One of the greatest challenges facing small carriers is how to wean themselves from the freight broker merry-go-round. If you're going to grow your company, you have to establish hauling relationships directly with shippers. Doing so will help you accomplish several goals:
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Gain greater control over your shipping rates by negotiating directly with the person who wants your services.
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Increase revenue by knocking out the intermediary and reduce the overall shipping cost to the end customer.
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Provide better customer service to the shipper and receivers with direct communication during the entire shipping process.
You're likely to find that kicking the broker habit is a bit like quitting cigarettes: It's easy to talk about, but requires real dedication in order to succeed.
Finding direct-ship customers involves developing a marketing plan, which includes building a database of potential shippers, creating a contact and follow-up strategy, and closing the deal with a hauling contract.
For now, we'll assume you've developed a profitable range of hauling rates that can serve as a starting point for negotiations.
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Keep your hauling capacity in mind as you develop a marketing plan. There's nothing worse than landing a great customer only to find you can't provide as many trucks as the job requires. If you have five trucks and there are 20 loads to cover, you're in trouble. So when you're looking for potential customers, choose companies you can grow with. Tying up all your drivers and equipment with one big customer is not prudent. Any one customer should not represent more than 25 to 30% of your total revenue. If you lose a contract, you'll be able to replace it more easily if it doesn't represent a bigger portion of your revenue.
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When your fleet is small but growing, smaller shippers are a better bet. Remember, 80% of manufacturers in the U.S. have 20 or fewer employees. Hauling for a smaller company means you'll be on a peer basis with the decision-maker, making greater opportunities to develop a growth plan for your trucking company that corresponds with his company's plans.
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Think regionally, not nationally. With escalating fuel prices, it's best to stay close to your home base. Today's average shipment is traveling less than 600 miles, and it weighs less than 13,000 lbs. There's also a trend among consumers to purchase products that have traveled shorter distances, part of an effort to reduce our dependence on foreign oil.
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Concentrate your initial customer search within a 100-mile radius of your headquarters.
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Look for small manufacturers that ship fewer loads over longer time periods. These shippers usually have a difficult time locating haulers that will meet their spread-out schedule at a reasonable cost.
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Develop a niche market that concentrates on the types of shippers most large truckload carriers aren't interested in because they can't provide the level of customer service required. As a small carrier you can react more quickly to changes in your customers' businesses.
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Search the not-so-obvious places such as home-based businesses or those leasing spaces in older buildings that are off the beaten path. Check with your local Chamber of Commerce, manufacturing associations and bankers for leads. Go to the county courthouse and see who's licensed to manufacture what. Almost all businesses ship and/or receive something brought by a truck, so find the ones having a difficult time getting products or supplies shipped, and quote them your hauling rates.
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Get involved in community service organizations such as the Chamber of Commerce, Rotary International and manufacturing associations potential customers might belong to.
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Pay attention to new companies moving into your area, as well as those that are expanding their operations. Know when new product contracts are signed; they usually increase a manufacturer's shipping needs.
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Always do a credit check on new customers, and about every 90 days thereafter. If they're not getting loads shipped because they're not paying their bills, they're not worth the risk. You can still haul their loads, as long as you require either COD (cash on delivery) or FOB (freight on board) payment. With today's high fuel costs, it only takes one or two nonpayments to destroy a trucking company.
The fun begins when you've amassed a decent database of potential customers. You may have to contact a prospect eight or ten times before landing the account. Here are some ways to keep your fleet's name in front of potential customers:
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Give him reasons to trust you and your drivers.
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Show that you're really interested in his success.
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Make sure he understands you'll provide the best value for his money, not necessarily the lowest hauling rate.
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Say what you'll do, and do what you've said. If you make a follow-up appointment, don't miss it.
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Know as much about each prospect's business as possible. Investigate them as if you were investing in their company, because that's really what you're doing when you agree to haul their product.
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Create a plan to deal with any objections. Make a list of all the objections you anticipate and be ready with responses. If new objections are raised during negotiations, add them to your list and prepare responses.
Finding and keeping direct-ship customers is one of the greatest challenges you'll face as a small carrier. But it's also one of the best ways to increase revenue without increasing hauling rates. As you eliminate the broker, the broker's fee becomes cash you can use to expand your business.
Contact Tim Brady at [email protected] or 731-749-8567.
