To those that work for low rates...

I recently heard about a OO that in refusal to work for low rates, parked his truck for 4 months. I really respect his decision, effort, and financial ability to PARK. If trucks, and not just a truck were to do the same thing, all over the country, I do believe the opposition could be made to hurt. I do believe that change could happen.

Unfortunately, he was alone, and therefore his impact was futile.

Things need to change.

Before I continue, let me make it clear that the rest of this message is not directed to those OOs who have managed to operate successfully and have withstood the test of time. Rather, this message is for those who have created a situation for themselves that does not allow them to park. A situation that requires them to roll their wheels to the tune of rates that are way too low. My intent while writing what I have written below, is to constructively criticize, and nothing less. Please do not take offense.

From what I've gathered over the years, from reading discussions on this website, and talking with some guys that I went to high school with who are now Owner-Operators, and from meeting OOs while on the road myself, the ability to start a trucking business is too easy.

What I mean by that, is that these days, it seems like anybody can start/have a "trucking business". I'm not talking about the fact that getting approval for financing is too easily given, and too easily accepted. The notion that modern society is too comfortable being a slave to financing and debt, is a conversation for another time.

I am talking about my observation, which has shown me that many OO are blind, in ways that aren't good for them:

Blinded by the pride that comes along with being able to claim that they are their own boss. Blinded by the pride that comes from claiming that they own (technically, they financed; the bank owns it until it is paid off) their own truck. Blinded by the pride that comes from being able to claim that they have their own business. And last, and perhaps the worst, blinded by the pride that comes from the ability to claim that they are "grossing" six figures annually. Those of us who actually know something, know that gross isn't worth anything; it is all about net.​

And blinded too by an attitude of ignorance that is too common. An attitude that entails an OO not knowing and doing things that any responsible and competent business owner should know and do in general, regardless of the business.​

Such as not knowing what his true operating-cost-per-mile is, aka his break-even point. Not knowing what his profit margin is, as in not knowing how much money he is actually making and taking home. I understand that OO have a long list of items to pay for, and that the math will require effort to solve. But, if you have chosen to be a business owner, your refusal to do the math will ensure your failure. Learn the math, or get out.​

Also, not accounting for the real depreciation of his equipment (in the case of OO, very expensive equipment). I'm not talking about "phantom" depreciation, which has to do with the IRS. I am talking about acknowledging the fact that equipment has a lifespan. In the context of trucking, that lifespan is measured in miles. Real word wear and tear will require that your equipment eventually be put out of commission, and replaced.​

And further, not respecting their time-worked. The CPM pay structure in general, is problematic as it is, as it does not take into account real world delays. But when you drive for low rates, it becomes even worse. Detention and layover fee amounts, are not suffice either.​

Instead, many just believe that if they keeps the wheels rolling, they are "making money".

And so you end up with an industry that is full of businesses burdened with financing, and "leases", etc., for which the true costs aren't even known nor understood.

Which leads to an industry full of businesses that have to do one or more of the following, throughout the life of the business, just to survive. Not thrive, but survive:

-Utilize factoring to compensate for their mismanagement of their cash flow's timing
-Settle for profit margins that are too lean if even existent at all
-Operate with a perpetual lack of cash reserves.​

Not all OOs are like this. But many of them are. Further, enough of them are, so as to hurt the industry as a whole, for everybody.

Ask yourself the following:

-How can a business be expected to turn down work if their cash flow is so messed up, that factoring is relevant?
-How can a business be expected to turn down work, when they don't see that the rate, and it's entailed profit margin, is too low?
-And how can any business be expected to turn down work, if they are broke, or just about broke, as in there are no cash reserves to call on?​

What all of this means, is that a large portion of businesses in trucking are operationally incompetent, and thus financially weak, to the point of dire straits.

The opposition, the brokers, they know this. And they push those offensively low rates on the market, because history has shown that somebody will take it. They know that their is no reason to push a decent rate, when many will settle for less. And evidently, many are settling for less.

The industry is paying just enough to survive.

The only way things will get better, is if those who are operating as I described above, to change your ways. To realize that the worth of false-pride, is nothing. To learn about business and your business, so as to fix your incompetence. Or, to just get out and don't look back.

And further, for anybody who has yet to get in, who plans to do things the wrong way, to stay just away.

 

With the abundance of $1.80/m operators, do $5/m loads even exist anymore?

 

That is true. Do you feel that there is anything in this thread of mine that needs correction?

 

If I understand it correctly, you are saying that this thread I started, the initial post of it, is incorrect.

Elaborate as to what I got wrong. I admit that I don't know it all. But that is not to say that I don't know anything.

You may have more years in this industry than I do. I know a good amount, but not everything. Correct me. I'm listening with an open mind.

 

Outsourcing is all it is. There is nothing wrong with it. Every business is different, each with its own combination of strengths, weaknesses, and preferences. Many successful businesses outsource, as it enables them to focus their effort and resources on their strengths in order to maximize production.

Everybody outsources to an extent. Some, more than others. For example, do you fix your truck yourself? Do you file your own tax returns?

Those questions were rhetorical. Your answers, whatever they may be, do not matter. If they are yes, then that is good for you. If they are no, that is honestly fine as well.