After a talk with a friend of mine this week about his effort to follow my lead and earn his stripes as a local independent carrier here in SoCal, I bestowed on him one of the most important tips that can make or break a local carrier. The fact that he didn’t have any direct customers when starting out just like myself meant he was going to have to fight to prove his reputation to the few brokers out there that would take a chance on his new authority. In many cases I have seen like this, the lack of business due to only having a few brokers can often lead to desperation for some and force them to take undesirable loads.
In our conversation, he made it known that he was having trouble getting loads that had decent transit times on them. For instance a 25-mile, single pick, single drop, loading at 6 am, but not delivering until 1pm by appointment and paying $200. On top of that, a lot of the ones that did have good transit times were ending up taking him a lot longer than expected to load and unload, leading to a detention fight with the broker. It was when I heard this that I knew he was feeling a bit of the “new authority pinch”.
My advice to him was to study his transit times and traffic patterns for the times he wants to run his truck and know how much he wants to make in a day. In the business of local freight hauling the number one thing to remember is that “Time is truly money!” Where OTR drivers are typically paid by the mile for their work, local haulers need to value each load by the hours it consumes and price it according to how much of our daily “hours to income” ratio it occupies.
Lets say you want to make $600 in a 12-hour workday:
$600 / 12 Hours = Roughly $50 Per Hour
Here is what a 25-mile load that occupies an average of 8-10 hours of the day should pay:
8 Hours x $50 Per Hour = $400
10 Hours x $50 Per Hour - $500
Competitively priced, I would say that $400-$450, but no less than even $350 in a desperate situation. If the broker didn't like it, then there is other freight out there to be hauled!
Nothing prepares you to measure earnings as a local hauler quite like knowing your customers and knowing your traffic patterns, especially here in Los Angeles. These two things can easily drain the sands of the hourglass and devalue your overall gross revenue for the day. When my friend was sitting entire days on loads that didn’t even pay a half-day of revenue, this was very counter-productive to his operation. The tips I gave him amounted to one simple rule of “knowing when to fold them”, or in other words, knowing when rejecting a load is better than taking it on in the first place! During desperate times, it may be better in some cases to reject an offer and search for another load, even if the chance is there that another load won’t be found. Most importantly I told him to keep on keeping on, as time passes it will hopefully get easier as more people will witness his great service, which often helps things work themselves out in the end!