calendar.jpg

One of the most valuable lessons I ever learned was that freight rates on each individual load are not tied to the cost of operating the truck. The part that is tied directly to the cost of operating the truck would be how the cumulative freight for the week month or year adds up.

When we used to go to the north east the freight paid really good going in with our flatbeds but freight coming out did not pay well, yet we still made a profit. We had already made enough to be profitable going in that we could take a lower paying load out and still make money. Many will look at the lower freight rate and scoff, and then say “I am not hauling that cheap freight”.

Supply and demand plays out in the freight market. Not all freight lanes have the same amount of freight going inbound as well as outbound. What you will see praticed by savvy independant owner operators and most well run trucks lines is a higher freight rate when the demand is high and a lower freight rate when the demand is low.

An extreme case of supply and demand used to play out for me in my flatbed days. It was easy to get a high rate of compensation to make a delivery in Florida yet it was extremely difficult to even find a load to leave Florida. The simple reason for this is that there was more freight going into Florida than there was leaving. This scenario often led to freight rate disparity of extreme proportions. There were times where the freight market would support inbound rates that were as much as three times the rate of outbound freight.

Most of the profit in this case was made on the inbound portion of the trip leaving the outbound freight if you found any to be pure profit. In this case I had made enough to profitably dead head back out. So, having freight that paid anything was pure 100% profit at that point. I realize that a lot of people will say this is what keeps the freight rate down. What truly keeps the freight rate down is that there were more trucks than freight in this situation.

The biggest area of concern for me regarding suppy and demand was the carriers who would not take advantage of the forces of supply and demand when in played in favor of the truck line .

The main area of importance to know the market forces at play and be competitive in that arena.

 

 

Read These Next...

BUSINESS Smart

Facebook

October 18, 2018

BUSINESS Smart

BUSINESS Smart

To Book, or Not to Book?

October 14, 2018

Comment ()


This blog post does not have any comments. Be the first!

SUBSCRIBE

Sign up to get the latest trucking tips and tricks!

ADD ME

Ask a question

ASK A QUESTION

Post a question to our forum and a Pro will answer as well as our community members!

GO TO THE BUSINESS Smart FORUM

Keep Reading Articles Articles

BUSINESS Smart

Facebook

October 18, 2018

BUSINESS Smart

BUSINESS Smart

To Book, or Not to Book?

October 14, 2018

BUSINESS Smart

Don’t Scoff

October 12, 2018

BUSINESS Smart

Freight Claim Blame Game

October 09, 2018

About Henry Albert

Henry Albert is the owner of Albert Transport, Inc. Henry has been in the trucking industry for 30-years.

View Full Bio and All Posts by Henry Albert