Tuesday, January 26, 2021
By Andrew Jackson
The trucking industry is kicking off the new year on a relatively high note. After a precipitous drop during the first two quarters of 2020, rates were buoyed by an uptick in ecommerce during the second half of the year. That has been a much-needed lifeline for carriers and drivers alike.
However, reports began emerging last fall about brokers that are slow to pay their carriers. It appears that many factors are contributing to this situation. But that doesn’t make slow payments a condition of doing business.
So what can carriers do? They can start by resolving to avoid slow-paying brokers in 2021. Here’s how.
Slow Payments Likely the Result of Cash-Flow Issues
With freight volumes and rates on the rise, cash should be flowing up and down the supply chain. Instead, the industry appears to be grappling with a cash-flow crunch that can be traced to last spring.
Months of extremely low rates on the spot market
during the first half of 2020 prompted many small and new trucking companies to close their doors. According to the Commercial Carrier Journal, roughly 95,000 drivers were dropped from the rolls
in April and May 2020.
Naturally, rates skyrocketed as shippers competed for shrinking resources. This created cash-flow issues for some shippers, which is trickling down to some brokers. As a result, carriers—and by extension, their drivers—are feeling the squeeze.
As carriers well know, slow payments have a ripple effect on their entire business. When they can’t pay their drivers on time, it’s difficult to recruit and retain staff. And they often don’t have the luxury of delaying fuel, maintenance, insurance and truck payments. Insolvency is once again a very real risk for carriers, which could further tighten the market on shippers and brokers.
Weed Out the Slow Payers
The good news for carriers is that they have options. By conducting due diligence, carriers can hedge their bets against risky partnerships before running loads that may not pay off.
Carriers can start by thoroughly reviewing each broker’s pay standards and performance. What is the broker’s days-to-pay standard? Have negative reports been filed against the broker? What about nonpayment complaints? Verifying that brokers maintain their days-to-pay standard before running loads will better position carriers to keep their own commitments to their drivers.
Another standard to consider is broker payment. Dwell time was up overall
in 2020. Though it appears that dwell time rates are decreasing, those minutes and hours still add up. Carriers will want to ensure on the front end that brokers pay for detention time or layover.
And finally, carriers should take the long view when it comes to slow payers. Consistently delayed payments could signal that bigger problems are on the horizon, such as bankruptcy. If slow payments are bad, no payments are even worse.
Nationwide Logistics is Dedicated to Paying Carriers Quickly
At Nationwide Logistics, we understand what’s at stake. We got our start as an asset-based carrier and we know how thin margins can be. Quick and timely payments aren’t a luxury. They are the fuel that keeps our carriers moving.
That’s why we are dedicated to paying our carriers quickly. As a result, more carriers want to haul our loads. But this isn’t just about creating a competitive advantage for our agents. It’s also because we are in this for the long haul.
Learn more about how Nationwide can keep your business moving at nationwidelogistics.net