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How To Set Your Rate In Trucking

Here’s my response to an online session from some time ago, this will deal specifically with how to set your rate in trucking.

To all that want a clear answer for how to calculate your miles. Weather you have a shipper or not, your primary consideration is all your expenses per month, including all your annual expense divided into 12 for a monthly figure and fuel on all monthly miles, lets just say about 13,500 max total monthly miles. Deadhead and loaded for an individual per month in miles that’s at least realistic. You have to decide for yourself what your earning expectations are for how you run the truck. In general, I feel if the company driver which has only the load responsibility can make 3,000 gross a month, if I'm least on I need to now make 4,500 net before taxes a month, this is what I call unit or truck responsibility.

If you own the business now I feel you should make twice the company driver makes for twice the headache or about 6,000 net before taxes, I call that "business responsibility". But that’s my humble opinion.
Take that total expense I told you to get, add what you think you need to net before taxes for a gross per month you need to make with your truck. Now divide that by the amount of loaded miles you can legally and physically run per month say about 11,000 leaving about 2,500 miles for dead head, I figure you can at best run about 13,500mpm, also included time off for family or what ever, for example, your total gross needs to be 20,000 ÷ 11,000 loaded miles = 1.82 per mile on all loaded miles. BUT it would take 24 loads "runs" to do that. The reality is, with lag time, down time and every other logistical nightmare you won't run 24 loads a month.
 So let's say you can run 19 loads a month that's still on the high but it might be possible.

 Take the gross per month you came up with and divide it by the 19 runs for a per run figure i.e. 20,000 ÷ 19 = 1052.00 average gross per load your truck needs to make. Now here's where it gets deep, so stay with me. I know darn well what you "can" run in a day but I'm not talking about that! You will on average figure you can run fairly comfortably and somewhat legally 575 miles per day. Of that 575 your dead head miles might be for this example 115 miles which leave you with 460 loaded miles take that per load figure of 1052.00 and divide it by 460 miles, i.e. 1052.00 ÷ 460 = 2.28 for your loaded miles rate.

If you have a family you'll need to figure more time for your family, you're worth it and they're worth it. So now you might be able to do let's say 14 loads a month and have a decent amount of time with family. That'll put your rate up around 3.10 per mile on all loaded mile pretty quick. That's why you should read on, to find how you can exploit your knowledge of the market and still have time for your family.

High Demand for trucks is a "Demand" market for Truckers. When the supply of trucks far out number the freight in the overall market it is a"Supply Market for Truckers

If the market is weak to dead you won't be able to get your rate, in some cases not even half the rate you need to make. You first should determine to continue to spend time with your family. Apply "Supply Strategies" as best you can and reduce your total monthly expense. Remember, in a weak market a company driver can earn more income so much easier and if you have the flexibility and an open door of opportunity you should get there until the market get's strong enough again. If you can't, then try the strategies I suggest below.

Be wise, If you've manage to catch a few good runs and see things only getting worse the best time to get out any boat and into a life raft is before the boat goes under water, if you know what I mean.Back to How to set your rate in Trucking Quote higher, there’s always reason, scales, traffic detours, tolls, and oh yea, getting lost, etc. That's the rate you quote your shipper in an average market where freight out numbers the trucks. You don't let the shipper quote you anything or the broker, you own the business, you know how much you need , and you're not settle for less, period.

In a dead market it works the other way around. However, at the time I'm writing this review the trucks out number freight, at which point your best hope that you've had a good run long enough to establish the credibility for the shipper to keep you on, even though they can go find a truck for half the price. Aso see "Supply Strategies for a market weak on freight"

If your planning on starting your business and don't have a shipper and you're planning to start running your own authority in a dead market, you've obviously lost you're mind and I don't know what I can say here to help you.

But if you find yourself caught up in this thing and you don't have a good run and are living off the brokered loads I feel your pain, but let's face it, a weak to dead market is a buyers market, and you just happen to be "the seller". The only thing you can do is cut your expenses on every hand. If you’re making truck payments get it refinanced if possible, yes you'll pay more in the long run, but right now you can buy time, stretch that payment out and reduce your monthly payment out, do that on all you equipment.

Also, if you been in this thing for anytime you got credit card debt from buying fuel and making repairs (don’t you try to hide from me boy, I know where you're at), how bout this, “Its better to have bad debt and stay in business than to go out of business trying to pay your debts and end up with bad debt anyway”, go to your debtors, close out the accounts, yes I know It will hurt your credit score, we're talkin survival here boy!!!

If you close the card it will be better. then get on a reduced payment plan which will cut your expense in half, (which by the way when you do that they close your account anyway) don't worry about your credit, you can always build it back up, but trying to make those huge debt payments in a down market when your runs are only paying half will only keep you out on the road so long you'll lose that little lady and kids you got, if you still got em; so ditch the debt before it ditches you. If you happen to have extra cargo insurance, ditch it, you only need 100,000 and you only need 750,000 Primary Liability, in a down market that’s all you should have. I could go on and on but I guess this is a good place to stop. Good Day, Jo Bernard
Oh! One more thing I just can’t resist, this will help you. If (in an average good market) you take a load to an area where the rates suck, let’s say 1.24 a mile, but you need 2.28 on “ALL” loaded miles, now you have to demand 3.32 on the miles going to that weak area. That right there is your job, and you owe it to your family to stand up for you rate. Hold out, stay put, in an average market if you’re in a strong lane they’ll eventually run out a trucks and you’ll find your rate. If you’re living in and running out of a dead area you better have enough sense and discipline to wait for a load to good strong freight area, or you’re not gona make it in this business for very long. I only tell it like it is, because I want to help you, Take care and be safe, Jo Bernard

Compare other Trucking Calculators

What ever stage of the business you are in, master the Trucking Calculator and essentially you master your knowledge of your trucking business. In the course of my search for trucking knowledge I’ve come across many so called financial plans, budget, projections, even other trucking calculators, Let me just give the plain unadulterated truth, truth that you can test. You just find what ever trucking financial plan, budget, projection or calculator there is out there, just whatever you can find, and compare it to my trucking calculator, just do it and you’ll see for yourself; there’s just absolutely nothing out there that allows you to not only identify how you run your operation, but also gives you all the real expense possibilities.

You’ll see, most of them don’t allow you to put in the important information needed to narrow down what your rate should be based on what you should be paid. What you will find are financial plans, budgets, and calculators that make you feel you’re making all this money when you’re really not. I’ve worked some of those calculators out there, there a joke!!! They are a real joke, most of them try to fit all these different ways of running the truck into one fill in the blank expense to income table without even allowing you to identify all the particulars about your business, how you operate, what the specifics of your equipment are etc..

 Not only can you go into my calculator and do all those things, quickly and efficiently, but you can also look at other ways of running your operation and compare with other operating situations. My calculator give you the real truth, most of those out there have so many hidden variable you will never know how they came up with their answers. I’m not just trying to sell you something here, it’s just the plain truth, they don’t measure up, not even close; and besides, mine is free, there’s enough of them out there that aren’t even close to real and the owners are charging for them.

One last really big thing to consider is the environment we run in. In an average market situation there are significantly strong rate areas and significantly weak areas, generally for the lease operator locked in to a rate that might not mean less pay as it would be less freight, but the business owner needs a plan for averaging his rate regardless of the significant rate differences from one area to the next. I don’t merely offer the numbers by giving you a calculator; I also offer a very real plan to achieve your rate. The reason most those Joe’s presenting calculations out there can’t do that is because they haven’t even actually trucked in this industry or become a real student of the business long enough to know what you really need.

They’re merely trying to either prove a point, sell you something you don’t need or steer you in the direction of buying their services or working for their company. Your best resources of reality in trucking expenses are from those that are already painfully aware of them “the Truckers”. Take other Owner Operators to the site, they can help you narrow down your expenses or include realistic ones you may not be aware of. You in turn will help them to find and have a clear reality of their business and find good resources for preparing themselves to earn a higher income. Sometimes in the course of discussing these things many ideas and innovative solutions can be reached, just by being on a mission to seek out information.  Also, the more feedback we get from you the Truckers, the better, we’ll be able hopefully to add other features to the calculator.

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