Tuesday, April 21, 2020
By Drew Jackson
The outbreak of COVID-19 has plunged us into an unprecedented economic crisis
that has all businesses operating in a state of uncertainty. Many are without work because their jobs are not considered essential. And essential workers are putting their health and safety on the line to do their daily jobs.
The truckers we work with are among these essential workers. Their commitment to their jobs and keeping necessary goods moving is what’s allowing the rest of us to continue with our daily lives. And their jobs are more stressful than ever: they are traveling lonelier roads and experiencing higher wait times.
On top of this stress is one certainty that truckers can count on during these uncertain times: inconsistent rates. Where a driver might secure a great rate in one region, they often find themselves having to take on cheap freight to finance their trip out. This has long been an aspect of the logistics industry, but it has intensified since stay-at-home orders went into place in states across the U.S.
Just how are these rate inconsistencies affecting our business? In the past, freight brokers would pay a carrier bound for the Northeast around $4 a mile. This was because the freight coming out of that region was closer to $1 a mile. At that lower rate, a trucker might even opt to deadhead hundreds of miles to better freight. This was always a reality of our business — and yes, there are truckers that will accept freight at lower rates in the hope that they can break even getting back to a higher paying area. But we’ve found that when freight is taken on at those low prices, the service is often lacking.
Social media has been a hotspot for recent criticism of freight brokers and the cheap prices right now. But that criticism is shortsighted. For the most part, the prices are set by the customers, who shop around to multiple transportation sources to find the lowest price. They know that trucks in certain regions need the freight and they use that to their advantage, lowering rates for freight brokers and trucking companies and dragging down profit margins for all.
But these low rates are not the result of brokers who are attempting to make larger profits. In fact, many freight brokers, especially those who are moving non-essential items, have lost nearly all of their freight. They’re now in the position of posting cheap freight just to keep their heads above water, so they can hold onto their customers and their jobs.
Finger pointing will not solve the problem. We need to collectively combat the blight of cheap rates and we believe communication is the answer. When truckers communicate what rates they need to operate out of a certain region, then their freight brokers can share that information with their customers, who are more likely to be receptive to higher carrier rates when they know they’re getting better service.
This model requires all parties to operate with the mindset that we are all in this together. As a freight broker, work with your carriers to find prices that are beneficial to you both during these difficult times. It will help strengthen your relationships, as your carriers won’t feel like they are being forced to take on loads at rates that are damaging to their business, and it could bring more freight in your direction once the market gets moving again.
As Vice President of Sales at US Logistics, Drew Jackson brings nearly 15 years of experience to his work leading our team in its mission of always being ready with solutions for brokers, customers and carriers. For more perspective on how Nationwide Logistics is navigating the business of freight during COVID-19, check out our blog