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What’s happening with the market and what can we do to weather the storm?EditorLana Batts
It’s a strange market that we’re in because not only is tonnage down, as well as there’s a lack of confidence in the market. But this is not the worst we’ve ever seen; we’ll get over this. Two immediate things that carriers can do today are one; make sure you’re getting paid on time. Pay attention to your daily sales outstanding and continue to shorten up how long it takes to get paid. If you can’t get paid by some companies, move on to companies that will pay. The second thing you can do is make sure you’re quoting your rates in terms of practical miles and not shortest miles. I’ve never understood why the industry charges as the crow flies, particularly when fuel is $4 a gallon. 1
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How can I make sure we get paid faster?EditorLana Batts
Prior to 1980, when the industry was regulated and carriers had no electronics, the industry got paid in seven days. So the reality is that shippers can pay in a short period of time. What the shippers are trying to do is spread out their payments to improve their bottom line, but the first thing a carrier can do is to make sure that it gets the invoice off to the shipper in the shortest period of time. 1
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What technologies are available to help us get our shippers invoiced in a timelier manner?EditorLana Batts
There is technology available that will allow you to get the information back electronically, truck stop scanning for example. You could push for electronic data interchange so that you get paid. Why not get paid when you pick up the shipment as opposed to when you deliver the shipment? Why not have signature capture? The reality is those shippers will accept a UPS shipment that comes in the front door with an electronic signature, but when it comes in the back door, they actually want a hard copy. So the reality is carriers have to become very aggressive on getting their own invoices out, and dealing with those shippers so that they don’t continue to extend the payment schedule. 1
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I’m noticing that the fuel surcharges don’t seem to be covering a significant portion of our fuel purchases. Is there anything we can do about that?EditorLana Batts
In order to minimize what’s happening with fuel price increases, is number one – motor carriers need to understand that even if they get a 100% surcharge, from 100% of their customers, they’re still short about 20% of the increase in fuel. That’s because of out-of-route miles, charging shortest miles instead of practical miles, allowing truck drivers to take home the truck – in all these instances, you aren’t getting compensated by the fuel surcharges being paid by your shippers. When fuel was cheaper it became common practice to allow the drivers to take their trucks home with them. But with $3, $4, $5 diesel, allowing a driver to take home a vehicle that gets 6 miles to the gallon just doesn’t make sense anymore. It’s financially irresponsible. 1
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Why is it so important to get practical vs shortest miles?EditorLana Batts
There are mileage software packages available today that have a number of different ways to measure miles; one is practical and one is shortest. When you are negotiating with the shipper you have to get practical miles; you cannot allow shippers to push you into “shortest miles.” You’ll end up being short 8% to 10%; in some places even more than that.
When fuel was .60 a gallon, it didn’t matter. When fuel is above $3 a gallon, it matters tremendously. Again, one of the fastest things people can do to make themselves whole is to not allow drivers to take their vehicles home and to start charging practical miles instead of shortest. 1
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We have some loads that we do where we are always coming back empty – what can we do?EditorLana Batts
For starters, you can start charging for a round trip. If you go from point A to point B, and you always end up coming home from point B empty, the empty miles weren’t actually created when you got to point B, they were created when you accepted the load. Empty miles are not an immaculate conception, so you’ve got to figure out how to get your empty miles covered and start doing more round trip tickets and charge more when you’re going to those places where you’re not going to a load back.
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