Overdrive - January 2010
But then you've got these other brokers who are taking advantage of you, and it's frustrating. Any owner-operator can learn what the Alberts have learned how to negotiate with brokers in a positive, productive manner. Too many owner-op-erators approach the process in the opposite way, says Kevin Rutherford, ATBS Trucking Business & Beyond host. They say, `The brokers are just not going to negotiate. Every time I ask if I can get a better price, they say here's the price, take it or leave it.' But price haggling does not have to be the name of the game in broker negotiation. Ruther-ford distinguishes two types of negotiation. One-time negotiation is really all about information and power, he says. Long-term is about building relationships and problem-solving. The latter ap-proach offers the most opportunity for less frantic negotiations and fair rates. Here are some tips for negotiating with brokers. 1 Know your costs. I've been on both sides of the fence, both as an owner-oper-ator and as a broker, says Charlie Parfrey, who runs Parfrey Trucking Brokerage of Spokane, Wash., and is a board member of the Owner-Operator Independent Drivers Association. As an owner-operator, he says, it was my responsibility to know what my operating costs were so that when I was contacting a broker and discussing a load and what it paid, I knew whether or not I could accept what the broker was willing to pay. The load should pay enough to cover all fixed and variable costs, and include deadhead miles. Determining how much profit you want above that should be settled before you enter negotia-tions with brokers. Paul Todd, operator of Augusta, Ga.-based T&G Dispatchers, which finds freight for 18 own-er-operators, emphasizes the need to know fixed costs and variable costs on a per-mile and per-day basis. For a rough estimate of fixed costs per operating day, Add up, if applicable, your truck payment, trailer payment and insurance costs per month and divide that number by 17, he says. Why 17? There are typically 20 weekdays in a month and, with Murphy's Law always in effect, you need to leave three days for something to go wrong or not having a load on the hook. Also know your variable costs primarily fuel, tires and maintenance. Apply those costs per mile to any load you're discussing with a broker, and include deadhead miles. In the choice to turn january 2010 Overdrive 29 THE BROKER SAYS... People think that as brokers all we have to do is pick up the phone and call someone or e-mail someone and we have freight to move. It is not that easy. Charlie Parfrey of Parfrey Trucking Brokerage If I know I can call you and know that you're an owner-operator who will pick up and deliver on time, I'll be very, very fair, pay fast, try to keep you loaded fast, be-cause I need you coming back. Michael Fouts, president of CRST Logistics Will the real rates please stand up? It's hard to know what to shoot for when negotiating rates. Studying real market averages can help, though services that provide such data vary in what they offer. For current and past rates on particular lanes, Transcore DAT's Rate Index Pro ($29 monthly) is a powerful tool, says radio host and small-fleet owner Kevin Rutherford. The inclusion of maximum and minimum payments allows you to know a potential maximum rate in a given negotiation. The service also shows the ratio of loads to trucks posted in any given area. National average market data with historical comparisons are published at transcoretrendlines.com. Internet Truckstop's Fuel Desk function in its load board services offers average rates, including historical trend data, on particular lanes and regions and likewise live loads-to-trucks ratios in areas. Its weekly ITS Trans4cast Letter ($59 yearly for IT subscribers) provides market analysis of the industry fluctuations week to week, says IT user Karen Albert. You can see freight demand this week versus last week. If demand is up, you might have more negotiating power with a broker. In November, Fairtran.com began offering the free National FairTran Rate service, specifying in flatbed, dry van and reefer segments average short- and long-haul benchmark rates for what trucking companies be making to should maintain an appropriate level of profit-ability. FairTran (www.fairtran.com) also can provide customized rate and cost data to customers at $36 to $55 a month, updated daily. Comparative rates during October Dryvan Reefer Flatbed TranscoreDAT $1.38 $1.47 $1.52 InternetTruckstop $1.35 $1.53 $1.40 FairTranNational $1.40 $1.68 $1.56