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One Driver Got Mad at Me
Several years ago while discussing trucking and brokering with a driver he got upset when I mentioned a truck “shortage”.
He retorted, “There’s no truck shortage! I could have a line of trucks a mile long for any load.”
Well, maybe so, maybe not.
I did not argue with him but he had a point: if truckers are dealt a fare hand with rates, etc., they’d come out of the weeds and go to work. There IS no shortage and there would not BE a shortage according to this driver.
Yet, the lack of capacity prevails in many parts of the country while rates HAVE BEEN increasing over the past year or longer.
Rates have risen primarily because of supply and demand reasons and they had BETTER be on the rise because fuel costs are increasing probably at a greater rate which touches upon another issue –
Why are fuel costs increasing so rapidly?
Many say it’s because, when the government pumped billions (or is it “trillions”?) into the economy, we had people buying more and more thus pushing prices higher and higher.
Greater demand means increasing prices – higher and higher.
Now it’s hard for the general public to figure all this out because one well known economist said that it’s NOT the increase in money supply that has pushed prices higher – it’s the Biden administration’s energy policies.
He said that Biden shut down oil and natural gas production – and indeed this is exactly what has happened.
He also said that when the government pumped so much money into the economy it went first to consumers – that is, into their checking accounts. And then banks turned around and gave some of that money back to the government to increase banks’ reserves.
The more money banks have as “deposits”, the more money the banks need in reserves to protect the consumer.
Therefore, all those billions never really FULLY got to the consumer. Thus, there was no great increase in the money supply which usually pushes prices higher which we call inflation.
Does any of this make sense?
If so, great; if not, join the club.
But, when banks receive money they lend it out at a tremendously high loan rate and then offer peanuts to those who keep their money in deposits.
Again, it’s hard for the general public to figure out what’s going on here.
But, here’s something to take to the bank – freight HAS TO BE MOVED and spot rates will keep rising for the foreseeable future.
Inflation for many consumer products WILL ratchet down, in my humble opinion, except for fuel costs. Fuel costs will remain high primarily because of the lid on U.S. production.
However, IF the federal government implements another round or two or three of money infusion into the economy, will that increase in money supply just go back to the government to further increase banks’ reserves? Or will it reach the people and stimulate spending which will keep upward pressure on increasing prices (inflation) across the board for everything?
Again, going back to the fact that freight HAS to be moved, it’s imperative for brokers to really get a grasp on rates.
You don’t have to know everything about rates all over the country – you just need to become an expert in YOUR corner of the world wherever that is.
In my freight broker training, you have spreadsheets to help record all load activity including rates and margins for not only each load but for each shipper and for any time period you choose.
More and more I believe that – for those who are ready to make a serious effort into freight brokering – rate or freight broker software may be a solution. But it’s not cheap.
When truckers determine their rates they usually use a cost-based approach plus “what the market will bear”. When they get it right, they succeed.
Brokers, however, look at margins. As a freight broker, you want to continuously ask yourself, “What lanes have the best elasticity for margins?”
Why in the world would you keep running loads on lanes that give you a 7% margin when you have options to run loads on lanes giving you 14% margins?
Software won’t always be the total solution but it may help. Experience is what you need.
Know your rates. There are some helpful resources but nothing will guide you better than recording your OWN load activity.
Rates are dynamic, being impacted by a variety of factors that you need to understand. There is no “set” rate for any particular load or lane and that’s where YOU need to come into play – take control! Know MORE than your competition and at least as much as the truckers you’re working with.
Here’s a video that may be helpful. Rates are fluid and require thought and knowledge – you’ll see it here.