I too agree that it's decreased capacity and I agree that reall rates aren't up as much as they seem. Alot of it is fuel. The other day a broker called to sell me a step deck/double drop load and didn't even try a rate on me he just asked "What do you need?". I was driving so I did some quick math in my head and said $1400 for the 425 loaded miles. Not only did he accept it, he offered me two more loads.

Now all of a sudden I'm a cheap freight hauler.

 

A couple of weeks ago, I was trying to come to grips with inflation, and mentioned that I need $3.50 a mile, for a legal load.

Yesterday, it was $4.

There is doubt in half the conversations.
There is understanding in the other half.

I acquired a couple of good contacts, yesterday.
I offered one of the good contacts a flat fee to go to CA: $25,000. It was 104" wide, and light.

There is lots of capacity building in CA, right now.
Even if there weren't lots of capacity building out there, I still don't care to go.

I'm just not sure what figure it would take, to motivate me, for any given job.

 

That certainly minimizes the impact of price fluctuations.

Is this another short season? So you've never worked with year-long contracts? I'm working on putting together a project right now for year-long hauling. Couldn't imagine not incorporating a FSC. Doesn't make sense for me, doesn't make sense for the customer. I'd welcome anyone that thinks they can logically argue to the contrary.

 

I just booked a load for $900 on 163 miles. One pick, one drop, no touch.
20,000 lbs

 

Your best and highest rates are negotiated on the spot-market only when market conditions are in your favor. I can negotiate $3.50+ all day in FL right now but if someone steps up and offers me year-round freight for $2, I'll drop that $3.50 in a heartbeat.

But you're absolutely right. FSC is irrelevant in the spot market but is needed for long-term contracts. That's been exactly my point all along to everyone that says, "Who cares about a FSC. All that matters is the gross rate." As you said, that's only true for short-term arrangements. Not everyone works solely on the spot market. In fact, I'd be willing to bet that the majority of freight does not move on the spot market.

 

The fsc can help offset some costs and avoids the inevitable give and take when fuel jumps quickly. It also assists shippers in planning their budgets. The problem is that some shippers and brokers keep part of the fsc. The consignee is not aware of what is going on. I know a shipper who charges from $3-4/mile for freight. He "brokers" his own loads for about $1.60/mile. I won't play that game. It is dishonest. He called me not long ago to start hauling freight for him but I told him that I won't haul freight that cheap. Previously, I had been getting loads through him for $2.50-3/mile and that was about a year ago before fuel jumped up so much. The fsc basically sets a formula so the shipper and carrier can offset higher fuel prices without constant negotiating. Personally, I prefer to do each load separately. Rates are usually much better. I can understand why large shippers and carriers find using a fsc to be beneficial. For the smaller carrier I believe it is more better to do one load at a time.

 

So if someone came to you and said they have a weekly load to Chicago and offered the equivalent of your current average rate with a FSC, you would decline? Sure there will be weeks when you could get a higher rate on the spot market but there will be just as many weeks when you won't get as much. Plus you have stability and can concentrate on finding loads in just one lane. The downside risk sure seems to outweigh any upside on the spot market.

 

It would depend on the rate and fsc. I want a decent rate, whether you structure it with a fsc or not. Breaking out the fsc is a matter of semantics. If it is a run that I wanted and had the rate that I needed, then I would consider taking it. I don't take a load simply because it is a good rate. I have my own criteria. I actually turned down several good paying loads this past week because they didn't meet my needs. It isn't always just about the money. There can be other considerations.