Carrier Negotiation Tips to Increase your Pay

To improve success and get paid their worth, carriers need to know where to find useful data, how to use it to their advantage, and understand the importance of confident negotiation skills.

When you’re negotiating rates as a carrier, it’s vital you know the market. You need to know how much freight is out there and how many trucks there are to move it. Having data-backed carrier negotiation skills gives you confidence with every contract while building industry relationships that can lead to long-lasting partnerships.

We recently sat down with TVC Pro-Driver to look at the importance of carriers utilizing data when negotiating rates and tips to get more money on every load.

Watch the webinar for a comprehensive guide to negotiating the best carrier rates.

Know the market and contract types

To navigate the freight industry effectively, drivers must familiarize themselves with different types of freight agreements.

There are three primary categories: Contract Freight, Spot Market Freight, and Relationship Freight.

1. Contract Freight involves fixed-rate agreements between shippers and transportation providers, typically lasting between six months to a year. These agreements specify destinations and estimated freight volumes. There is little to no room for carrier negotiation with contract freight.
2. Spot Market Freight rates fluctuate based on factors like supply and demand, shipper needs, and driver availability. The spot market offers opportunity for negotiable rates that can change rapidly.
3. Relationship Freight is posted by brokers who have established connections with carriers. These agreements prioritize relationship building and provide fewer negotiation opportunities.

If drivers aim to negotiate higher rates per load, understanding the current market conditions becomes crucial. Opting for spot market freight allows for the most room for negotiations based on market trends, enabling drivers to maximize their earnings per mile.

Better carrier negotiation skills means more money in your pocket

Having negotiation skills as a carrier can mean the difference of hundreds of dollars for every load. 

Let’s say you negotiate to get an extra 25 cents for every mile on 70 loads. That adds up to an additional $350 per load. When you calculate it for a whole year, that’s an additional $24,850 annually. That’s a huge increase in earnings over time!

Negotiating rates not only means having extra cash, but it also means having more opportunities and flexibility on the job. Better compensation opens opportunities to shape your trucking career and fulfill your personal goals. This can mean fewer days on the road and more time with family, planning a vacation, or investing in your business by purchasing a new truck or equipment. 

How to utilize data for carrier negotiation

To negotiate rates using data, you need to know what to look for and how to use it effectively. 

Market conditions for a specific route or lane are a great starting point. Understanding the market involves analyzing historical freight volumes, rates, and supply and demand data. By monitoring trends, you can make informed decisions during negotiations.

With Truckstop’s Rate Insights, you can get a daily, specific rate for a particular lane—all on the go. As a carrier, you can plug in the equipment type, date, weight, length, and then the lane you are interested in, and immediately get real time rate data. 

You can also check load density by entering your equipment type. It will show the supply and demand for each state. You can see how many loads are going into a state compared to how many are going out. If there are fewer loads going into a state than out, it can mean more bargaining power.

Here is what to look for to find lanes with the best rate and the best opportunity for negotiating.

• Identify areas with high shipping demand that match your equipment using load density details. 
• Follow the 450-550 mile rule when necessary. This allows you to pick up one day and deliver the next, while still getting a good rate per mile. 
• Consider trade-offs that can benefit you financially. These include flexible delivery and pickup windows and lightweight loads. While they may pay slightly less than larger loads, it’s still better than nothing.

Best practices for negotiating

When you are negotiating for a better rate, remember to keep it professional, be knowledgeable, and keep emotion out of it. 

Here are some things that are important to include:

• Use facts and data to demonstrate why you want to negotiate. This could include any of the following. 
  • Number of deadhead miles
  • Price trends for a lane
  • Seasonality or upcoming holidays 
• Define the solution, not the problem.
  • State the rate you want. Confidently give a solid number and what data was used to come to that amount. This may include time of year, miles covered, amount of deadhead, etc. 
  • Ask for preferred accommodations. This may include changing the delivery time or date based on your other commitments. 

Remember: Anything can be used to negotiate, but you want it to be a win-win. Make sure everyone is happy with the final rate. 

The most important thing to remember when negotiating, be prepared to walk away. It’s ok that every negotiation doesn’t work out and don’t put yourself in a bad situation just to smooth things over. This is your livelihood, take it seriously.

Truckstop can provide you with the tools to ensure you find the best rates for each trip. Use our Rate Insights tool to calculate fuel surcharges by cost per gallon and miles per gallon to help you land on the correct surcharge rates.