By Cain Adams
Trinity Logistics/Longboard Logistics
Well, we are past one holiday and have a spell of a time before the next one starts to affect freight rates. This week is a good one to push back on your rates. We try to push rates down a bit knowing they will push up around the Summer Solstice. June 21. The longest day of the year. It can definitely feel like the longest day in freight. Especially if you are shipping melons.
Washington State and Idaho have shown signs of weakening rates. This is helping the potato sheds finish up. It may help with winter overs in Walla Walla too. McAllen has slowed way down, which is helping Uvalde TX, this week.
California, Brawley, is still high but let up a bit. We have seen trucks making $5 a mile from Brawley to Portland. Rates to the East Coast have been between $9,000 and $13,000. We hope to push down as we move up to the Bakersfield area this week.
New Mexico rates are competing with Nogales. Nogales is 288 miles from Hatch, NM, so we need to really watch Nogales for any sudden rise or fall in rates. This helps us negotiate with a truck. If we see rates out of Nogales being lower than New Mexico, we can pull trucks from Phoenix. If we see Nogales being higher, then we need to negotiate a dead head fee to get them over from Phoenix.
I literally just got off the phone with an El Paso carrier. He wants to push me up $250, Hatch, NM, to Chicago. He said the magic words: “Nogales is paying a high rate.” My reply was. “Yes sir. It’s paying $6700, which is $3.75 per mile. Mine is paying $5600, or $3.85 per mile. Mine is better. Also, you are a carrier from El Paso. You should be taking care of your neighbor, right?”
He agreed laughed, and we booked the load Chicago load.
We think New Mexico is going to be expensive this year. This is because trucks who can get into California will head that way with their back hauls. If you have contracts out of New Mexico, you should keep an eye on things so you do not get hurt. Don’t underbid just to get the job. You may be under water very fast. Be careful. It’s almost bragging rights for some of the trucks this year. We hate the swings. Both directions are creating some hostile feelings in freight.
“I got $9400 from Fresno to Salt Lake City and Billings, MT” was the bragging I heard yesterday. He is a great carrier. We talk about once a week about different lanes. We hear both sides of course. That same truck had to deadhead 340 miles to Idaho Falls. Once there, he saw the rates back to California and decided it was better for him to deadhead back to California. He would not need to wait to be unloaded and turn faster. He turned down $1800 to Los Angeles to deadhead. Can you feel that?
Okay, so how can we call this article 30,000 Feet in Freight? Backing out and looking at the market, we can see one area can have an inverse effect to another. It’s always been a counter effect for freight. Washington to California high? Then California to Washington may be lower. What state is paying higher rates? The backhaul will usually be lower to get into those high-paying states. We look at these trends and we market the information to the trucks.
Is the season done in a growing region? If so, rates should be falling. We push trucks into areas where they can get out easier. Is Florida going strong? If so, we tell them and we build relationships in doing so. We can also use that information to get a more competitive rate. Sometimes.
We try to keep locals in our playbook. Gift cards and having a beer now and then goes a long way. Even in the off season. It’s also just a good excuse to get out of chores at the house and enjoy a cold one.
Once the 4th of July is over, we think everyone has to get on board and drop rates quick. Push back and push back hard. If that can happen then this fall may see some decline and be back to a place where the middle guys and farmers can make it this fall.
Inflation is a bad word. So is deflation, but deflation is needed now and then. Fair pricing is a hard thing to find, but we all have a gut feeling freight is now inflated. A year ago I said the exact opposite, but a year ago we were losing thousands of truckers due to low-paying loads. 30,000 feet seems high, but we have to keep that view so we know what to do in 90 to180 days. Enjoy the month! Eat more onions! Feed the world!