As a carrier or owner-operator, rate negotiations can be frustrating. It eats away at your time, energy levels, and mental state. But negotiating good rates is critical to a successful business. Good rates mean more money in your pocket and a better bottom line for your business.
Pay attention to spot rates
A spot rate is a one-time rate for transporting a load. Spot rates can vary widely depending on time of year, fuel prices, hot and cold lanes, supply and demand and more. Good load boards will have average spot rates for a particular load specific to the lane and type of equipment.
See if the rate falls within the spot market average. If not, ask the broker to give you a better rate.
Know the loads-to-trucks ratio
Always check the number of trucks posted for the lane you want so you know what kind of wiggle room you have.
Lots of loads and few trucks? You have the upper hand to ask for a better rate because trucks are in high demand. But the reverse of that is also true. If there is more trucks than loads, rates will likely be lower with less room to negotiate. A good load board will provide the ability to see that information when you are negotiating rates.
Figure out your cost per mile
If you do not know how much it costs to run your truck, you have no idea what to charge to keep it on the road. If you are accepting rates less than your operating costs, you will run yourself out of business.
Calculate your cost per mile so you make good decisions while on the road.
Brokers will always negotiate for a lower rate while you are trying for a higher one. Make it easier with data to backup your rates negotiation. Knowing your cost per mile will make you a better negotiator.
Watch load times
Watching load times serves multiple purposes:
- The longer a load is on a board, the more of an advantage you have in negotiating. If the broker has been working the load for a while, you may be able to get a better rate.
- Pay attention to the pick-up time. The less time there is until the load needs to move, the more likely the broker needs a carrier stat.
- Find out about dock hours. If there are specific pick-up and delivery times making it tricky to deliver on time, if it requires you work after-hours, or you have to drive in rush-hour traffic, bring it up to the broker or shipper.
Consider the drop-off location
For example, getting good rates into Florida is easy, but coming out is a different story. If you know it’s unlikely, you’ll get a good rate on a load when you’re coming out of an area, prepare by negotiating for a higher rate. It will help cover the cost of getting out. You can also ask the broker for a load coming out of that area or use Truckstop.com’s Decision Tools to see what the market is like in that delivery area.
Provide good customer service
Remember, both you and the broker are trying to get the best price you can. You cannot go wrong with good communication. If you know your cost per mile and understand the market, you can state clearly, quickly, and directly why you are quoting a certain rate which a broker will appreciate. Listen to their needs, as well. If you are respectful, you’ll develop a good reputation for fair negotiating skills. Plus, what if they decide to pay your rate? You want to be the one they call back, not just this time but in the future as well.
Time is money for everyone; keep it brief but respectful.
There is more to know about the load than just the rate, weight, and lane. Make sure you ask:
- If driver will be helping to load and unload.
- Pallet questions.
- How long you can expect to be at the dock.
- If it pays per pound, per bag, per foot, etc.
- If driver is going to need anything specific accessories like straps, load locks etc.
These are just a few of the questions you might ask to make sure you are prepared for any scenario.
Questions should be relevant and move toward your end goal.
Know your end goal
Do you already have arrangements to pick up another load by a specific date?
Consider where you want the truck(s) for the next load. Money is important, but so is repositioning.
There will be times when you will want to plan a series of moves, not just one load at a single rate.
Find out if there are additional fees
Some lanes are more expensive to run than others. Ask questions about fees you know are likely to be an issue:
- Do you have to pay dock or lumper fees?
- Are there any tolls along the route?
- Is the fuel surcharge covered in the rate?
- Does the load require any special permits?
This is only a handful of fees that may be involved, so make sure you ask anything that might be relevant regarding the shipper, receiver, late fees, etc.
The bottom line is that YOU are the one responsible for your business. It is up to you to make sound decisions that will help and not hurt it. Asking for rates that are fair and based on facts will go far in negotiating, so learn the market and always be professional. If the worst thing that happens is someone says no, just move on to the next broker. You must protect yourself and your business.