Negotiating Freight Rates

Learn when to be stubborn about your rate or when to fold and stop the negotiations.

Negotiating freight rates with brokers and shippers can be a challenging yet essential skill for truckers aiming to thrive in the competitive world of transportation. The difference between a successful negotiation and settling for a subpar rate can significantly impact your bottom line.

In this guide, we'll delve into proven strategies to help you navigate the intricacies of freight rate negotiations and secure rates that reflect your true value..

Let Me Show You How I Do It

Watch as I book several loads.  You will learn what I'm looking at and what my thought process is when negotiating.  It's an art and a chess game.  You need to meet in the middle of their needs and your needs.  

Negotiating freight rates with the broker

Don't Settle for the Posted Rate

The first cardinal rule of negotiating freight rates is to resist the temptation to accept the posted rate without question. Often, these rates may be intentionally set low, as part of a tactical maneuver by brokers or shippers.

Instead, invest time in researching the average rates for similar loads.  If you're using DAT this is easy to find.  This valuable information will serve as your baseline and empower you with the knowledge you need to make informed counter offers.

On JB Hunt's loadboard you can see what the other lowest bid are.  On Trucker tools you can also see what the other quotes are.

They both have book it now rates.  Obviously these are usually very low rates.  Every now and then JB Hunt will have a great rate because the load is urgent and the pick or delivery is very late or very early or there is extra days sitting on the load.

For a high posted rate, be extra careful to view the details before agreeing to the load.

Begin With a Strategic Counter Rate

Once armed with the average rate, take a calculated step forward by making a counteroffer that ranges from 100 to 300 dollars more than the calculated average.

This initial move establishes your willingness to engage in negotiations and sets the tone for the discussion.

Remember, the art of negotiation is about finding a mutually beneficial middle ground.  Be confident and say why you think the rate is fair if you have a great point to make.

For example:  Off highway routes with traffic lights and heavy load means burning more fuel.

Play the Game Wisely

Recognize that negotiation is a two-way street. Just as brokers might play the low ball game, you too can engage strategically. When your counteroffer is met with a lower rate, remain patient and confident.

The goal is to get at least the average rate. Be prepared to engage in multiple rounds of negotiation if necessary.  Freight is seasonal and rates are cyclical. 

There will be times and places where there are less loads available than there are drivers. That gives them leverage.

There will be times and locations where there are more loads than drivers. That give YOU leverage.

You will notice a trend and pattern and that will let you know when to play hard ball or be more lenient.

You can check the freight to truck ratio to get this insight about areas all over the country.  Dat Trends will tell you this.

The Power of Comparable Loads

When assessing whether a rate is fair, use comparable loads as your benchmark. If you spot other loads with similar distances and routes, their rates should serve as a reference point.

This approach provides you with a more objective and balanced perspective on what constitutes a reasonable rate within a specific context.

The Exceptional Circumstances Rule

While sticking to your rate negotiation principles is crucial, recognize the instances where hauling for less than the average rate can make sense.

If a load serves a unique purpose, such as taking you to a desired location, connecting you to a high-paying subsequent load, or conveniently starting and ending near your home, it might justify a rate adjustment.

Remember, flexibility should be driven by clear strategic benefits.

Define Your Sweet Spot

Every trucker's sweet spot for loads is different and can vary depending on factors like location and operational costs. Establishing your ideal range based on distance, time, and profit margins is vital.

A well-defined sweet spot ensures that you're consistently pursuing opportunities that align with your goals and financial needs.

You have to consider the time to load and unload as well when considering pay or distance of the load and how much it pays.

Personally, I am always looking for loads in 150 - 400 miles range.  Closest to 200 is ideal and I start negotiating $750 for 200 mile load.

Factors Beyond the Rate

While the negotiated rate is a pivotal factor, it's not the only consideration. Factors such as load weight, route complexity, delivery time, and your fixed costs (breakdowns, repairs, fuel, and insurance) play a significant role in determining the profitability of a haul.

Always weigh these variables in your negotiation process.

Striking a Balance

Balancing flexibility with assertiveness is key to becoming a master negotiator. Rigidity might cause missed opportunities, while excessive flexibility could lead to undervalued hauls.

Regularly assess the market conditions, your current financial situation, and operational goals to calibrate your negotiation approach accordingly.

But remember, the more we haul for more than average, the higher the average will go!

Patience and Positioning

Ultimately, your goal should be to position yourself for success in the long term. While there might be instances where you need to take a calculated risk for short-term gains, the bigger picture is about saving time and energy for those hauls that truly align with your desired rates.

Patience and strategic waiting will eventually lead to the opportunities that match your worth.

Negotiating freight rates is an intricate dance that requires a blend of research, strategy, flexibility, and assertiveness. By adhering to these principles and continuously honing your negotiation skills, you'll be better equipped to secure rates that not only sustain your business but also allow it to thrive.

As you navigate the highways of the trucking industry, remember that every negotiation is a step toward achieving your desired destination – financial success and fulfillment in the world of trucking. Happy trucking!

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