In the business of being an independent owner-operator, there will come a point and time that rates will have to fluctuate for different reasons.  Whether it is the price of fuel, a customer moving locations, or a change in volume, you may find the need along the way to recalculate what you charge to haul a particular customer’s goods.  We are all in this business to make money, but if you are going to change a price on what you haul, you had better be prepared with good reason behind the change.  If you are justified, do not be surprised if your new rate is honored and it still works out to be a win-win for both parties.
 
Where your justification will be most likely questioned, is when the need arises to increase a haul rate.  I recently had to negotiate this scenario with my number one customer, who was most certainly not a hauling account I wanted to jeopardize!  The shipper for most of my morning loads was finally moving to their new warehouse, which would serve to consolidate three of their separate warehouses into one giant warehouse.  Only ever having to haul from one of their three warehouses previously, I was very accustomed to having that warehouse only a couple miles from my house to drop my trailer for overnight loading.  The bad news coming with the move was that their new warehouse was going to be 20 miles further from my current shipper location.
 
When most drivers think of 20 miles, they typically don’t think it to be that big of a deal.  In the local hauling world though, it can make a huge difference, especially in a run that was already only 29 miles from shipper to receiver!  This would add a considerable amount of bobtailing as well, since this customer was a “drop to load” overnight and pick up first thing in the morning.  With the first load set to ship out of the new warehouse on my trailer, I figured it as good a time as any to discuss with my customer the increase in rate they would have to incur as a result.  Being that I have proven myself for quite some time now with their loads, they were more than willing to negotiate and pay the new rate, based on my service history hauling for them.  It was nice to have them understand that I was not raising the rates just to “stick it to them”, but that it was an added cost to my business due to the additional time and deadhead.
 
Most folks get a little leery when approaching a customer with a higher rate, especially in the highly competitive local SoCal work I am involved in.  It is no surprise that there is always someone out there willing to haul the same load cheaper than I would.  I am always willing to negotiate on a rate, but I make it a point to never compete in a “race to the bottom”.  A successful owner-operator shouldn’t be afraid to make it known that he/she only intends to haul for a decent rate, or be afraid to lose a load to someone that can do it cheaper.  When the time comes for you to raise your rate, be sure you know why and then share it with the customer.  Having transparency in this manner will help them better understand why it is happening and will aid in making it known that you are not just trying to gouge them!  Make sure you’ve got a leg to stand on when walking that fine line between getting paid more and losing a good customer.

Comments (2)

Jimmy Nevarez

Jimmy Nevarez is the Owner/President of Angus Transportation, Inc., based in Chino, California.  Jimmy pulls a 53' dry van hauling general dry freight for his own small fleet, operating on its own authority throughout all of Southern California and Southern Nevada.

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We always gauged our rates by how our phone rang. If the phone does not stop ringing the rates are too low. by the same token if you cant get the phones too ring its time to look at our marketing , load availability and finally decide if we have "priced " our self out of the market .

January 30, 2016 18:53:15 PM

Good blog Jimmy. These are extremely tough economic times. I was making way more money when fuel was higher so I agree that we must walk a fine line with making a profit and realizing rates are down and shippers are not going to pay as much as before.

January 30, 2016 7:34:12 AM