Now is the time to get better contracts with higher truck load rates and open up new business.
1. Right now, the demand for trucks is really high which causes the truck load rates to go up. Oftentimes we get locked into contracts with customers. The customer wants to lock you into a truck load rate for a long period of time, so that when the demand for trucks is high, you can’t go back for a rate increase.
However, it’s really important, even if you’re in a contract, to go back and revisit those rates.
If you’re not available to pick up that load, a customer going to have to go to a secondary carrier and they’re going to be paying a lot more for that truck. Customers realize they’re going to have to pay higher rates.
Truck load rates can be negotiated. Both sides can win when the driver knows his costs per mile.
So, it’s a good time to go back to those customers and say,
“We have an opportunity to make a lot more money other places. Also, if you go to somebody else, you’re going to have to pay a lot more. You like the service you’re getting from us so pay us some more, so we can run our business at a profitable point and you’re still getting the service you expect. It seems like the right thing to do.”
Can you renegotiate a contract?
Yes, you can. You can always renegotiate a contract. Most customers want you to live with a contract for a year. But if there are service issues on the lane, or if things aren’t working out as expected, even if it’s a new contract, you can go back and say,
“Hey, we set this contract up some time ago, and now conditions have changed. We need to open negotiations back up so we don’t have service problems.”
That’s how you approach it.
2. The other thing is, because the demand for trucks is so high, a lot of customers will talk to you during a market like this who wouldn’t talk you otherwise. If you have customers locally or anywhere, really, that you’ve wanted to get in with, this is a great time to contact them. Most shippers out there right now are having trouble finding trucks, and they’re paying truck load rates they’re not comfortable with, higher than normal. So it’s a great time to call them up and say “I have trucks in your area. How about giving me an opportunity to quote on some lanes?” So you might be able to break into some new business.
How can TruckingOffice help increase your truck load rates?
The important thing that TruckingOffice does is allow you to monitor what your average revenues per mile are and your average expenses per mile are, which are the most important numbers you need to know in a trucking company. Because you’re oftentimes bidding these freight contracts based on a per mile rate, it’s important to know where you’re making money and where you’re not. So if you know your average cost of operation for the month is $1.45 per mile and you’re at $1.65 a mile on a load, you’re not making very good money. Or, if you know that because generally rates are up right now, so you see that your average revenue per mile has gone from $2.00 per mile to $2.40 per mile, and you still have a contract on this particular lane that is $1.70 per mile, and see within your own business that that contract is well below your average rates are, so you can easily go to a customer and say,
“Hey, my average rate for everything I did was XYZ, and this contract is well below that.”
With the demand for trucks so high, right now is also a great time for you to start your free trial of TruckingOffice so that you’ll know what your truck rates need to be.