Success! You found a load on the load board that satisfies your business requirements. The next step is to contact the broker to negotiate the freight rate. You as a trucker know that most load board rates listed are rarely considered “all-in” rates. Which means a rate the covers the hauling costs as well as assessorial fees and fuel charges. Brokers generally offer a lower price, but if you as a trucker know that some freights are worth more than others, don’t be afraid to ask for a better rate especially if you know it will help your business succeed. If you need help on how to negotiate rates to help better your trucking business here are 6 tips for freight rate negotiation:
KNOW YOUR OPERATING COST
Before accepting any new loads, you first need to know how much it costs to operate your business. Accepting rates far below your average profits can hurt your operation and may put you out of business. Don’t be afraid to turn down a low paying freight.
PAY ATTENTION TO THE DROP-OFF LOCATION
Areas in the US have reputations for offering low freight. For example, hauling a load from one state to another might give you a good rate but leaving from the same state you arrived in is a different story. Negotiating a higher rate can help you cover the cost of getting out.
IDENTIFYING THE LOAD TO TRUCK RATIO
Pay attention to the posted trucks around your location. They also will want the same loads as you and as the outcome, influence the truck demand in your pick-up area. If there’s a higher number of posted loads and a small amount of available trucks, you have room to negotiate a higher rate because the demand is high.
MARK LOAD TIMES
Time is a significant factor over freight rates. If a load remains on the load board for a period of time the more anxious the broker will be to find a truck. This is a good advantage to negotiate a higher rate for that matter. You should also consider the pick-up time. If there is a window in between finding the load and the pick-up time the broker may be more than willing to negotiate with you.
ASK ABOUT ANY FEES
As a trucker you must take specific lanes designated for your safety and the safety of others. Therefore, you know some lanes are more expensive than others. Before agreeing on a load make sure you know which routes to take and if there are any tolls along your route. Here are a couple of good questions to ask; Do you need special permits to haul the load? Am I required to pay dock or lumper fees? Is the fuel surcharge covered in the rate?
VERIFY BROKER AND SHIPPER INFORMATION
Run a credit check on the broker and shipper’s information. This may sound like extra work but for the safety of your business, it is crucial. You want to make sure you are not running into a scam and that your next haul is coming from an actual company. Moreover, you also want to know the broker’s average days-to-pay. If you can’t wait out their pay terms, look into quick pay or factoring.
Overall, when negotiating freight never hesitate to ask questions. You want the best for your business, so you will want to take loads that will help you become successful. The worst that can happen is have a broker say “no.” But that is not going to stop you from looking for better freight rates. Negotiating sounds like a handful but it is a smart tactic for your business.
How about you fellow truckers? When was the last time you had a good freight rate negotiation? Let us know in the comments below!