than the true destination. When I called inquiring I found out it was the same freight. I asked why the wrong pick up and delivery destinations and got the answer that they were close enough .
The freight used to go for $700.00 , (4 skids) she wanted to pay $475.00 the price of 2 skids.
As a carrier I will not touch it , I am sure that some carrier desperate to get his truck moving will pick it up.
The difference is that I do not beleive a carrier would set such a low rate beacuse he knows his costs, and would lose money servicing his client!!!
What perplexes me is that several of the load brokers that originally called me are reputable and sizable, they have held on to their guns and removed their posting. The last broker I mentionned is an affiliate of the Transforce group and is reputable. The question remains as to why they are trying to move the freight for so little. Are they hurting so bad that they need to move freight at any cost????
 
To ALX

Various brokers over the past 6 months ... kinda says it all, doesn't it?

Honestly, sometimes we gotta do what we gotta do. If anything, being part of a public company makes them fight harder because it's all about market penetration.

I for one can tell you for sure, margins aren't what they used to be ... I also work for a large broker but my opinions may not necessarily match the coporation's so I can't tell you who.
 
theman said:
Honestly, this whole thing is hypocritical. Pablo shouldn't have to justify himself to the carriers ... us brokers (and yes, I am one too) survive because we by and large do a better job of marketing ourselves to our customers. And I can tell you 100% for sure that while one can't be out to lunch on price, you don't have to be the cheapest. Those who live by the sword die by the sword.

As far as this 'holy rate cut business', let's face it, transportation rates flow with supply and demand. Rates are falling outbound ... yes ... but not on inbound. When all is said and done, the rate per mile on a round trip is relatively constant.

Why are carriers falling apart? Mostly for the same reason I decided 10 years ago to switch to the broker side ... poor capitalization, weak marketing skills, etc. Sorry to sound harsh but this is my honest opinion.
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I agree with some of the things you said. Rates is about demand and supply yes.

Rates of outbound shouldnt be going down, and inbound going up, because overall your lucky if you get 1.50$/round trip either way. So overall your still barely making it.

My biggest wonder is why I see Dryvan carriers leave go to different places like CA or TX for 1.15$/mile? its totally ridiculous put on your pants van carriers.

And the reason why 5-6 different broker have loads and etc? easy, i've had the same problem this week, customer calls you and calls 6 other carriers, some of them are like me, ask the carrier how much he needs, add a 10-15% on it, and give that customer the price. And thats when it fails, until that customer finds someone who is getting it the cheapest.
 
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