Nearly everyone in transportation has seen the effects of the capacity shortage that’s been building in the trucking industry. Truck drivers haven’t been in a better negotiating position in a long time. As a broker, you may find yourself surrendering margins just to make the delivery.
However, when it comes to booking trucks to carry your spot market loads, you may have more negotiation power than you think, especially when you have data at your fingertips.
“You got any more in that load?”
Brokers have been hearing this question from carriers for decades, and it doesn’t look like that will change anytime soon. What has changed is the way that technology plays into negotiations. Real-time market data is now readily available to both brokers and carriers, and it’s the person with the most data—not the best negotiator—that usually wins the game.
So, what data should you know before negotiating with a carrier?
1. Know your average.
As soon as you know the lane and type of equipment needed, you can use Truckstop.com’s rate tools to make quick decisions and stay ahead. Use Rate Insights before you post a load for a sneak peek into what your competitors are offering (inclusive of fuel surcharges and other charges).
2. Know posted vs. paid rates.
Rates posted aren’t always the rates paid. Most carriers will expect some wiggle room when they make the call. Be armed with the average paid rate (Rate Insights can help!) so you remain confident if a carrier brings up what other brokers have paid them for the lane in the past. Data doesn’t lie.
3. Know your margin.
If you and your team handles negotiations between both shippers and carriers, it’s important to have a grip on your margin. Truckstop.com’s Rate Insights provides Paid Shipper Rate trends for the last 30, 60, and 90 days, so you know if your load was over or under bid. This will help you determine what gross margin you can live with on this and every load.
4. Know your negotiation strength.
Truckstop.com’s Rate Mate can tell you the approximate number of trucks heading in and out of your pick-up and drop-off destinations and how many are looking for loads. Using the concept of supply and demand, Rate Insights also provides your Broker Negotiation Strength telling you how firm you can afford to be on your rate when the phone starts ringing.
For example, if your Broker Negotiation Strength is “Very Good,” that means there’s an excess of empty trucks looking for loads at your origin, and you can probably hold out for the right one. A Broker Negotiation Strength of “Bad” signals that trucks currently have their choice of loads at the origin, so you shouldn’t hold out for a better deal that might never come.
5. Know the popularity of your load.
Once you’ve posted your load, view “Load Insights” to keep an eye on its popularity relative to the competition. Due to tight capacity, your negotiation strength naturally weakens as the pick-up date and time nears, so consider reducing your posted rate quickly if the load popularity is low.
6. Know how many loads remain in the lane.
Using Load Insights (available with Truckstop.com Pro), you can see how many loads remain at your origin, and how many are still available in your exact lane. To seal the deal with a carrier that’s wavering, tell them exactly what market they’re looking at if they turn down your load.
7. Look at carrier performance.
Take a look at the Carrier Performance Report (CPR) in Truckstop Pro before agreeing to terms. Truckstop.com’s CPR rating is the freight industry’s only carrier reporting and rating system. This report includes the carrier’s Government Safety Rating, plus the level of risk associated with hiring them (as calculated by the industry’s largest in-house credit and monitoring department).
A “Moderate” or “High-Risk” rating may mean you have more negotiating power if the carrier won’t budge while negotiating. Use this data to your advantage to stand firm on your margin, increase your margin, or halt negotiations to wait for a more reliable partner.
Save time. Avoid negotiations.
Negotiations can be a useful tool for inspiring great relationships with carriers and maximizing your profitability – but they can also be a drain on your time and cost you money. One way to avoid this altogether is to post your loads with Book It Now – a feature of Load Board Pro. With the Book It Now tool, you can post specific load details and rate information to allow your preferred carriers to book loads instantly, whenever they want. It’s convenient for them and simple for you. Win, win.
When you have real-time data at your fingertips, negotiations with carriers should be profitable, not painful. Use Truckstop.com Pro to post and track your loads, compare rates, vet carriers, and find hidden capacity to move loads.