Features
Road map
Plotting your way around down freight and low rates requires careful planning and informed decisions

By Jami Jones, senior editor
and Sandi Soendker, managing editor

 

No trucker in his or her right mind would roll up to a “Bridge Out” sign and park the truck.

Waiting for the bridge to be built before continuing with business would be ludicrous.

Every day truckers navigate a complex network subject to changes and detours. While most are familiar with how to plan their routes around road hazards, when the economy throws a monumental speed bump their way, many truckers find themselves wondering what to do next.

So when the economy does take the mother of all U-turns, leaving everyone from mega-business to small-business owners such as truckers wondering what to do next, what does the smart trucker do?

The answer is to come up with a solid plan to deliver you through the tough times – much as when you encounter road construction, road hazards and bad weather. There is always a way through, even in a bad economy.

The key is to have 20-20 vision and no illusions when plotting your path through hard times.

Getting there in one piece

Six or more months before trucking sees an improvement may sound like an eternity to a lot of truckers.

The hits the industry took in the mid ’90s and early 2000s taught the industry a lot. Now is the time to take the lessons learned and put them into play. Even with skyrocketing fuel prices and falling freight levels, many savvy truckers and company owners know you can make it through if you take care of business.

Treat people right

Many successful owner-operator members and trucking companies are that way because even when times are tough they stay with their high standards of customer service, treat people right and make sound business decisions.

Take, for example, Debrick Truck Lines.

In 1958, Arnold and Lorene Debrick started Debrick Truck Lines in Paola, KS, with just one truck. Times were tough, but they survived the old-fashioned way – by treating people well.

Arnold is now retired, although still involved in the company and officially the chairman of the board. His wife, Lorene, was killed Nov. 2 in a three-vehicle collision as the family was gathering for a pheasant hunt. Land Line spoke with their son Kevin less than a week after the wreck.

“My parents were both very involved in the business and very close to their owner-operators. They taught their children that treating people right was the way to keep drivers and customers loyal,” said Kevin, president of the company.

Debrick says the company’s turnover is extremely low, and keeping good owner-operators helps the company meet the challenges of the industry.

Treating people right includes taking care of your customers. Herb Schmidt, president of CFI in Joplin, MO, credits good customer service as a big part of what has seen his company through the lean times.

He pointed out that when freight rates trickle downward, customers who have come to depend on quality service stick with CFI rather than switch to a company with cheaper rates – and maybe service that’s not up to CFI’s standards.

“It’s the level of service we offer. You can’t buy the premium service we offer,” he said.

The right rates

If you paid... Surcharge per
mile

$ 2.01 2.02 2.03 2.04 2.05

2.06 2.07 2.08 2.09 2.10

2.11 2.12 2.13 2.14 2.15

2.16 2.17 2.18 2.19 2.20

2.21 2.22 2.23 2.24 2.25

2.26 2.27 2.28 2.29 2.30

2.31 2.32 2.33 2.34 2.35

2.36 2.37 2.38 2.39 2.40

2.41 2.42 2.43 2.44 2.45

2.46 2.47 2.48 2.49 2.50

2.51 2.52 2.53 2.54 2.55

2.56 2.57 2.58 2.59 2.60

2.61 2.62 2.63 2.64 2.65

2.66 2.67 2.68 2.69 2.70

2.71 2.72 2.73 2.74 2.75

2.76 2.77 2.78 2.79 2.80

2.81 2.82 2.83 2.84 2.85

2.86 2.87 2.88 2.89 2.90

2.91 2.92 2.93 2.94 2.95

2.96 2.97 2.98 2.99 3.00

3.01 3.02 3.03 3.04 3.05

3.06 3.07 3.08 3.09 3.10

3.11 3.12 3.13 3.14 3.15

3.16 3.17 3.18 3.19 3.20

3.21 3.22 3.23 3.24 3.25

3.26 3.27 3.28 3.29 3.30

3.31 3.32 3.33 3.34 3.35

3.36 3.37 3.38 3.39 3.40

3.41 3.42 3.43 3.44 3.45

3.46 3.47 3.48 3.49 3.50

3.51 3.52 3.53 3.54 3.55

3.56 3.57 3.58 3.59 3.60

3.61 3.62 3.63 3.64 3.65

3.66 3.67 3.68 3.69 3.70

3.71 3.72 3.73 3.74 3.75

3.76 3.77 3.78 3.79 3.80

3.81 3.82 3.83 3.84 3.85

3.86 3.87 3.88 3.89 3.90

3.91 3.92 3.93 3.94 3.95

3.96 3.97 3.98 3.99 4.00

4.01 4.02 4.03 4.04 4.05

4.06 4.07 4.08 4.09 4.10

4.11 4.12 4.13 4.14 4.15

4.16 4.17 4.18 4.19 4.20

4.21 4.22 4.23 4.24 4.25

4.26 4.27 4.28 4.29 4.30

4.31 4.32 4.33 4.34 4.35

4.36 4.37 4.38 4.39 4.40

4.41 4.42 4.43 4.44 4.45

4.46 4.47 4.48 4.49 4.50

0.18

0.19

0.20

0.21

0.22

0.23

0.24

0.25

0.26

0.27

0.28

0.29

0.30

0.31

0.32

0.33

0.34

0.35

0.36

0.37

0.38

0.39

0.40

0.41

0.42

0.43

0.44

0.45

0.46

0.47

0.48

0.49

0.50

0.51

0.52

0.53

0.54

0.55

0.56

0.57

0.58

0.59

0.60

0.61

0.62

0.63

0.64

0.65

0.66

0.67

Smart truckers know their costs inside and out. They know how much it costs to leave their truck parked and how much it costs per mile when under a load.

If you’re not going to make money, there’s no reason to take the load, another owner-operator told Land Line. He contends it’s better to sit and search for another load for an extra day or two than to lose money on a load. Watch freight lanes for profitable rounds, not just trips.

One ever-changing cost is fuel. Charging a fuel surcharge is essential, given the unbelievable levels fuel prices are hitting. Even mega carriers admit they have trouble getting shippers to pay a full surcharge rate – but something is certainly better than nothing.

The most effective fuel surcharge programs are based on the U.S. Energy Information Administration weekly reports on the average cost of diesel. Every Monday, the agency releases a report of the past week’s average price of diesel, broken down by region.

Fuel surcharges can then be based on a load’s originating region’s average price of diesel. You can see the most recent price averages on OOIDA’s Web page at ooida.com.

The accompanying grid (at right) shows what the surcharge should be depending on price ranges. The fuel price grid starts with a fuel surcharge of 1 cent per loaded mile with fuel prices at $1.16 per gallon. Fuel prices haven’t been that low since early 2000.

The sample letter, which you should tailor to your individual business needs and policies, notifies your clients that you need to be compensated for the additional costs of fuel and explains your surcharge calculation.

For customers who resist the surcharge, point out the obvious fact that fuel prices are a significant expense for your business and you can no longer operate at the same base rate with your expenses increasing.

Be nimble

Right now, trucking freight and rates are up and down more than a roller coaster at Six Flags. Smart owner-operators and trucking companies know this and build their business base in such a way that when one type of freight dries up or the bottom falls out of the rates, they change their operations.

Through the years, Debrick Truck Lines has expanded to a nationwide carrier of general freight. The company runs 60 trucks, 55 of which are owner-operators. Diversified, they have a 2-to-1 trailer/tractor ratio, which includes vans, flats, steps, double drops, and removable goose necks, giving them the adaptability to keep money flowing.

“If we see one area of freight dry up, the company has the versatile drivers and the equipment to switch out and concentrate on another area,” said Kevin.

Debrick said making conservative growth decisions allows you to manage what you have, keep good drivers, and meet customer expectations.

The old-fashioned way of working hard and working smart will see them through.

Owner-operators with a one-truck, one-trailer operation can do the same thing. You may have hauled the same freight on the same lanes for a decade, but that doesn’t mean you can’t seek out better paying freight elsewhere in the country.

Longtime owner-operators watch the load boards to see what freight is paying and what is not, keeping track of which regions are continuing to need freight and still have return loads out.

Dear xxxx,
As you are no doubt aware, fuel prices continue to spiral to historical high levels. (Insert your company name here) has acted in good faith to resist seeking price relief as long as we possibly could. Due to the critical nature of the current situation, we can no longer continue to absorb the increased cost.
Therefore, effective (insert date here), we must implement a temporary fuel surcharge. The fuel surcharge will remain independent from our base rates and will be shown as a separate entry on our freight bill. The fuel surcharge amount will be charged on a mileage basis, reflecting the extra cost of the fuel used in the specific trip.
Our pricing is based on the U.S. National Average Diesel Fuel Index. We will review this data and our actual costs on a weekly basis. The figure used for cost per gallon is also region specific, established by the average cost of the fuel per gallon, the date and origin of the load.
We deeply appreciate your understanding and partnership with us in helping to share the dilemma of these fuel cost increases. It’s working together that will keep our nation strong during this time of crisis. We hope that by sharing this burden together, we can keep the goods and services that power the American economy moving.

Respectfully,
Your name
Your company’s name

It’s all about doing your homework, one savvy longtime owner-operator told Land Line. Just because you have a broker on the phone telling you it’s a good load, doesn’t make it so. You have to know the market on your own. Brokers will profit at your expense if you let them.

Think fast, move slow

Truckers who are considering making any sort of big financial decision during questionable economic times must make well-informed decisions.

Gimmick loans for homes and automobiles are advertised everywhere. No matter how much a loan officer may assure you it’s a “good deal,” if it sounds too good to be true, it probably is. If you doubt it, talk to a homeowner who bought into such a deal and is facing foreclosure right now. There are plenty out there.

The same goes with leases. Look long and hard before you leap. Running from one bad situation into another that is just as bad, or worse for that matter, could be catastrophic in these tough times.

Plotting out your next step is as important in business decisions as it is in trip planning. The Member Assistance Department at OOIDA can be invaluable for the owner-operator pondering his or her next move. Reviews of leases by Association staff can help. All in all, there are no quick and easy shortcuts out of an economic downturn.

“Weather the storm, and focus on margin rather than growth. The freight you’d be hauling for free – let it go. Downsize, do what you have to do to,” Schmidt of CFI advises. “Just keep blocking and checking until you’re in the clear.” LL

jami_jones@landlinemag.com
sandi_soendker@landlinemag.com

March/April
Digital Edition