Stupid, Stupid, Stupid...

M

Manitoba Moose

Member
Jul 27, 2009
322
0
16
Otterburne, MB
10
Some carriers are just looking to go under by some of the most stupid pricing I've seen in a long, long time.

A number of good carriers have already closed their doors and there is starting to be a shortage of trucks so, pricing for freight should be on the way up.... Wrong...

So what happens???

Yesterday, I called a carrier on a 16' Long x 10' High LTL load that we had quoted from Las Vegas, NV to Edmonton, AB - 1484 miles - need Stepdeck and tarped. (A side note that the shipper also posts on load boards directly). (Another side note since most people on here are from eastern Canada and probably don't know that the only thing coming out of Alberta is $.70 a mile lumber for decks)

So, he accepts our quote of $3,000.00 and I call a carrier that had a truck posted in the area. He tells me that the shipper has already given him that load, but would not tell me for how much he got it. I told him that we were paying $2,800.00 on this load. So he offers to cancel from the shipper and take it from me.... I told him it was NOT GONNA HAPPEN...

So I called the shipper back to confirm that he had given the load to the carrier and he had after he informed me that the carrier had quoted him $1,650.00 all included. How could he refuse if the carrier was that stupid, he was going to take his cash... I told him to go ahead and take his cash...

We work like dogs trying to get the rates up and then the same ***holes that bitches about brokers all the time for taking their cash are going direct to shippers and handing them their wallets. He left $1,150.00 on the table. That's half of what he should be getting but he'll probably be the 1st to bitch at how low rates are.

Again, stupid, stupid, stupid.
 
Hey Moose, Two things. First off why would you even bother with freight that was only going to provide you a 7% return. Second did you ever stop to consider that maybe this carrier has a good reason for hauling the freight at that rate. Maybe he was paid for a roundtrip and this or any revenue received is all just gravy. There are many reasons why carriers can haul certain freight from certain lanes at reduced rates. It is very possible that this carrier did just fine on this trip. We will never know, I sugest you chill out a bit theres more than one side to a coin.
 
That happens to me too. I have shippers who work with both brokers and carriers..and my rates are on the high end. So sometimes the carriers actually prefer to work through my company..ie. they may have 1.50/mi. through the shipper but can get 1.80 per mile by going through me. It doesn't happen as much as it used to though because I know who the house carriers are and when they call me I offer them the same crap rates they quoted their shipper..hey...that's fair..their crap rates mean that they get offered the loads first when times are slow..ahead of me.
 
TRUCKIT said:
Hey Moose, Two things. First off why would you even bother with freight that was only going to provide you a 7% return. Second did you ever stop to consider that maybe this carrier has a good reason for hauling the freight at that rate. Maybe he was paid for a roundtrip and this or any revenue received is all just gravy. There are many reasons why carriers can haul certain freight from certain lanes at reduced rates. It is very possible that this carrier did just fine on this trip. We will never know, I sugest you chill out a bit theres more than one side to a coin.
Click to expand...

7% isn't necessarily a problem.If the shipper pays promptly and its a good carrier with a proven record of reliability then 7% or 200 bucks for 15 minutes work on the broker's end isn't so bad. It ain't all about the margin. I move some stuff at 40%...but hey.. I charge my customer 45 bucks and pay my carrier 32..wonderful margins..but still only a lousy 13 bucks. One problem in this industry is we get hung up on margins..The margin you need should be the one that maximizes dollar profit at an acceptable level of risk. I could require 50% margins and move one load a day...or...i could settle for 15% and move 100 loads a day. The bigger the account the slimmer the margins as a rule...you want to maximize profits not margins..

Another reason brokers in general have such a bad rep with carriers ties in with the margin..often you can't get 25% plus margins without beating up the carrier. So you've got a compettiive rate and when 25% is taken off the top you've got a carrier who is working at a loss
 
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Truckit...
Why, if he had a reason to transport for $1,650 did he offer to cancel his trip with the shipper and offer to take it from me? He just low balled because he doesn't know what up-sell means...
 
Flawed thinking

Truckit,

I gotta say that the logic of "I made good money one way so comming home whatever I get is all gravy" doesn't make sense.

This really screws up the market. If you made good money going out, then good for you, don't settle for less coming home. Once the shippers smell a new low rate it becomes the new market price. Everyone loses. Can you imagine a car salesman saying "I got list price on the car I sold today, so the one I sell tomorrow I can lose money on" Never!

I hear this logic all the time and it drives me crazy. We all got to be pushing to get rates up. Let's all try not to leave money on the table regardless of what we got on the other half of the transaction.
 
Pablo said:
Truckit,

I gotta say that the logic of "I made good money one way so comming home whatever I get is all gravy" doesn't make sense.

This really screws up the market. If you made good money going out, then good for you, don't settle for less coming home. Once the shippers smell a new low rate it becomes the new market price. Everyone loses. Can you imagine a car salesman saying "I got list price on the car I sold today, so the one I sell tomorrow I can lose money on" Never!

I hear this logic all the time and it drives me crazy. We all got to be pushing to get rates up. Let's all try not to leave money on the table regardless of what we got on the other half of the transaction.
Click to expand...

This is EXACTLY what I was trying to post, but couldn't put it as eloquently as you did.

Well said!
 
Well said Pablo.

I've had a few shippers call looking for a price and then they follow it up by saying "Can you get me a backhaul rate please?" :rolleyes:

It's no shorter or cheaper to travel from here to there than it is to travel from there to here.
 
In transportation rates are determined by "supply & demand" it has been that way for my 30+ years in this industry. As an asset based carrier I do not have the luxury of passing on a large percentage of freight that does not pay what I want it to pay. I have commitments to keep the flow of my "High Paying" freight moving. I highly doubt as a broker you move your freight at the same margin. I am quite sure you have some accounts you do well with and others that are marginal but at the end of the day/month you hopefully reach your target. It is quite easy for you to sit there when you don't have millions of dollars worth of equipment operating to say we should hold out on every load because we risk damaging the market and/or industry. Personally, I don't give a rat’s &$!@ about the market. I have only one mandate and that is to increase the value of the company to its shareholders. How I do that should be of no concern to anyone other than the shareholders. We operate our business to make a profit and have done quite well over the years. So Pablo with no disrespect it makes complete sense to us.
 
I agree Truckitt our business plan is probably completly different from the next guy and that is because it is what is right for our business not somebody else. In the end if it is a bad business plan we will not be here but it has worked for 16 years (at thiscompany) so I guess we have to continue on.
 
The days of "It costs me $2.00/mile to operate so I have to have $2.25/mile on every run" are gone and have been for quite some time now. These days, from a carrier's standpoint, we look at total cost per month, add in a profit margin and there is our target. The accounting model in asset-based transportation has changed considerably over the past ten years or so. Headhauls and backhauls make no difference any more. It's all about the target.

On another matter, it's good to see that there are actually honest load brokers in the industry, alive and doing well. I find it quite refreshing to see you guys talking openly about the margins you get and/or need to make ... the same as carriers do. Where have you guys been all my life ?!? ... LOL. So, how do we honest carriers find you honest brokers?
 
The Business Plan

I agree with Truckit, and lowmiler88. While being cognizant of the general conditions of the "marketplace", and mentally speculating about the effects that low rates have on it, I have only one mandate. And that is for my business to provide what I want for myself personally. And it does so in spades, without my having to abandon ethical business practices, or empathy and compassion for those that are frustrated and struggling with current economic conditions. That is the whole of my concrete business plan. The other elements are variable as needed.

I, like other brokers here, enjoy a fairly wide range of margins from customer to customer, and various types of freight. I've found that the customers from which I obtain the highest margins, are more than willing to pay for reliability (peace of mind), and innovation (save my butt!). Therefore, logic dictates that I ensure that the carriers that enable me to do so are satisfied also. This means paying them what they require,on time, and developing a mutually beneficial relationship. If I employ the same logic as posted by others about the effects of "low ball" pricing on the market in general, then it follows that my practices must have a negative effect for the shippers whose only consideration is "how little can I get away with paying", and those carriers who are somehow compelled to acquiesce.

I am at times, as others here are, shocked with some of the low rates offered and accepted, and am left wondering"how can they do it for that and stay in business???". But honestly, it's really none of my concern unless it impacts my particular bailiwick. If it does, then what I do about it will be congruent with my "concrete business plan". If that means getting out of transportation altogether and getting involved in a different business, then so be it.
 
I agree with the last few posts. It's not about margin % or margin per load, it's total margin. My job as a salesperson is to give the operations guys work to do ... some stuff moves at slim margin but moves quickly and with customers who have high volume. Freight which is more complicated, more difficult, and smaller shippers moves at higher margins .. needs to as the account has a cost to maintain it.

I'm actually surprised that people out there still think there are these huge margins in it. It's true, there's the odd one out there where you make a lot per load, but all the babysitting and everything doesn't really make it worth it ... the odd one that works on the big margins will have salespeople booking 10 or fewer loads per week, the volume type ... let me put it this way, not even in the same world. I'd rather move the volume.
 
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