Posted on Mar 12, 2008 - 4:56am by Donovan Ackerman in Business
Carrier: “Hi, it’s John from ABC Trucking… You have a van load posted on Truckstop.com from Dallas to Chicago?”
Broker: “Yes, do you have a truck available?
Carrier: “Yes, he’s empty now, what does it pay?”
Broker: “You called me, what do you need?
… And so starts the negotiation game. But who truly has the advantage in this scenario? The broker of course. The broker now knows that the carrier is calling for something that the broker has and the carrier wants. Game over. The carrier will be forced to give their rate first at which point the broker will initiate a counter offer and they will settle somewhere in between the two rates. But what if:
Broker: “Hey it’s Mike from ABC Brokerage… do you still have that truck in Dallas available to go to Chicago?”
Carrier: “Yes I do. What have you got and what does it pay?
Now, the carrier has forced the broker to throw out their first rate, which of course will be the basis for the negotiation. The broker is going to offer less than what they are getting paid, to make their margin but what if the number that they offer is far greater than what you would have opened with? You may have just left a bunch of money on the table all because you chose not to post your truck.
The same applies to brokerage companies and the basic rule is that the advantage from a rate perspective will always go to the Carrier or Broker that is receiving the call. If a carrier calls for a load, it obviously shows that they are in the need for something and as such, they needed to initiate the call. When the call is received, the other party immediately will have the advantage.
Get Your Advantage Back
So how do you give yourself back the advantage? As a carrier, post your truck first as far in advance as you can and wait for the phone to ring. Neither party in this transaction has any idea how long that truck has been sitting for or how long that load has been sitting open. The internettruckstop and other load boards show how old a posting is but most clever brokers and carriers will take the posting down and repost so as not to show how long the truck or load has been sitting for. If you are not doing this, you should do the same as the older a posting a gets, the more susceptible you are to being low-balled for your truck or load or even worse, not called at all as the other party might think that the posting is so old, that you’ve already moved your truck or load.
What’s the Answer?
So you ask, why does it need to be this way? The short and simple answer is “Supply and Demand.” At any given time, in any given market, there could be more trucks available than loads or more loads than trucks. If you are a broker and fail to recognize this, you could be calling to offer a load to a carrier that may be completely stuck and as such, lose the advantage completely. Chances are, if the market is that poor for a load, as soon as your load is posted, your phones will become quite busy with eager carriers, looking to get moved.
For carriers, the same applies. Take produce season for example out of California. For three months, there are more loads than trucks available. The rates are driven by what carriers need to move their trucks. So why would you call looking for a load? Post your truck and field the best offer for it.
Ultimately this is about working the market and having the market work for you. The time will come when you need to make some calls to cover a load or to move a truck. In the meanwhile, be patient and let the market dictate who initiates the phone call. The potential for increased margins as a result will be well worth the wait.
Posted by ITS Canada
Find Freight and Trucks Fast
Trucking Transportation Software
Trucking software and Freight matching specialists
What Does an Insurance Company Owe You When You Are In an Accident?
RSS feed for comments on this post | Trackback URI
No comments yet.