50% cut and here is why
I have had a shipper trying to get us to do a lane for them for quite some time now. There is just one or two little problems with the deal.
Problems:
Shipper needs to ship two loads per day.
Loads load each night and will not be ready until 02:00 am in the morning.
Receiver would like to have loads by no later then 10:00 the next morning.
Loads pay $1800.00 for 364 miles
Shipper sometimes likes to take 120 days to pay
It would take three trucks and four trailers to service the account.
(Currently there are about 7 brokers all dealing with this customer and selling the loads for about $900.00 per load)
Ok i can overcome most of the objections and problems with the exception of the 120 days to pay. I will have carried around $306,000 in notes by the time the first ones start paying. This is why the brokers are sharing the loads and taking a 50% cut from the deal, their exposure with this customer is very great just as mine would be. I felt like sharing this so that many out there could see why sometimes you are paid only 50% of the deal, because the other person is indeed taking on the risk associated with paying you long before they even get paid.
So whats my answer to the problem. I told the shipper I would cover the loads for $2200.00 each under their current payment stucture, or I would give them a discount for paying us in advance for our services. I explained that what was currently going on was costing them more money in the long run. I explained that their receiver (of which I have talked to as well), is currently shopping for a new source and they are going to loose the very customer that is feeding them. They responded back that some of their customers took 120 days to pay them. I explained that I understood that but this customer was paying them within two days of receipt of the product, so why are they punishing the good paying customer. I let the shipper know that I have already located another source for the receiver and that they are more than happy to accomadate my terms in order to get the receivers business. I will know which way this is going to go after DOT week is over, we were not willing to go to contract before that time.
Now here is where the brokers should have alredy fixed the problem, but the ones dealing with these customers really don't care about fixing the customers problems at all. They can all rotate the loads around among themselves and make 50% profit, limit their risk, reap the reward, and keep on doing it all over again. Is this really a winning situation for all parties? Looks like the only ones winning are the dishonoable brokers that a gleaning both the shipper and the trucker. Now this shipper can possibly keep going on the way they have been going, but in the end we will get the lane with or without them. I would prefer it to be with them as they are a small company like mine, and they are just at that point of expanding but not knowing how to manange the expansion.
Now I read, and listen to the ads that you 3PLs and brokerages put out there. You claim to be able to help your customers reduce their risk and overhead. Are you really reducing their risk when this is how your side of the industry functions on a day to day basis? The way I see it you are increasing their risk to loose the very customer that the shipper is trying to sell their widgets too. There are many in our industry that seem to like to pass all the risk on down the line but fail to pass the reward of those risk as well. This will shock you truckers, but I actually agree with the brokers taking a larger cut from a load when it is indeed a risky situation. Me personally would rather figure out how to mitigate the risk so I can share the reward with my customers (the shipper, receiver, and yes the trucker). Sometimes when the blinders of greed are on our eyes we fail to be able to do basic problem solving anymore.
Greed, Greed, Greed does not fill the Need, Need, Need.
Problems:
Shipper needs to ship two loads per day.
Loads load each night and will not be ready until 02:00 am in the morning.
Receiver would like to have loads by no later then 10:00 the next morning.
Loads pay $1800.00 for 364 miles
Shipper sometimes likes to take 120 days to pay
It would take three trucks and four trailers to service the account.
(Currently there are about 7 brokers all dealing with this customer and selling the loads for about $900.00 per load)
Ok i can overcome most of the objections and problems with the exception of the 120 days to pay. I will have carried around $306,000 in notes by the time the first ones start paying. This is why the brokers are sharing the loads and taking a 50% cut from the deal, their exposure with this customer is very great just as mine would be. I felt like sharing this so that many out there could see why sometimes you are paid only 50% of the deal, because the other person is indeed taking on the risk associated with paying you long before they even get paid.
So whats my answer to the problem. I told the shipper I would cover the loads for $2200.00 each under their current payment stucture, or I would give them a discount for paying us in advance for our services. I explained that what was currently going on was costing them more money in the long run. I explained that their receiver (of which I have talked to as well), is currently shopping for a new source and they are going to loose the very customer that is feeding them. They responded back that some of their customers took 120 days to pay them. I explained that I understood that but this customer was paying them within two days of receipt of the product, so why are they punishing the good paying customer. I let the shipper know that I have already located another source for the receiver and that they are more than happy to accomadate my terms in order to get the receivers business. I will know which way this is going to go after DOT week is over, we were not willing to go to contract before that time.
Now here is where the brokers should have alredy fixed the problem, but the ones dealing with these customers really don't care about fixing the customers problems at all. They can all rotate the loads around among themselves and make 50% profit, limit their risk, reap the reward, and keep on doing it all over again. Is this really a winning situation for all parties? Looks like the only ones winning are the dishonoable brokers that a gleaning both the shipper and the trucker. Now this shipper can possibly keep going on the way they have been going, but in the end we will get the lane with or without them. I would prefer it to be with them as they are a small company like mine, and they are just at that point of expanding but not knowing how to manange the expansion.
Now I read, and listen to the ads that you 3PLs and brokerages put out there. You claim to be able to help your customers reduce their risk and overhead. Are you really reducing their risk when this is how your side of the industry functions on a day to day basis? The way I see it you are increasing their risk to loose the very customer that the shipper is trying to sell their widgets too. There are many in our industry that seem to like to pass all the risk on down the line but fail to pass the reward of those risk as well. This will shock you truckers, but I actually agree with the brokers taking a larger cut from a load when it is indeed a risky situation. Me personally would rather figure out how to mitigate the risk so I can share the reward with my customers (the shipper, receiver, and yes the trucker). Sometimes when the blinders of greed are on our eyes we fail to be able to do basic problem solving anymore.
Greed, Greed, Greed does not fill the Need, Need, Need.