One of the greatest challenges for new owner-operators and small fleet owners is finding loads and long-term trucking contracts. Sadly, this is one of the most common reasons many small trucking companies go out of business. In this article, we cover:
- How to fail (what not to do)
- Who is your ideal shipping client?
- How to find shippers
- The government moves a lot of freight
- How to sell to shippers
- How to get started
- How to keep your clients happy
- Dealing with growing pains (cash flow)
(Note: we do not provide trucking contracts. This article is provided for information purposes only)
1. How to fail (what not to do)
Some owner-operators try to get most of their loads by focusing specifically on two sources: load boards and brokers. They spend hours on the load boards, trying to find a load. If that effort fails, they contact as many brokers as they can.
This approach can be considered the “easy” approach. All you need is a computer, an internet connection, and a phone. It’s also a bad approach. These loads have a lot of competition and pay the lowest rates. Unless you know what you are doing, you may end up taking loads that pay less than your cost per mile.
By the way, this does not mean that you should never use a load board or a freight broker. These tools have their place, but you have to use them strategically. The best trucking contracts come directly from shippers. They pay the most and have the best long-term value. However, there is one thing you must do before you start looking for direct shippers.
2. Who is your ideal shipping client?
There is one step you must take before you start looking for shippers. You have to figure out who is the right shipper for your trucking company. This step seems obvious to many truckers. After all, everyone recognizes a good trucking contract. Perhaps. But you will have a better chance at finding and negotiating your trucking contracts if you spend some time defining your ideal shipper. Here are some of the traits of a good shipping client:
- Established shipper (or brokerage)
- Pays well
- Offers quick pays (ideally)
- Uses your services regularly
- Gives you loads in the lanes you drive
- Has reasonable expectations
- Understands that quality and reliability come at a cost
Keep in mind that there is no such thing as a perfect client. But if you look strategically, you should be able to find clients who come close. Finding good reliable shippers that give you regular trucking contracts is the best way to make a successful trucking company.
3. How to find shippers
The best way to find shippers is to go to the places that they gather. The approach varies based on the industry you support, the type of loads you pull, and the lanes you run.
In most cases, you can find a list of shippers by going and industry association of the industry you haul for. For example, if you want to work with retail, join an association of retailers. If you want to pull cars, join a dealer association. You get the picture.
Keep in mind that some industry associations restrict membership to companies in their industry. However, many associations have special “vendor” memberships. They go by different names, such as “supporting member” or “associate member.” That is your path into the organization.
However, industry associations are not your only way to meet shippers. Some industries have other options. For example, if you pull reefer loads and haul fresh produce, you should visit the metro produce markets. You will meet plenty of shippers there. You can also visit wholesalers.
4. The government moves tons of freight
One way to get steady work that pays is to find government contracts for freight. The U.S. government moves quite a bit of freight, including specialized cargo. For example, the U.S. Postal Service is well-known for moving a lot of freight.
Becoming a government-approved contractor is a time-consuming process. Furthermore, finding bids, submitting proposals, and winning them takes effort. Become familiar with the process before you get started. You can find government contract opportunities at Sam.gov.
5. How to sell your services
Most truckers hate selling their services and avoid it as much as they can. However, learning how to sell is the only way to build relationships and get high-paying freight contracts. You can get a substantial advantage over other truckers by knowing how to sell your services. It’s not as hard as it sounds.
A good approach is to call a prospective client and ask for the person that handles shipping. Learn about their business and inquire about what’s needed to get on the shippers list. In some cases, you may be asked to come in for a short meeting.
Shippers are interested in reliability and availability. Be sure to let them know about:
- Your equipment
- The lanes you drive
- Your availability
Consider investing in inexpensive promotional materials, such as pens or similar office items. They should have your company name along with your contact information. Leave a few pens or similar items whenever you visit a potential shipper. It’s a constant and straightforward way to get your name in front of clients and grow your trucking company.
6. How to get started
The strategy you use to get started depends on your individual situation, time frames, and objectives. Here is a possible strategy as an example.
a) Use load boards to get started
Loads boards can be useful initially. They can help you get started and can help you fill any empty legs. Use load boards strategically and be careful of bidding too low for a load. Otherwise, you could end up making less than your cost-per mile. Your objective should be to use load boards while you build your contacts with reliable shippers and brokers. Eventually, you should transition most, if not all, of your work to direct shippers. Here is a useful resource with 40 free load boards.
b) Start looking for quality shippers
Most of your time should be spent looking for direct shippers. These shippers pay the highest per-mile rates. Ideally, you want to grow your business so that most of your revenues come from direct shippers. Building these relationships and getting shipping contracts takes time and effort. You must be persistent and can’t give up easily. Spend most of your time building these relationships.
c) Look for reliable freight brokers
The right freight brokers can be a great source of loads and help you grow your business. There is one catch: you have to share the revenues with them, so you make less than working with direct shippers.
Finding a good broker is much like finding a good shipper. You have to meet and interview each one to determine if they are the match for you. A few good brokers can complement your existing roster of direct shippers. It depends on your specific situation.
d) Consider looking for government contracts
Getting a government contract to move freight is difficult. Most contracts have heavy competition. However, the U.S. government has a number of programs designed specifically to help small business owners. These programs give you a great advantage and help you compete in the government marketplace.
7. Keep your existing clients happy
A common mistake that many new and growing trucking companies make is focusing on getting new clients at the expense of existing clients. Consequently, some existing clients become dissatisfied with the level of service and leave. It’s a lot easier and cheaper to keep an existing client happy than to find a new client. Truckers who want to grow their businesses for the long haul know this. Go the extra mile when you have to. It’s the right thing to do, and it will help you grow your business.
8. Can you afford to sign on new shippers?
We finish this article by asking a simple question. Can your business afford to take on new shippers? To many, this sounds like an obvious question. Of course, you can take on new shippers. However, there is a financial catch. Many shippers don’t offer quick pays. Instead, they pay their invoices in 30 to 60 days. This situation can create cash flow problems for truckers who need funds to pay for fuel, repairs, and salaries. These problems can get worse if you add clients quickly.
You can solve this problem by using freight factoring. Factoring improves your cash flow by advancing funds against your slow-paying invoices. This solution gives you funds to run your trucking company and grow. Many factoring companies also offer fuel advances and other additional benefits. If you need a factoring quote, contact us at (877) 300 3258.
To learn more, read “What is Freight Factoring and How Does it Work?”