Bidding your rate per mile

When we truckers or carriers decide to quit bidding our prices based upon our cost per mile then and only then will we realize why we are getting screwed.

I realize that the economy is bad and freight is scarce. This did not make the price to run your equipment magically become cheaper to operate. There is a battle right now again between the Mega's (Shippers, Brokers, and Carriers). The shippers have seen the rates tumbling down and down because small Independents that lack the discipline are pulling cheaper and cheaper. Now the Mega shippers are telling the Mega carriers that they too need to lower their prices to match what we smalller carriers are pulling for. Looks like again the only ones that are going to win in this cess pool are the very ones that pushed for deregulation in the first place. The Mega shippers.

For you small brokers this is my warning to you, just like I warned my contacts at the ATA two and a half years ago. I told them that when the oil market went bust that the rates would start tumbling and that they should help and protect us small Independent Carriers by only making .25 - .50 per mile off of us. At first they did, but they could not resist the greed monster and got into the game of making more and more off of the smaller carriers as well. Well that now is biting them in the ass, is it not? There has been a trend over recent years for the shippers to open their own 3PL's and brokerages and then force feed that fregith into a poop funnel while taking a cut off of the top. Then the brokers and carriers are in a bidding frenzy to get the same freight that just a few months prior they were making more from. They brokers did not change their margins to match and then in return the rates were eroded even more. I want you honorable brokers to think about this for a minute, you are now in effect co-brokering with the shipper after they have already taken a cut of the freight rate.

Why does this happen?

Because hardly any of us small Independent Carriers and brokers know how to properly bid the freight cost in the first place. We are constantly bidding it by the cheapest trucks rates. Wow, and we wonder why we are working harder to go in the hole. We need to understand that our customers can't do it themselves any cheaper then a certain rate. That is the magic number that we should all be working from, not the cheapest trucks rate. Think about some of the shippers that have their own fleets as well. Ask yourself these questions?

1. Are these shippers running around with old beat up equipment or new?
2. Are these shippers paying their drivers substandard wages and no benefits?
3. Are these shippers paying for all miles their equipment run?
4. Are these shippers still paying the cost of overhead for that equipment even if it is not running?
5. How much do these shippers have to pay somebody to manage those trucks?
6. How much risk exposure do these shippers now have moving the freight on their own trucks vs ours?
7. Why do these shippers expect us to take on the risk at a quarter of the cost for them to do it themsevles?

Once you take the time to answer these questions, you will find that you have indeed been selling your services often times too cheap.

Next group of questions for us small carriers and brokers to ponder:

1. Do you think a Mega Carrier that is paying .50 per mile to a driver plus some benefits, and running new equipment is running a truck down the road at $1.50 or less per mile?
2. What does it cost that Mega Carrier to have almost three times as many trailers as trucks?
4. How much does it cost that Mega Carrier for those nice offices and shops with staff?
5. How much risk exposure does that Mega Carrier take on for the Mega Shipper?
6. With a constant turnover rate, is the quality of driver that Mega Carrier as good as the smaller carrier?

Once you realize that we as small business individuals that do not receive subsidies from the government for a training program, or grants for hiring certain types of people. We are at a point in our industry that we are about to hit critical mass. Does anybody remember what happended in 2008 when the shippers expected the Mega's to make concessions on rates? The drivers were asked to take pay cuts by as much as .20 per mile. They just recently started getting back what they had lost, now throw in that trucks, trailers, and parts have went up by as much as 30%. Just how much can our industry absorb on behalf of the rest of the industries behalf. The small shippers are now being coerced to allow the Mega shippers and Mega brokers handle their freight for them. They have been told that we small carriers are unreliable and are getting gouged by the Mega's because of their lack of capacity. Just who is winning in this war? My dad told me when I was a kid, the rich get richer and the poor just get poorer. I used to think this was BS, and I told him in response those that work hard become wealthy, and those that don't become poor. Well my dad ends up being right. When laws and regulations are being stacked against us hard working individuals and we just continue to get told that we have to work harder just to break even or go bankrupt. Where is our relief? Where is our bailout? (which most of us do not desire). Where is our incentive to just sit around and do nothing yet still get paid? I am very concerned about not only America, but our neighbors to the North and South as well. When America starts hurting it effects them as well.

If we smaller business owners don't start working together willingly then we will work together by force. We will be gobbled up by the larger firms and the dream of true capitalism ceases to exist. We small business owners produce 95%, haul about the same percentage of freight. Yet we are the ones constantly being told to lower our prices on our widgets our services, and our lifestyles in order to supply the taste of the greedmonster. I do not believe that this is what our founding fathers envisioned when they decided to put everything at risk for freedom. What we currently have and I am not sure how to exactly classify it politically, or economically except for a combination I call Fasicist-Oligarchy Socialism. This quite simply means a government that is controlled by a leader that one should not dare oppose, that leader is contolled by a few that are really in power with the money, and they pasify the people with socialistic style programs. Is this really what the United States and the majority of the world has become?

When will we small business owners decide enough is enough and take back what is ours, Freedom with Integrity. We still have a chance if we decide to work together, if we don't well you all can't blame me, I have tried and will continue to try until I am dead. "Give me Liberty or give me death" Patrick Henry

Alfred Scott Jordan
Powerhouse Transportation, LLC
Founder of the Independent Carrier Group
Freedom with Integrity