As I was flipping through my Facebook feed this morning, a post caught my eye from a trucking group I belong to, which was suggesting a boycott of a rather large brokerage firm during the upcoming workweek.  This type of feeling towards brokerages has been getting a lot of attention lately in many avenues of trucking media and in my eyes the finger might as well be pointed in both directions.  It is no secret that many carriers starting out utilize brokerages because of their vast surplus of freight and customer connections, since a new carrier is usually very limited in this important business information.  As most carriers evolve and follow through in their own methods of success, customer contacts made along the way can eventually lead to direct freight, which can help eliminate a trucking company’s dependency on brokerages.  With the ability for some mega-brokerages to offer large quantities of freight, the question of greed and low rates offered to carriers in an effort to boost profits has made its way into trucking news.  Not that I think offering lower-than-market rates to increase profit is the most ethical business decision, but drivers taking freight at those given rates might be just as much to blame for declining freight rates as well.
 
In all honesty, I can admit that all of my company’s freight comes from brokerages that I have established good working relationships with.  I ran for just about anyone and everyone I could when it came to brokerages during the infancy of my independent operating authority, partly fueled by the fact that a lot of brokerages would not work with my new authority.  As I made my way through finding decent brokerages to work for, I found a couple select brokerages that were not only willing to offer fair-market rates, but were also willing to go to bat for me in terms of paying accessorial charges like detention and layover.  The relationship I built with them through proving I could get the freight there on time, every time, allowed them to capitalize on my service ratio to bid on larger contracts in the area, that my company now covers exclusively.  Running for brokerages has not been all “sunshine and lollipops” for me however, as I did find my fair share of “leeches” out there while overturning the many “brokerage stones” that littered the load boards. 
 
There is one concept through all of my hauling independently that has remained steadfast since day one!  From the beginning, I made a vow to not haul cheap freight, which is a term you hear tossed around in the trucking industry quite a bit.  In doing so legitimately, I first had to educate myself as to “What really is cheap freight?”  Anyone that has been out there hauling has seen a back-haul that pays 30-40% less than the exact reverse of that same lane as a head-haul.  This lesser-paying backhaul is not the definition of “cheap freight”, since this is truly dictated by supply and demand for that particular lane and its ratio of available loads to empty trucks.  Instead, cheap freight by definition is a load paying less than the market can readily sustain for that same load and lane.  It has always been a goal of mine to educate myself on the lanes I run and to not accept rates lower than the market average for that particular time.  That was my exact methodology in not running the true definition of cheap freight, since by not doing so I would not be contributing to the declination of freight rates.  Any driver that accepts a lower-than-market rate, either out of desperation or ignorance, is just as much at fault for rates declining as the brokerage offering it at that rate in the first place.
 
I am by no means sticking up for the un-ethical business practices, which I have witnessed first-hand, from some of the larger mega-brokerages out there.  In fact, shame on them for preying on the lambs among the herd to boost profits.  In retrospect however, shame on the drivers out there that continue to settle for less than fair rates and fail to educate themselves on ways either negotiate a better position on a haul, or to be able to cut ties and run from these so-called “wolves” of the freight boards.  Believe it or not, it is actually a lot of the same people I see complaining about freight rates that are the ones accepting loads from brokerages I know do not offer fair haul rates to independent carriers in the first place.  There is plenty of freight out there, brokered and not brokered, for all of us to make a good living, whether it is local, regional, or long haul.  The rule in all of it is to make sure you don’t over-compete past a decent level of operational profit.  An important thing to remember is that when you undercut your own bottom line into the red just to land a load, you hurt no only yourself, but also the trucking industry as a whole!

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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Very good article Jimmy and it is so true for people who want to be successful. Sometimes I feel that some operators, unexperienced operators, will haul a really cheap load just to get somewhere. Very bad practice. I must be profitable on every load. Some more than others but a little is better than none.

July 02, 2016 20:46:48 PM

Knowledge is the real power.

June 26, 2016 4:39:33 AM