One of the many challenges small and micro-carriers face is how to avoid haggling over a rate with a shipper or broker. If you find yourself going back and forth with a customer where price is the only subject of discussion, you’ve resorted to haggling. And when that occurs, inevitably you’ll lose, leaving revenue you need on the negotiation table. In every load negotiation, your objective needs to be selling value to your customer.
Both you and the shipper/broker need to feel you got what you needed and more. Your power position in any negotiation is knowing more about the shipper’s and broker’s wants and needs than is necessary. Creating value from that knowledge enhances the hauling rate you provide.
It’s also imperative you know your company’s capabilities and weaknesses along with the revenue necessary to meet your carrier’s goals. In other words, successful negotiations begin way before you’ve picked up the phone.
Smart negotiators acquire information about a load, such as:
- How much time will be required from where your truck is sitting after completing its last delivery to when the load is to be delivered?
- What are the total miles from where your truck is sitting after completing its last delivery to where the next load is to be delivered?
- What is your hauling rate range from break-even (including salaries for driver and other employees) to the level of revenue that covers your sustainability and growth (profit)?
- What is the truck-to-load ratio for the area where you’re loading and the area where you’re going to deliver? You must make sure any deadhead miles are covered in your rate.
- Is this a one-shot load, or is it a series of loads that you can add as a leg of the freight lane for this or other trucks you operate?
From this information, you can determine the following:
- Is the load worth negotiating for?
- Does the load have potential to create more opportunities for revenue?
- Is this load profitable? Can it be used to get to a better-paying area?
The vast majority of the information used in negotiations can be assembled one time and then tweaked once a month. The same goes for any of your regular shippers and brokers; however, when it’s a new customer or someone you haul for occasionally, do your homework. Make sure you’re up to speed on their wants and needs before making the call.
To negotiate successfully, you must know the needs and wants of the customer along with what’s required of your operation to generate profitable revenue that will sustain and help your company grow. It’s easy to lower your price. Negotiation is the art of selling value of service with a hauling rate that’s profitable to both the carrier and the shipper.
Contact Tim Brady at 731-749-8567 or at www.timothybrady.com
