Today's Trucking

[loaders]

An interesting article in this month's edition, about the role of load brokers written by Mike McCarron. There is an e-version on the web. ( If you don't get the printed version like most of us old geezers!)

 

[MikeJr]

Found it

 

[whatiship]

It's nice to know that the "creative writing" skills learned at Yellow when filling in expense reports have been put to good use.
Good job Ace!

 

[MikeJr]

I thought it was a pretty good article. I'm not clear on the portion about 'customer specific rates' though.
Is he saying that if I have ABC Company and XYZ Company and both ship the identical lane, but ABC ships daily and XYZ ships weekly I should be discounted for the daily customer as they produce more volume?

Anyway, it was a refreshing read.
Happy Friday!
Mike

 

[Rob]

Good article, Kinda funny when he mentions the fact he had a brokerage division at MSM. We used to call Mary tight purse.

Now on the other had when his trucking side called the rates where usually way out of line on the high side.. Go figure.

 

[whatiship]

I believe that Mike's point was that rates should not just be based by lane, but more specifically tailored to each shipper/consignee's individual factors. Things like shipping hours, volume, how the freight "fits" with other shipments on the trailer, what part of town they are in etc, all play a role in the true cost of moving the freight. To just base your price on a city to city and so much per skid formula will often result in pricing that should be higher or lower depending on the above factors.

 

[Michael Ludwig]

Is what he is saying not exactly what I have been preaching since coming onboard here ???

@Mike ... yes Mike, daily shippers cost less in the long run than weekly shippers do. I sent an example to one of your dispatchers. If you haven't seen it, have her dig it out for you.

 

[martinetav]

I personally think that Mr McCarron's article is a fairy tale. Give me a break. When there are 25 trucks for one load, even the nicest most fair broker will take advantage of the fight by carriers to get the load. We carriers don't appreciate having to fluctuate or rate but sometimes, you gotta do what you gotta do to get the freight. Nobody makes a profit when paying a driver layover after layover. The margins are just too thin. I would be curious to know how many brokers are keeping less on a load than they did 10 years ago. We carriers, despite the hefty hikes on our 'cost' side, are getting paid less than 10 years ago. I'm sorry to say that the WHEELS group is no different and take advantage of the high truck ratios to loads too. And please don't talk to me about volume. It wouldn't be the first time that we take a rate cut in order to keep the load only to have it taken away because there is someone else out there who will do it for $50 less a load. They all want 5 star service for dollar store prices... And it is tale telling when you mention how high just the toll cost are and they say back 'what toll costs'. Kind of an indication that they did not factor in the tolls when they developed their rate.

 

[loaders]

Michael, that is what quite a few of us have been saying for a long time on this site, both brokers and carriers such as yourself. There will always be some scumbag brokers and just as many low-life carriers out there. Avoid them at all costs, partner with the 'good" guys and life becomes a whole lot less stressful, and most likely, more profitable for everyone.

 

[Freight Broker]

Quite often the worst rates come from those who have their own trucks and also broker freight. The thinking is that if they can't broker the load off cheap they can always call in one of their own trucks in a pinch. Funny how some outfits demand high rates for their own trucks yet want others to work for peanuts. This is why I like offering cheap lumber loads to some of these guys.. and I'm laughing while I do it. $.85/cent per mile and they do sometimes move for that!!

 

[loaders]

I have heard that quite often as well FreightBroker. We have lanes from a large, multinational shipper that are also serviced by asset based carriers. We get regular calls from carriers who would prefer to haul these for us, as our rate pays better than the asset based carrier who is brokering their loads instead of hauling them on their trucks.

 

[Michael Ludwig]

Loaders, that is our "modus operandi" .
My ideal broker customer is the one that comes to me and says "Michael, we have an opportunity here. What are your costs ... ". To my way of thinking those are the smart people worth dealing with. In fact, those are the people I actively seek to do business with. Those are the people I will actually buy equipment for. Of course lanes come and go but for the most part I've been pretty successful in establishing those relationships and continuing them. I've really only had one go sideways on me, and that was mostly due to the broker truly believing he was smarter than his shipper, but that's a story for another thread.
The long and short of it is that not everyone is built to be a sales person, nor is everyone built to be an operations person, or a human resources person. I'm great at putting puzzles together. Whether it's my puzzle or your puzzle is immaterial. What I do have trouble with is making you understand what I see in your puzzle.
Play to your strengths, partner with those that possess strengths you lack, and make the world go 'round for yet another day.

 

[martinetav]

Quite often the worst rates come from those who have their own trucks and also broker freight. The thinking is that if they can't broker the load off cheap they can always call in one of their own trucks in a pinch. Funny how some outfits demand high rates for their own trucks yet want others to work for peanuts. This is why I like offering cheap lumber loads to some of these guys.. and I'm laughing while I do it. $.85/cent per mile and they do sometimes move for that!!

I have to disagree with you FreightBroker. Nothing new there... in our personal experience, the trucking companies tend to be more generous... they factor in costs like tolls, bridges etc. Brokers tend to pretend they did not know about these costs... yeah right, and I have a bridge that I own in Manhattan for sale

 

[theman]

I can't speak for what he did at MSM but his model is sound. I think what he means by customer-specific rates is that if the broker has a commitment from their customer for the same lane running regularly for say a year, the best partnership is with a carrier that will offer the same to the broker. BUT ... if the customer is transactional and lets their rates be dynamic over time, the broker has to react to it and unless the volume is still committed, the rates from broker to carrier need to be dynamic as well.

I've done it in the past where our rate would be static over time even though our revenue was dynamic ... and vice versa. But there is definitely risk to doing so and not everyone can stomach it.

 

[Michael Ludwig]

... and where that falls apart is when the customer is really transaction, despite voicing their commitment to sustainability. This quite often happens when senior management is paid a bonus based on how much they trim off the budget.

 

[loaders]

Or when a new head of the traffic department comes in and wants to prove themselves in the eyes of management by cutting the transportation budget at the expense of service and reliability.

 

[theman]

I dunno. My experience is that well over 80% of the freight I bring in is on termed contracts with a commitment. If freight is being brokered and our rates are dynamic to carriers it's usually because we haven't secured a sustainable partner to handle the lane regularly.

Low volume freight is pretty much only spot unless it's with a customer who has a bigger picture for us. Buyers need to buy well but it's really a waste of their time if they are buying it load by load.