Believe it or not there are still those drivers out there that refuse to take loads for anything under a certain set price they’ve made up in their head, whom you may occasionally hear spouting off from time to time around the truck stops something like, “I’d rather drive empty home than haul that cheap freight back!”  Sometimes it is necessary to step back and analyze the specific lane and market you are in to better understand the true implications of turning down a “cheap load”.  More often than not, market demand will dictate freight rates out of certain shipper locations.  If there is a lot of freight coming out along a certain lane, that lane will command a higher price to ensure it gets hauled on-time by a reputable carrier when dumped into “the pond” with all of the other freight in the area.  Similarly, if an area is suffering from a “freight drought” in a particular lane, you will see lower prices.  It only makes sense that a large group of independent carriers fighting for a couple fish in a large pond would be more desperate and take a lower rate to get out of the area and hopefully into a better “head market”.
 
A lot of guys out there might fault the driver who takes the cheap load, leaving his fellow owner-operators there to sit idle and wait for better paying freight.  I, on the other hand, typically applaud that driver for following my general rule of taking the cheaper freight to move to a better market.  This brings me to a little something I learned of called “Opportunity Cost” back in college.  After seeing guys in the truckload business deadhead sometimes anywhere from 250 to 400 miles to get to a better load, I cannot hold it against a driver to take a load paying $1.25 per mile to get to a better market, rather than sit overnight waiting for that $2-$3 per mile load.  Opportunity cost comes in when you consider the lost revenue for not taking that bad paying load (known as the opportunity), inclusive of all things like idling fuel, showers, and even food while sitting waiting for that “gravy load” to come in.  A driver making a little bit of profit, or even just paying the fixed and variable costs for the load, will still ALWAYS make more in the end than the guy who sits idle watching TV and shooting the breeze all day in the driver’s lounge!  Sitting idle does cost money and you don’t want to be the driver saying “I should’ve taken that load out of this dump!”
 
Being a local owner-operator does not exempt me from these frustrating situations of highs and lows when it comes to freight rates.  It is not uncommon for me to run a lane into Los Angeles and get 25%-30% less revenue on the same lane in the opposite direction.  My trick has been to know the ratio of “loads in” versus  “loads out” of any area I am hauling freight to and plan on making the best money on the “head” side of the lane I am running out of.  Making the most that I can on the head-haul helps ensure that I can be prepared to take the cheap price on the backhaul and not be adversely affected on my overall bottom line by it.  Pay attention to and use the lane tracker software and market estimate tools available on many load board sites as well.  They can give you a good idea of the freight coming in and out of certain markets and the rates associated with them in real-time.  Most important of all, when the freight dries up in an area you are in, do not let pride keep you from doing what is right to better your situation and put you in a better position than the next driver!
 
 

 

 
 

 

 

 
 

Comment (1)

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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Always do the math. There are times deadheading to a more profitable load is the best decision. Sometimes you are better off taking that load. Try staying out of dead spots whenever you can.

October 21, 2015 5:24:32 AM