With this week's edition of Overdrive Radio, we pick up where longtime Overdrive contributor, former OTR owner and current business coach Gary Buchs left off on the Overdrive Extra blog last week: https://www.overdriveonline.com/15736116/
There, as regular readers will know, he penned and published notes on the "fine art" of rates negotiation, with a special emphasis on ways to counterbalance the pressure so many owner-operators feel to move fast on load opportunities, given the speed at which loads come and go on the boards in particular.
Compared to just a short time ago in history, freight "information's moving so much faster" in this day and age, Buchs said. "The speed ... interferes often with solid negotiation. When you speed that up, things get missed."
Move too fast to just outright accept an offer, and you might neglect to consider fully that the good-sound long-haul run to the West Coast starts out due well east of Atlanta, with a load pickup time of 2 in the afternoon. If you didn’t effectively build into your rate the added cost of traffic in Atlanta rush hours (or the time to wait it out, as it were), you’re behind the eight ball before you even get started on the run.
Buchs offered a different example of one among many details you can miss if you don’t take the time to effectively negotiate.
He's heard this one several times: An owner "got to a shipper and ... they wanted cash for the lumper and they didn't have cash," Buchs said, asking "How does that get missed if you do a lot of reefer work?"
He advises owner-operators think about such scenarios: "What lessons do we learn when things don't go quite right? How do we apply the lesson we learn? Like when we overcommit or fail to anticipate travel times, drive times. ... Drivers and owner-operators feel the pressure of time squeezing them so much, and that interferes with our ability to tap that brake pedal, to pause for even just a moment. So we have to" be aware of that and "use our experience," he said, knowledge of routes and so much more.
Today on the podcast, much more in the way of specific ideas built on Buchs’ wealth of personal experience in business and with owners operating in the freight world today. Getting better at negotiation in general certainly isn't easy. "If we're going to get better, we've got to stop thinking that everything is going to be easy," as Buchs put it.
But with some of these ideas, hopefully more can avoid participating in what might otherwise feel like an auction, where the “winner’s curse” is almost always to be paying more than what an item is really worth, research has shown. In the freight world, that’s the opposite. Win the load after race-to-the-bottom ping-ponging with the competition or accepting a broker's lowball offer blindly, and you’ll certainly be getting compensated below the market value for the freight movement.
In the podcast, Buchs also stresses starting with cost analysis, and recommends including salary needs on the cost side of the ledger when it comes to business profit analysis. It might help you in load-by-load profit analysis and negotiation, too. Overdrive’s Load Profit Analyzer, our fairly simple online calculator introduced late last year, is an assist to analyze individual and/or compare multiple loads. The calculator includes on its front end places to use the knowledge and analysis Buchs talks about to input not just cost per mile overall, but variable cost per mile, fixed cost per day worked, and, again considering it on the cost side, a salary per day worked figure.
Profit-potential results then show results not only per-mile but per day -- with salary added back in, too -- for better appreciation of the impact of time and fixed costs. The Load Profit Analyzer is free to use with registration: https://overdriveonline.com/load-analyzer