Lane Pricing and Negotiation Strategies in Freight Brokerage | Episode 228

Freight 360

January 26, 2024

In this episode, we dive into the world of freight brokerage, blending insights and personal stories to equip you with essential industry tools, including strategies for successful lane pricing and negotiations. We explore the factors influencing freight rates and capacity, using analogies and situational awareness to navigate the complexities of the spot market and the art of negotiating truck rates. Beyond just business tactics, we emphasize the importance of passion, relationship-building, and a positive mindset in achieving success and providing exceptional service in the freight industry.

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Show Transcript

See full episode transcriptTranscript is autogenerated by AI

Speaker 1: 0:19

All right, welcome back for another episode of the Freight 360 podcast. Today's a good one we're going to be talking about well, actually they're all good, but this one is going to be all about pricing a lane. It's one of the fun things you'll get to do once you have gotten a customer to give you the time of day and they're going to ask you to quote some stuff out for them. But first, if you are brand new and I know a lot of you are every week we've got new and new listeners go to Freight360.net. Check out every other blog, podcast, youtube video in our collection there. The whole library is searchable on the website. Leave us a comment. We answer a lot of comments from the YouTube channel and questions that come through our contact us form. On our Tuesday show the Final Mile and share us with all of your friends. It helps us grow and get the good word out there to other folks in brokerage. And if you want to learn more about us, you can check out the Freight Broker Basics course. It's a full-length, self-paced course that'll help you learn how to get your brokerage off the ground and everything in order from getting customers, building the carrier network and growing the business. Ben, what's happening, man? How's Florida?

Speaker 2: 1:30

Not bad man A little under the weather this week, but hanging in there, I'm actually kind of anxious and I know it's probably not the thing you're most excited to talk about today. But I watched most of the game Sunday except and this will you'll chuckle at this like I fell asleep. In between I had to be like two minutes and 40 seconds left in the game. The bills had the ball and I nodded out and woke up and the game was over and the time ran out and I went. What happened? I'm like I literally didn't know what happened. I still didn't know exactly what happened. I think there was a missed field goal and again, I don't want to jump to the conclusion, but I genuinely don't know how that played out.

Speaker 1: 2:17

So I was at the game. It was a missed field goal and I'll talk you through it briefly. The bills, the first half of that game, were the more dominant. We went into halftime with the I think it was a three-point lead, I think it was 17-14, and came out and it was kind of like a back-and-forth shootout Great game.

Speaker 2: 2:37

It was one of the best games I've watched in a long time.

Speaker 1: 2:40

Yeah, so pretty much everyone was saying whoever has the ball last in this game is going to be the winner, because they're going to score last. That's how it's going to work. And actually, ironically, that's not what happened. Kansas said he was able to kneel it out Because there was a couple of weird things. So the bills had this really strange fourth down attempt they're at their own 30, and I didn't even watch the play because I was like, oh, we're planting it and apparently Damar Hamlin tried to go fourth and three from our own 30, and didn't convert. So that led to a turnover. But luckily I'm pretty sure it was the same drive. The Chiefs get down just short of the end zone, fumbled the ball into the end zone, which the result of that?

Speaker 2: 3:24

was.

Speaker 1: 3:25

My wrist was attached back for Buffalo. So Buffalo got out of a stupid mistake. So then, we're getting towards the end of the game. Kansas City is, let's see, buffalo was up by four. Kansas City drove down and scored to be up by three. Buffalo drives down and a couple of dropped balls and missed reads leaves them at fourth down and they're in field goal range. It was like a 40 yard field goal and the kicker just wide right and like dude, someone who knows Buffalo Bill's Super Bowl history. One of the most painful of the four consecutive losses was the first one, when the bills were down by a point and had the ability to win the game at a game ending field goal and Scott Norwood was the kicker. I think it was 1990 and he went wide right. So forever. The words wide right were like burned into our memory and, listening to the broadcast, I think it was Tony Romo or who Jim Nance, tony Romo, whoever those, the combo is Wide right. Two words that no one in Buffalo wants to hear again. And that was it. Wide right. Basically, all Kansas City had to do at that point was pick up a first down or two and they would build a kneel it out based off of Buffalo's timeouts remaining and that was the game. It was a sad one, but again, you never know. If we had made the field goal it would have been a tie game and my homes could have went down and scored there, or it could have been like two years ago. The 13 seconds went and under two minutes there's like 25 points scored because Allen and my home just go back and forth. But great game was a great matchup. I lost my bet with Trey Griggs so if let's see this drops on Friday at midnight, friday morning, if his jersey arrives to me on time, I will be on his podcast at noon on Friday wearing a Padma Holmes jersey, and I had I think it arrived today Kansas City Chiefs face tattoo like stickered logos that go will go on my face.

Speaker 2: 5:36

So yeah, I think I'll be at that word on the street Friday, if you are. Yeah, we're actually all up in.

Speaker 1: 5:42

Yeah, check it out. We're on the street and if his jersey does not arrive on time, I will be. We'll just gonna postpone to the following week. So but it wouldn't be as good if it's got to be like the week after the game.

Speaker 2: 5:54

You know before everyone. You should both mail it to each other prior. So you've got it.

Speaker 1: 5:59

Well, but so he wore his jersey, like during the game. He took a video of himself there in the game and it's like it's his Super Bowl jersey, because they won last year. So he got one that's like an adult size.

Speaker 2: 6:10

He's like, hey, it'll at least fit you this time, Instead of the youth large that he sent me, which that's not a joke, trey had a youth large, but anyway hey, speaking of Bill's trivia, the one that I always remembered, because I mean as an AFC fan I was always rude for the bills against the Cowboys in the 90s, but I remembered. I think his name was Don Beebe. I could have swore his last name was Beebe. It is he celebrated with for the touchdown on like the 15 or 20 yard line and just got crushed before he scored was the one, for some reason, I can just always stick out my memory.

Speaker 1: 6:47

I don't have this. It sounds familiar. I'll tell you that happened to the bills in modern history. I think I want to say it was like the year that we had just got. We got LaShawn McCoy and he was running towards the end zone and like slowed up some range to only get tackled at like the two yard line or something like that. Yeah, I just did a quick Google search and it says Don Beebe chases down Leon let. Does that sound right? Leon, yeah, leon let for a Super Bowl or Super Bowl 27. That might have been it. Yeah, it's a famous, so it would have been him as him as like a linebacker. Oh, okay, assuming he was a. No, he was a wide receiver. What am I missing here?

Speaker 2: 7:36

Most of that there is a famous play from Super Bowl 27 and 93 that involved Don Beebe celebrating early, though he wasn't the one who got tackled. Here's what happened the fumble Dallas Cowboys defensive Leon let recovered, recovered a fumble close to the bills end zone and started running towards the other side of the field celebrating as if he scored the chase. Bill's wide receiver, don Beebe, chased, let down from behind, stripped the ball out of his hands just before he crossed the goal line. The result the fumble went out of bounds in the end zone, resulting in a touchback for Buffalo.

Speaker 1: 8:10

Oh, wow.

Speaker 2: 8:11

I was actually in favor of Buffalo, but I still remember that.

Speaker 1: 8:14

I look out, I don't electricity.

Speaker 2: 8:17

It came one of the most iconic moments in Super Bowl history and is often referred to as the Leon left on board the BB strip.

Speaker 1: 8:23

Just watching the video. Sorry, that's wild.

Speaker 2: 8:27

Does correct me. It's important to remember BB didn't celebrate early. He was the one who saved the touchdown from Buffalo. I had it backwards, but Wild.

Speaker 1: 8:36

But hey, that's sports, oh that's. You know, that's the NFL and you know another. It makes it exciting. What's that?

Speaker 2: 8:42

It makes it exciting. You don't know, you got to watch me play out.

Speaker 1: 8:46

Yeah, um, I did see golf. There was a 20 year old kid that won. He was at the youngest, youngest player to win the tournament that he won. Is that ring of bell to you?

Speaker 2: 8:59

I haven't seen anything in golf lately.

Speaker 1: 9:02

Let's see what I got here. Yeah, dunlap. So Nick Dunlap, a university of Alabama sophomore, won the American Express Tour Sunday. He wouldn't be able to collect any prize money because of his amateur status. But yeah, it was the 20 year old golfer and he won that tournament. Wow, that's an amateur.

Speaker 2: 9:22

That's pretty nuts.

Speaker 1: 9:24

And so $1.5 million prize went to the runner up, because he wasn't. Oh my God, that's wild, that's awesome. Hey, he made a name for himself youngest amateur to win since 1910. I always pronounce it amateur. Why do people say amateur? You ever hear that.

Speaker 2: 10:59

I've heard both and I don't know what is correct. I've never actually looked it up to see the grammatical spelling.

Speaker 1: 11:05

Listeners less than what you think.

Speaker 2: 11:07

Yeah, I'm sure it in the comments. Is it amateur or amateur?

Speaker 1: 11:13

Yeah, I've always said amateur like chinchard, but who knows? All right, so that's our sports news. This came out in our newsletter yesterday or Tuesday for those of you listening on Friday, but it was from last week. The FMCSA, the head of the FMCSA, stepping down, there's going to be a new sheriff in town, lynn. The FMCSA and I did like Ken Atamo's brief take on it was like oh, like the federal motor carrier safety administration, but literally 94% of your carriers carriers don't have a safety rating because they haven't been rated. Yeah, you're probably probably not doing something right, you're probably doing something wrong or forgetting to do something there, when nearly all of your people that you're in charge of safety for don't have a safety rating. So, but there's a bunch of other stuff involved there too. But, yes, fmcsa will have a new leader in DC and yeah, that's pretty much it. We had to make sure you sign for the newsletter. You sent out a bunch of stuff market updates on Thursday, big news stuff on Tuesday.

Speaker 2: 12:28

There's a couple. I found One diesel price is declining. Near shoring boost. Us Mexico trade predictions suggest increase in near shoring with manufacturing shifting closer to the US. So prospecting opportunities. Hey, focusing on cross-border transport, I think it's going to be a great niche this year for anyone out there looking for things to specialize in. This is interesting. I was just looking at these companies for a client but Sam Sarah, who is a tracking provider, is suing Motive, another tracking provider, over patent infringement. Lawsuit filed by Sam Sarah against Motive highlights the growing competition and innovation in the transportation tech sector. Both companies offer fleet management and telematic solutions A lot of AI and automation into TMS stuff that we're seeing. We're going to be talking about a sponsor soon along that front. Us House advances bill to protect moving privacy Bill aims to regulate data collection and sharing practices in the moving industry, not for us household goods, but kind of in our industry.

Speaker 1: 13:38

Yeah.

Speaker 2: 13:39

That's it.

Speaker 1: 13:40

Where are you pulling all?

Speaker 2: 13:40

that news from. I just started going into Bard and GPT. Oh yeah, what's new in the transportation industry this week, and it gives me at least a little high-level overview.

Speaker 1: 13:49

For anyone out there that I don't want to go down a news rabbit hole, but so freight waves is huge. Obviously they're a great place to go. But in addition, transport topics If you're a member of TIA, you likely have access to transport topics and they probably send you that every single week magazine that I get to my house every single week. I never recycling it because I just look at the articles online. Cdl life is another good one. Yahoo News surprisingly, puts out interesting articles in the transportation space every now and then and who else? There was a major news outlet that I found on their website had like a freight section that talked all about freight, whether it's import, export, domestic tonnage, legislation and all that stuff. But it's really important to stay up to speed on what's going on in our industry because it can change so quickly and the changes can impact dramatically the way that our job works, so like, for example, when ELDs went in place five years ago or whatever it was. It might have been longer at this point, but it created a big capacity crunch. And a lot of people trying to figure out, ironically with our topic today, like how do I price this freight in the spot market when I don't necessarily know it's changing so rapidly and it's so hard to find a truck? How do I price this Not knowing that? So it's probably a good place to segue right into it, right For sure. Yeah, like how to price a lane. So we've got some short form content on this. We wanted to be able to have a little bit longer discussion because you can't fit everything into a eight minute YouTube video or a two page blog. It's just the reality of it and we can tell stories on here about pricing and what's worked and what hasn't worked. And when you get into freight brokering, you're not going to have a chance to quote on business until you've built enough relationships with customers where they're going to have enough trust in you to offer it up. But what happens is that first time, if you don't know how to do this, you might lose that shot that you had. So you can play around with pricing and how to understand how it all works before you actually have freight to move, and I would encourage people to do that. So, like, if you have a DAT account, go into that IQ, look at some of the different tools in there so you know what blue means versus what red means. And if you have a license for rate view which is a really good rate until from DAT, play around in there, understand what seasonality has done in the last 52 weeks in certain lanes and understand how to read what the projections are, understand where that data comes from. We had a really good episode with Tamir from DAT last year where he gave us the analytics on where these data points come from in rate view. But you know, we'll peel back the layers today on some of the rating tools that are out there, maybe some of the internal rating tools that you might have at your company and good old, just talking to drivers, those are kind of like your big three buckets, I would say. Anything you want to lead off with or add in.

Speaker 2: 17:11

I would just add this, right, like I think rating has far less to do with the numbers than the situation. And it's funny like I did a training on this for one of our clients a couple of weeks ago and I went and rewatched it and read the transcript. I think I used an example and talked about numbers for maybe two or three minutes out of an hour and a half. Right, because the reality is it is just a number and, to be honest, it's always just a guess until you've actually booked that truck, right? So the reality is that it's really far less to do with what number you land on and far more to do with understanding the situation that you're trying to bid on. Those are the questions you ask and those are the understanding of your customer's supply chain, how they operate and the different variables that go into it, because you look at any tool, it's going to give you an average, right? Okay, it's my situation average, is it above average? Is it below average? What makes it any of those things right? Those are the questions and, I think, the more important foundational knowledge that teaches you how to do this in every situation. Right, because if you understand the first principles of just how this works. You can apply it to anything, right? As opposed to let me teach you how to rate LA to Chicago and then I'll teach you how to rate the next lane the next day, and then the next day, the next, like. Once you understand how these things function and what tells you what, you can do it for anything anywhere at any time, and to me that's what we're hoping to be able to provide for you, guys.

Speaker 1: 18:46

Yeah, absolutely. Well, let's kind of talk about situational stuff first. Right, and I like that. You brought that up because I didn't mention it before. When you look at, this is just a recap on the DIT stuff like, or any rating. So I don't care if you're using RateView, ratecast, ratemate, whatever these different tools out there are, impact if you're a MacLeod user or maybe some third party Green screen I haven't played around with it too much, but I've heard good things about green screen. The reality is it's just data. It's being displayed in a way that you can see. It's mostly historical averages, right, but an average is just an average. It's not. Doesn't mean that because the average yesterday was this, that in my specific situation today it's going to be right there, right, and there's a lot of data points to go into that. So when you look at, go ahead, ben.

Speaker 2: 19:40

I wanted to give you. I want to give an analogy because I've been looking for one, Because when we were talking with Ken about this, I wanted to do a video where you could see some visual representation that wasn't trucking, to try to get people to understand the point you just made. Right? What do you start with? What you start with right are hopefully enough transactions right to get an idea of what happened yesterday, the day before and at any period up until today. Right, what you have no information on is what is going to happen from this point into the future, because there's no data on it. Right, so it's helpful, but it doesn't tell you everything. Right, and the one analogy I think that was really good, and I did use GPT for a lot of suggestions until I found one that I thought made sense was a farmer's market. Right, Think about it like this so let's say you lived in South Florida, Miami, and you go and buy raspberries for your family every day. Right, you buy trucks every day for a freight broker. You're going to go buy them, but you buy them at farmer's markets. But let's say there are five farmer's market around your community and you can go to any one of them and there are multiple people that sell raspberries at every one of them, right? Well, you would assume that to your point. What do you start with? What was the average price that raspberries were sold yesterday? Well, a guy that came in and bought $500 worth of raspberries for his restaurant probably paid a lower price than the old lady that bought a little box like this per pound. Right, you buy more, you get a discount. You buy less, you pay a little bit more money. There's going to be a difference in those two numbers, right, If you've got a family of five or three or 12, again, same thing you buy more, you tend to get a little discount from the guy there. You buy less, you pay a higher price. But DAT, or any place that you're going to go look for, your average price is just going to show you that every single transaction from almost every one of these farmer's markets that were large enough to keep records, right, that sent them, they divide them all out by the number of sales and you get the average. That does not tell you, if you're a restaurant buyer, what you're going to pay tomorrow, and it doesn't tell you, as an older lady that's going to buy one little box of raspberries, what they might pay tomorrow. It'll give you an average of everything that happened and that might be more or less than what you're going to go try to buy tomorrow. If you've got a holiday and you've got to buy a bunch of them, maybe it's a different situation and to me it was a pretty good analogy of really what you're looking at to start with versus what you can use this information to determine. I guess yeah.

Speaker 1: 22:41

Now, how do you relate that to freight? Right, your analogy was great, though, with the farmer's market and the raspberries. So think about this with your customer. We're going to look at the customer side and the truck side, because this is what the spot market is. Right, we're not talking about a contracted lane going to a contracted carrier, where it's predictive and it's all the same. We're talking about hey, here's an unexpected load, we need to get it covered. Well, there's a couple of things that we're going to factor in here. Let's talk about the customer, the shipper. First, pricing are they going to be as price sensitive as they normally are? Well, it depends. Well, is this time sensitive? Is there a massive opportunity cost if this load is not delivered immediately? Does this load can it sit there for you know? Did you know? Regular carrier fell out, but hey, it can sit here for you know, up to two weeks, right? Those all impact it. The more urgent it is, the more flexible they're going to be with spending more money to secure a truck. If it can sit there for a while, they're probably going to be a little bit more price sensitive. So those are a couple of things to look at.

Speaker 2: 23:49

Good question, right, and I want to reframe this for the audience If you had to ship something and you had five days to move it, are you going to pay a high rate today if you can probably ship it cheaper tomorrow? Probably not. And again, if you got four or five days to wait for the right truck to give you the rate you want, then you would wait. If you can't wait, meaning if this load doesn't pick up today, my customer is going to tell me they'll never buy my product from me, ever again. Then guess what? I got to pay whatever cost to move that today, right? Those are your two extreme examples, right?

Speaker 1: 24:22

Exactly Now. Kind of the same concepts apply on the carrier side. Are you getting them a load in a city where there's, you know, 10 trucks for every one available load, where they're just trying to get their hands on anything, or are they? So that's called loose capacity? Right, very loose capacity, there's an excess of trucks. Or is it tight capacity, meaning that, hey, there are only five of us trucks available here and there's 30 of you trying to get a truck today, so there's six times more freight than there is trucks available? That's called tight capacity. So when capacity is loose, you can typically get a truck for less. If it's tight, it costs you more. That is basic supply and demand right there at a micro level in a geographical market.

Speaker 2: 25:19

Right, and here's back to the other example. The carriers are the one that are going to perform the work or buying the thing from you right In the farmers market. They're the one shopping for raspberries. The broker is the one selling the raspberries right In the farmers market. So guess what If I sell raspberries and there's only one person to buy it that day? Right, I got to kind of offer my fruit to whatever they're willing to pay or sell nothing. Those are my due choices, right? Yeah, If there are a thousand people in line to buy raspberries, I can probably charge a little more than I did yesterday, because everybody wants what I have and maybe I'm the only one selling it. Now I have the leverage to your point, and that means that it's a very loose market. Lots of people want what I have and I don't have enough of it for everybody.

Speaker 1: 26:05

So I want to go a step further too. Now, outside of the capacity being tighter, loose or neutral in any given market, think about where you're sending this driver. Are you sending? Maybe they live and spend their whole life growing up in the South and you're trying to send them up to New England in the middle of winter.

Speaker 2: 26:29

How about Buffalo?

Speaker 1: 26:30

last Friday.

Speaker 2: 26:32

Yeah.

Speaker 1: 26:33

Buffalo, new York. Last Friday we had it's above freezing now, but we got upwards of six feet total in certain areas around here. That all fell across two storms within a week. Tractor travel ban. Tractor trailer ban yeah, I mean there was, and when there wasn't a ban you still didn't have a lot of trucks that wanted to drive through because the conditions were bad. But that's a great example. You're going to have to entice somebody to get there. So let's say, on the flip side, you talk to a driver who is from Buffalo and is trying to get a load back because he's trying to be there for the bills game that they lost, right? He's like I'm going to be, I'm going to Buffalo one way or another, whether it's a football game or a kid's birthday or, fill in the blank, holiday. Somebody wants to get home. They're going to drive home, no matter what. They might as well take a load and they'll take it on the cheap to make sure that they're getting something instead of deadheading and drive it empty. So there's different scenarios there. Or let's say you're sending them to a location that doesn't have a lot of freight that comes out of it. So let's say you send them from Buffalo to Boca Raton, florida, and it's not citrus shipping season and they're going to have to drive up to Georgia to get their next load. Those are all things that impact it. So situation depends, or impacts, more than price. Now, price does matter, though, for sure, and if you're looking at the everyday average like, let's say, middle of summer, dry van going from one hot market to another hot market, no holidays, no storms, so we're taking all that weird stuff off the table. Okay, then and really only then can you look at numbers alone? Okay, in most situations there's going to be some subjective situation that's going to impact the rate, either up or down from what you see on a rating tool. So we'll start with DAT right, we talked a little bit about it, rate View, and they've got rate cast to give future predictions. What I'd recommend here is man, there's like so much that goes anywhere, because you're going to look in there, you're going to see a median price and then you're going to see amount above and amount below. It's going to capture, basically, the 25th to the 75th percentile. So what does that mean? Out of all their data, the top quarter and the bottom quarter, they toss out and they're leaving that middle 50% in giving you the data. So they're giving you the upper threshold, the lower threshold and then the median, which is like the average number that you see right away.

Speaker 2: 29:22

Now I want to give an example. I have one right here pulled up for us, so this was one I was looking for. A produce customer in California and they move their operations to Arizona in the winter and then back to California right. So this one is Yuma, arizona to Los Angeles. It's 280 miles right and you can see, right now We've heard one pulled up too. So in the past seven days the median is 958, with a high of 1142 and a low of 784. Right, wide range, wide range. And here's the other thing it's excluding, as Nate said, 25 on either end, on both ends, which means that the real peak probably paid was probably close to 14 or 1500 for that load and probably as cheap as $500. That is not going to show up here. And why do they exclude those? For all the listeners out there and all of the? I can't remember his name, but I would have name dropped him right now at that association for whatever it was called. Oh, as to why rates aren't reported and why everybody thinks it's this massive conspiracy of my, numbers don't look like DATs and everybody's trying to, whatever right, here's why they're not on there Because they're not the average load. They're not a 42,000 pound dry van Right, these are for reefers but it's not a 42,000 pound load of average commodity with average pickup and delivery times. Right, it's not average. So it doesn't help anybody to determine what they might be paying for an average load. It doesn't help anybody out there to go. Oh, wow, jimmy paid Jake 500 bucks to run a load off market because he needed to get home for his birthday party or was willing to run this cheap because his next load he needed to pick up got him right there, or whatever it was that made sense for that one truck to run that load for that cheap with that broker. Maybe they did a favor, maybe he took up, you know, a loss a few weeks ago and he's making up for it. There are a thousand different reasons why somebody runs it for below market. But guess what? If you saw $500 on here, what do you think everyone's going to try to do? Pay as low as they can. That doesn't help anybody figure out what they are likely to pay. That's the point of the tool. It doesn't help me to see the extreme examples of every situation, unless that's the only type of work you move in. And I'll give you the other extreme Super heavy, overweight permits take forever to load, floor loading by appointment, multi drop, but still the same lane. You're probably at 15 or 1600 bucks Again. If they include that rate. You looking at an average normal load. That makes up again here's the statistics 50 to 60% of all of the load shipped on that lane. That data doesn't help anybody. That's why it's excluded and it just makes it harder for everybody to see what's actually happening. You need a narrower range. Think about if you had to quote your customer and your ranges were $1,000 apart. How valuable was that tool to you? If you got to quote your customer and they go could be 800, could be 2,000. Okay great, but my customer needs a range of at least $100 or $200. So where am I going to fall? That's why you see tighter ranges and they exclude the extreme examples and why smaller carriers numbers don't often report. They don't run enough loads on one lane sometimes. Or if they only run that lane, they aren't an example of a spot load, they're a contract carrier and again, the variables and why they're willing to run that load for that rate aren't applicable to your situation.

Speaker 1: 33:03

I had to go back and do my homework on the Twitter feud. But it's James Lamb and the small business in transportation coalition who you were referencing, but it's good, but it's not just him or that organization. There's people keyboard warriors that will type stuff, trying to say who sets rates, and it's all rigged. And you just outlined situations where that's where the rate comes from. That's what leads to that situation.

Speaker 2: 33:32

And, furthermore, it's in nobody's benefit to create a tool that doesn't give you accurate information. Why? Because, as an industry, you're going to go do the thing yourself anyway, and if you keep paying different rates than what the tool tells you, you're going to stop using the tool. It's not even in their best interest to do that. They would lose customers. It doesn't even make business sense for anybody to do something like that.

Speaker 1: 33:59

So for the spot rate they benefit to. Looking at a rating tool like RateView is it gives you a starting point. It's a much more effective tool, in my opinion, for doing a bid, because you have a lot more lead time when you're going to book a truck. For a situation like that, if it's got to go like today, tomorrow, it gives you a starting point. But there's nothing and you can again. You can use internal data from your TMS. Right, look at what. Did we pay for this lane recently or a year ago at this time? Oh, what's carrier ran it? Let me call them and see if they're interested again. Or if you're talking, maybe. Maybe you get the load posted or you start making up on calls to carriers. If you can talk to an actual dispatcher or a driver, that is going to be way more accurate and current than any rating tool that's online or historically in your TMS. Why? Because that is someone telling you right now how much they are willing to take that load for or run that load for. That's what precedes every other piece of data.

Speaker 2: 35:04

Exactly Back to the farmer's market. It's like calling your friends and asking them what they paid yesterday and then calling the farmer's market today and going here's how much I need to buy. What would you charge me if I showed up now? That's your difference, right? Yeah, it might be close to yesterday, but it might not be. That's the thing that changes so much in our industry is, things do change day to day and they can change drastically.

Speaker 1: 35:27

I want to talk. I want to preface with this. People can smell desperation, whether it's a customer or a carrier. So if a carrier can sense that you're desperate, either because of the tone of your voice or you just tell them, you can expect to be paying a premium to them, right, and maybe you have to because they're the only truck available and you wanna make sure that you lock them down, and that's fine. But when you start to go out and source this stuff, don't forget that there's things important to that carrier. And, ben, can you talk through some of this stuff, because you've done a great job this in the past. Is it explaining the questions that you would like to ask a driver that can kind of reveal to you what's important to them? Yes, right, like you kind of separate yourself from, or like you know, hey, so where does your driver wanna go?

Speaker 2: 36:22

Like stuff like that, right, here's mine and it's funny like I can't write it down, like I've just done it so many times. And this is what we talk about, right? Whether it's prospecting, negotiating with carriers, right, where you get good at this is just doing it a lot right. So, after new, realize it's gonna take some time and practice until you get better at it Like I wasn't good at it when I started. Do it thousands of times a month for years and you get better at it, right. But the first thing is who speaks first. And why does that matter in a truck negotiation with a carrier? Right? Because the person that speaks first gives information to the other side that they don't have. Like, if you and I are gonna start and I go, hey, so you're the carrier, nate, and we're gonna go with this lane U-Mata, la, and I call you, normally there's like kind of a standoff where, like, I'll be like hey, someone will be like, hey, I'm calling on your truck that's posted in U-Mata, what do you need to go to LA. And then the carrier goes well, what are you paying? And you go, well, what do you need to run it? And they go well, tell me what you got in it. And you're like well, how much do you need? It's your truck, and they argue over who's gonna speak first. Right, that's a typical situation with somebody that is trying to get the upper hand. But again, when you do that, it pushes each of you farther apart and it creates confrontation, which makes it harder to get to the point you both need to, which is it needs to work for both of you, and in every negotiation, both should be a little unhappy. You should get a little and I should get a little right. So what I try to do is ask the questions that are the leverage in the negotiation, right? So what are your leverage If I say, hey, your truck's posted in U-Mata and I need a rate to LA. Most of the time McCarrie goes, my guy doesn't really wanna go to Cali, but what are you paying? Why do you think he says that?

Speaker 1: 38:14

Even if he yeah, I mean he's immediately trying to take the defense of like and you know we're gonna, you know he's already. He's trying to take it out of your hand, right?

Speaker 2: 38:23

Whereas if you were to put it on-.

Speaker 1: 38:26

Hey, where is your driver looking to go? You know he's trying to get to Southern California. Oh, that's perfect. Yeah, I've got a load going to LA. Here's your next one.

Speaker 2: 38:37

Next one is the call it the complexity or the weight of the load. Right, it's either gonna be hard on the truck and burn gas if it's super heavy, or maybe it takes a long time to load. That is clearly a negative. When selling a load to a truck. They want lighter loads that they can load quick to go make more money, right?

Speaker 1: 38:55

So if you've got a load Easy, easy, easy.

Speaker 2: 38:57

That one's gonna be. I know he's got leverage on me there. He's not gonna want, he's gonna want more money. To run a heavier load Makes perfect sense. So you got direction, you got the complexity or weight of the load. Then usually your appointments versus you know, open first come, first serve, or kind of your last ones as to negotiating your big buckets to negotiate your leverage right. So the questions and the way I try to frame it is I'm not calling about one load first off, I'm calling about many loads, because now I can take that one out of your hands. So for instance hey, nate, I see you got some trucks posted up in Houston. Those guys still open and available. My first question yeah, they're still there. Hey, my next question when are they looking to be empty and why do I do? I think I asked that question before I tell them when my load needs to pick up. It's the same reason.

Speaker 1: 39:55

Yeah, I mean I would go a step further. It could also be in have to do with their hours.

Speaker 2: 40:01

Yes, hours of service. And also anybody that's brokered more than a couple of dozen loads realizes you've booked trucks before where the dispatcher thought the guy was gonna get empty in an hour and a half, got stuck there for three hours and it's no fault of the driver or the dispatcher and they go. Yeah, he should be fine to pick up in three hours, but he's still there and you booked a truck that can't even pick up the load that you needed to pick up this afternoon. So my next questions are when is he gonna be empty? Where is he and is he fresh on ours right? So again, these are very honest questions. You can ask any carrier that they're really gonna tell you yeah, this guy's fresh, he's at his delivery. He should be done an hour or two. My next question usually has he delivered there before or is this his first time? Because the dispatcher might be assuming it takes an hour and a half to unload, but he's never delivered there before and maybe this place is not very efficient and it takes him four hours. So those are my ways to prevent problems that have bit me in the ass later. Those are my first couple of questions and then, right after that, to your point, I'm gonna go hey, I can see you guys are based out of, because you can see where the carrier's MC's out of. I pulled that up and I'm like, hey, you guys are based out of LA. Out of curiosity, is your guy looking to get back home for the weekend or is there anywhere he's hoping to get to, to bounce out of Arizona? To your point, the dispatcher is gonna usually say, well, where is your load going? Where do you need him to go? And I'm gonna say, hey, I've got a couple of loads I can use this guy for Couple going to the East and a couple going out West. Does your driver have a preference? And now I'm usually gonna get one of two answers Either yes, and where he has a preference, or he doesn't have a preference and his preference is the highest paying load. Okay, either. Or I got my answer of what is important to this guy If he wants to go home. Now I'm gonna be like, well, hey, look, I think I got a load going to LA. My customer mentioned it earlier. I gotta confirm it. But would LA work for that guy? Yeah, to be honest, like I said, he needs to go home. Well, let me ask you. What's he looking to make on his way home? But what's your load plan? Well, I gotta call my customer to make sure it's still available, but usually it's around. And now I got my number and for this one I might be like, hey, usually my customer's right around. Average He'll pay about 9.50. Does that work for your guy? Yeah, I mean, I think if you can get 9.50, that works Okay. Well, maybe I'm there. Maybe he's like, no, I need to be at 1,050. I might go okay, well, hey, I only got 9.50 into this. Does this, is this load? And I go through the rest of the details. If he's fresh on ours and he's gonna be empty in time, and can he make my spot load pick up a delivery and I know it fits for him, hey, I'll go back to my customer for you, mr Dispatcher, and ask for the extra 100 bucks. Now that I know everything I needed to line up is good and this is a good fit, I'll see what I can do. Great hold on. Call my customer. Maybe I get the money, maybe I don't. If I don't, I'm gonna come back to them and go tell them the truth. Look, hey, I tried to get 1,050. I'm willing to take it in the chin and I'll run it for break even to give you an extra 50 or 75 bucks. That's all the margin I got in it. It's only a 10% margin load. I'll give you the you know maybe 9.75 or $1,000 and maybe I only make 25 bucks on it. But hey, I think this load works for you and my customer really needs it and I don't wanna go through the headache of trying to risk not getting a truck for my customer's need right, and that's what it really needs.

Speaker 1: 43:34

So you can. This is DAT, has this if you're doing a truck search, like you're outlining this scenario, it tells you and the company it tells you where they're located. So, and further, if you have access to highway, you can not only say I know you guys are based in fill in the blank city, but hey, you guys run this lane a lot. You can see their inspection history on a map so you know they run that lane quite often or they get inspected a lot in this city or in the vicinity of the city. So you know that it's a desirable location for them. Whether they're they might be located there, they might have a bunch of contracted business so that they run out of that city every single week, but they gotta find spot loads to get themselves there empty. But yeah, I mean there are a lot of tools and data out there and like this stuff is only gonna be getting better and better for us to make this a way more efficient supply chain.

Speaker 2: 44:37

Well, that's the last thing, right? The last thing I do for a spot load is rate view gives me historical. The record of everything that has happened tells me nothing about the market today. If I wanna know what I gotta pay for a truck in the next three hours to pick up, I care first how many trucks are actually in that market. If I'm trying to find a truck in Sparks, nevada, or the middle of nowhere, there's probably not that many of them, which means I've gotta pay whatever it costs. If there's only five trucks that can pick up my load in my terms or that pickup window, I gotta go through all of them and just get the best rate and then take it to my customer. If I'm trying to cover LA to Chicago, there might be 200 posted trucks that could work for that lane. Well now, the averages mean way more when there's plenty of trucks there. When there's a small number of trucks in the market your load is loading out of, the averages mean far less, because any one of those five trucks can go I don't wanna go to California, and then every one of them might tell you I won't go to California. Then you might gotta call all five of those back and go. What would it cost to get you to California? And they might say well rates, normally 1,050, I need 2,200. And you know what? That might be the cheapest. You can find a truck that will pick up that load and meet your customer's needs. And in that scenario this is what most brokers don't do. They just call their customer and I go, nobody will work. But that's not true. Like good brokers will call their customer and tell them the thing other brokers are scared to tell them. There is a truck there. Yes, it's not a great rate. No, I wouldn't pay it if I didn't have to. But you told me your customer is going to be so angry with you that if you don't get this load there they might not buy anything off you all year. If that's me, I pay the guy the $2,200 bucks. Get the load picked up and get it done. And oftentimes your customer will pay that just because they posture and tell you all day long they want to pay $2 a mile. They won't pay any more of it. That is negotiation. When you can get your customer in a conversation to what I call like the fork in the road and you make them make that call, you will be astonished at what they will spend when they need to. Because if you know all those things, and I ask you point blank hey, nate, I got you on the phone. I have another carrier on hold right now. He can be at your facility in 35 minutes, meets all your insurance requirements and can get your load to your customer. I know you wanted to be at $1,100. This guy's $2,200. I'm letting you make the choice. Do you want me to cut them or send them? And you say nothing and you will be astonished at just being silent. They'll be like you know what. Send them. I don't want to deal with a headache. Now. You know where your customer is really willing to go in these scenarios and this is how you really learn how to price your customers and where there's opportunity and where there isn't right, because not all freight's created equal. That load was worth more to them to get it moved in that time and maybe they were willing to. Maybe they weren't right and maybe some of that wasn't true, but that's your only way to determine where are they really willing to put their money or their ass on the line? Their ass is going on the line either way. Are they going to willing to pay to buy themselves out of it or deal with the repercussions tomorrow. Right, it's our job to make them make that choice. On behalf of the carrier.

Speaker 1: 47:53

So, in summary, it's important to note here that we spent very, very little time talking about numbers, right, just to kind of echo what you had prefaced with much earlier in this segment. Because the spot market, the reality is there is a lot of subjectiveness on both ends, right, and I mean you could even include the brokerage. It could be that you're going to be flexible because you're trying to save a relationship with the customer, right, maybe oh, one to them, something like that, but either way, that plays a big role in all this stuff. So the pricing gives you a starting place so that if somebody is 4x, requesting 4x, whatever the going rate is and it's not a tight market you're not even in the same ballpark. Someone's got wrong information. But yeah, have conversations, talk human to human, figure out what's really going on and what's important to everybody. It's like playing a game of poker.

Speaker 2: 48:56

Right, and here's the last thing, right. The other extreme to this is if you're working on a bid for a customer, right, I want to take as much market risk out of that bid as humanly possible, right. Again, you can use the averages. And if you're doing a large bid, you have to use things and tools like this. But if I got a customer that's got like eight lanes and they're like, hey, can you bid these out for me? What I'm going to do is call carriers to your point, email them and speak to them individually and go hey, do any of these lanes work with your other customers? Would any of them be of interest to you? If I can get you this load every week, what would be a rate you'd be willing to give to me to run this load every week? That number is going to almost always be different than your averages or your spot markets. And not only is it going to be different as a number, it's going to hold up better because you know that situation. For that load fits that carrier. It might not fit the next 12 carriers you talk to, or 20 or 40. That's a great point One works for you because that load fits with their other customers and where their drivers need to be every week. So now all of that risk of the market doesn't matter to me, because I know that ABC Trucking likes this lane because it fits for them and they're willing to do it for this number. So now I can put 12 or 15% on that for spending the time not the talk to the one driver, by the way. It's the talk to the 70 that didn't work and that's the thing that carriers lose sight of when they go. I'm just going to take my broker's margin by open a brokerage. Great, You've got to talk to 70 other carriers for the lanes that don't work for your asset company. Are you going to do that? That's what we get paid for and that's the thing that gets lost when everybody yells about margin is that it's the time and effort that it takes to talk to everybody that doesn't work. That's what you've got to pay for to find the one that does work, and that's why we get the benefit throughout the year, because we spent a whole bunch of time working on something we didn't know we were going to get paid on and the likelihood is you spend more time calling carriers that don't work than ever do. That's why you've got to get paid for the ones that do work. It's not just because you had the right truck at the right point in time on the right moment that you get that margin. Yeah, that'll happen periodically. But you can't build a business around that. You can't build recurring revenue. You can't build anything on it. It's just luck. It happens right. It's exactly right.

Speaker 1: 51:22

Good stuff, man. Great discussion today. I think that kind of puts a bow on it. If you guys have any specific questions or scenarios you want us to run through, email us. We can always try to line you up in the Q&A session that comes out on Tuesdays and also we're always open to topic suggestions. If you guys have a specific topic you want us to cover that we haven't done in a while, we'll consider it. Yeah, share it with the friends, send us a message, leave us a review, comment on the YouTube channel, ben. Any final thoughts?

Speaker 2: 51:57

Yeah, I pulled up a quote because I haven't found anything new in a while and this one I thought was really good. It says in this life there are new do-overs. What if you treated each day like it was your last? What would you do differently? What would you be grateful for? What would be important to you? How mindful would you be? What would your interactions with others be like? How meaningful would your day be and how would you spend your time? And energy is one of the most important decisions you get to make in life and you get to make it every day right. And again, I don't think people think about this much, but I think when you try to change the perspective, it changes the effort and how you approach things, because we're all human and every day we've got to get up and sometimes do the same things day in and day out, and it gets monotonous and it's not that exciting and you don't want to put all of your energy into it because it just gets old sometimes. Right, but I love the reframing of that quote because I do that often with myself is to think about like, what if this is the last week or the last day that I'm going to do this right. What would I do? Because what's really going to differentiate you as a freight broker or a freight brokerage or a freight agent is you've got to add more value to your customers than your competitors, full stop. You're never going to be able to do that if you don't give a shit and if you don't care enough, you're never going to be able to get there. That precedes everything else we ever talk about on this show. Right Is just caring enough about what you're doing, that your customer is getting more working with you than other people, and if you can sometimes just keep it that simple, you're going to get far further than you will worrying about every minuscule detail and what you're doing here and there. Just putting your best foot forward to me, is some of the best advice that we all kind of forget on a day-to-day basis Enlightening.

Speaker 1: 53:49

That's good, now that echo is pretty good. A lot of times I hear people ask like, do you think I should get into freight brokerage? And I'll often ask them like, do you enjoy doing this, this, this, this, this? And they're like, well, I've never really done cold calling before, I've never really done a sales job. I'm like, well, it's heavily intensive on that. And if you've never done it before and you don't know if you like it or don't like it, I probably wouldn't hop into it without having tried something. That's going to echo at that, because if you don't enjoy doing parts of your job, you're going to be miserable and eventually resentful of the industry. Every single person I've met in this industry that is long-term, successful truly enjoyed it. It's passionate about it and they don't just have a transactional relationship with their customers. It's a real. It's a real like deep-threaded, like long-lasting relationship that you're basically friends. You're basically friends with these people that we do business with because you care about them and you're making their life. You care about them more than, like you mentioned, the other 10 folks out there that you know dump For sure I mean.

Speaker 2: 54:58

I case in point, one of my first customers, a younger guy, had something horrible happen recently, passed away early, was only like in his late 50s. I haven't done business with them since 2019 and I got invited to their funeral because that's how well I knew them and their families right. And again, I can name at least a dozen customer relationships I have that are similar to that, because you really do become like co-workers with these people, your customers. You know them because you go to work with them every day, maybe not in the same location for the same company and the same name on the paycheck, but you guys have each other's back in a way that again, I've never been in the military, but I gotta assume that it creates a bond that is different than where you're gonna get in a day-to-day you know relationship, so for sure you gotta care about it.

Speaker 1: 55:46

Otherwise it's not gonna work. For sure, for sure. Well, good stuff. Make sure to check us out on the next episode of Freight 360 and on the final mile, which comes out on Tuesdays, ben.

Speaker 2: 55:59

Whether you believe you can or believe you can't, you're right.

Speaker 1: 56:03

And until next time, or should I say next season? Co-pills.

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