Holy Rate Cut !!

Sorry I can't resist..

Sorry, I can't resist....

We can argue about how much it cost to change a tire all day. It's still not going to get you carriers any more customers or any higher rates.

I'm trying to help.

How about this.. I'll tell you what my sales team did over the last two days and you can use that as a benchmark to see if your sales efforts are paying off.

300 cold calls
=talked to 60 decision makers
=30 Qualified sales leads
=3 sales opportunites in the buying cycle

As I said closed one new customer with 50 loads per month

Got 3 self qualified leads in from my web marketing efforts who are in the buying cycle.

What did your sales guys do?

Here's what I normally see them do, because they come to see me too...

Go to strip of business, drop off rates to 10 people with a business card. = 10 sales calls on their weekly report.. yeah!

Go out to lunch with a current client. = Business Development.

Visit some new/current/prospective customer, talk about their kids for half an hour, then the prospects kids for half an hour, drop off rates and leave. = Great call, new opportunity!

After having met with so many of the trucking sales guys over the last 10 years, maybe I'm just cynical.

The only message I'm trying to convey is if you put as much effort into sales and marketing as you do into running your operations you'd be much better off and have a choice of business.

That's it, I promise, no more. If you don't like my advice, then just ignore it.
 
You should of resisted... I don't think what you just said has anything to do with the subject of this conversation.
 
got the message

I think that what Pablo is trying to tell you, is that in order to generate the revenue that we require, we must think outside of the box. Get on the internet, and the phone, and try to rely less on the link and more on the direct connection with the customer. Try to hone in on the relationship. Its easy on the trucking side of things to get lost in the daily shuffle, and its awfully awfully difficult to stay focused on generating new leads. His suggestion is to hire someone qualified to soley generate new leads. As an owner, in today's market, it is a difficult decision to make, to bring on a new salary, especially when you just finished the best years in trucking to date, and it only took 1-2 customers to keep your trucks full, and now it takes 10-15 customers to do the same. As a salesman Pablo is probably correct, and might be successful at what he does, but as a carrier you're looking through a different light at the same problem. I sympathize with you, as i am a carrier, and this has been the most difficult time in my 15 years, but the only thing that i can suggest is to think outside of the box, and do your best to get the rates up. $5/friday is almost here. lol
 
Here is what seems to have happened to our industry, and I use the term industry lightly. In reallity it stopped being an industry many years ago and is now a commodity no differant than pork bellies or orange juice whose value goes up and down based on supply and demand. If there is lots of freight and few trucks the rates should go up, if the reverse happens the rates go down, simple as that.
I am sure that many of you started in this business years ago and worked for larger carriers that are no longer around. When carriers go tits up and people lose thier jobs and have fewer big carriers to apply to they tend to go into business for themselves.
The "operations" people tend to buy a truck or two and start up a new trucking company, and the sales people tend to start up load broker companies.
The whole load broker/carrier relationship is still a relativly new partnership in trucking.
If you look at the airline, ocean or rail side of things you will see that the "carriers" stopped calling on customers direct 20 years ago and left it up the freight forwarders who are responsible for getting the customers. (except the major accounts).
CN and CP have less sales people knocking on doors than your medium size load broker and they move millions of pounds per day.
Does Air Canada have sales people making cold calls, I dont think so.
10 years ago, load brokers controlled 10% of the freight out there. Today it is probably closer to 90%.
Until both parties learn to work with and respect each other for their indivual strengths they will always be at war.
Without a doubt, load brokers will increase thier customer base 10 times faster than the average carrier simply because they try harder to do it. They are better at it and will go out and get it rather than sit by the phone and wait for a customer to call them.
Until there comes a time when we go back to having a small number of very big carriers, the load brokers will have the power.
Simple as that.
 
So you have a customer direct they ask you for a quote on quite a few loads. You know you will not be able to cover them all with your own trucks so you get a rate from a 3 other carriers. (you all being in the same ball park). Give the rate to your customer and ask how was it? Oh guess what a load broker gave them a cheaper rate. Is it because the load broker's truck runs cheaper? Oh wait that's right they don't have any. So what are they going to do? Find the cheap bottom feeder to take it! How many customers (direct customers) do you think those companies have? Likely none just work off the internet. If the load broker had not cut the rate in the first place three or four normal companies would have had some work. But oh no!!!. Or how about you give a load to another carrier who comes back a couple of months later and cuts the rate to less than you paid him to do it in the first place!!! Thats smart! Work together eh. I'll send our truck empty before that carrier ever gets another load from us!!!!
All the web pages in the world won't stop that. Freight quote .com???? part of the problem or answer? think about it!!!!
 
Don't 75% of the carriers out there, at this point, have thier own brokerage division? Or use other carriers to help them with some moves for their customers that they can't do? I'm sorry but Brokers aren't the only reason for the rate cuts... aside from CH Robinson, Traffic Tech, and a bunch of other smaller Brokers (Including some Carrier/Brokers) there are alot of us out here that actually do try and be fair with everyone we deal with.

Regardless of how this thread started, Pablo has it spot on with sales. Imagine your sales team doing what they did.... I wish the ones we had had half the drive that he expressed his do. Instead they wait around and hope something falls in their lap or depend on other parties (agents) to do the selling. It's upon the owners to make sure there is accountability put on each person, and to make sure they know they will be held accountable for their actions.
 
Like i said, freight has become a commodity. The brokers will eventually control the majority of the frieght. He who controls the invoice, controls the freight.
Rates will never change until until there are fewer trucks, but then again if there were only 2 trucks left in the world they would probably still undercut each other.
Carriers can demand a higher rate but unfortunatly other carriers will come in and cut it back, dont blame the customer for taking a lower price.
Like the owners of sports teams that need a salary cap rule to protect them from themselves, truckers are no differant. Unfortunatly most truckers are smart folks but are thier own worst enemies.
How many times have you called a carrier for a rate and you hear " I dont know, how much are you paying?"

People start trucking companies because they love trucking. People start load broker businesses because they love money.
I agree with who ever started this post, times have changed. This business is not even close to what it used to be. But then again that can be said for most business's.
100 years ago they used donkeys to pull loads, who are we kidding about this "trucking industry" crap. All we do is move stuff from one place to another. If we can charge more than the next guy it is because the shipper hasnt looked hard enough to find the cheapest rate.
I had a customer once say that he treated his freight tenders the same as the tenders he gets for his garbage bin pickup. And he is probably right.
 
Well said whatiship

The salesperson's job is to find the right value quotient for the customer -- in other words, the best mix of price/service. For some customers, service is so paramount that they'll pay more to move something ... if that wasn't true companies like FedEx couldn't exist. Some want the blend that says best price without sacrificing service ... others still are how much can I buy for how little.

Which customers one will be successful with depends on where the company they work with stands on the value quotient scale.

Overall it's driven by supply and demand though -- if you're not priced right for your service level, you've got nothing. If you don't bring value added to the table, you've got nothing.

Really it's only the large carriers that are able to market themselves properly, because the sales process is usually long and requires sizable investment in the sales staff (ie patience and time) to really make it work -- something most trucking companies cannot handle.
 
This post as gone way out of subject. This guy posted about the fact that a broker gave him a load, and the week later wanted to pay him 700$ less. What does it have to do with sales pitch and tools of the trade / technique?

I see also a little gang war with brokers vs carriers going on which I think is dumb. I respect brokers, I respect brokers that know what a truck costs to operate. Not those who come in and think about the $$$ before anything else. Don't forget that its us carriers that make it so you leeches can make money without moving a finger.
(haha im gonna get shit for that one)

But overall, I think there should be a law that if you want to broker out loads, you have to have cargo inssurance, a NIR #, and at least 5 trucks. Because basement brokers are dangerous, when they go bankrupt and that they dont have assets, you'll never see a penny from it. If a carrier flops, well the assets will get some of the payables, and by some I mean most, paid off. I know theres a surity bond but thats only 10k$ whats if its more or people already paid themself off of it.

I don't hate all brokers tho, some do a good job, and pay honest rates. But those who don't, you are the ones I call leeches.
 
leeches can make money

I glad you qualified the "Leeches" business pkf182.

BTW, I've had two customers go bankrupt in the last 13 years. I paid the carriers within 60 days of invoice date.
 
pfk182 said:
This post as gone way out of subject. This guy posted about the fact that a broker gave him a load, and the week later wanted to pay him 700$ less. What does it have to do with sales pitch and tools of the trade / technique?

I see also a little gang war with brokers vs carriers going on which I think is dumb. I respect brokers, I respect brokers that know what a truck costs to operate. Not those who come in and think about the $$$ before anything else. Don't forget that its us carriers that make it so you leeches can make money without moving a finger.
(haha im gonna get shit for that one)

But overall, I think there should be a law that if you want to broker out loads, you have to have cargo inssurance, a NIR #, and at least 5 trucks. Because basement brokers are dangerous, when they go bankrupt and that they dont have assets, you'll never see a penny from it. If a carrier flops, well the assets will get some of the payables, and by some I mean most, paid off. I know theres a surity bond but thats only 10k$ whats if its more or people already paid themself off of it.

I don't hate all brokers tho, some do a good job, and pay honest rates. But those who don't, you are the ones I call leeches.
Click to expand...

Thank you, this was getting way off base. I could understand a rate change if there was a longer time period in between us doing the load and the rate cut, but 7 days? There's no way in hell a rate can drop 24% in that period of time. But what really put the burr under the saddle, is calling and still expecting us to jump all over it, spouting the fact of how slow it is and if we can't find other work their loads are still available to us if we want it. That just told me that they're just playing the game against the down on their luck carrier (like to make them think that) and trying to take advantage of them. Truth be told, the only reason we even did the first couple was because it was a decent lane for us.
 
The decrease in rates are real simple to understand. People (both carriers and freightbrokers) cut the rate simply because they can.

It is common knowledge that whatever the price is, carriers will continue to do it and keep pushing that rate lower because they need the freight. This is why the first thing out of most carriers mouth when freight is available is "what are you paying?" They will make the decision based on a number of other factors such as what rate they got going out, how long has the driver waited, what is the opportunity to put other freight with it, what do they need for cash flow in the upcoming months, and what other commitments do they have that they need to get covered.

Shippers will keep hammering away at the rate if one person out there will do it for cheaper. It is the same for everyone, if they can get the same product for cheaper, they will obviously do it. The unfortunate part for everyone involved is that freightbrokers can find the carriers that will do it cheaper better than anyone else. They have the resources to make dozens of phone calls to source that one guy who has a driver waiting or a load in the destination or any of the scenarios that I mentioned above. Hence, successful freightbrokers who are willing to put those resources on the table are in demand.

At this point in time, carriers will not agree to a price - it has never happened in the past and even if some tried, nobody stuck to it because not all carriers are the same. The factors that carriers contemplate shown above will pressure any price to become lower (just like it will force it to go up when trucks are scarce) and once it happens with some carriers, the same factors will present themselves to other carriers.

Unfortunately, the only obvious solution is either more freight (economy gets much better) to support the number of trucks or less trucks (the rates decrease till people get out) to support the amount of freight. The supply/demand relationship has, over the past 2 years, lowered the rates causing some carriers to go under and others to downsize. The rates are such that most carriers are running at losses. This will only go on until the supply/demand relationship balances out and the price will go back to a point where the majority of carriers are working at a profit. Once the price goes to a point where "good" money can be made carriers will add trucks and start the process over again.

There is no need in an avenue such as this comment board for people to justify their rates or go on about who's right and who's wrong. It is the way it is and everyone wants to make a buck. The best thing anyone can do is to evaluate their position regularly and see weather or not they can make a difference in this market. Maybe its time for you to leave the market? Maybe decrease your equipment more? Maybe change your stragedies a bit. Something has to change or the market will make it change.

This is my 2 cents worth - sorry if you find it redundant or out of place for this post.


Jim
 
Holy crap did this discusion get out of control.

Economics 101: Supply and demand.

More trucks than freight= lower shipping costs

More freight than trucks= higher shipping costs

Only the strong (or lean) will survive. And greasy sales tactics won't help you.
 
now I see

So what you're trying to say is that I'm wasting my time trying to get price increases and sell on value. It's impossible to make people pay more. The market price dictiates everything and it has nothing to do with me, just the supply and demand of trucks.

Great, I'm going to stop working so hard. I'm just going to beat the lowest price and then post it on the Link. Someone will move it, I shouldn't worry that the carrier is losing money because it's not my fault, it's the market.

Thank you all for enlightening me.

Before I change my sales strategy though, I do have one more question. Is there a coffee shortage? Why do people pay $5.00 for a coffee at Starbucks when they can get it for $1.50 at Tim Horton's?

Somehow I can't see how economics 101 applies. Please help me understand how this can be possible in your view of the world.
 
I go back to what I said earlier "you are either a lowest cost carrier or a value differentiated carrier". Never both......yes your price needs to be in line but you can upsell to include services that add value to your customer without adding cost to your bottom line.
Pablo, unfortunately I can't manage to make that work for all of my customers...start a new thread and give us your thoughts on how to convert customers from cost orientated to value orientated.
 
Thebluffs

I gotta say, that is the best question of all. How to convert cost oriented customers over? The supply and demand point is certainly on the spot too. The oversupply of equipment in the market place, has most certainly made it very difficult, to upsell anything. But it doesn't mean that you can't try.
 
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