Mike
Well-Known Member
As soon as the fuel prices started skyrocketing, an effort also began to push down the rates. Not a small drop, but what appears to be a 50% slash in average rates. I could speculate on who is to blame for this, but I think it boils down to a few things.
First and foremost, I think there was an assumption, probably an accurate one, that carriers would try to jack up the rates for the near $1.00/gallon price hike in fuel. To hear the experts on Facebook, many were pushing that rates needed to be raised $1.00 or more to cover the increased fuel cost. Obviously, these folks fail badly at all things math. .20/mile more than covers you unless you are down below 5mpg. I'm sure brokers and shippers had this in mind when bringing loads to the market and wanted to start on the low end of the spectrum.
I also think that the brokers and shippers are anticipating a coming hike in rates as produce season breaks loose. Again, try to get the rates as low as possible in order to absorb less of a hit when capacity starts to tighten.
the boards were loaded up today with rates in the $1.50-$1.80/mile range, in lanes that have been consistently around $3.00 or higher for quite some time, including the entire winter.
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Know your costs, and know your worth. Don't cave to stupid low rates, but also realize that there are fixed costs that must be covered as a carrier, and even as owner operator leased to a carrier. Business expenses beyond fuel don't disappear when you "park a truck", nor does your personal expenses.
Efforts to tank rates simply mean you have to work a little harder on the negotiation side. Maybe you have to work a lot harder in some cases, but don't cave to absolute crap rates, and don't think you are going to solve the problem by parking your truck.
The freight still has to move. Sure, loads will fly off the board in times like this as low rates. Just keep working until you get a respectable rate.
Give it time, and those that panic and haul below cost will soon weed themselves out, once again tightening the market.
Don't take it personal. This is business. Carriers want to maximize their profits, and so do brokers and shippers. We all want to make as much money as possible with the lowest possible costs. The brokers are ripping you off when you get a low rate on a load. You are simply failing at negotiating or possibly in the wrong place at the wrong time.
And finally, you aren't failing if you occasionally take a load that loses money. Sometimes you allow yourself to get in a bad location, sometimes the market falls out from underneath you unexpectedly. Cut your losses and get out of there with whatever you can. Just remember, the cheapest load out there is an empty trailer. While it may occasionally make sense to bounce empty, that is the exception, not the rule.
First and foremost, I think there was an assumption, probably an accurate one, that carriers would try to jack up the rates for the near $1.00/gallon price hike in fuel. To hear the experts on Facebook, many were pushing that rates needed to be raised $1.00 or more to cover the increased fuel cost. Obviously, these folks fail badly at all things math. .20/mile more than covers you unless you are down below 5mpg. I'm sure brokers and shippers had this in mind when bringing loads to the market and wanted to start on the low end of the spectrum.
I also think that the brokers and shippers are anticipating a coming hike in rates as produce season breaks loose. Again, try to get the rates as low as possible in order to absorb less of a hit when capacity starts to tighten.
the boards were loaded up today with rates in the $1.50-$1.80/mile range, in lanes that have been consistently around $3.00 or higher for quite some time, including the entire winter.
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Know your costs, and know your worth. Don't cave to stupid low rates, but also realize that there are fixed costs that must be covered as a carrier, and even as owner operator leased to a carrier. Business expenses beyond fuel don't disappear when you "park a truck", nor does your personal expenses.
Efforts to tank rates simply mean you have to work a little harder on the negotiation side. Maybe you have to work a lot harder in some cases, but don't cave to absolute crap rates, and don't think you are going to solve the problem by parking your truck.
The freight still has to move. Sure, loads will fly off the board in times like this as low rates. Just keep working until you get a respectable rate.
Give it time, and those that panic and haul below cost will soon weed themselves out, once again tightening the market.
Don't take it personal. This is business. Carriers want to maximize their profits, and so do brokers and shippers. We all want to make as much money as possible with the lowest possible costs. The brokers are ripping you off when you get a low rate on a load. You are simply failing at negotiating or possibly in the wrong place at the wrong time.
And finally, you aren't failing if you occasionally take a load that loses money. Sometimes you allow yourself to get in a bad location, sometimes the market falls out from underneath you unexpectedly. Cut your losses and get out of there with whatever you can. Just remember, the cheapest load out there is an empty trailer. While it may occasionally make sense to bounce empty, that is the exception, not the rule.
