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Freight Rates and Loads – Contract and Spot
The biggest question I frequently get is: Will I get paid?
My answer is, Yes, more than likely you’ll get paid. Don’t worry about that. The real question is: WHEN will you get paid? This issue of getting paid or not – and when – will be the focus of another message. So, stay tuned.
Today, let’s discuss rates in a different way.
Rates are where the action is insofar as building either a trucking company or a freight brokerage. Companies live and die by their ability to work their rates.
In this message I want to talk about “contract” versus “spot” rates (or loads).
Contract loads bind a shipper and a freight broker for normally one year at a time. Spot loads are negotiated individually as they come to you.
Right off the bat, I’ll tell you – if you are a new freight broker, do NOT work with shipper contracts – work only with spot loads which don’t involve contracts. Why?
If a new broker enters into a contract with a shipper, the question is: Will the broker be able to fulfill contract requirements due to the fact that they are new?
You can bet your bottom dollar that any shipper contract you sign is going to be slanted by far in favor of the shipper. Try telling a shipper that you want to use YOUR contract. Good luck.
You don’t need the potential threat of non-performance especially if you are new. You don’t need to accept freight liability either. So, stay away from shipper contracts, work with spot loads if you are new. (You WILL, however, have a Broker-Carrier Agreement).
Transport Topics in their July issue stated that rates are trending from spot back to contract.
Listen – to the point – there are tens of thousands of shippers – maybe more – that don’t use contracts. THESE are the ones that will be buttering your bread with spot loads.
Transport Topics further states that freight tonnage jumped in June as compared to 2018. At the same time, the same article states that U.S. factory production decreased slightly. So let’s continue …
Despite freight tonnage jumping in June, there most likely will be a slowdown in the coming months. The economy is weakening for several reasons. Plan accordingly but don’t put your blinders on.
Keep this in mind – you don’t need hundreds of shippers to succeed as a freight broker. Sometimes just three or four can keep you very busy for years if you choose to stay small.
Also, in my freight broker training, I’ll show you customer acquisitions strategies that will take you where no one else is going.
You don’t want to follow the herd when searching for loads.
Contact me below with your questions. Freight will have to be moved no matter what happens.
P.S. Along with this article, I HAD PREPARED a rant about the Fed and our crumbling economy. But, I’ll spare you this time. However, I may be working on a separate venture that will reach out via podcast, YouTube, subscription or whatever and will address issues related to the economy, the future of money, investment opportunities in cryptocurrencies and precious metals, geopolitics and more. I’d like to be focused, but where? There are too many hot topics that need to be understood. The bottom line is that I have a profound concern for the way our country is headed; the problems start with our early education and go on up to politicians and heads of organizations. It wasn’t this way when I was growing up. I guess this is a rant after all. No apologies, however.