Freight Guru Podcast Ep.1

The current state of the Spot Market in Q1 2021

The goal of the Freight Guru Podcast is to educate and inform the trucking community. We want to grow industry knowledge by trying out new techniques and sharing our successes and failures with the broader community. 

For this podcast, we want to focus on five key markets: Florida, New York, Texas, Ohio, and Washington. We want to help you answer the question, “If I have a truck in any of these states, where should I be moving that truck?” The way to answer that question is to make sure you are focusing on round trip profits.

Moving freight out of Florida is rarely profitable. As a result of this, you need to be mindful of your destination. That is so you can turn a profit by going somewhere with higher rates.

 

Every trucking company is going to have different costs per mile. In our model, we prefer to lease our trucks because it offers cost stability. That is because there will not be large unexpected charges if there is a breakdown. Leasing new equipment also provides the drivers the best vehicles.

 

We highly recommend leasing from Ryder or Penske and have a full-service lease, which allows us to have stable costs that are easier to plan around. We also recommend having ties to multiple leasing companies because it gives you leverage in your negotiations.

 

We strongly recommend DAT. DAT is an online load board that gives you access to loads. FTL is almost entirely digital, which is different from last and first-mile delivery operations.

 

We use a trucking method called The Triangle, which we believe is the key to successful trucking in the United States. The Chicago Bulls successfully used the triangular strategy in the 90s. You want to set it up such that you have a backhaul market leg and a very lucrative leg. You want to work your drivers on the same consistent lanes to optimize The Triangle.

 

Familiarity is essential when it comes to compliance. Good compliance is vital for a good trucking company to survive. Honestly, it is way more important than any other fundamental trucking principle. Having truckers on the same route week after week means they will not be surprised by bridges, roads, or where to park their trucks. 

 

Many brokers do a poor job of correctly utilizing their relationships with the trucking company they just vetted and spent 45 minutes onboarding. Trucking is a very fragmented industry, and we are here to make it more efficient by educating the trucking company on maximizing their assets, drivers, and routes. 

 

We are focused on improving the efficiency and operation of small carriers. We seek to do this by allowing them to use analytics to grow profits. That helps when answering questions about rates and costs per mile, net margins, etc. If you are a trucking owner, can you tell me right now what your average rate per mile is, loaded, empty, last month’s cost per mile? 

 

The only time moving out of Florida is profitable is in May, during produce season, and in February during Valentines. The goal is to go to a head haul market from Florida. Ending in the midwest is ideal. Moving out of Florida is usually done at a loss. Using DAT, you can filter by state, zone, and rate. 

 

You have to make sure that you are working with a creditworthy broker or shipper who has a bond on file with FMCSA. If their credit is low and they do not have a bond, you risk getting your invoice unpaid. Trucking is much more than point A to B. You need to account for the human component and the relationship with your drivers, customers, and the regulatory offices like the DOT and Highway Patrol you will deal with during compliance reviews and audits. 

 

For small carriers, you should be looking for experienced truck drivers, as getting insurance will be one of the most challenging tasks of your yearly fixed costs. New truckers should be team drivers to make sure that they build the correct experience.

 

On other podcasts, we will show live booking of freight.

 

When shipping out of Florida, we recommend going to zones Z4, Z5, & Z6. ( Please see the attached DAT Zone Chart for your review) If you move triangularly between those three zones, you will make more money and build driver familiarity with those routes. If a customer wants a load delivered to an area of low demand, you have to charge a premium. 

 

Minimizing deadhead mileage minimizes risk and reduces costs. Ideally, you will specialize within a 2,000-mile radius within The Triangle.

 

Sonar, a product of Freight waves, is an excellent resource for data analytics and real-time updates. We highly recommend the use of this tool for day-to-day market research. 

 

We are still under the effect of pent-up demand from covid. A result of this is that the outbound tinder index is much higher than it has been in past years. That might mean that we see a notable bust in 2022 as things normalize, but you have much more capacity, as seen with the crash from 2018 to 2019. 

 

Rates are very high in the midwest, but you have to be careful and ensure that you are doing business with reliable people. Make sure to do your due diligence when it comes to booking freight.

 

Thank you for reading, and make sure to check out the full podcast available on our website!

 

Download here https://thefreightguru.io/wp-content/uploads/2021/02/dat-zip-zone-directory-2.pdf

 

The Freight Guru

ll@thefreightguru.io

 

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Meet Luis Lopez

Luis Lopez is the chairman of Go Hub Holding Group, a logistics holding corporation and the active CEO of Freight Hub Group.