Posted on 07 May, 2009
Timothy D. Brady
Categories: Trucking Business
Negotiating is one of the most important skills a trucker can possess to improve his financial position or his work environment. But it’s one of the areas where most Owner/Operators are the weakest.
Here are some guidelines every trucker should follow when negotiating, whether for better loads, per-mile pay, dispatch, or a contract.
- No matter what you’re negotiating, being prepared is the first step.
- Know all the facts. This includes any financial information and knowledge about the people with whom you’ll be negotiating.
- Know the answers to any questions you’re going to ask.
- Be prepared to back up any statement or answer of yours with the facts.
- Check all emotions and attitudes at the door; keep your cool.
- Set specific goals which must be met in order to continue the discussion.
- Have a final destination mapped out.
- Always have an exit strategy if objectives aren’t met.
- Don’t give up something without getting something of equal or greater value in return.
- If you have to give up anything, always make it seem painful to you.
- Have your entire negotiating strategy written down and in front of you during all negotiations, and include all supporting documents and facts you plan on using.
- Practice, practice, practice—know your material before you sit down at the bargaining table.
- Listen more than you speak.
Rules of Engagement when dealing with brokers and shippers:
- Know your current break-even point; not last week’s, last month’s or last year’s.
- Establish a hauling rate range based on your break-even point.
- Know the load potential both of the area in which you’re negotiating, and the destination area where the load is going. (Loads-to-truck ratio.)
- It’s human nature, when you’re paying for something, to quote the lowest price possible. Brokers and shippers are no different. Having a hauling rate range for the freight you’re negotiating to haul will help you land the best rate for your operation.
- Know the facts of the load before providing a rate. The more detailed information you have, the fairer rate you’ll quote. The when, where, how long, and what is expected are necessary to establish the correct figure.
- If the broker/shipper gives you a rate before you’ve had a chance to figure yours, simply continue getting your load facts. Once you have all the required information, calculate your rate, and politely provide him with your hauling fee, explaining this is based on the actual cost of providing the service.
- Never provide them with your lowest rate; make them work toget any rate lowered. They must provide you with a reasonable incentive, such as multiple loads, return tonnage, etc.
- Negotiating hauling rates works with the law of gravity—it’s easy to lower a rate; next to impossible to raise one.
- Always do a credit check before agreeing to haul a load for a new customer or broker.
Finally, here are additional rules to adhere to as you negotiate:
- Never ask how much the load pays.
- Verify your load information is correct.
- Know the absolute rate you must have, and never let your focus drift from it.
- Quote a hauling rate which includes all required miles, days, fuel costs, tolls, special services, etc. and is well above your break-even point.
- If they accept your rate, you’re home free; but if they balk at it, be prepared with a counter-offer.
- Be prepared for the unexpected. Anticipate.
- Know your worst-case scenario, and know when to say ‘no.’
- At all times, have your break-even figures in front of you.
- Be prepared to say ‘no,’ and walk away.
- Always be polite and courteous. You never know when you might need them again.
The tricks to effective negotiating are: always keep your cool, listen to what they have to say, answer their questions completely and honestly, but don’t volunteer any more information than they need.
For negotiations to truly work, there must be a desire and effort on both sides to be fair and equitable. But remember, don’t always assume this is the other side’s responsibility; be sure they’ll work to earn your respect, as you’ll put the effort forward to earn theirs.
Timothy D. Brady is:
- A 20 + year trucking veteran
- The Trucking Business Expert on Sirius/XM Road Dog Trucking Radio
- Author of best-selling trucking business books and columnist and business editor for top trucking industry publications.
Join Brady in the Trucking Business Community at www.truckersu.com for a continuing business learning experience. Be a part of the solution.
Contact him at firstname.lastname@example.org or call (731) 749-8567.