Al’s Corner – February 2024

    Beware of “Spot Market Loads and Rates”

February has arrived so it is time for another Al’s Corner note. 

Personal note, my incredible, beautiful wife got good news on all her tests!  Love that girl!

No big events for the club this month but we do have three coming up in March and April.

2024 TC STL Trucking Symposium, an event dedicated to the Carriers is March 21, at Syberg’s on Dorsett. 

Blues Hockey Night is March 28th with a Pregame Party at Wheelhouse at 3PM, and a ticket to the Blues game at 7pm. All for $85, impressive! They are going fast, so get them now.

Recap—The Holiday Party January at The Hideaway again was a tremendous success. I was unable to attend due to a family thing. Brad said it was an enjoyable time. Plus, they had pretty of extra pizza as somehow, we got seven extra pizzas at no charge. Now I really wish I had been there!

Annual Dinner is April 25. Save the date, registration opening soon. 

Transportation Update—the market remained strong in the shipper’s favor in January. Many logistics companies closed, laid off some employees, and in the case of the carriers, some drivers parked their trucks due to cratering rates. More of this is coming. Plus, the weather really messed things up with ice and cold in January. The end of this is not close, but it is coming in 2024. Seems rates may be starting to go up, slightly.

History continues to Repeat itself.

Over the past few years hundreds of carriers have come back to the same shippers they left in the past few years after leaving for bigger paydays elsewhere (it’s part of the DNA of making money). The shippers now have welcomed these carriers and logistics companies back with open arms. These carriers will do it again, as the rates now being offered by shippers and thus brokers are below a slightly normal profitable market for carriers. Not all shippers do this, and thousands are exceptional at running their business and are loyal. They value consistency and predictability. To me, shippers that only look at rates, and not the value they get are making a big mistake in the long term. I know, I know, they want both! I want to be younger, prettier, and hit the golf ball as far as I did at 30. Value is getting your products picked up and delivered in a timely manner for a reasonable cost. Not all carriers or brokers are as good and or the same. You get what you pay for many times. I drive a Silverado and it is impressive. It is less in price than other trucks but gives me an incredible, similar value to more expensive ones. Fair price, great service, and dependability, you get it.

Mistakes cost too!

Over the years I have seen more than a few shippers do an extremely poor job in load planning, which includes operational and load tendering mistakes. Many logistics companies like us are more than willing to accept a very small rate increase and work on low margins in order to keep their customers happy. So, price wins are there. I believe the mistake of mostly looking at rates is the smaller piece of the puzzle compared to mistakes in operational procedures with shippers. 

My comparison example would be this. 

Looking only at rates, savings of a few hundred.

Operational mistakes:

Shipping the wrong product causes a second load to be shipped, losing thousands of dollars. Plus, adding in the paying of returning shipment of that mistaken first load. 

I have also collaborated with hundreds of shippers that were quite good at what they do when looking at operations and freight rates. To me, this should be the goal, to be great at operations while maintaining good price controls. I have also felt that only looking at what you think is the correct rate per mile, without understanding/knowing carrier costs, is not accurate. Carrier equipment is extremely high from 2022, 2023 causing their cost to be high. Just because the rates have dropped, it does not mean carrier costs have gone down. I see this as a problem. 

Example—a load picking up in NC to MS paying a little over $2 per mile. 

Origin—2.6 loads per truck, which means the truck can pick and choose from the one that either fits them the best or pays the most. This gives the carrier an advantage on this load.

Destination—3 trucks per load outbound. In this case the nearest city is 100 miles away, so, the carrier either deadheads for no money, or adds this to its price it must get from NC in order to get to its next load.

I also think having 2 bids or more per year is needed. I am sorry, but in the world, we live in today, there is no way anyone could predict what freight rates will be 6 months from now. If you can do this please fill out my lottery picks for me!!! 

 My point with all of the above is wins can be had when done in an organized, well thought out game plan. 

So that’s it, have a great month, AL

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