Just Say No To Cheap Freight!
 

Does the association that coined and placarded this phrase offer its members access or training to finding Not Cheap Freight?

No. They don't define the term either.

And how would you define it? Personally, for me, "cheap";- means below average, and customary, for that particular area, and season. And in any case, i would not haul below cost. And since i'm mostly running rounds, i'm also considering average for that particular round.

Below ones' own personal break even point, wages included. Anything above that I consider average or above average.

What is cheap for you may be just fine for someone else, if their costs are lower than yours.

Agreed. Assuming they are know "real cost".

Other than discussions on their forum little assistance is offered. Some think that $1.20 is a good rate while someone else may think that $2.50 is too cheap. Much of the difference will depend on the length of time someone has been in the business and the type of freight they haul. I think some give little thought to what is cheap. They just want to keep moving. Their only thought seems to be to get one load off and throw another on as quickly as possible with little or no thought given to the rate.

The cheapest rate is turning down a load and ending up not hauling anything. When you, finally, find a "no cheap freight" load, you are that much further in the hole because of missed days and the rate has to be that much better just to break even.

There will never be a concensus on "no cheap freight." Like someone else said, what is cheap for you, may be just fine for me.

For example, a group of drivers are sitting around waiting for a load. Shipper offers a load that is "too cheap." All the drivers agree not to accept it. Shipper finally raises the rate. Now who gets the load? Which of the five drivers gets the load at a good rate and whick four are going to sit without a lload?

Now, all the back stabbing begins, whoever got the load, another driver will go to the shipper and offer to do it for .10 cents less and so on. Chances are the driver who finally gets the load is going to haul it for the original rate and maybe less.

No Cheap Freight will never work. The free market is at work the way it should be. If you can't find ways to reduce your cost, you will be out of business.

It's a catchy slogan though that helps them sell worthless memberships.

But isn't there a "general average" for the type of freight? For example - Dry Van $1.35, Reefer $1.65, Flat, etc., etc.?

I mean, its always a "what the market will bear", in a free enterprise system. Folks that are stuck in an area with slow freight (South Florida for example) will take ANYTHING rather that have to deadhead out - so So. Florida rates for ANY KIND of freight may be typically way lower than say, Arkansas, California or the NW during harvest. Some folks will do the HAUL cheap, to make the killer BACKHAUL - as solo was indicating - where he averages both out and back to arrive at what is "worth it for him" to take a run. The difficulty and added expense of running into/out of NYC, makes rates there higher also.

Since I'll be "home port'd" out of South Florida - I can see myself taking "cheep" runs, just to get OUT of the area to where freight IS moving. Runs INTO So. Florida seem to pay decently, as you can't talk folks (who know how difficult getting a haul OUT is) into coming down here.

I have an number of O/O friends that just run EMPTY out of here, rather than sit and wait for a load.

If you think the shippers and brokers don't look at how things are moving in a given area, and use that to "beat rates down" - think again. Just "saying no" isn't going to FORCE the rates up. As has been already mentioned, SOMEONE will take the load just to get MOVING. But again, supply and demand (of both trucks and freight) in a given area will dictate rates (as they ALWAYS HAVE). It's just the sense of DESPERATION that permeates ALL BUSINESSES right now - that drives folks to take ANY CRAPPY RATE out of FEAR. Until the FEAR SUBSIDES (and we have quite a ways to go), this is the way things are gonna be - like it or not...

Rick

Exactly, those going out of business are the ones who cannot adapt to this poor economy. The only way you will make more money is to haul more freight, get better rates on the freight you do haul or CUT EXPENSES.

Cutting expenses is one variable you an affect immediatly. Quit running at 70 mph plus or do so when it truely makes the difference in delivering that day or getting another load that day. Nurse all the fuel savings you can. Quit idling. Keep your truck/trailer in good operating condition, get you PMs, learn to do maintenance yourself, have spare parts, etc.

I know I am preaching to the choir, you drivers know how to do, so pull a Nike!

How about"all of the above"?. But....there is an always the "but", isn't it? While is the last two, are always the case, the first one, could just prolong your agony....

Some bullhaulers feel that anything under $3/mile is unacceptable. If interested in some discussion on a bullhauler forum, click on this link: LIVESTOCK NETWORK - Livestock Loads | Cattle Loads

or this one: LIVESTOCK NETWORK - Livestock Loads | Cattle Loads

There are average rates by the region and nationally. Vans typically have the lowest rates mainly due to the number available. I have seen many offering rates of $1/mile or less. A friend of mine who runs his own authority just took a van load for $2/mile. That is not a widely available rate for vans right now. You can usually do better running short if you pull a van.

When people get scared then they do stupid things, such as haul cheap freight. The thing is most of us are hauling cheap freight if you look at what you were hauling for last year and then check out this years rates. When I go to an area where I know freight is cheap or sparse then I get a rate that will allow me to deadhead to a better area. For instance, if I go to the Northeast or New England then I get a rate that will allow me to deadhead to an area where I can get a better rate. From New England I expect to deadhead at least 300 miles to get a load. I don't usually sit for more than a day in an area unless I am putting a load together. When I go to Florida I deadhead out unless I have something lined up or booked before I get unloaded. Past experience tells me that I either deadhead out or take a load half way across the country for $1/mile. I prefer to deadhead out to Georgia or perhaps north Florida where I stand a better chance of booking a decent paying load.

The truth of the matter is that there will always be someone who will haul a cheap load. They are most likely taking loads that are too cheap into a cheap area so they may not have the money to deadhead out. It becomes a vicious cycle. I can't control what others do. I can control what I do. I just hauled a load into the northeast. My reload canceled so I had a choice to make. I can deadhead home for a cost of about $450 for fuel or sit for the long weekend for a cost of about $150. Had I deadheaded home I would still have made about $1.30/mile for the round. By waiting I should do much better even though I sat for the weekend. That is a choice that I made. Someone else might have deadheaded home because of the holiday weekend rather than sit and get a decent paying load on Tuesday. Had I deadheaded home then my good paying load would have turned into a cheap load. I will still make less due to the expense of sitting, but it will not be as much as paying for fuel to go home. While sitting I ran into someone who gave me a lead on a shipper who is having difficulty getting some product shipped. It may turn out to be a blessing if this turns into some new business.

A small correction. I do not haul "cheap", in my defenition. Last year, i've averaged $2.00 per loaded mile. That's not the whole rate, that's my cut, 72%+Fsc+extras. And that's for all directions and miles.
I'm pulling dry box, buttom of the barrel. Yes, $1.00 a mile seems to be "cheap", but i'll take it, coming out of NJ, NY, cause with the very few exception, it's what the market pays from that area, for dry box.

At the same time, just a few days ago, i've refused load, going to my hometown, from OH, $1.51 a mile, cause tho i know it's not too bad this days, i simply can't afford it, considering my roundtrip. Just to make something clear, $1.51 was 72% of the actual rate.

You're much too picky. That eliminates 90% of the freight out there!

Disclaimer : the previous post was in jest, and full of sarcasm.

Wasn't calling you a cheep-ster scoundrel there bro. Just noting that there may be a compelling reason to take a below-average load and average out BOTH SIDES of the trip.

Seems like full dry-box on most of the boards runs at, or below that $1.51 rate (depending on total miles). If you've got the patience and foresight to load plan LTL's from point A-B and back, then multiple LTL loads along route would maximize the cpm #'s. If you're getting paid all directions and all miles (including MT) then it sounds like you're not independent - but leased on, or at least subscribing to a dispatch service. Not that there's anything WRONG with that - but 100% O/O's that have their own clients and shag the load boards have to factor the MT miles, usually NO FSC, and negotiate extra's. Thus is the lot of deregulated trucking. Having your own "published tariff" as a single unit (or small fleet) independent is nice - but actually contracting work at your PUBLISHED RATES (including FSC, detention, lumper pay, etc. etc.) is a whole other story.

Most dry box out of South Florida runs significantly lower than that - but it comes down to - would you rather EAT your fuel to get out, or at least break even and get to where freight is running and paying better. Personally, while I'd LOVE to stand on "principal", if I need to get the duck out of dodge <quack quack> and I can do it and not go INTO POCKET - I'd probably be inclined to grab a cheap run, than run MT.

Rick

That thinking is the reason rates are so cheap in some areas. I understand why someone might take a cheap load, but it does perpetuate cheap rates. As long as shippers and brokers are moving loads for $1/mile there is no reason to raise the rate to $2/mile. Until owners stop hauling at or below cost, rates in these cheap areas will continue to be below average. I won't haul for $1/mile but am hauling for less than I was last year at this time. The big carriers average the rates for the entire trip. If they get $2/mile going to an area and $1/mile out then they will average $1.50/mile for all miles. While I understand it in principal it does leave a sour taste in my mouth to haul a load, even one way, for such a cheap rate. It boils down to how you want to run your business. Everyone will do what they feel is best for their own business interests.

No Allan, i call it "selective". And 10% is plenty for me. Last month, i've compared 2 weeks, i run back to back. One week was 3300 miles, and another 1295 miles. After all said and done, i've maid $400 more "absolute" net, for 1295 miles. Gross net, was $200 bigger on 3300 miles...it pays to be "picky" sometimes....

Good and bad freight areas
 

"IT Internet Truck Stop" magazine in its May/June 2009 issue ran an interesting story on freight rates (Page 26).

"To understand supply and demand the first thing to understand is that there are regional differences that affect rates. Some regions command a higher price due to higher overall demand for trucking services than other regions..

According to the magazine, there are best states, worst states and then those in between. Here's the magic list:

Best states (highest rates):

Wisconsin, Michigan, Missouri, Iowa, Illinois, Indiana, Kentucky, Tennessee, Ohio, Virginia, West Virginia and (surprise!) Nevada

Worst states (lowest rates)

Idaho, Montana, Wyoming, South Dakota, Colorado, Vermont, New Hampshire, Massachusetts, Connecticut

Average states (average rates)

Everything else

So, I'd say let's stay away from "the bad states" and haul more often to and from the "best states". I've cut out the story from the magazine and will keep it until I get my own authority and will have a chance to test this theory in real life :)

I am surprised that Florida wasn't in the worst states category.

I'll go on a guess that north fl probably saves the rest of the state. plus when citrus season comes round I'd think that saves the state also.

Neither was Jersey, or NY.

When talking about cheap rates, many bring up supply and demand. This is absolutely true, supply and demand are the biggest drivers of rates. Florida will always have cheap rates. Yet a "good" rate out of Florida will be lower then a "cheap" rate out of Illinois.

It's all about maximizing the rate wherever you are. Some areas it's just easier to do this.

There are soooo many factors that go into what would be considered "cheap freight". I am leased on with a carrier and some would consider the average $1.20 a mile I am getting now as "cheap". But I don't have to wait for or factor the settlement, pay a broker for the load, have my own authority, didle with rates/region or seasonal fluctuations, I get up to $.28 a gallon off of the cash pump price when I fuel (even after getting fuel surcharge in the rate). So, am I hauling "cheap" freight? No, I am not with one of those mega carriers either and I run primarily the upper midwest, average 2800 miles/wk, get home every weekend, and do my own services and some of the maintenance as well. In good times, I could see the advantage of running on my own. In these times, it pays to have a little leverage that even OOIDA will not provide (even though I am a member).

Leasing to a carrier who offers deep fuel discounts can make a difference in the rate you can afford to haul for if things get tight. I have seen some as high as $0.50/gallon off the pump price at TA. Discounts vary from one TA to another. Many of the large carriers offer price plus at TA. Some also offer discounts at other store such as Petro, Pilot and Flying J. If you have one of the major fuel cards you may be able to get a discount on fuel at certain independents and chains. You could equate cheap rates with your operating costs. If your operating costs are high, such as having high equipment payments, then a cheap rate for you may be higher than someone with low operating costs or someone whose equipment is paid off.

Ditto...

Rick

Hello All,

I,m new here but been trucking for over 40 years. Call it what you please but I can't understand how anyone paying near .50 cents per mile for fuel, can twist their mouths to justify hauling anything for a dollar a mile. Call it back haul, loading to a better area, needing to get home or whatever you will. THAT behavior is killing ALL o/o's future, and it will only get worse as time and history have proven. :mad:





99 MACK 460ho 18 spd 3:70 twin screw
97 Great Dane 53 ft dry van
on board scales apu

to me, cheap freight is when a carrier cuts the rate. the rates originally set by the shipper or who ever pays the freight bill is usually o.k. it gets cheap when a carrier offers to run the loads for less $$ & other cut that rate even more. I used to haul for Worthington steel, back when ruan was the logistics. their pay sheet was not bad at that time(several years ago) it was when some co's would send in a bid sheet & offer to haul a lot cheaper to get the freight & even when they got it, they would not have enough trucks' that would haul it, so they would broker a lot out & that would even cut the rates more. but having some driver 500-800 miles from home & no load he will take one for .70 a mile just to get home. I dead headed home a few time over 500 miles , rather than take a cheap load. I don't do it. home or away. I don't do it! last time was just 3 weks ago.

Welcome to the forum, kotflb. I agree that it doesn't make sense to me that there are owner operators who will take a load for $1/mile. It may help them get home but next time the same broker or shipper will expect him to take a load for the same rate no matter where it goes. It also hurts the next guy who wants to make a living out here. The shipper or broker figures that if one guy will take a load for $1/mile then everyone should be able to take it for the same rate.

Things will not change until owner operators start running their truck like a business. There is a high percentage of loads that are hauled by owner operators in this country. Many of the major carriers are moving more toward recruiting owner operators to haul their freight. If the owner refused to haul below a certain price then rates would go up. I will also deadhead home if that is what I need to do rather than take a cheap load. I deadheaded from Pennsylvania home a few weeks ago rather than haul a cheap load. I had to be home to take care of some personal business.

I think that is on target. Many just hold onto the wheel and expect the world to come to them. You have to be more of a bean counter than the shirt and tie guys in the big offices. You have to spend a lot of time researching things, like what tire will give me the best bang for the buck and has the lowest rolling resistance to conserve a little more fuel. Should I buy that "real" truck or get one that will cost me the least to keep it moving and keep my fuel costs lower? Thinking outside the box to minimize expenses, yet keep equipment in best shape. Not thinking "no matter what I spend, it's a deduction".... let's see if this makes sense... I will spend $1 to save $.20 in taxes. Gee, that's smart!

Rates are what they are. Not much anyone can really do in the broad scheme of things. We may be able to influence them a little, but not much. However, operational costs are something we all can influence, and usually quite a bit. Those that can adjust will make it. Those that can't, well....

John Wayne said it well.... "life is tough, it is tougher if you are stupid"

I know some owners who will buy more equipment rather than pay more taxes. I have one friend who just runs less so that he doesn't pay as much taxes. He still keeps about the same amount of money but doesn't run as hard and doesn't gross as much. It works for him.

Thanks for the welcome GMAN. I been lurking for quite a while and I really enjoy this forum.

I started trucking back in '63 and we're all aware of the many, many changes that have affected this industry, especially the o/o segment of it. As owner operators, we are some of the hardest working, most under paid people in this country. We sacrifice family, security, workers benefits and a normal home lifestyle to keep this county afloat.

We have made trucking companies, brokers, dealers, insurance companies, truck stop owners, government agency's, parts suppliers, etc., filthy rich because of our dedicated service to this industry. While far too many of us are on the brink of bankruptcy. And this can't all be blamed on o/o's not being good business people.

When we take a close look at the facts, the laws and practices are designed to drive us out of business. SAY WHAT YOU WILL.... I REPEAT- the laws and practices are designed to drive us out of business. Most everything government has done has been against the o/o.
Everything big business has done, from fuel & shop prices to supporting legislation has been opposite of what is good for us. You get the picture so far.

Now I said all that to summarize with this. How can we, as a group fight back. "Stop cutting our own throats". The lowest freight rate should be 4.00$ a mile with today's economy. Owner operators should clear (after all business cost) $120k per year, running legal. I know this all sounds like pie in the sky dreaming, but think about it. As o/o's & company drivers, if you'll work for peanuts, that all you'll ever get, peanuts. That is until
big business figures out how to get you to work for just the peanut SHELLS.

We're gone from home 9, maybe 10 months out of the year for 50k, 60k, while others in business make $250k+. Smell the coffee people, they need us more then we need them. Once we're history, freight rates will fly up past $4.00 a mile. :banghead:

I think you just made a huge amount of friends here at CAD with that statement!

kotflb... I think the majority of the problem is o/o's that think they need miles to survive, not revenue. Think of all the suckers that sign on to swift, CR england etc... that need 13,000 miles a month just to survive, and have to drive with a team driver 20k miles a month to pay down debt.

We have to educate our fellow drivers as best we can.

I agree Allan5oh. As large as the trucking industry is in itself, the o/o segment is the only business that ask the customer what they're willing to pay verses telling them what we charge. Even the independent tire repairman tells us what he charges, he doesn't ask what we'll pay him. It's indeed a mindset, and we have put the buggy in front of the horse.

Why so many of us are willing to work for 1980 wages in this economy only goes to prove that we don't understand how business or money really works. If more of us would realize that the value of our services is directly related to the price of AN OUNCE OF GOLD, we would see just how cheaply we are working for. The mindset that the dollar a mile for a backhaul (BACKHAUL: A brokers play on words to get you to work for peanuts)
is OK in some circumstances is akin to shooting oneself in the foot on the promise that the blood and pain won't show up till next week. Its still gonna hurt like h*ll, just not today.:(

Why are they willing to work for peanuts? Because most, not all but most, company drivers can't make as much as they do in trucking anywhere else. Trucking is a bottom of the barrel industry. Like it or not, most people can do this job. Drivers work for what they're offered because it's still their best option.

The vast majority of O/O's don't make any more than company drivers do. They're in the same boat. They've invested their own capital to make company wages. If they can't figure that out they're probably not qualified to do much else either.

The small number of drivers or O/O's that could actually make good money doing something else, are probably not working for peanuts. The fact that rates are where they're at is a testament to how few of these types there really are. The peanut eaters far outweigh them.

You are correct, kotflb. I have made a few brokers speechless when I tell them what I get on a particular route. They give me a rate and then I tell them what I get or need for that run. Sometimes it works to get the rate up and sometimes it doesn't. The problem is there are too few who are willing to do that. There are too few who value the service they provide. For some of these cheap loads to fly off the loadboards these people cannot be negotiating on price. They must be just taking the first offer made just to move the truck. I never worry about miles. The more miles you run the greater your operating expenses. The more miles the quicker you wear out your equipment.