How to Negotiate Better Rates with Carriers

How to Negotiate Better Rates with Carriers

Freight 360 By Freight 360

In this blog we’ll cover strategies for covering loads in the spot market.  We’ll list out the priorities and what you’re up against negotiating with dispatchers and carriers.

In most cases we’re prioritizing rates.  At least, that’s where the conversation seems to end up.  Meaning that most new brokers when covering a load tend only negotiate and discuss the rate of the load.  The price per mile or total spot rate.  Why is that?  Is this the only variable that’s important to a carrier?  No, it isn’t.  So why do we always end of haggling over the rate and not discussing much else?  It’s because that’s only variable that the carrier or dispatcher want you to think matters.  

Let’s dig in to what are the important aspects of any load for a carrier.  The direction of the load and the total miles.  Carriers and drivers usually have other customers every week.  They will usually have some local shippers that they may start their week with.  Or they may have the same loads in the middle or end of each week.  Over time as carriers run more loads and build more relationships with shippers and brokers, they acquire more of these dedicated lanes.  

This is important because we never really know where that specific truck is coming from, or where they need to head next.  And if we aren’t asking these questions when we’re negotiating we don’t know if we have the perfect load for where they need to be.  Or that we have one that doesn’t fit their schedule at all.  It should be no surprise that if we have a load that delivers on the right time, of the right day in the right zip could that would be valuable to a driver.  In some cases more valuable than a few hundred extra dollars.

You should be starting each negotiation by asking where the driver is looking to go.  For instance, if they call in on a Memphis to Chicago lane.  I’ll begin by saying, “how’s it going?  Out of curiosity where’s your driver looking to go?  Any specific mileage he’s looking for?  The reason I ask is that I’ve got a handful of loads available headed out of Memphis.  Some headed south, west and north.  We could probably even ask the shipper if they have anything going to east as well.  What would work best for him?  

Then pause, and listen.  If you present the situation as a buffet where the dispatcher or driver can give you their top choices, you’ll increase the amount of information you have.  And any time you increase what you know, you are slowly leveling the playing field.  Remember, that negotiations are mostly about information.  Who has how much and when do they know it.  The more questions you can ask in a negotiation, the more leverage you have over the rate at the end of the day.  

If you have the perfect load for that specific driver, they are never going to come out right and tell you.  Why?  Because it’s in their best interest to keep that info from you.  So that they can sell you on how difficult your load is, that the destination is terrible, and the load is too heavy or difficult to secure.  A great test to remember this, is that if you’re discussing the rate and only the rate, the carrier is controlling the conversation and likely to come out on top of the negotiation.

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