I hate to use the word secret, but this one really is. (Well, it was for me until I found it.) As a former trucker for many years, I really don’t like talking about cheap freight rates.
But this new idea could revolutionize trucking. Or rather, I should say, this could ruin trucking. Don’t get me wrong, there will always be a need for trucks, and that need will grow and grow as long as people can buy stuff. But this new freight-auction idea is going to be huge. In fact, I’m a little scared of what it might do to the trucking industry.
And I really hate to be the bearer of bad news. I can usually find the bright spot in any situation. But this story here is simply bad news as far as I’m concerned. Well it’s bad for one side, but just great for the other. I guess you can tell which side I’m on.
First, I should mention that I was an eBay seller for about ten years, so I know a little something about that too. In fact, I wrote an article about how eBay single-handedly ruined the antique marketplace. (Well, they did.) For example, there was a time when a Shirley Temple doll was worth $2500 to $5000. I saw it on Antiques Roadshow a number of years ago. Well, these days you can find the exact doll on eBay, all day long for $25 to $800 depending on condition.
Freight rates are all about supply-and-demand:
Before eBay, there was no supply, but there was a reasonable demand. These days, that has been flipped on its rear. There is plenty of supply on eBay, so naturally the price has dropped- way down for just about every antique and collectable item. In fact, comic books, baseball cards, and just about everything else that we kept in a box in the closet and thought would be worth a fortune won’t be, thanks to eBay. Rare coins might be the exception to that rule, but the average collectable coins that most of us have in a jar have plummeted in price in recent years. Remember the price-guide books? Toss them in the garbage- just check eBay to find out what something is really worth now.
These days, the same thing is happening in the trucking industry:
I hate to say this, but freight rates are going down, and the trend will likely continue- at least to a point. Where that point is, nobody knows yet. But down she goes- that much is for certain. And for that, we can thank Uship.com, and the way they auction freight. They are the eBay of the freight business.
If you have no idea what I am talking about yet, let me ask- have you ever watched A&E’s Shipping Wars? Maybe the show hasn’t quite gone as mainstream as HBO, but what they are doing certainly will catch on like wildfire in the trucking industry. (Or, at least a lot of shippers hope so.)
They have a network of over 100,000 trucking companies and owner-operators.
So, whenever they get a freight shipment, they post it on their auction site, and trucking companies bid on it. The “winner” is the lowest bidder, and that’s who “gets to” haul the freight.
This is great news for people searching for the lowest possible freight rate.
They will certainly find it there. But it’s bad news for the trucking business, especially trucking companies that are looking for good paying freight.
As a former driver and trucking company owner, I can promise you this- you get what you pay for in this business. Any trucker worth his salt simply won’t haul cheap freight, and rightfully so. On the other side of that coin, you have the starving trucker who just bought a truck, or the trucker who is just trying to get home, or the immigrant who hasn’t yet figured out what top-dollar means in the US, or my biggest fear- the large trucking companies that know how to cut corners and run their trucks cheaply.
When these trucking giants get on-board, look out!
That will be the nail in the coffin for a lot of smaller trucking companies and owner-operators. You see, the big-boys know how to run cheap- they buy their trucks in bulk, pay cash so there are no payments, get discounts on insurance, and pay their drivers and dispatchers a low wage. A lot of these guys can afford to run a truck for .90 cents-per-mile and still turn a profit, whereas a smaller guy who has to make truck payments, and pays his drivers a decent wage simply can’t afford to haul cheap freight like that.
What’s the solution?
Simple- owner-operators have been saying this for years- don’t haul cheap freight. I know that’s easier said than done these days, with the freight index down, and the economy down. But you have to set your own standard.
Like I said at the top- it’s not the end of the world. In fact, many will argue that this has been going on all along, with DAT. I know all about DAT and other online trucking load-boards. And I also know a lot of that freight is going at a pretty low rate. But again, if no one will haul it, they simply have to up the ante.
Supply-and-demand is key. Since demand is down, there are more trucks out there looking for a load. In that environment, rates are bound to drop.
But, for those looking to ship something on the cheap, all of this news is just swell.
Add to that, constant increasing regulations on truck manufacturers for new fuel-economy and safety standards, and increased healthcare costs to companies that hire drivers, and what we have here is a brand new trucking industry- a down-graded one.
You heard it here first, on Big City Driver.