Bottom Line
Low Rates
This article is directed to those of you who are truly independent, as I am, and rely on the services of load brokers for the majority of your revenue

by Woody Chambers

Brokers, whether true brokerage houses, freight forwarders or brokerage divisions of carriers, are in business for one reason – to show profit, period. This certainly should be the reason you and I are out here busting our butts and risking our financial futures. If, on the other hand, you are only out here to have an adventure and are subsidized by your spouse’s paycheck and medical benefits, see the country, break-even or enjoy the frustration and depression involved in going broke, stop reading now.

I’ve been trucking for 37 years, 32 of them as a successful owner-operator. Success, remember, is only relative to your own wants, needs and personal satisfaction. I write this not to whine or complain, but as one who truly loves this business and all the challenges involved. This is all I have done my entire adult life, and I intend to continue for the few years I have left until retirement. Nor is this any altruistic effort on my part. What benefits you, most certainly benefits me. I offer the following observation and suggestions in regard to brokered loads.

Observation number one: Low rates are nobody’s fault but our own.

If there is no one available to haul cheap freight, the rate will go up. Most true brokers and freight forwarders have few or no trucks whatsoever. They depend entirely on us to cover their loads. Carriers with brokerage divisions do not put cheap loads on company trucks; there is no profit. Fortunately, depending on your position, there are exceptions to this statement. We see them filing Chapter 11 every day.

Usually these motor carrier companies are run, not by truckers, but by money men, investment bankers and board of directors unfamiliar with this industry. They operate with calculators and sharp pencils figuring their bottom line. Your bottom line could mean less to them.

The operations manager at a company I leased to many years ago used to say, “Figures don’t lie, but liars figure.” Nothing could be truer in today’s environment. Carriers’ successful owner-operators are not dispatched to haul cheap freight because they refuse to haul it. Carriers depend entirely on us independents to cover cheap loads. They live by the motto, “There is always some poor, desperate soul to haul this load.” Make no mistake, brokers are indispensable to our operation. They are our sales force and are absolutely necessary. However, in this respect, they work for us, not the other way around. We have the trucks, the trailers, the authority, the insurance, the drivers and all the expense that goes with it. We should determine the rate, not our sales force and certainly not the shipper. We don’t go into the grocery store and tell them what we will pay for a loaf of bread or a gallon of milk. Stores charge what they need to show profit. Competition will keep the price of groceries down, but the store that sells goods below cost will not be in business long.

To continue with this analogy, nothing in the store will be sold below cost. If it is, the smart shopper will buy only that item and go elsewhere for their other needs. Shippers, especially the big shippers, are smart shoppers. In other words, there is no such thing as a backhaul. As we have seen time and again the backhaul will be in your front yard sooner than later. The idea that a load will pay you for fuel is ridiculous. We are out here to show profit, not buy fuel.

I have worked with, and continue to work with, many fine, honest brokers and carriers. As I mentioned before, they are my sales force and indispensable in that regard. Unfortunately more and more of them are losing their good accounts to the big rate cutters. You know who I’m talking about. The load boards and sheets around the country are dominated by only a few big brokers and carriers. They post loads of 48,000 to 50,000 pounds of full-tarp lumber for 80 cents or less a true mile, not counting your deadhead. The same goes for steel or box freight, or even temperature-controlled goods. All this to sit in some shipper’s or consignee’s yard for hours and then be treated like a piece of dirt.

Have you ever noticed the cheaper the load the worse you are treated? The shipper has beaten everyone else up and the broker has promised him the world at your expense. Why not pick on the easy driver? This is not the broker’s fault, or the shipper’s fault, or the carrier’s fault. It is our fault alone for contracting to haul this cheap garbage in the first place. The above mentioned cast of characters depend entirely on us to move the goods. Remember their motto, “Some dumb owner-operator will haul this load.”

Let’s stop cutting each other’s throats. Don’t call these people. You know who they are. Or better yet, if you have the time, call them on their 800 number and ask every detail about the load. When they give you their deplorable rate tell them that it stinks and hang up. If the broker does not post an 800 number, don’t waste your money. There is no reason for us to cover their cost of doing business. Don’t worry, when a load gets hot and no one calls, the shipper, in the end, has to move the product. Let’s be honest. One phone call should move a decent load every time.

Do not hesitate to negotiate a rate if the one they give you is not satisfactory. We have operated in a deregulated environment for 18 years now. Everything is negotiable – that’s business. I have had some brokers tell me they don’t negotiate with drivers; obviously, lowly drivers in their opinion. I have had just as many brokers come to an agreement on a rate I considered fair. If they don’t have enough to give you a higher percentage, they will have to go back to their customer and negotiate a higher rate. This will only happen when we all refuse to haul cheap. I can’t state this enough; we should determine the rate. It will surely be competitive, but it must be profitable. In this regard, it makes no difference what the broker is keeping – 5 percent or 50 percent – or if the load is double or even triple brokered, as many are. There are no laws governing this. You alone determine what you need to operate at a profit.

There should be no such thing as a dead area where we must take cheap freight to move. The shippers in these areas expect carriers and brokers to cut each other for the limited freight. If we all just deadheaded out of these areas, the rate would go up immediately. Time and again, I have bounced as little as a few hundred miles to haul loads paying a good rate for a shipper who appreciated my service.

Don’t be duped into hauling something you didn’t agree to haul or perform a service not included in the rate you agreed upon. If that 35-foot, 25,000-pound load turns into 45 feet and 45,000 pounds, renegotiate or let it sit. If that two-day delivery spread turns into tomorrow morning, 600 miles away and after the shipper jerked you around for seven hours, cross that appointment off the bills before you sign, or tell them to take the load off. If that legal load is suddenly 10 feet wide, renegotiate, or let it sit in their yard. When that no-tarp load turns into a full-tarp load, renegotiate or take it off. If that no-touch load turns into a 40,000-pound fingerprint or a $150 lumper fee, take it back or take it home.

Or here’s an idea that usually works – screw around long enough on the consignee’s dock, getting in their way and generally goofing things up, so that they will finally unload you themselves.

This job is tough enough as it is. When enough of us refuse to do more than we contracted to do, these abuses will cease. But, we have to stick together.

In closing, I will again repeat observation number one. Low rates are nobody’s fault but our own. Encourage everyone you know and see not to haul this crap. Speak up in front of that load screen; yak about this on the CB. We, alone, determine our independent future in the trucking industry. Let’s stop cutting each other’s throats, now.

The Author

I am pleased that a number of our readers have requested a reprint of my editorial, “Low Rates - Whose fault are they?”, originally published in the November 1998 issue of Land Line. Land Line’s managing editor, Sandi Soendker, asked me if there were any changes I would like to make. I can think of none. Other than the fact that more carriers have gone under, rates have remained low, and in some cases are going even lower and fuel prices continue to rise. The base observation remains the same. “Low rates are nobody’s fault but our own.”

I realize under the present fuel price conditions, it becomes even more difficult to refuse cheap freight or deadhead even moderate distances. But, I am constantly amazed, and usually amused as I read of carrier after carrier going under. I am going to mention only one here, but the circumstances are the same in every instance.

The demise of the Intrenet companies (Roadrunner, Eck Miller and Advanced Distribution) are a perfect example. It would seem they simply refused to operate at a profit. I can vouch for this because other than an occasional partial from Advanced Distribution, any of their loads I ever called on were so ridiculously cheap they didn’t even deserve consideration. The biggest laugh I had was when Intrenet’s executives stated that their customers refused to allow them to raise their rates or institute a fuel surcharge. What? So these geniuses continued to haul at less than cost until they went broke. And us little guys wonder why our business is in such dire shape. It is precisely because we have to compete with carriers like this. Hopefully, whoever takes Intrenet’s place will demand a profitable rate.