– Brad Hollister, Freight Access
Although all carriers operate differently, the negotiation of freight rates has many similarities and differences between large commercial freight carriers and smaller indepdent trucking companies. Many small carriers operate under the assumption that a large carrier has more negotiating leverage than a small carrier, and to a degree that’s true if you consider the following:
Typically, large freight carriers have a good number of resources available to make informed decisions. Most significant carriers have a pricing department, long standing shipper and freight broker relationships, market data, capability to turn down freight along with can provide volume pricing discounts. These big freight carriers (over ten trucks) have tremendous advantages when negotiating freight yet only make up 75% of the marketplace . Utilizing the tips below small freight carriers will be able to compete with larger freight carriers during the next request for pricing proposal made by your shippers and supply chain managers.
– Better understand your operation expenditures. There are many operating costs to be considered when establishing your price. Trucker pay, Fuel Costs, Taxes, Insurance Costs, Maintenance allowances, office expenses, default or factoring fees and also significantly much more. In order to obtain a healthy profit, these operation costs are to be kept in mind. Fuel is the great fluctuator, so ensure that you understand in impact that freight diesel has on your company. Know your operating cost per mile (annual expenses divided by annual miles driven) and your fuel costs per mile so that you are to have clear idea of your expenditures.
– Establish relationship with clients. Make sure that you search for accounts which will aid to deliver profitable freight. An account which constantly tries to take advantage of you or pays late is not worth having. It is important that a healthy relationship is built which benefits both parties. If an logistics broker, manufacturer, or supply chain manager is challenging to work with or pays freight bills slowly, do not be afraid to quit conducting business with that shipper. Cutting accounts lose when they are not performing will make sure that you are spending your time working for only profitable customers. This starts by letting shippers know exactly just what you expect from them along with understanding your pricing policies as well as minimum profit expectations.
– Build a rock solid reputation. In everything that you do make sure that you are attaining 100% customer satisfaction. By making positive that you can easily exceed expectations, you can soon develop a solid recognition which should help to grow your business and provide a service that shippers are comfident in. Frequently customers determine to hire smaller carriers because of the freight shippers or third party logistics firms may have customized shipping objectives. As a tiny freight provider you are able to provide customized services which may aid you to win business which is not able to be attained by larger carriers. If a small carrier provides features or services which go beyond typical carrier responsiblities, make sure that the driver and trucking company is being paid for these services.
– Turn down freight shipments which cause you to lose money. It starts with understanding your costs, but make sure that you are able to refuse freight shipments which cause you to lose money. All successful freight carriers know when to pass on freight shipments which would cause them to lose money.
– Identify top lanes and freight lanes which pay more money. Making use of numerous tools inside the marketplace such as the Lane Pricing Tools of Freight Access.com, may make certain that you might be not under-charging clients in specific lanes as well as are protecting your minimum profit margins. Freight Access has utilized tens of thousands of freight bills to develop its market rate base for accurate pricing in almost any lane.
The North American Trucking Marketplace has encountered a number of hardships throughout the last year. The future suggests that more difficulties are a head for freight carriers. It is important to adhere to these types of fundamental enterprise principles of prosperous trucking companies to ensure that your freight operations are effective as well as able to produce an income, instead of lose money.
Brad Hollister is an Seasoned Logistics Executive with Freight Access (Brad Hollister). along with Director of Enterprise Development for Freight Access, Inc. Hollister has a interest for Enterprise Development by way of innovation, process improvement, as well as implementation of the most current technology. Feel totally free to contact him with virtually any inquiries, opportunities, or suggestions or (312) 450-3020.