In light of Covid-19, I have been seeing a lot of positive and negative posts on social media. One in particular that I would like to address is:
Fair freight rates between shippers, brokers, and trucking companies, mainly the owner/operators.
Freight rates are determined by:
- The type of freight hauled
- Where it’s going
- Supply and demand
- Availability in the market place.
When a shipper wants to ship their goods, they will typically look for the right carrier or broker to take the contract. It is then up to the hauling or brokerage company to work with the shipper to get an agreement on the rates. Sometimes there are many hands in the process of a freight move.
This is like any other sector that has a cost of doing business. Costs + Profit = your rate.
When you start adding in things like load brokers, owner/operators and extra drivers, the game changes. There are more hands in the pot. So, as the rate goes down the line, there is less money at the end.
At the end of the day load brokers have to make money, the same as you do. I often hear complaints like, “the rates are terrible, I can’t make money, I’m going to go out of business.” You don’t have to accept the rates you’re offered, and if enough owner/operators decline the going rates, the rates will go up because the freight isn’t moving.
Ask yourself this: Why are you in business in the first place? It’s all fine and good to have a small trucking company, but if there’s no room for you to make a profit, then why are you there? You can try to blame outside forces, but it all starts within yourself. Everything you project outward is a direct reflection of what you are feeling inside. This will affect your business at some point.
Here’s an example: if you feel you’re not getting enough money to haul freight, what is that really about? Somewhere inside yourself you’re feeling that you don’t value yourself enough to set your rates and stick to them. This mindset comes from the belief system you’ve developed over your lifetime. Accepting this might be difficult, but if you stick to your guns, you will either force the rates up or leave the industry.
When you value yourself enough, you will not haul freight at a lower rate. This is a conversation you need to have with whoever you are hauling for, ahead of time. There will always be someone who will haul at a lower rate, which devalues the industry and all the companies in it. These types of businesses usually don’t last long in the industry. As we all know, when you haul freight at a rate that is lower than your costs, you won’t be in business long.
Being a small owner/operator in a big pool can be overwhelming. Try to focus on the important things and stick to a plan. There will always be ups and downs in the transportation industry. Of course things have changed since Covid-19 appeared, and companies will have to do business in different ways moving forward. Get creative and stick to your rates. In the long run it will benefit you more.
Here are some things to focus on:
- Start with your WHY. It is really important to know why you are in business in the first place.
- What drives you?
- What do you value in your life?
- What gets you out of bed in the morning?
- What are your gifts and strengths?
- What are your passions?
- What products or services are you providing that set you apart from your competition?
- If you can’t compete on price, what else can you excel at to add value to your customers?
This is just a small list of things to start you thinking about moving forward in your business or career. People are typically driven by either passion or pain. A lot of businesses are started on passion because this is what drives people. If you’re always focused on negativity and pain, then you will eventually shut down, close off, and stop whatever you’re doing.
Don’t let this happen to you. There are ways to make light of everything. Think about some of these things as you move forward, and if you would like some help, please reach out to us at firstname.lastname@example.org
Until next time…