Have you ever received a counter-offer from a carrier in the process of carrier sales negotiations that made you drop your cup of coffee? Or have you ever lowballed an opening offer and heard only the dial tone as the answer?
Negotiating is an integral part of all of our lives. We are all constantly negotiating, even if we don’t realize it. So, why do we have such issues when negotiating trucking rates when we are sourcing carriers to cover loads?
The most likely reason is that freight brokers and carriers like to cut through the noise and go straight to the rate. While this might seem the most efficient way to negotiate freight rates, it is far from it. When you lack the information you need, then you are negotiating from a position of weakness.
However, if you follow these five carrier sales tips, you can put yourself in a position of strength when negotiating with carriers.
To avoid getting quotes from carriers that are 20% above what you are charging your shipper, make sure you know something about the carrier. Does the carrier run this lane regularly? Is the company more interested in the most miles, getting to an exact location, or looking for something in the other direction?
Running a trucking company is much different than a brokerage. It is expensive to operate and each carrier has its own set of profitable and unprofitable lanes. Ask great questions to get to know what lanes the carrier typically runs before you start talking about rates the carrier sales team is offering.
The trucking market is volatile, in large part because spot market rates change on a daily basis. You had better know what truckload volumes and capacity are doing in real-time. Then be able to paint the picture of the lane to the carrier if you want to strengthen your case.
This market intelligence is available in SONAR for 135 domestic freight markets. SONAR tracks in near-time electronically tendered load volumes and tender rejections for those 135 freight markets. And now with SONAR Lane Signal freight brokers only have to insert the origin and destination pair to receive pricing power scores for the lane, along with predictive truckload rates.
By separating out the accessorials you are demonstrating to the carrier you are its partner in this load. When you start with an all-in rate you are not giving the carrier enough information to negotiate wisely with you.
If there is standard detention pay, tarping fees, drop charges, lumpers, etc., then always start the carrier sales negotiation with these accessorial fees before quoting a load. If you can quote accessorials with above-average charges, then it does wonders to increase your credibility.
It is especially true with detention. Being clear about when detention starts, how to document it, and the rate will help gain the carrier’s trust. By establishing your credibility you can negotiate a better line-haul rate with a carrier.
Using data and insights
as your guide to freight
How many times have you thrown out $1,600 as an opening rate for a load and the carrier sales team comes back with $1,200? Then either you or the carrier say, “Why don’t we split the difference?” and the rate instantly becomes $1,400. While splitting the difference reduces the risk of finding another carrier, it also leaves precious margin dollars on the table.
Always be thinking about how you can add value to your loads. Value rarely means more money. Value almost always comes from services you can offer. What about quick pay? Or a simple on-boarding process? If it’s a consistent lane, then first crack at future loads might be the ticket. Always be looking to bundle services that don’t cost you anything, but do add value to the carrier.
One of the ways to add value mentioned above is to make the on-boarding process as simple as possible. Remember, it doesn’t matter what rate you negotiate – if the carrier doesn’t get on-boarded, you have to start from scratch again. Have simple paperwork and processes for onboarding new carriers. Make sure you spell this out in your negotiations with the various carrier sales staff, along with payment terms and options.
Throw away the email forms that have to be scanned, faxed or electronically signed and go all digital with carrier packets online. It is inexpensive and It will make life much easier for both you and your carriers.
FreightWaves SONAR provides the fastest freight market data in the world, across all major modes of traffic. The SONAR platform is the only freight forecasting and analytics platform that offers real-time freight market intelligence driven off actual freight contract tenders.
SONAR has proprietary data that comes from actual load tenders, electronic logging devices and transportation management systems, along with dozens of third-party global freight and logistics-related index providers like TCA Benchmarking, Freightos, ACT, Drewry and DTN.
Whether you’re working from the office or from home, SONAR can provide you the data and intelligence you need to stay ahead of your competitors.
Find out more about FreightWaves SONAR for brokers.
You can find more information on freight brokerage and carrier sales on the popular FreightWaves sales show, Put That Coffee Down.