Overdrive

May 2017

Overdrive Magazine | Trucking Business News & Owner Operator Info

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Business 28 | Overdrive | May 2017 Owner-operators choosing loads by the mantra of "Say no to cheap freight" could be doing more harm than good for their profitability, says Kevin Rutherford, SiriusXM trucking host and former small-fleet owner and owner-operator accountant. Rutherford presented a session on finding profitable loads in March at the Mid-America Trucking Show in Louisville, Kentucky. "Is there really a definition of cheap freight? I say 'No, there isn't,' " Rutherford says. Instead of "let's say no to cheap freight," he says, "let's say no to deadhead, or minimize it, or plan it better." Even a load that pays below an operator's cost per mile isn't worth shunning if it can bridge two loads that pay well, he says. Rates are determined almost exclu- sively by supply and demand, says Rutherford. Operators turning down what they perceive to be cheap loads don't affect that demand. Instead, outside of market-based forces, the main influence on a load's price is the trucker's ability to define his value and negotiate with brokers, he says. Therein lies the problem, Rutherford says. Many owner-oper- ators don't know their cost per mile and are uninformed about rate trends within the lanes they travel. "The owner-operator always feels like he's getting screwed in the deal because he's the least prepared party in the transaction," Rutherford says. "The brokers know this stuff inside and out and backwards and forward. Does that put them at an advantage when negotiating with you? Of course." To secure the best rates, own- er-operators should become well- versed on the rate trends in the lanes they run and learn how to build relationships and negotiate. He recommends using services such as Truckstop.com to learn historical and seasonal rate trends for the lanes where they operate. They also need to define their business model in ways that highlight their ability to increase value to their customers, he says. "What can you do that would make a broker willing to pay you more?" This could be taking on prob- lem loads or inconvenient schedules, or offering specialized trailers or securement. "You need to start think- ing 'That's my customer. How can I provide so much value that they're willing to pay me more than they would pay anybody else to move the same freight?' " – James Jaillet Rethink 'Say no to cheap freight' Owner-operators should become experts on their favored lanes, says Kevin Rutherford. We believe a rate increase is coming, not by the end of 2017, but [starting] in 2017 and into 2018. Todd Amen, president and CEO of owner-operator business services firm ATBS, speaking on a conference call with clients. Amen predicts implementation of electronic logging devices by yearend will spur rate growth by as much as 10 percent until about mid-2018. As a result, he expects owner- operator net income in 2017 to be "flat to up," an improvement over 2016 when it dipped from 2015. Jim Allen | 365 Trucking

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