Sam- I fairly familiar with trucking. I’ve worked in a lumberyard for the last 29 years. 99% of what we sell comes in on a semi. Most of those cats are struggling.
This obviously has a tremendous effect on transportation, and trucking specifically. I still question what, if any, effect this has on railroad intermodal.
Randy Vos mentioned this in his post above: … the volume has picked up for us a bit, but rates are still low, as there is still too much capacity in the market. Being the major carrier for a certain beer brand has helped us a lot, too… I read that as meaning that the major shippers are willing to pay a little more for dependable, ongoing, predictable service. I see that as something rail intermodal would be good at, but some trucker or trucking firm barely holding, probably would not be.
As a point of reference, my father was an over the road trucker.
Commissions are no where near 30% to 40%…and CH Robinson is a publicly traded company…so you can check that for yourself.
Truckers don’t need to use brokers… they CAN call on shippers directly…no laws state that loads must go through third parties. Let me help out a bit here with some leads… Kraft Foods, GM, General Electric, Ford, Progressive Packaging…call on them and others and I guarantee you that one of two things will happen…1)…you will get alot of freight and become wealthy…2) you will gain a new appreciation for the importance of sales and in the cost and difficulty in winning accounts in an industry that views what you have to offer as a commodity.
I run asset based (trucks) as well as broker operations…the most intensive part of my business is sales…my sales people are straight commission and make more than anyone else in the company. This is becuase there are hundreds of thousands of carriers in the marketplace that are virtually indistinguishable in terms of service and price. Thus…the person or persons who can direct freight my way are extremely valuable to me… trucking is not a service that sells itself. Don’t knock brokers for taking a healthy cut…if you think sales is easy then pickup the phone and call GE or Exxon right now… to get an account like that (and keep it) is alot of hard work…even before you see a pound of freight sent your way.
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Greyhounds, I’ll try to explain it, but I can’t guarantee you will understand. I’m just a dumb truck driver, after all…
When a load is brokered, the person paying for the transportation pays the freight broker a rate. The broker keeps some of this money as a “fee”, and passes the rest onto the co
Well said. As a commission based salesman (not trucking, but in a related field), you pretty much nailed it on the head.
These shippers do not want to deal with the day to day selection of carriers. Many have eliminated their “traffic departments” and have given those functions to “Logistics Services”. I have customers (trucking companies) on both sides of the fence. Some provide full service (including sales) and complain of “how the brokers screw up the system”. Others pretty much move “brokered” freight and seem to be doing ok at it. For the most part, the latter group is almost exclusively Eastern European immigrant based companies. Their drivers are usually from the same country (Poland, Bulgaria, Lithowania, etc).
Down in Nova Scotia, on Cape Breton Island, we had ‘entrepreneurs’ that sold coal, door-to-door, out of small trucks. We called them “bootleggers”, “gypsies”, “independents”, “outlaws”, and other things. I don’t know where they obtained their coal. They might have had small mines, or picked over the culm tailings of the big-time operator in town, the Dominion Steel and Coal Co., Ltd., owner of the Sydney & Louisburg Railway. Their prices were much cheaper, but the quality of the coal was very poor. Lots of shale, etc… I’m sure that others, who lived in “coal country”, had the same experience. They seemed to make a marginal living, and delivered softwood ‘slabwood’, too. One guy even delivered fresh fish! Pret’ good fish!!! We’d trade him fresh vegetables, maybe some milk or butter, and a bit of cash and everyone was happy! No UMW involved!
So far, we’re having a good, civil discussion about transportation issues. I’d appreciate it, if you’d quit trying to bait someone into an arguement with your jabs about unions. It’s trolling behavior, that I feel is inappropriate. Thank you.
There is some good news…the shippers are getting truckload service levels at rates that often aren’t much higher than a dollar a mile. If nothing else that’s got to be quite an incentive to the domestic manufacturing sector…a good thing as we all depend on that sector for survival.
That’s just what is supposed to happen in a recession/ depression - it’s the old Adam Smith ‘Law of Supply and Demand’ at work - when demand goes down, so does the price* - and/ or much better = faster service is provided. That tends to counteract the plunge and re-stabilize the economy - at both the micro-economic (= at the individual firm) and the macro-economic (= nation as a whole) levels at a new equilibrium.
*Typically, to a ‘short-term marginal cost of production’ level, which is the bare ‘avoidable costs’. In this ‘‘zombie’’ context, for each truck trip it would be the fuel, tolls, some food and coffee, and maybe a few bucks towards the next - or last - set of tires, next or last repairs, and next or last insurance payment, etc.
The payments to the bank can wait - that’s why they’re in a ‘‘zombie’’ state . . . It’s an unfair advantage as to the guys
Greyhounds here is what I am talking about the Brokers Keeping 30-40% of the Total Freight charges. They might tell you it pays say 1000 bucks for 800 miles yet when you get the BOL it may say and I have had this happen to me MULTIPLE TIMES IN REAL LIFE 1500 bucks for the Brokers Carrier listed. Yet the company has no idea that the Broker is getting that much for that load. Worst loads were ALWAYS out of Florida Nothing coming out either Deadhead out or haul cheaper than HELL ITSELF and the Brokers KNOW IT. I hauled Grapefrit out of Florida one time for a decent sized company as their driver for less than 70 CPM and I was getting 30 CPM as my pay there was no way in hell 40 cents a mile was going to cover the Fuel INSURANCE OR MAINTAINCE AND PAYMENTS ON MY EQUIPMENT BACK TO ILLINOIS. Load milage was 1300 miles barely paid the truck 1000 Bucks. Yet when the company got the Freight bill it showed that the Original rate was 2000 to teh BROKER.
The rate on the BOL is not the rate the broker gets…I have a bill in front of me that shows transportation charges as $2743.58…but I got only $2300.00 of that. The reason for that is simple…the rate on the bill is what my customer (the shipper) charges their receiver. They make a profit on transportation (obviously) apart from their core business. It ain’t always what it seems. Freight brokers do well at 18 to 19% margins… and in my opinion that often isn’t high enough as there is huge risk involved. In general, the bigger the account the skinner the margins because the folks at GE or Kraft (or any of the other big ones) know what the market will take…unlike some smaller shippers who can be fooled into paying premium rates…
But first, I’d like to thank everyone who has participated. This has been a good discussion. It relates to railroads in that it deals with how freight moves around the country. That’s the evnvironment the railroads have to earn a living in. Understanding that environment (“The Freight Market”) helps understand the actions of the railroads. The railroads do what they do for real reasons. And those reasons come from the freight market being described in this thread.
I don’t want to get cross wise with Ed or anyone else. But the disputes he describes are not unique to trucking. The freight is moving in a “Channel of Distribution”. Different entities play different roles in the channel. Each entitiy is alternatively a buyer or a seller and there is a natural conflict between buyer and seller. The buyer wants more value for fewer doll
Yeah Trust me I know all about the Brokage regulations all you need to do is put up a 10K bond get a DOT Number and guess what your a Broker. Guess what until the age of the Internet there was NO WAY to check to see how many carriers had filed against that BOND. It would be nothing for a carrier to have 100-200K against their bond Close up shop then reopen new name and start all over and be keeping all the cash. IT DOES HAPPEN GRAYHOUNDS EVEN TODAY IT STILL FREAKING DOES.
Look at the bright side…you at least have the 10K bond when dealing with brokers. When dealing with shippers directly you don’t even have that…and trust me on this one…plenty of shippers are stretched to the max and aren’t paying their bills. Why do you suppose so many brokerages are struggling if all that is required is a telephone and the margins are a juicy 40%?..Answer…a) because margins are alot less…b) there’s plenty of bad debt to go around…3) huge risk…4) a lack of street smarts… Of those I would say 3 and 4 are the most important…most people who get into brokerage are unaware of the risks involved and don’t have the mental wherewithal to solve problems/deal with crises as they occur. Sure…from an asset based standpoint it is easy to get into brokerage…just as it is easy to become a lawyer or an accountant because those folks don’t need hundreds of thousands in assets either to get started…but they do need a good mind and the ability to use it…if you don’t have that you get yourself into alot of trouble as a broker…I do both asset based and brokerage…I see it from both sides.
Ed why are you even going to FL if you have come back that cheep.
I know a guy that does pallets. He buys them in New England and ships intermodal from Boston to Chicago for $700 and that includes the dray at each end. The Zombies would have a hard time with that. Just the tolls back to Chicago would be too much. The Zombies will be gone as things pick up. The banks will get their money and go after them.
I have to say I learn more about trucking here than any other place.
Why did I go to Florida called we were servicing a CUSTOMER. Walmart has a HUGE DC in Winter Haven FL. It takes care of the Whole State on Its own. My company in 2000 did not have a customer at the time for Outbound loads back to IL and I was due to get HOME after being out of the house for about 8 weeks. I had been on a different run that would have kept me out of FL 3 days earlier but a driver had a Heart Attack and I was the only driver that could Cover the load. That was why we got SCREWED. Our normal load out was go to Tropicana and get a load of Juice for California and HAUL BUTT. So my boss decided to get me home a take a loss for one run. However as to the claim well at least you still have that 10K bond to file on. That bond amount is for all claims against the BROKER. So if he goes out with 300K agianst him only the first 10K in claims will get paid the rest are told SO SORRY YOUR SCREWED.
but that can happen with any business closure…look at the recent closure of Arrow and look at how many people lost on that deal. Usually when a business goes bust there are casualties…that’s true of a freight brokerage, a clothing store, a railroad, a trucking company, etc… The bond may not be much…but it is more than shippers have…when they go bust there’s no bond to file against…