Truck Driving Jobs

Professor427 · Posted: Sat Apr 05, 2008 11:30 am Post subject:

Ridge Runner wrote: I do want to add one more thing. This has been one of the best debates I have been in, in a long time. No attacks, flames, ect.... Even tho we have different opinions it was kept to a respectful level. I haven't read the book.... but I will. This is the kind of debate we ALL learn from.

Ridge

Not only this thread but a couple of others in the past week have been well debated by people who know a great deal about the transportation industry from all sides. As a newbie on this board, I've enjoyed reading many different forums but the owner operators forum tends to have the best business discussions.
As someone who only recently started calling brokers to get loads for a new owner-operator who busting his ass just to load, drive and deliver, I looked at the requirements to become a freight broker and found them to be extremely lax. Any swinging d*** can fork out $300, post a bond and hang out a shingle.
For the most part, it's probably wise to stick with experienced brokers with decent reputations and credit scores (as many have already pointed out) and (as many like Ridge Runner and Twilight Flyer have said repeatedly) stop hauling cheap freight. Know your input costs, control your variables expenses, and add a reasonable profit margin to establish your rate - nothing less is good enough (but more is always better :lol: ).

no_worries · Joined: 18 Apr 2006 Posts: 856

Paul, I didn't really want to get into the theoretical side but, in my opinion, it's all about the efficiency of the market. With an economics background, you know what I'm talking about. The more inefficient the market, the greater the economic losses experienced by ALL players. It's painfully obvious just how inefficient this market is and how much waste occurs.

No, I would not advocate placing any kind of price controls. History has shown time and time again that they simply don't work. You put in regulations to punish bad behavior and encourage desirable outcomes, such as better information. If you limit regulation to those areas, pricing takes care of itself.

As far as this being an example of perfect competition or a perfect market...hardly. This market has maybe half (and that's being generous) of the characteristics of a perfect market. The most obviously lacking of which is perfect and complete information.

Paul McGraw · Joined: 05 Nov 2006 Posts: 94 Location: Georgia

no_worries wrote: Paul, I didn't really want to get into the theoretical side but, in my opinion, it's all about the efficiency of the market. With an economics background, you know what I'm talking about. The more inefficient the market, the greater the economic losses experienced by ALL players. It's painfully obvious just how inefficient this market is and how much waste occurs.

No, I would not advocate placing any kind of price controls. History has shown time and time again that they simply don't work. You put in regulations to punish bad behavior and encourage desirable outcomes, such as better information. If you limit regulation to those areas, pricing takes care of itself.

As far as this being an example of perfect competition or a perfect market...hardly. This market has maybe half (and that's being generous) of the characteristics of a perfect market. The most obviously lacking of which is perfect and complete information.

Great point, I agree on all counts. Having lived through the Nixon "WIN" (whip inflation now) price controls of the 1970's and seen the problems WIN created, I would think regulation, not price control, would lead to the best results for the most people.

Got to hit the road. Hope to chat with all of you again next week.

Rev.Vassago · Posted: Sat Apr 05, 2008 1:46 pm Post subject:

Paul McGraw wrote: no_worries wrote: Paul, I didn't really want to get into the theoretical side but, in my opinion, it's all about the efficiency of the market. With an economics background, you know what I'm talking about. The more inefficient the market, the greater the economic losses experienced by ALL players. It's painfully obvious just how inefficient this market is and how much waste occurs.

No, I would not advocate placing any kind of price controls. History has shown time and time again that they simply don't work. You put in regulations to punish bad behavior and encourage desirable outcomes, such as better information. If you limit regulation to those areas, pricing takes care of itself.

As far as this being an example of perfect competition or a perfect market...hardly. This market has maybe half (and that's being generous) of the characteristics of a perfect market. The most obviously lacking of which is perfect and complete information.

Great point, I agree on all counts. Having lived through the Nixon "WIN" (whip inflation now) price controls of the 1970's and seen the problems WIN created, I would think regulation, not price control, would lead to the best results for the most people.

The only regulation suggested in this thread so far that would have a positive overall effect would be bonding regulations that put 100% accountability on the broker. It would also likely put most brokers out of business.

got mud? · Joined: 27 May 2006 Posts: 243

Paul McGraw wrote: Dispatch_This wrote:
Brokers frequently overcharge shippers and underpay carriers, leaving less money for growth, equip. maintenence, and ROI.

Loads are all too often co-brokered 2 and 3 times to preserve their marketshare which benefits only the brokers.

Carriers get stiffed when broker goes under because there is nothing (other than a measley $10,000 bond) compelling them to meet their fiduciary responsibilities.

And I won't get in to how badly they have screwed up the cargo claims process, due to their false since of entitlement.

All of these things create INEFFICIENCIES in the MARKETPLACE.

Exactly! In the long run they are sowing the seeds of their own destruction and do not realize it. Anybody see the write-up on CHR in Business Week? These guys do not feel guilty about their actions, they BRAG about them!

would you feel bad if you could haul loads and bring home 1/2 a million a year to yourself? I think you would even brag! the bottom line is why are you so upset because a business is doing well. that is what a good business is supposed to do!!!

a free market already has checks and balances instilled into it. Its called competition. its what keeps prices down and service better. if you charge a high rate and provide poor service then you will fail eventually (this is true in any industry) if you provide outstanding service at to low of a rate you will fail. you have to find the happy medium. competition is what makes it possible.

if you can't get a decent paying load, or you think the broker is ripping you off DON"T USE HIM. would you use a plummer that did the same thing to you? no you would use his COMPETITOR!

no_worries · Joined: 18 Apr 2006 Posts: 856

Quote: The only regulation suggested in this thread so far that would have a positive overall effect would be bonding regulations that put 100% accountability on the broker.

Care to expand on what those other regulations are and why they wouldn't work? So increased bonding would be a positive?

Quote: It would also likely put most brokers out of business.

So this would be a positive?

If it were to put brokers out of business, wouldn't it just be those that fail to pass on their costs of doing business?

Rawlco · Joined: 25 Jan 2006 Posts: 1160 Location: Central Maine

The definition of insanity is doing things the same way and expecting different results. In other words you ought to change yourself before you demand that others change.

Turn the fuel price argument around. Do the gas stations complain to the government when the price they pay for fuel goes up? NO they simply raise the price. Why do we expect the government to do what we won't do for ourselves?

Rev.Vassago · Posted: Sat Apr 05, 2008 6:43 pm Post subject:

no_worries wrote: Rev, correct me if I'm wrong, but didn't you give Steve a hard time when he took his $3.40 load for $1.80?

I did.

Quote: That would seem to imply that he should have had more knowledge of what the shipper was willing to pay instead of simply taking a rate acceptable to him.

While he certainly could have gotten more out of the load than he did, he was comfortable with the rate he negotiated, and when push comes to shove, that is all that matters to his business. The fact that it ultimately has a negative effect on other carriers is simply a byproduct of how he runs his business. In that particular situation, the complaints should be directed at the carrier who failed to properly negotiate the rate, rather than the broker who took advantage of that fact.

The opposite also holds true. I'm sure you've hauled a load for far more than what you needed to earn on it. In that situation, would it have been fair for the shipper to complain that there need to be rate caps on the motor carriers to eliminate those excessive rates? Would you support that?

no_worries wrote:
Care to expand on what those other regulations are and why they wouldn't work?

I'd be happy to.

Rate caps: While it would guarantee that the motor carrier would receive the same amount of the rate every time, it would have the negative effect of causing brokers to raise rates with shippers to compensate for lost revenue, thereby causing shippers to resort to using non-brokered carriers. It makes the big carriers bigger, and the small carriers smaller.

Transparency: This is already available if you do the research. If a broker chooses to not do business with you again for requesting it, that is their right to do so.

Flat rate brokerage: This is essentially the same thing that any carrier who provides percentage based rates offers. If that is what you want, then lease on with a carrier.

Streamlining the process: This would spell disaster for the trucking industry by actually lowering rates. The trucking industry thrives on ineffeciency.

And now onto the issue of 100% bonding:

Quote: So increased bonding would be a positive?

Yes and no. While it would guarantee payment in full to the carrier, it would also put most brokerages out of business. Think about it: If a single broker has 100 loads currently brokered for $1000 each, that would result in that broker needing to be bonded for a minimum of $100,000. It would also require the broker to obtain a larger bonding if they wanted to broker any more loads. I doubt that many brokerages have that kind of cash flow lying around to obtain bonds that large. Due to this fact, the broker is going to attempt to "sell" (not literally) the load to the carrier for as little as possible, to prevent their bond from being tied up. After all, if they have 100 loads for $1000 each eating up their bond, they could simply drop the rate to $900, and squeeze another 11 loads out of their bond, and profit another $10,000 in the process.

The best way to handle it would be to simply run a credit check on the broker (which you should be doing anyway), and choose not to do business with brokers who do not pay. I've said it several times in this thread, and I stand by it. If carriers choose to not do business with a bad broker, the broker will go away, as shippers will stop using that broker. After all, why would any shipper use a broker who can't ship their loads?

Quote:
If it were to put brokers out of business, wouldn't it just be those that fail to pass on their costs of doing business?

Absolutely. And the costs would be passed on to the carriers, which would start the complaining process all over again.

In the end, all of the complaints should fall on the carriers who allow such brokers to thrive; be it the broker who is taking 50% of the rate, or the broker who isn't paying the carriers for services performed. But it's easier to complain about the brokers than your fellow carriers.

hoohaa · Joined: 15 Feb 2004 Posts: 413 Location: Cleveland,TN

Quote: Yes and no. While it would guarantee payment in full to the carrier, it would also put most brokerages out of business. Think about it: If a single broker has 100 loads currently brokered for $1000 each, that would result in that broker needing to be bonded for a minimum of $100,000. It would also require the broker to obtain a larger bonding if they wanted to broker any more loads. I doubt that many brokerages have that kind of cash flow lying around

a broker bond works much the same way as a carriers insurance.

A carrier needs 1,000,000 dollars of Liability insurance.
He does not put up this million dollars himself.
He pays an insurance company a yearly premium .

same with the brokers bond.
They do not put up the 10,000 dollar bond in cash, they pay an annual premium.
The price depends on their credit.

I checked into this, and it would cost me 500 dollars a year to get a brokers bond.

If you raised the bond to lets say a million dollars, then anyone trying to get a brokers bond, would have to have some decent credit, or pay a hefty premium.

This would weed out the guy in the basement brokering loads in his underware, with a phone, and a fax machine.

rank · Joined: 02 Oct 2006 Posts: 1291

Just thought I'd paraphrase what I mentioned earlier. I am all for free markets, but this is more like an auction with a reserve bid.

It has already been decided that the load will move with, oh say LNDSTR company on this day for this amount of money, but MAM posts the load on the internet hoping to get somebody to move it for fuel. The free market theory kind of implies that the broker NEEDS a carrier. They do not. They WANT a carrier to do it for less.

Doghouse · Joined: 21 Mar 2007 Posts: 967

Hey guys first let me say that you have put out some great information for me to work with and also you've done a great job of keeping this thread focused.

I am very interested in our capitalist system,..it's what makes this country great. I have been in many fields making money in all of them, and the system works. I don't want to move to a communist country.

That said, I still think that there should be a cap on what the middle man who does practically nothing should make in the transaction. It's not that I don't think they are doing nothing, they do provide a valuable service,..kind of a one stop shopping for shippers and carriers. The problem that I see is that they start competing with each other and they force the rate down. Then the larger companies like CH see how low they can place freight on our trucks,..and then CH runs the rate down., Then the shippers see the same thing and they run the rate down.

The easy thing for all of us is to not run cheap freight, find direct shippers and forget about the brokers. The thing is,...I think that as time goes by, the more shippers will lower their rates to match what the brokers are paying the carriers. This all leads to a mess. Good paying shippers will be low paying shippers and so on and so on.

If we can put a stop to what the brokers are doing (or atleast make it easier to find out what the shippers are paying, and I mean before the negotiation between the broker and carrier) then all we have to contend with is the shippers. They can't blame the brokers, and the brokers can't blame the shippers. The brokers have been living in this grey area for a long time,...to send some light in there can only help.

I ask my self why do I want to do this for OO's who are too lazy to get out and beat the street (hey, I did it,.and I have some good paying shippers). My response is that if something is not done now,..then what will trucking be like 10 years from now,....will we be running for the same rates?, will the shippers and brokers continue to force the rate down?

I don't know,...I sure don;t want to give another OO the upper hand over me,..but I also don't want to see a guy being forced to run for $1 per mile. Is the driver being forced to,....no absolutly not,....or so it seems. When one driver has a break even point lower than the other,..than the one driver will make more $$. Why should the broker get the $$ when the OO is the one who is running smart with efficient tools.

I apologize for seeming scattered, but I have been in contact with no less than 20 people over this, from OOIDA's political action group to Kevin on XM, from Senator Bill Nelson's aid to 10 reps in the Florida house. Some think this is a valid fight that has good and bad points,..some say screw the OO who can't make it. I am still not sure what to do,...but like somebody said in this thread,...at least I'm making people open their eyes to a problem.

Thanks again everyone for keeping this focused,.....I'm frazzled!!!!!

Rev.Vassago · Posted: Sat Apr 05, 2008 9:21 pm Post subject:

hoohaa wrote: Quote: Yes and no. While it would guarantee payment in full to the carrier, it would also put most brokerages out of business. Think about it: If a single broker has 100 loads currently brokered for $1000 each, that would result in that broker needing to be bonded for a minimum of $100,000. It would also require the broker to obtain a larger bonding if they wanted to broker any more loads. I doubt that many brokerages have that kind of cash flow lying around

a broker bond works much the same way as a carriers insurance.

A carrier needs 1,000,000 dollars of Liability insurance.
He does not put up this million dollars himself.
He pays an insurance company a yearly premium .

same with the brokers bond.
They do not put up the 10,000 dollar bond in cash, they pay an annual premium.
The price depends on their credit.

I checked into this, and it would cost me 500 dollars a year to get a brokers bond.

I stand corrected.

Quote: If you raised the bond to lets say a million dollars, then anyone trying to get a brokers bond, would have to have some decent credit, or pay a hefty premium.

This would weed out the guy in the basement brokering loads in his underware, with a phone, and a fax machine.

I can't disagree with that.

Rev.Vassago · Posted: Sat Apr 05, 2008 9:32 pm Post subject:

Doghouse wrote:

That said, I still think that there should be a cap on what the middle man who does practically nothing should make in the transaction. It's not that I don't think they are doing nothing, they do provide a valuable service,..kind of a one stop shopping for shippers and carriers. The problem that I see is that they start competing with each other and they force the rate down. Then the larger companies like CH see how low they can place freight on our trucks,..and then CH runs the rate down., Then the shippers see the same thing and they run the rate down.

But like I said before, the focus of your frustration and anger is directed in the wrong place. You are blaming the broker, when you should be blaming the carrier. The broker can offer the freight as low as they want, but if there is no carrier willing to move it, then all the discounting in the world is futile. A cheap rate is only a cheap rate if a carrier hauls it for that rate. Otherwise, it is only wishful thinking on the broker's part.

Quote:
I don't know,...I sure don;t want to give another OO the upper hand over me,..but I also don't want to see a guy being forced to run for $1 per mile. Is the driver being forced to,....no absolutly not,....or so it seems. When one driver has a break even point lower than the other,..than the one driver will make more $$. Why should the broker get the $$ when the OO is the one who is running smart with efficient tools.

The driver running for $1 per mile is doing nobody in this business any good, and to be honest, deserves to fail, and should fail. By supporting him, you are helping to drag the rest of the industry down (and believe me - regulating brokers is only supporting that $1 per mile driver, as he is the cause of the low rates in the first place). I would rather see 1000 carriers operating at decent rates, than 10,000 carriers with regulations in place to force brokers to give them decent rates. I don't understand your motivation in supporting the lowest common denominator in the transportation industry.

Focus your efforts where they will do more good - by convincing carriers to stop hauling that cheap freight. Then, and only then will the brokers be forced to increase those rates you feel are too low.

Doghouse · Joined: 21 Mar 2007 Posts: 967

A bunch of other things so the brokers don't think I am trying to go for their throat.
1.I don't care if the bond stays at 10,000 to me thats the OO's job to check the broker out and make sure they are legit.
2.I don't want to shorten the "days to pay" on them,,again this info is up front as well.
3.I don't care if they offer a quick pay for 5%, again that is part of the negotiation.
4.I don't wish to force anyone who choses to work in their undies to put on pants.

I'm not anti-broker at all, but like the real estate brokers,...enough is enough, because they were cutting into a homeowners equity, just like the brokers are cutting into carriers profit.
When a load is put out there for $5,000.00 and the broker gets thier 10% thats $500.00 for a couple of hours work,....and let me tell you, thats all it would take,..loads would move like the wind if the brokers would stop trying to keep,..some of them,....70% of the freight bill.

GMAN · Joined: 13 Feb 2005 Posts: 9779 Location: Tennessee

The main problem we have in this industry as far as rates are concerned are the owner operators and carriers who are more than willing to take the cheap freight. Some industries do seem to have standardized rates for brokers, such as stock brokers and real estate brokers. They all seem to charge about the same commission for their services. Most freight brokers don't want to disclose how much they charge on a load. Some do. However, as someone mentioned earlier, you really don't know if they are being truthful with you or not. I think some transparency would be good for the industry. It would let both the shipper and carrier know what is going on with the money. I have never been one to support more regulations, but the transparency on the bills would be good. After all, they show the gross rate on government loads. Why not on those in the private sector? Having said that, no amount of government regulations will make good businessmen out of those who have no business savvy. If we start putting regulations on how much anyone can charge, it helps to sustain those who are poor business people and hinder those who are good businessmen. Right now we have something akin to a market free for all. Only the strong will survive.

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