Tuesday, April 21, 2020
There is no doubt that we are living through an unprecedented economic crisis
that has plunged all lines of business and commerce into a state of uncertainty. Since the outbreak of COVID-19, many are out of work because their jobs are considered nonessential, while essential workers are risking their health and safety — as well as the safety of their families and households — on a daily basis.
Among these essential workers are the truck drivers we work with. They are helping the rest of us maintain our daily lives by keeping the important goods we need moving. And they’re now working on lonelier roads and delivering to areas with higher wait times. Their jobs have never been more stressful.
Adding to truckers’ stress is one certainty they can count on in these uncertain times: rates are all over the place. A trucker may get a great rate in one region, but they often find themselves having to take cheap freight to get back out. This has always been a pattern in the logistics industry, but it seems to have intensified since states started issuing stay-at-home orders
In the past, for example, a freight broker would have to pay a carrier headed to the Northeast around $4 a mile since the freight coming out of that region was closer to $1, or else the trucker might opt to deadhead hundreds of miles to better freight. This was always a reality of the market — and there are truckers that will take the freight at lower rates in the hope that they can break even and get back to a higher paying area. But when the freight is taken at those low prices, the service is typically lackluster.
There’s been some recent criticism of freight brokers because of the cheap prices out there. However, these prices are mostly set by the customers that go to multiple transportation sources shopping for the lowest price. They know that trucks in a certain region need the freight and they take advantage of freight brokers and trucking companies to lower the price. This drags down profit margins for everyone.
But brokers aren’t doing this in an attempt to make massive profits. Many freight brokers who are moving non-essential items have lost nearly all of their freight. They’re now posting cheap freight in an effort to keep their heads above water, keep their customers and keep their jobs.
The only way to combat the scourge of cheap rates? Communication. Pointing blame will not fix the problem. If truckers can communicate to freight brokers what rates they need to operate out of a certain region, then their brokers can relay this to their customers. And customers typically are receptive to a pricier truck if it comes with better service because it makes their jobs easier.
So remember, we are all in this together. When the system works better for one of us, it works better for all of us. If you have a carrier on the line, work together to find a price that is beneficial to you both during these uncertain and dire times. It will help steady your relationships, as your carriers won’t be faced with taking on loads at rates that are detrimental to their business, and it could bring more freight your way once things open back up.
In his role as Vice President of Sales at USL, Drew Jackson brings nearly 15 years of logistics experience to his work leading our team in its mission of being always on, ready with solutions for customers, brokers and carriers. For more of Drew’s perspective on how USL is navigating the business of freight during COVID-19 and beyond, check out the USL blog