August 2018

Overdrive Magazine | Trucking Business News & Owner Operator Info

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Voices 4 | Overdrive | August 2018 Some brokers are truly feeling the pinch on the spot freight markets, as evidenced by an email that came into Overdrive offices with the subject line "Price Gouging." In it, a broker de- claimed that some carriers have been asking for $7 to $10 a mile "just be- cause they think they can get it." The broker wished for a place to report carriers for bad-faith negotiations. One man's terrorist is another's freedom fighter, one might say. The broker recognized the basics of supply and demand, well aware of what she called a "capacity shortage" and a "driver shortage." With the uptick in freight flowing through the economy, the regulatory constraints on hours (including that ELD man- date thing) and the difficulty for any fleet to scale up to meet increased demand at the drop of a hat, it's nat- ural that a carrier would aim higher and higher on rates. A carrier might even aim at out-of-touch-with-reality levels if negotiating with brokers in situations where there's little to lose by doing so. Say it's a situation where the broker's a one-and-done (a term often applied from the other direction to carriers), with whom there's little likelihood of any further relationship. Just as it's true that owner-ops can do consistently better if they invest in relationships with trusted brokers, the same is also true for the brokers. When a broker's not willing to make a relationship effort with steady carriers, he might well expect the occasional or more-than-occasional $7-$10/mile demand. From the owner-op's perspective, Sean Linn, among others, emphasized the need for small fleets and own- er-ops to get what they can while the getting is good. He also noted approaches to negotiations "depend greatly on the broker and the area you're in. If I'm running my normal region and/or dealing with a broker I like working with and trust, then I don't squeeze them. … But if I'm having to deal with one of those large brokers that are at the bottom end of the rate pool, then I squeeze for everything I can get. I take full advantage of their desperation. "I also only haul for them when I can't work with someone I've built that relationship with. Thankfully, I've never been stiffed on a freight bill. I might have a different opinion if I've hauled something for free because they decided to skip out afterwards." Independent Howard Salmon has of late been working with one broker virtually exclusively. Despite the auto- mation buzzword that figures heavily in discussions around traditional and new brokers becoming more and more tech-enabled, Salmon's broker at C.H. Robinson deals with him mostly on the phone when it comes to load scheduling. It's this central point of contact that Salmon, hauling with a reefer, believes has kept his business a success. Rates between $2 and $4 a mile have been the norm of late. He's certain the company's use of data Exploiting rates vs. prepping for slowdown Howard Salmon is making the most of today's explosive rates environment with his 1999 Kenworth (below) and an equally import- ant investment in a long-term relationship with a regular broker, effective insurance against the inevitable downturn. $3.25 $3.00 $2.75 $2.50 $2.25 $2.00 $1.75 Flatbed Reefer Dry Van $2.33 $2.17 $2.04 $3.02 $2.88 $2.73 June 2016 June 2017 June 2018 Spot market paid rates

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