Why Will The ELD Mandate Affect Freight Rates?

 

 

Currently at least 80% of drivers are able to keep a “flexible” schedule. Many like to say drivers using paper log books are cheaters, super truckers, danger on our highways. It’s this belief, a picture society holds of a driver shooting up some sort of a drug, with his teeth rotting from sugar products, smell of cigarettes and smells worse than a rotten body speeding down American highways with no sleep as if the driver holds license to kill. For a long time truckers image has been tainted as dangerous and dirty.

Now let’s snap back to reality what is really going on with our truck drivers, and our industry. Drivers on paper logs are actually more safe. Majority of these truckers uses the paper logs in order to take a break when their body and mind require it. Once rested, they will adjust their log book and keep driving to deliver products to the people of America.

Let me try to paint a picture for you. A driver wakes up at 7:30 AM, checks in with a customer in order to deliver these precious products. Best case scenario the driver has a dock by 8:15 AM. However, the product did not get unloaded until 11:30 AM. Technically the driver’s log should claim he started his day at 8:15 AM at the latest. Once the driver is unloaded, hopefully he has a load already and now he has to drive maybe 80 miles away. This can take about an hour and a half at best case scenario. By now it is 1:00 PM. The shipper decided to load the driver until 3:30 PM. Finally loaded, the driver has a problem. At this time traffic is forming and he is losing his drive time. He needs to get to a truck stop, wishes to fuel up his truck, take a shower, and maybe grab a decent meal finally. By the time he reaches the truck stop it could possibly be 4:30 PM, if not later. Diesel pumps are full, and he loses another 30 minutes getting fuel. This is 5:00 PM right now. It takes him about 10-15 minutes to find a parking, grab what he needs and heads into a truck stop. There is a line for showers and he waits another 15 minutes.elog Takes about 30 minutes to unpack, shower,get dressed, pack his bag again. By now it is close to 6:00 PM. His delivery is 340 miles left to go. Which means, grab a sandwich, or a slice of pizza and adjust your log book to allow you to have another 6 hours of driving at average speed of 60 miles an hour. The driver makes it to his delivery at midnight. Goes to sleep. Maybe the driver did not feel well, and decided to go sleep for 7 hours, and left at 1:00 am, and made his delivery by 8:00 am. However, anyway you look at this if this driver started his clock at 8:15 AM, he would have been pressured to drive as fast as possible, no time for breaks,showers,or meals. He would be fighting the clock. What if this driver checked into a dock at 8:15 AM, and decided to go sleep for 3 more hours as he waited to get unloaded? Once he drove another 80 miles, and was awake for 3 hours maybe he went back to sleep for another 3 hours while getting loaded? I am sure he is more rested than a driver that couldn’t sleep on his 10 hour break, and is now pressured to drive 11 hours on his ELD. Well, the problem with safety, and the law is the HOS Regulations, but paper logs allowed drivers to be flexible, and get the rest they need in order to keep doing their job.

What does this have to do anything with ELD affecting the freight rates?

Once this flexibile time is lost due to the ELD mandate, these drivers are not going to drive the truck tired and fatigued just because their device says they are safe to drive. The flexibility will be lost. Carriers will start losing company drivers that can’t make the miles they used to. Some may even been forced to drive tired because their ELD had hours such as the YouTube trucker RunHardGetPaid. Why would any driver be away from their friends and family to make as much money as he would driving for Uber? Only way to keep drivers happy will be, less miles, and more money! This money does not come from thin air. It has to come from the shippers.

Successful owner operators and carriers know their operational costs. The more miles their truck does, the less their operational cost is, which can drag freight rates down. Trucks not being able to keep the operation costs down due to the fact the miles are being cut down creates two things: tight truck capacity, and demand for more money in order to keep their operation costs and profit going. Shippers will not have OPTIONS, and brokers will find themselves in tight spots. Brokers will have to do a lot more work looking for drivers that have legal hours to complete a delivery, pick up, and so on. Customers will not be happy when brokers give them rates that carriers ask for and it could possibly create a shift of brokers losing customers, at the same time gaining new customers. Not too sure how well it go for brokers, but from my perspective I would not sign any contract freight for the next year at least.

But there are more drivers that will come and drive! I doubt it! Old drivers are retiring, and ELDs was the last pin being dropped. Young drivers are hard to come by now a days. Smaller carriers with good reputation, good pay can’t hire younger guys due to insurance policy requirements. Younger drivers are being forced to drive for carriers such as Swift, Werner, and so on. These carriers starve their drivers. How many 21-23 year olds can you think of would want to be away from parties, drop out of college, away from their relationships, to be gone for 3-4 weeks, and bring home $1600 if lucky? Would you? Exactly.

I would not be worried about smaller companies expanding again. It’s hard to find good drivers and not many wish to invest money into equipment that might sit again. For some reason, I can’t help but wish to add that this winter may not be as mild as the last two.In winter time many paper log book drivers will drive with caution 30-40 MPH for an hour or two to get out of a bad storm, fix their log book and continue driving. With ELD this will not be possible. 400 mile run can possibly turn into a two day delivery. Truck parking shortage is serious. Now a trucker can drive through here and there to find a safe parking spot, but once ELDs kick majority will look to find a parking an hour or two earlier before their clock shuts them down.

Overall, driver shortage, no flexibility in HOS,and parking shortage, is a perfect storm to even force some brokers out of business, allowing the brokers who stayed to get more customers, but also for higher rates. My prediction is .46 -.66 cents per mile rise.

 

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Find & Book Freight Like a Professional

dispatch-center-2Dispatching a fleet of trucks can be tough. You have to keep brokers or customers always updated. Communication with drivers for pick up numbers, delays, break downs, and at the same time look for more loads to book! In a healthy freight market it can be an easy day in the office, but it’s not always a healthy freight market for trucks, and this can cause a huge amounts of stress.

It all starts with your mindset. Your focus needs to be on the loads, and concentrating on anything else, chances are you will not catch the load you are looking for. You must know what lane you are looking for, and what type of money. Being a seasoned dispatcher you should already know which brokers and lanes pay the most. Don’t waste your time on the phone with cheap brokers or customers, because you may miss on a good load.

In order to be efficient in catching EVERY load, and being the FIRST caller for that load, this takes speed, and proper tools.

To start off, anyone can log onto a load board, call on the first load, accept the rate and get a truck loaded, but is it profitable? Drivers have this concept that the freight they haul is the trucking company’s either A) Direct Freight, or B) Direct Customer Freight. Not many understand the wires that are connected to get a truck loaded using spot market freight. This is where majority of owner operators, especially new owner operators blame the company, and the trucking industry. It’s not the trucking industry, it’s typically your dispatcher. A great dispatcher can either make or break a company. Imagine having 6 owner operators leased to your company and you hand them to a poor dispatcher that you hired. Within two weeks those guys will be gone. I’ve witnessed companies rise to over 100 trucks with 2 great dispatchers. However, those dispatchers are paid A LOT OF MONEY!

When a person opens their own MC, not all the time but typically, they don’t understand much about spot market freight, and they believe load boards are full of gold. Load boards are not full of gold, but there are a lot of diamonds hiding in the dirt. I personally know a guy that drives a truck, has 9 owner operators, and 2 company drivers, however he only uses a dispatch service. He pays well money to a woman that woks from home, and handles all his trucks. How does this work out for them? He doesn’t need a office with employees, and she has it so good that she doesn’t want to lose her deal, because what woman doesn’t want to wake up in her home and start making a lot of money?!

To be excellent in dispatch you must use 3 screens. Each screen must have a load board except 1. 1 screen must have your email, and google maps open at all times. This is how you never miss a load on either of the load boards, or your email account. Also it’s a great way to communicate with brokers or customers through emails, trust me, this can be you golden ticket to securing amazing freight before it even touches a load board. Majority of great paying brokers have serious customers, and they don’t like using load boards, unless they really have to. Google maps should always be open so you can QUICKLY check miles for the trip. Quickness is the biggest factor in booking a load. Wasting your time to load google maps, and what not, will surely make you miss on loads, and phone calls, plus it’s annoying!

Being a professional dispatch isn’t just booking a load that you see on a load board. Most dispatchers think “Hey, truckers don’t have time to look for freight, so I will book a load for them while they drive”. That’s not really helpful. You must know the owner operator’s needs. You must know what load is profitable, you must be the first to call on it, and you must sell your truck and want that load. Once you have that load, you must be professional, keep updates on the freight.

 

Higher Rate Per Mile During DOT Road Check Week

 

Will your truck be on the road during the DOT road check week this year?

According to DOT this year between June 7-9 they will be inspected a lot of truck drivers and their equipment. Last year the DOT’s focus was on brakes, and this year they will be focusing on tires. While many truck drivers,specifically owner operators are driving safe and legal equipment they don’t like being targeted. The truth is DOT can pull over a brand new truck and trailer and find something to write a violation for.

If you are a independent carrier, typically a 1 man owner operator company you wouldn’t want to risk damaging your company’s CSA score over something minor that DOT may find on your equipment. Many carriers that are company driver operation typically put all their trucks for DOT inspections at places like Petro, T/A, Love’s, etc.

dotinspection

DOT Inspection

Do you plan on rolling during the DOT road check this year?

If you plan on rolling remember that rates will be higher. Don’t sell your self short or accept cheap freight. The truck capacity will tighten and majority of the truckers that are on the road will be accepting only shorter hauls due to less driving which equals to less chance of being pulled in for an inspection. If you are a night time driver this will probably be good for you since DOT is not going to have 30 DOT SUV’s inspecting trucks at 2 AM. Majority of the inspections are done between early mornings and late afternoons. It’s a chance for longer miles and high rate per mile to accompany the transportation of the freight. If you are a dispatcher, or a owner operator that books loads don’t leave money on the table this week!

Road Check 2016 Inspection Check List

Be Ready and Prepared:

  • Fire Extinguisher & Safety Triangle Kit: Check that your fire extinguisher is not dirty and dusty, wipe it off in case it is. Make sure that it’s charged and operable. Check your safety triangle kit is in the truck, not broken, and you know exactly where it is when a DOT officer asks to see it. This is part of your daily pre trip, and if you can’t find where you placed it flags rise that alert DOT officers that you haven’t done a proper pre trip. Safety Triangle Kit
  • Proper Documentation: Your log books if on paper logs, should ALWAYS be updated, and filled out properly. Straight lines, clear hand writing will allow DOT officers to do a quicker check to make sure you haven’t violated the HOS Rules & Regulations. It also indicates that you know how to do your log books properly, which is part of being a professional commercial driver. Your documents such as Registration, Insurances, IFTA, Permits,medical card, etc should be kept in a neatly organized folder, and a clean one at that. This makes it easier for the DOT officer to verify that your truck is indeed properly authorized to be on the road. DOT officer does not want to spend 45 minutes waiting for documents to be found with coffee stains over it.
  • Professional Attitude: Your attitude is everything in this world. A DOT Officer is not looking to ruin your day, he or she is simply doing their job. This doesn’t mean you have to make best friends with the DOT Inspection squad, but a professional and kind attitude with honesty will get you far. Poor habits such as smoking cigarettes in the DOT Inspector’s face, and giving them attitude for puling you in may prolong the inspection. Keep politics, and personal beliefs out of the conversation. Don’t play with your phone, blasting music, and smoke cigarettes. Do as you’re asked and go about your day.
  • Clean Cab & Clean Truck: When a DOT officer sticks his head into your truck he doesn’t expect to see a sparkling luxury like in the backseat of a Rolls Royce. He does expect not see piss bottles all over the floor, mold, cigarettes butts, and other dirty habits. If you can’t dust off your dash, sweep the floor, and make your bed, this indicates that you don’t check anything on your truck either. If you can’t keep where you sleep clean and organized, chances are you don’t check for your equipment. Dirty cabs can also call for a thorough search for any drugs, or weapons. Get a truck wash. Doesn’t mean you need to detail your truck, but any oil stains can indicate you have oil leaks. A dirty truck can indicate that you haven’t had time for a wash due to driving nonstop.
  • Citation Quota Myth: Just because you have been pulled in for an inspection doesn’t mean it’s because the DOT has to meet a citation quota. They do have to meet a inspection quota however. What this means is as long as they inspected a certain number of trucks they’re off to go. It’s much more easier for them to meet this quota with passing trucks.
  • Inspect Your Truck: Spend 15 minutes to ensure all your tires are legal by having good PSI, no cracks and good tread. Having an extra spare tire helps in case you do run over a nail during transit and cause damage to your tire. In the perspective from a DOT officer, it’s understanding sometimes things can go bad, but being prepared for it will make them easier on you. Check all your lights, and keep extra bulbs just in case that a light does go out after you inspected it. If you are not sure how to adjust your brakes, find a mechanic shop that will do it for you. $75 can avoid a bigger headache, and your brakes should always be adjusted all the time! If you have extra oil bottles, tools, etc keep those nicely organized as well. This indicates that you do check your truck, and properly organize your tools. Truck Tire Inflator KIt
  • Seat Belts: You will be surprised how many drivers get chosen for an inspection due to being caught without a seat belt. No matter how clean, and brand new your equipment is a seat belt is a violation.

 

 

Money Lost By Idling Trucks

Reduce Idling Increase Profit

Reduce Idling Increase Profit

How much fuel per hour does a semi truck use while idling at night?

It depends on what type of a truck you have. Are you idling on high rpms or low rpms? Is it cold or warm outside? Are you blasting heat or A/C? All these factors have to be considered when idling. It can range from 0.5 gallons per hour to 1.5 gallons per hour.

Cost Of Idling a Truck

If you are idling your truck 10 hours a day average, at 20 days a month that equals 200 hours of idling per month. Yearly that’s 2,400 hours of idling.  At an average of .8 gallons an hours yearly you are spending 1,920 gallons for idling 200 yearly idling hours.

At current diesel fuel prices average of $2.40 per gallon that’s yearly average of $4,608.00. Fuel prices, winter,summer, and more or less idling will obviously either raise or lower that average.

Saving money by reducing idling

If your average of $4,608.00 or more expense of idling can be avoided by at least 50% that is at least $2,304.00 yearly saved. If you have bought a truck on a 5 year term you can pay it off quicker by having extra $11,520.00 in your bank. Depending on your truck payment this can be 3-10 months paying your truck off quicker! Not only would you avoid a lot of interest on your loan, but also save your truck’s engine. Now imagine how much quicker you could pay off your truck or trailer by reducing 75% of idling.

 

Majority of big companies use any and every way possible to reduce idling. Multiply the savings by thousands of trucks by reducing idle times. There are plenty of after markets sources such as APU’s, cab heaters, and more to help you reduce your idle time.  At times we must idle, and that’s alright, but always look at idling from a business perspective if you are in this industry and realize that this is a great way to reduce costs, which will generate more profit in your bank.

 

Tell Me About Freight Factoring

freightfactoring

Freight Factoring

Freight factoring can be good and bad for your business. When you start your own authority your phone will be ringing off the hook with factoring services. You’ve also probably heard about factoring services prior to starting your own authority.

Tell Me About Factoring

Factoring is equal to payday loans. Typically in the transportation industry it’s a 30 day standard to receive payment on the loads you have delivered. Some brokers and direct customer may pay the same day, or can take up to 90 days if not months! By factoring loads, you submit your proof of delivery (BOL – Bill Of Laden) and the confirmation agreement between you and the broker. Once submitted the factoring company pays out the % of the money you agreed upon. This can range anywhere from 15% to 1% of the load gross.

Debating If I Should Use Freight Factoring?

Smart business decision would tell you not to give up any percentage of your loads, however not many people come into this industry with cash laying around. If you need cash flow to keep your business operating you should use factoring. Factoring companies typically have credit check for brokers and customers to give you some sort of a in sight if you should haul a load or not with that customer. If you aren’t looking to use factoring you have other options as well. Other options include getting a business loan from a bank at  low interest rate, or using a broker quick pay option when cash flow is needed for fuel, emergency situations, etc.

Not Sure Which Freight Factoring Company To Use?

If you do decide to factor your loads, I can not tell you which factoring companies are the greatest because they all of course want to make as much money as possible. However, depending your business plan you can decide if you want recourse or non recourse factoring. You also want to look at what’s being offered by the factoring company, such as fuel cards with discounts, terms and conditions on when you want to stop factoring. Fees for termination, and process fees. It’s very important to read through every agreement before signing it. Make sure you don’t even just send a application form before reading it thoroughly or having a lawyer go through it.

Looking For Good Freight Factoring Company?

A good factory company does not have hidden fees. You should be able to factor the loads you choose to factor. Some factoring companies force you to factor EVERY load. Also, you want  factoring company that will allow you to terminate the contract without crazy fees, and at any time you want with at least a 30 day notice. Do not get locked into yearly contracts.

Factoring companies can be great for starting out for someone that is in need for a cash flow. Certainly most business owners will tell you how bad factoring companies are, but everyone has a different business mind and majority of small business use some kind of funding for cash flow. At anytime you read the agreement contract with a factoring company, don’t feel pressured to sign it without having them change certain terms that you wish to be put in place.

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