September 11, 2025 • 33 mins
What do today’s freight market conditions really tell us, and how can carriers and brokers use data the right way to stay profitable? Dean Croke from DAT Freight & Analytics joins us to break down the real story behind flat spot rates, capacity velocity, and why AI-driven data isn’t always reliable!
Dean and I also talk about the financial discipline it takes for owner operators to survive, the importance of tracking P&Ls and return on capital, and how strong broker-carrier partnerships deliver real value!
About Dean Croke
Dean is the Prinicpal Analyst at DAT Freight & Analytics, the leader in market and pricing intelligence and operates the largest truckload freight marketplace in North America. He is a Global Supply Chain and Logistics Executive specializing in freight market analytics, multi-modal freight flows, thought leadership, and the application of business intelligence using digital technologies.
Connect with Dean
- Website: https://www.dat.com/
- LinkedIn: https://www.linkedin.com/in/deancroke/
- YouTube: https://www.youtube.com/@datfreight
- DAT iQ Help Center: https://iq.support.dat.com/
📊📉 Don’t miss out on the latest market trends by subscribing to your TOP Transportation Morning Show! 🌎
🎬🎯 #TheFreightCoach Morning Show is LIVE every weekday at 10:30 AM CST to break down transportation industry headlines! Mark your calendars!
🤝 Shoutout to my sponsors!👇
- Denim | https://info.denim.com/chrisjolly
- SPI Logistics | https://spi3pl.com/
- Revenova | https://revenova.com/freightcoach/
- NMFTA | https://nmfta.org/
Help Sgt. Murphy's Kids Soar: A Fallen Hero: https://www.gofundme.
🚀🔥 To sign up for my Newsletter, go to http://eepurl.com/iNoHco, get in touch with me through the social media channels below, and subscribe to my YouTube Channel!👇
▶️ https://www.youtube.com/channel/UCjrL70IEnCfDkNaiYMar3jw
📷 https://www.instagram.com/thefreightcoach/
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Came back with a bank window down yelling now money anything hey oh Got the foot on the gas pedal to the metal when I'm get to the back hey Got the foot on the gas pedal to the metal when the blame moving fast hey Let them all cross if they hate then let them hate to make a bigger boss hey.
Speaker 2 (00:26):
What is up ladies and gentlemen?
We are back.
We are live.
It is a freight coach podcast, the top podcast in transportation coming to you guys every single weekday, 8:30am Pacific, 10:30 Central, to break down some industry headlines.
But most importantly, you guys provide some actual insight into what you can do with all of this information.
If this is your first time tuning in, welcome.
This is the real side of freight, ladies and gentlemen.
(00:47):
And I do say that before every single show.
And what I mean by that is I only speak with transportation professionals because at the end of the day, you guys, I want to talk to the right individuals who have done what you're looking to do or who are currently doing what you're trying to achieve.
So you can take that information, apply it, utilize it and see a meaningful difference in your business and your life.
Happy Thursday everybody.
I got a very special guest for you guys here today.
(01:09):
We're going to be talking about truth and hype.
Like what actually drives the freight market?
Where are things?
And this guy, there's nobody more qualified to talk about it.
This guy, my good friend Dean Croak with DAT is back on the show.
Dean, thank you so much for taking the time to join me today.
Speaker 3 (01:24):
Yeah, great to be with you.
You've had a, a bevy of rock stars across your show in the last couple of years.
I was just looking at the intro.
Speaker 2 (01:34):
It's been, I mean, Dean, this is your episode 1281.
We're up, we're rocking.
And I think like at this point I could be wrong, but I, I think I have the longest running independent show in the industry at this point.
And you know, because we're over five years strong and we're not, we're not slowing down because, you know, there we need more of the right information kind of being out there, in my opinion and you know, and especially by people who are in the seats.
(02:03):
Right.
I think like in today's day and age with social media, it's very easy to position yourself as like a subject matter expert because you can just like go on chat GPT and get a couple of talking points and then create a bunch of content.
But it's like, have you lived the life that you're talking about or are you just posting about it?
And, you know, were.
I think a great place to start is it's kind of like what.
What you were just discussing backstage here with me.
(02:25):
So, like what.
What's been going on out there, man?
Speaker 3 (02:29):
Yeah, yeah.
Someone asked me the other day about data.
I mean, I was in a software platform called Gemini this morning, and it's an AI platform.
I asked it to tell me about the freight market, and I gave it some sample data.
Chris.
It straight up lied to me, and it told me about a lane from Jacksonville to Phoenix, and it said it was paying $5.05amile.
(02:51):
And I said, what?
And I said, are you sure?
I said, Jacksonville, Phoenix, A is not in the data, and $5.05 is not even the highest rate per mile in my spreadsheet.
Where did you get that from?
And it kind of went through this whole apology, and I said, are you making this up?
We're having this discussion back with this AI model.
And it kept apologizing.
And I said, why are you lying to me?
(03:12):
And it kept apologizing.
And I had to tighten up my parameters and say, stop hallucinating and stop lying to me.
And I think it's a question of garbage in, garbage out.
In the end, I had to tighten up my parameters about what I was asking it to do.
And I got to the right place in the end.
But it comes down to context.
If you don't know the market, the AI software will tell you whatever you want to know.
(03:37):
Right.
And that's.
But what my point was, you've really got to know the market.
And I spend a lot of time out in the market.
And by that I mean I have a Peterbilt truck, and I go to truck shows a lot.
Yeah, I spend a lot of time in.
In truck stops and at truck shows.
Last weekend, I was at the Big Iron classic in Casson, Minnesota, with.
(03:58):
With 450 owner operators.
And.
And so it's the first time I've been in a truck show without my truck.
So I felt a little bit naked.
Just walking around without my truck was the first time I'd been to a truck show without waking up in my truck.
Yeah, just a really weird experience.
And.
But I was talking to these truckers about the market, and when you got four days with a bunch of owner operators, you learn a lot about the freight market, and you learn a lot about latent capacity, and you learn a lot about the velocity of capacity.
(04:31):
A lot of guys said, and this is not about the Net capacity leaving the industry or entering the industry, like how many trucks are leaving or joining.
It's about the speed of the capacity.
Because when things get quiet, it slows down.
Yeah, right.
And when things get busy, it speeds up.
You don't necessarily add more trucks or lose more trucks.
It just speeds up or slows down.
(04:52):
You don't need to add more or lose more.
So.
So guys were saying, you know, instead of doing two loads a week, I'm now doing one.
Your net number of trucks hasn't changed.
Speaker 2 (05:02):
Yeah.
Speaker 3 (05:02):
This is where you've got to get a really good feel for the market to understand what the data is telling you.
Because when you look at the revocation data, what you see is the market is pretty flat from the number of trucks, the number of carrier authorities entering and leaving the market.
But it still doesn't tell you whether rates are going up or down.
(05:22):
You can't infer that.
If, if capacity is leaving the industry at a higher rate, does that mean rates are going to go up?
No, it just means carriers have slowed down rates where they are.
And that's what kind of.
It dawned on me when I was watching all of these owner operators.
I thought, and Chris, the majority of these 400, I think it was 470 trucks were all loaded in between loads.
(05:46):
So you take out a couple of days to wash, shine, polish your truck, sit there for four days, leave Sunday.
They've lost the best part of a week of productivity to go to this truck show.
They would do this four or five times over the summer.
Takes a lot of time.
Now in busy years, they don't do this as much.
But there are certain shows that these guys go to religiously.
(06:08):
And that's that latent capacity that sort of.
We talked about in other shows.
It dives in and out of the market when the opportunity's there.
Speaker 2 (06:15):
Yeah.
Speaker 3 (06:16):
That's what tends to flatten out spot rates.
So that's one of the features of this market, is that carriers have tended to.
I've said a lot that there's been a bigger cohort of carriers because they made so much money during the pandemic, they can afford to take more time off.
Because, Chris, all of these guys at this truck show, the vast majority own their own trucks.
Speaker 2 (06:38):
Yeah, right.
Speaker 3 (06:38):
There's very little debt.
Now.
These are vast majority of pre emission, pre eld.
Yeah, right.
They, they do all their own maintenance.
These are skill.
These are the sort of guys you want onto any load because they can do almost anything.
Speaker 2 (06:54):
Yeah, these are the guys that have been like, because that, like that's how my old man used to operate, right.
He did all of his own maintenance on his own truck.
He knew exactly what he was doing, like at all times.
There was no guess, you know, and it was that old school, you know, professional, right.
Like he was a professional truck driver.
And it sounds like that's what a lot of those guys out there at that show were doing.
(07:16):
And you know, I, I think because I'm out here obviously building my freight brokerage.
We're moving freight every single day of the week.
And you know, we look at it as, it's like from our seat, we want to obviously I like, I practice what I preach.
We use the same trucking companies as much as we humanly possible can with our customers freight.
(07:36):
Because I don't want to go out to a spot market or anything else and roll the dice because customer relationships right now with brokers I feel like are as fragile as they've ever been.
And I don't want to roll the dice and risk putting somebody on my customers load that isn't a trusted provider.
Right.
And I know it takes time to build up to that.
(07:58):
But you know, I'm looking out there and I see a lot of this stuff, a lot of the data, obviously I'm studying it, I study markets more than anything and if I can see anything that is like a positive right now, this is the consistency that's out there in regards to capacity and the pricing and, and for me it's like that is like that equilibrium that a lot of brokers need to get to because like customers pay us for consistency.
(08:27):
They pay us to keep their right, their rates the same and then to hopefully get the exact same trucks coming in there time and time again.
Speaker 3 (08:34):
Well, rates have been pretty much the same for the last three years.
Well, when I look at spot rates, right, so this is sort of spot rate territory.
Even contract rates have been fairly flat within.
When you look at new rates coming into routing guides on the contract side of our business, which is about 50 billion roughly in freight spend, they've been plus or minus 1% for the last year.
(08:56):
Even going back two years, you could argue they haven't moved up much.
So shippers have certainly been having pricing power for a lot of that period of time.
A lot of carriers have had to keep their rates fairly flat to hold onto volume.
Spot rates though have been.
If you go back to the last three or four freight recessions, you sort of 20, 14, 15, 17, 18, 19, you saw these sort of plus or minus 20% year over year movement in spot rates.
(09:26):
The pandemic, of course, was plus 35% up, 35% down.
The last 12 months, Chris, has been barely plus or minus 1% up or down.
So spot rates have been really flat for the last year.
But when you go back and look at 23, 24, 25, they barely budged, like they're within a few pennies of each other.
So it's been a really flat freight market.
(09:48):
And I did a piece for the Wall Street Journal yesterday and it was really shocking because I looked at, they were writing about California carriers and I looked at spot rates before the pandemic and I'll just talk about sort of long range averages here, and I know these are averages, but before the pandemic average, outbound California was $1.79.
And then during the pandemic it was the highest in the nation at the average.
(10:11):
During that sort of two year pandemic period to the end of 2022, it got up to $2.40, peaking at $3.70.
That was the highest in the nation.
Yeah, but that $2.40 average since the pandemic has dropped way back down.
It's dropped 33% back to $1.79.
So it's dropped back to pre pandemic averages, outbound California, but carrier costs have obviously gone up during that period.
(10:38):
So all of our costs, so I think that's the rub here, is that every rates have sort of stabilized back to where they were, but everyone's costs have gone up.
And I think that's where everyone's getting squeezed here.
Speaker 2 (10:50):
What, so how is this balanced moving forward?
Right, because I, I look at it as there's.
And, and I know that not everybody out there agrees with this, but like what we're seeing right now, I think overall is a normal freight cycle minus a little bit of like holiday squeeze, you know, because like in years past, around every major holiday, long weekends, capacity tends to tighten up.
(11:14):
I haven't seen that, but I have seen a little bit of a drop in capacity around that times.
Not enough.
But like I, I'm trying to explain to a lot of individuals out there, like what we're going through right now is a normal, like this is how the market normally is.
And I think that, you know, just knowing how human beings are, Dean, a lot of people forgot 2017, 2018, 2019, or they never worked in the industry during that time.
(11:40):
So they don't know what that was like.
They only knew those boom times that they experienced.
And now like what you said there Dean, is the most accurate thing.
Rates drop back down to where they, I don't want to say should be, but where they normally are.
But costs, maintenance costs, everything else is increased.
So that's where that squeeze is coming from.
(12:00):
But I, I also look at it is how many of those owner operators that you were talking to last week, that stat, that stash cash like that, they all probably, I'm assuming, told you we've seen stuff like this happen before, maybe not to this extreme.
That's why we do the way like we operate.
The way that we operate.
Speaker 3 (12:19):
Yep.
Yeah.
This is, there's a lot of seasonality and they know that, they know they've seen it before, they know that they can get by and they control their costs like, just like your father, they're very good at controlling their cost, doing their own maintenance.
So I think they take a much longer term view to this and they certainly don't do, they don't panic and they don't try and cut corners and haul bad paying loads like so I think the one thing I noticed from these guys is consistency.
(12:49):
But they don't take risks and they don't cut corners.
So you know where they might do two loads a week.
One guy said to me, he said I would normally do two combine harvesters in a season like this.
I'm now doing one.
But because the farmers aren't buying as many combines at the start of harvest season, which was not good for farmers, he said I'm not going to go out and chase cheap freight with my rgn.
(13:12):
Which is really interesting because he could do that, but because it would blow his chances of getting that one load every, you know, so they don't take the risks and I think they take the pain of not taking that cheaper freight, which is, that's the discipline.
I think they're very disciplined when it comes to these soft markets.
Speaker 2 (13:29):
And that right there, Dean, the way you described it is where I think a lot of brokers fail to understand that methodology.
Right.
Because there's a lot of brokers who are like why aren't you just taking my freight?
Right.
Like I see posts, I would say at least seven to eight times a day how somebody's complaining that a driver didn't take a load for 80 cents a mile or you know, a dollar 10amile or whatever that is and then they'll Screenshot.
(13:54):
Like them saying it's not worth our time.
And like, how is it not worth your time?
What you're describing there is exactly it.
And, and that is the difference, I think, between a lot of people who've ran dedicated customer freight before is like when you need to get back and you need to service them, it's service at all costs.
Right.
Like they look at it is that's an investment in their business if they deadhead back empty.
(14:14):
And especially if you're talking about guys with an RGN and stuff like that are at least five to six hundred grand rolling down the freeway, you know, like they're not going to take something for $2amile.
Are you kidding me?
Speaker 3 (14:27):
Yeah, yeah.
Well, you mean trucking isn't just about miles, it's about math.
Speaker 2 (14:31):
Yeah.
Speaker 3 (14:32):
And part of the equation is since ELDs came in, it's about time.
And what they're saying is it's not worth my time.
The reality is that if you've only got 15 hours left on your 60, you got to be very careful about how you choose that towards the end of the week because it could put you in the wrong spot for your 34 hour reset.
If that 34 is not at home, puts you in the wrong spot to start next week.
(14:54):
Because if you're not in the right spot to start that load that you need for your prime contract, that spotlight could actually cost you a lot more than the money that it generates.
And that's the reality.
Speaker 2 (15:03):
No, I agree.
And so from your perspective, Dean, what is actually driving things to remain where they are for as long as they have?
Right?
Like what?
Because like, again, if you, if a lot of people out there who listen to the show, they're on social media, everybody's got an opinion on this.
And you know, it's either, oh, the drivers don't know how to price their freight, or though the brokers are keeping, you know, rates this low, the brokers are taking all the money.
(15:30):
There's a bunch of, in my opinion, just a bunch of false narratives that's out there.
So, like, what actually drives this in its simplest form?
Speaker 3 (15:39):
I think I'll stand by this.
We've been saying this for probably almost two years now, so this is not news for anybody.
That follows Ken, Adam, myself, which is that the pandemic generated a cohort of smaller fleets and owner operators that made an excessive amount of profits.
Remember, this was one of the most profitable periods in maybe carrier and broker history by a long shot.
(16:04):
And the smart money paid off a lot of debt.
So what we've got is this big spread in operating costs because normally carrier operating costs traded in a fairly tight margin.
Fuel, tyres, filters, all were put in at a pretty tight range.
Remember, I'm someone that owns a truck, so I'm buying stuff all the time.
The costs are fairly similar, but since the pandemic, we've got this big range.
(16:26):
So if I said to you that it costs, you know, $1.86 to run a truck in the spot market, I know that if you paid off your own truck, you can run for a $45 today.
Now, if rates are $1.70, I'm making a good profit and still paying myself $60,000 a year wage.
So there's a cohort of carriers that can run and be profitable and pay a wage and make 34 to $40,000 a year and survive quite okay in this market.
(16:57):
Now, I'd put to you that the carriers that have got a much lower level of debt is a much bigger cohort of carriers than we saw before the pandemic because of the profits they made during the pandemic.
Now the Runway is getting shorter and shorter because if they own their own truck and trailer and they're not generating a serious amount of profit, that truck is aging.
(17:21):
And if you're not getting a return on the capital that truck is involving, right, you start to get to a point where you trade down.
If you're not generating enough profit, you can't trade up to a newer truck, right?
So the economics start to work against you.
I'm not saying they're at that point yet.
But if you own your own truck and trailer and you have, let's say, cost you a buck fifty, you can run at spot rates all in the current market.
(17:47):
If you're in our top 50 lanes, Chris, and our top 50 lanes are running at I $80.90amile, you're actually doing really well today.
So there's a wide range, but if you're a guy that's a guy or a girl that needs $2.12amile because you've got an aging, you know, truck that's got high mileage, you paid too much during the pandemic, you might need $2.12amile.
(18:10):
And they're the ones that are really hurting.
So for the first time, you know, in the 25 years I've been here, we see this big spread in operating costs.
So I think your bid strategy as a broker is really dependent on the debt levels of the carrier, which I know you don't get into when you're talking to the carrier because the truck's a truck.
A truck.
But I think there's a difference in bid strategy depending on the viability of the carrier, which is driven largely by how viable they are based on their profit and loss sheet.
Speaker 2 (18:36):
Yeah.
And what you're describing there, I think, is something, you know, I've heard a lot, and it's something that I kind of stand by as well, is freight moves for what somebody's willing to take it for, like, at the end of the day.
Right.
And what you're describing there is like if there's a, an individual who can take a load for A$40 or A$50amile, they might still be making a small profit, albeit, but a profit, and then it repositions them back into the market where their core customers are and stuff like that.
(19:03):
So is, it's like, again, I think, like, you know, just for some basic numbers for people to put it into constant context.
I believe it's like, is it 95 of the trucks on the road, 20 truck or less operations?
Speaker 3 (19:16):
Correct.
Speaker 2 (19:17):
95.
Maybe even 96.
997, I believe.
And it's like, if you think about that, though, like in comparison to the freight that you're moving.
And then Dean is describing the vast operating costs that are out there.
You have a majority of those fleets that are out there that have paid off or extremely low debt ratios out there.
And, and then you have another group of individuals who bought at peak, they were a company driver in 2020.
(19:43):
They said, boom, I'm going to go out on my own in 2021 and buy a truck and trailer.
They bought $100,000 truck for 200 grand.
And anybody who had saw that, you know, they saw the sharp increases in pricing.
So those operating costs are vastly different.
So it's like I, I look at it as, like, I think in its simplest form though, Dean, like, this is how a free market will always operate.
Speaker 3 (20:06):
Right.
But the thing is, you know, when I say it's if it's A$80 to break even, the reality is for those carriers, this is where the market's a race to a bottom.
You really need like something like $2.20 to be profitable long term.
Speaker 2 (20:19):
Yeah.
Speaker 3 (20:19):
And this is the economic reality because if you're not making 40 cents a mile on top of your break Even you haven't got the money to throw an in frame rebuild.
Speaker 2 (20:28):
Yeah.
Speaker 3 (20:28):
Three or four years down the track.
Right.
Because I know a good friend of mine just had an engine go.
His X15 went on his Peterbilt.
He's had to refinance 70 grand because it was 40 grand for the motor.
Then he had the towing costs and a whole heap of other stuff went.
And now he's into this truck for like 70 grand on top.
You always had it paid off, Chris.
(20:49):
Like so.
And this is the sort of stuff that breaks.
I got another guy that's got like this big truck with a big motorhome type sleeper on it and he's like, he's broke and he doesn't know what to do because he hasn't been getting a return on the capital that the truck's been generating.
Like the economics of running a truck is so hard.
And so when it comes to these numbers we're talking about, it's extraordinary how generally carriers don't think about the business of running a truck.
(21:20):
Like it's not about the rate per mile.
They focus too much on that, not the revenue per truck day.
This is where the time factor comes in.
Because if I was running a truck, I would say to you, Chris, as a logistician, I need $1,200 a day.
I don't care how you get it, give me 1200 a day.
It's not a rate per mile question.
(21:40):
I got to run 600 miles at $2amile.
That's it.
Because if the rate per mile doesn't give me 600 miles, I'm behind.
Speaker 2 (21:50):
Yeah, you, no, I, I, I get it, Dean.
And I look at it as, like all, like what you said earlier too.
It's all math at the end of the day.
And I, I know that, you know, lessons that I've learned in being self employed, you know, like balancing a budget, you know, because it's like if you're not generating enough revenue for your business and then your expenses go out and it's like this is why I tell people the most important thing you can do as an entrepreneur.
(22:19):
And if you're an owner operator, you are an entrepreneur.
You have to work with a bookkeeper, you have to work with somebody to help you keep your cash flow or have a send you a P and L profit and loss statement.
You need to see and track your expenses.
Because I think a lot of individuals assume that everybody operates this way.
And I'm actually alarmed at the amount of people That I know that own businesses that don't have a P L Like they don't, they operate on, oh, I made a thousand and that's all I know.
(22:50):
And I think that's like the big, the big thing here is like when it looks, when everything boils down to it, everything's a system.
All right?
You need to, you need to build a system and follow a system in your business.
And if you don't have any back office support at all and you're an owner operator, you're not tracking your expenses, you don't know what your fuel bill is or you, even if you're a broker, I mean again, you people assume you don't know what your technology spend is every month.
(23:18):
Like I am literally going through my PNL Dean with a fine tooth comb every single month.
What are we spending our money on?
Did we use this piece of equipment this month or not?
Can we get rid of it?
Can we sell it?
What do we actually need?
Because like this isn't like a game to me, you know, Like I've come to realize that I have my break even point.
(23:40):
I know what that is.
I have my profit where I can pay myself to be able to do that.
Because like again, I can't work for free.
I got a family to feed.
And then on top of that there's money that comes in that I have to stash for a rainy day fund.
On top of that, in the event, hey, I have a drop in revenue for a couple of months, for whatever reason, I need to be able to continue to pay my bills and operate.
(24:00):
And I think like a lot of people hear this and they say it's not that simple, but it is that simple.
Simple to start tracking your expenses, find out what your break even point.
Every business has that number, what their break even is a 10 profit, 20 profit.
They need to see what they're spending money on.
And again, I was alarmed when I started going through it and I'm like, I'm spending how much on what?
(24:24):
And, and it's not the one time purchasing.
It's the 1050amonth subscriptions that you're paying for that you don't even realize and you forget, right?
Speaker 3 (24:34):
Well, imagine a lot of truck companies come into the business without a good business plan or a good understanding.
Little things like not amortizing your fixed expenses or your finance costs over 10 months instead of 12.
That's a really easy way to give yourself that two month buffer if you accrue your expenses over 10 months instead of 12.
But here's what most people do wrong, I think in trucking is they don't get the return on capital employed into the rate per mile.
(25:02):
Like.
So if you've got 50 grand down on a truck, that 50 grand has to be giving you a return on capital from the rate per mile equation that equivalent to what it would get in the bank.
So if it's giving you 3% in the bank and that's equivalent of 2 cents a mile, it has to be giving you at least 2 cents a mile.
Otherwise you might as well keep it in the bank.
(25:24):
Right.
So that 50 grand will be eroded over time.
And I think that's where a lot of carriers come unstuck, is you're not getting a return on that 50 grand that's in the truck.
And what happens is you end up trading down over time.
I've done it.
I did it in Australia.
I made this fatal mistake.
Cause over five years I ended up with the inability to have enough capital in my business, appreciating to the point where I could buy a new Kenworth, ended up having to buy a used truck.
(25:51):
I think that's what carriers do.
Your advice was very sound because you've got to get good at being in the business of being in business, not a truck driver.
And a lot of carriers don't know their cost.
And then that means they don't know how to talk to you with the bid strategy.
Because if you don't know your costs, how do I know how to negotiate?
Where do I start?
(26:11):
And I kind of accept anything just to keep the wheels moving.
And that's kind of.
It's a false strategy.
Speaker 2 (26:17):
Yeah, no, it really is.
I feel like it's just a guess at that point.
Point.
And again, everybody starts somewhere, but you got to learn at some point, right?
And because there are companies out there that have lots and lots of money to burn in times like this, they spend more on coffee in a month than some people make in a year and stuff like that.
(26:37):
And that's really what you're competing with out there.
But again, I look at it as if one company can do it, another company can do it.
And they.
I guarantee and I say this often and I need to say it again.
I would love to have owner operators come on this show and talk about what they're doing, like what makes them successful, so we can put that information out there.
(26:58):
But again, like we can sit there and talk about knowing your costs.
Putting together a P and L all day in and day out.
And then unfortunately there's going to be people who are think, oh that's not the case.
These people are just ripping us all off.
And that, that's just not it.
Again, in its simplest form, I feel like the freight market will always be driven by supply and demand.
And then ultimately, Dean, which you were talking about, there are carriers out there who can run for significantly cheaper than others at certain times and they will get the freight right.
(27:26):
Like at the end of the day.
Speaker 3 (27:27):
Yeah.
I always looked at freight brokers as my best friend.
Like, because you have access to a market I know nothing about.
Like, I don't understand the animosity and I've always taken it as, like sometimes when I go into a market I know nothing about, I'm happy to pay for that because time is money.
(27:48):
Like, so that's where the 13 to 15% I'm going to pay you.
I could quickly recover that cost by turning and burning.
Like if I lose a day, if my fix, if I'm looking for fifteen hundred dollars per truck day I can't afford, like if I'm going to pay you 150 on a load, I, I can't afford to lose 1500 dollars revenue per day because it's not that, it's not the 1500 dollars revenue I lose, it's the fact I'm out of sequence for my next contract load in the other city.
Speaker 2 (28:19):
Yeah.
Speaker 3 (28:20):
So it's the sequencing.
And that's why I think that's where a lot of carriers get hung up on this.
So I think, you know, the service that brokers provide is an invaluable service because the actual cost to do that marketing itself is far more than the brokerage fee itself.
But I think I want to make one more point before we wrap up here because I think if you can survive these times and control your costs, I think it sets you up for what's about to come next year.
(28:44):
Because these are, I think, Chris, the worst of times in the market.
This is like the bottom of the bottom.
And I think that's where control is absolutely critical.
Speaker 2 (28:55):
No, I agree, Dean.
And I think like, ultimately at the end of the day, this is where, this is that time.
And I've been saying this for a few years now, but like, this is that time where you need to start approaching your business, get that back office organized, hire a bookkeeper, whatever it is you do, factoring company Whatever.
Do something to where they can look at it and be like, hey, you are generating hypothetically $10,000 a month.
(29:20):
You're spending $11,000 a month.
Here are some things that you're paying for that it looks like you are not actively using.
And I feel like you can start uncovering some profitability very quickly that way.
And again, I've done it.
You guys.
All right, I don't own a truck, right.
So you could sit here and be like, oh, you just pay for software for your show.
And that's true, right?
(29:41):
That is.
But again, I paid for stuff that I wasn't using.
And it's those small fees that you don't think about that pop up on your credit card that are 80 bucks or $40 and you don't notice them because you're spending $1200 on fuel every three days.
Right.
Get buried down there.
But it's those little expenses that add up quick.
Speaker 3 (30:01):
Or food in truck stops instead of cooking your own food, like I'd imagine if you looked at the amount of food you spend in truck stops on a 34 hour reset.
Well, God forbid, like on a long weekend, like I think that would be a huge expense for a lot of carriers is their food expense.
And I'm sure a lot of people don't track that.
But I think that's probably where there's a big black hole, dude.
Speaker 2 (30:22):
As somebody who makes all of their own food and brings it to work every single day, Dean, I, I can tell you exactly how much money you save out there to go out.
But Dean, thank you so much for your time today.
How does anybody reach out to you?
Any drivers or who's like, Dean, I like what you're saying.
Can I just like pick your brain here?
Speaker 3 (30:38):
Yep, yep.
LinkedIn.
So Dean CRO at LinkedIn, if you want any data, our IQ shows 10:00am Eastern on YouTube, DAT Freight and Analytics every Tuesday.
If you got any Data questions, ask iqdat.com perfect.
Speaker 2 (30:53):
I appreciate it, Dean.
If you guys can't find any of that, hit me up.
I will gladly put you guys in contact with Dean and my friends over at dat.
But that's going to be it for today, ladies and gentlemen.
As always, if you got value in what you heard and you're not subscribed, subscribe to the show.
You guys.
And if you're feeling ambitious after this one, which you should be, rank the show on itunes and Spotify.
Because if you see value, your network's going to see it as well.
(31:14):
I appreciate you guys.
I love you guys and we'll be talking to you.
Speaker 1 (31:22):
Came back with a bank to the metal when I'm get to the back a got the foot on the gas pedal to the metal when the lane moving fast a Let them all cross if they hate and let them hate them make a bigger boss a.
Came back with a bank window down yelling now money anything hey oh Got the foot on the gas pedal to the metal when I'm get to the back hey Got the foot on the gas pedal to the metal when the blame moving fast hey Let them all cross if they hate then let them hate to make a bigger boss hey.
Speaker 2 (00:26):
What is up ladies and gentlemen?
We are back.
We are live.
It is a freight coach podcast, the top podcast in transportation coming to you guys every single weekday, 8:30am Pacific, 10:30 Central, to break down some industry headlines.
But most importantly, you guys provide some actual insight into what you can do with all of this information.
If this is your first time tuning in, welcome.
This is the real side of freight, ladies and gentlemen.
(00:47):
And I do say that before every single show.
And what I mean by that is I only speak with transportation professionals because at the end of the day, you guys, I want to talk to the right individuals who have done what you're looking to do or who are currently doing what you're trying to achieve.
So you can take that information, apply it, utilize it and see a meaningful difference in your business and your life.
Happy Thursday everybody.
I got a very special guest for you guys here today.
(01:09):
We're going to be talking about truth and hype.
Like what actually drives the freight market?
Where are things?
And this guy, there's nobody more qualified to talk about it.
This guy, my good friend Dean Croak with DAT is back on the show.
Dean, thank you so much for taking the time to join me today.
Speaker 3 (01:24):
Yeah, great to be with you.
You've had a, a bevy of rock stars across your show in the last couple of years.
I was just looking at the intro.
Speaker 2 (01:34):
It's been, I mean, Dean, this is your episode 1281.
We're up, we're rocking.
And I think like at this point I could be wrong, but I, I think I have the longest running independent show in the industry at this point.
And you know, because we're over five years strong and we're not, we're not slowing down because, you know, there we need more of the right information kind of being out there, in my opinion and you know, and especially by people who are in the seats.
(02:03):
Right.
I think like in today's day and age with social media, it's very easy to position yourself as like a subject matter expert because you can just like go on chat GPT and get a couple of talking points and then create a bunch of content.
But it's like, have you lived the life that you're talking about or are you just posting about it?
And, you know, were.
I think a great place to start is it's kind of like what.
What you were just discussing backstage here with me.
(02:25):
So, like what.
What's been going on out there, man?
Speaker 3 (02:29):
Yeah, yeah.
Someone asked me the other day about data.
I mean, I was in a software platform called Gemini this morning, and it's an AI platform.
I asked it to tell me about the freight market, and I gave it some sample data.
Chris.
It straight up lied to me, and it told me about a lane from Jacksonville to Phoenix, and it said it was paying $5.05amile.
(02:51):
And I said, what?
And I said, are you sure?
I said, Jacksonville, Phoenix, A is not in the data, and $5.05 is not even the highest rate per mile in my spreadsheet.
Where did you get that from?
And it kind of went through this whole apology, and I said, are you making this up?
We're having this discussion back with this AI model.
And it kept apologizing.
And I said, why are you lying to me?
(03:12):
And it kept apologizing.
And I had to tighten up my parameters and say, stop hallucinating and stop lying to me.
And I think it's a question of garbage in, garbage out.
In the end, I had to tighten up my parameters about what I was asking it to do.
And I got to the right place in the end.
But it comes down to context.
If you don't know the market, the AI software will tell you whatever you want to know.
(03:37):
Right.
And that's.
But what my point was, you've really got to know the market.
And I spend a lot of time out in the market.
And by that I mean I have a Peterbilt truck, and I go to truck shows a lot.
Yeah, I spend a lot of time in.
In truck stops and at truck shows.
Last weekend, I was at the Big Iron classic in Casson, Minnesota, with.
(03:58):
With 450 owner operators.
And.
And so it's the first time I've been in a truck show without my truck.
So I felt a little bit naked.
Just walking around without my truck was the first time I'd been to a truck show without waking up in my truck.
Yeah, just a really weird experience.
And.
But I was talking to these truckers about the market, and when you got four days with a bunch of owner operators, you learn a lot about the freight market, and you learn a lot about latent capacity, and you learn a lot about the velocity of capacity.
(04:31):
A lot of guys said, and this is not about the Net capacity leaving the industry or entering the industry, like how many trucks are leaving or joining.
It's about the speed of the capacity.
Because when things get quiet, it slows down.
Yeah, right.
And when things get busy, it speeds up.
You don't necessarily add more trucks or lose more trucks.
It just speeds up or slows down.
(04:52):
You don't need to add more or lose more.
So.
So guys were saying, you know, instead of doing two loads a week, I'm now doing one.
Your net number of trucks hasn't changed.
Speaker 2 (05:02):
Yeah.
Speaker 3 (05:02):
This is where you've got to get a really good feel for the market to understand what the data is telling you.
Because when you look at the revocation data, what you see is the market is pretty flat from the number of trucks, the number of carrier authorities entering and leaving the market.
But it still doesn't tell you whether rates are going up or down.
(05:22):
You can't infer that.
If, if capacity is leaving the industry at a higher rate, does that mean rates are going to go up?
No, it just means carriers have slowed down rates where they are.
And that's what kind of.
It dawned on me when I was watching all of these owner operators.
I thought, and Chris, the majority of these 400, I think it was 470 trucks were all loaded in between loads.
(05:46):
So you take out a couple of days to wash, shine, polish your truck, sit there for four days, leave Sunday.
They've lost the best part of a week of productivity to go to this truck show.
They would do this four or five times over the summer.
Takes a lot of time.
Now in busy years, they don't do this as much.
But there are certain shows that these guys go to religiously.
(06:08):
And that's that latent capacity that sort of.
We talked about in other shows.
It dives in and out of the market when the opportunity's there.
Speaker 2 (06:15):
Yeah.
Speaker 3 (06:16):
That's what tends to flatten out spot rates.
So that's one of the features of this market, is that carriers have tended to.
I've said a lot that there's been a bigger cohort of carriers because they made so much money during the pandemic, they can afford to take more time off.
Because, Chris, all of these guys at this truck show, the vast majority own their own trucks.
Speaker 2 (06:38):
Yeah, right.
Speaker 3 (06:38):
There's very little debt.
Now.
These are vast majority of pre emission, pre eld.
Yeah, right.
They, they do all their own maintenance.
These are skill.
These are the sort of guys you want onto any load because they can do almost anything.
Speaker 2 (06:54):
Yeah, these are the guys that have been like, because that, like that's how my old man used to operate, right.
He did all of his own maintenance on his own truck.
He knew exactly what he was doing, like at all times.
There was no guess, you know, and it was that old school, you know, professional, right.
Like he was a professional truck driver.
And it sounds like that's what a lot of those guys out there at that show were doing.
(07:16):
And you know, I, I think because I'm out here obviously building my freight brokerage.
We're moving freight every single day of the week.
And you know, we look at it as, it's like from our seat, we want to obviously I like, I practice what I preach.
We use the same trucking companies as much as we humanly possible can with our customers freight.
(07:36):
Because I don't want to go out to a spot market or anything else and roll the dice because customer relationships right now with brokers I feel like are as fragile as they've ever been.
And I don't want to roll the dice and risk putting somebody on my customers load that isn't a trusted provider.
Right.
And I know it takes time to build up to that.
(07:58):
But you know, I'm looking out there and I see a lot of this stuff, a lot of the data, obviously I'm studying it, I study markets more than anything and if I can see anything that is like a positive right now, this is the consistency that's out there in regards to capacity and the pricing and, and for me it's like that is like that equilibrium that a lot of brokers need to get to because like customers pay us for consistency.
(08:27):
They pay us to keep their right, their rates the same and then to hopefully get the exact same trucks coming in there time and time again.
Speaker 3 (08:34):
Well, rates have been pretty much the same for the last three years.
Well, when I look at spot rates, right, so this is sort of spot rate territory.
Even contract rates have been fairly flat within.
When you look at new rates coming into routing guides on the contract side of our business, which is about 50 billion roughly in freight spend, they've been plus or minus 1% for the last year.
(08:56):
Even going back two years, you could argue they haven't moved up much.
So shippers have certainly been having pricing power for a lot of that period of time.
A lot of carriers have had to keep their rates fairly flat to hold onto volume.
Spot rates though have been.
If you go back to the last three or four freight recessions, you sort of 20, 14, 15, 17, 18, 19, you saw these sort of plus or minus 20% year over year movement in spot rates.
(09:26):
The pandemic, of course, was plus 35% up, 35% down.
The last 12 months, Chris, has been barely plus or minus 1% up or down.
So spot rates have been really flat for the last year.
But when you go back and look at 23, 24, 25, they barely budged, like they're within a few pennies of each other.
So it's been a really flat freight market.
(09:48):
And I did a piece for the Wall Street Journal yesterday and it was really shocking because I looked at, they were writing about California carriers and I looked at spot rates before the pandemic and I'll just talk about sort of long range averages here, and I know these are averages, but before the pandemic average, outbound California was $1.79.
And then during the pandemic it was the highest in the nation at the average.
(10:11):
During that sort of two year pandemic period to the end of 2022, it got up to $2.40, peaking at $3.70.
That was the highest in the nation.
Yeah, but that $2.40 average since the pandemic has dropped way back down.
It's dropped 33% back to $1.79.
So it's dropped back to pre pandemic averages, outbound California, but carrier costs have obviously gone up during that period.
(10:38):
So all of our costs, so I think that's the rub here, is that every rates have sort of stabilized back to where they were, but everyone's costs have gone up.
And I think that's where everyone's getting squeezed here.
Speaker 2 (10:50):
What, so how is this balanced moving forward?
Right, because I, I look at it as there's.
And, and I know that not everybody out there agrees with this, but like what we're seeing right now, I think overall is a normal freight cycle minus a little bit of like holiday squeeze, you know, because like in years past, around every major holiday, long weekends, capacity tends to tighten up.
(11:14):
I haven't seen that, but I have seen a little bit of a drop in capacity around that times.
Not enough.
But like I, I'm trying to explain to a lot of individuals out there, like what we're going through right now is a normal, like this is how the market normally is.
And I think that, you know, just knowing how human beings are, Dean, a lot of people forgot 2017, 2018, 2019, or they never worked in the industry during that time.
(11:40):
So they don't know what that was like.
They only knew those boom times that they experienced.
And now like what you said there Dean, is the most accurate thing.
Rates drop back down to where they, I don't want to say should be, but where they normally are.
But costs, maintenance costs, everything else is increased.
So that's where that squeeze is coming from.
(12:00):
But I, I also look at it is how many of those owner operators that you were talking to last week, that stat, that stash cash like that, they all probably, I'm assuming, told you we've seen stuff like this happen before, maybe not to this extreme.
That's why we do the way like we operate.
The way that we operate.
Speaker 3 (12:19):
Yep.
Yeah.
This is, there's a lot of seasonality and they know that, they know they've seen it before, they know that they can get by and they control their costs like, just like your father, they're very good at controlling their cost, doing their own maintenance.
So I think they take a much longer term view to this and they certainly don't do, they don't panic and they don't try and cut corners and haul bad paying loads like so I think the one thing I noticed from these guys is consistency.
(12:49):
But they don't take risks and they don't cut corners.
So you know where they might do two loads a week.
One guy said to me, he said I would normally do two combine harvesters in a season like this.
I'm now doing one.
But because the farmers aren't buying as many combines at the start of harvest season, which was not good for farmers, he said I'm not going to go out and chase cheap freight with my rgn.
(13:12):
Which is really interesting because he could do that, but because it would blow his chances of getting that one load every, you know, so they don't take the risks and I think they take the pain of not taking that cheaper freight, which is, that's the discipline.
I think they're very disciplined when it comes to these soft markets.
Speaker 2 (13:29):
And that right there, Dean, the way you described it is where I think a lot of brokers fail to understand that methodology.
Right.
Because there's a lot of brokers who are like why aren't you just taking my freight?
Right.
Like I see posts, I would say at least seven to eight times a day how somebody's complaining that a driver didn't take a load for 80 cents a mile or you know, a dollar 10amile or whatever that is and then they'll Screenshot.
(13:54):
Like them saying it's not worth our time.
And like, how is it not worth your time?
What you're describing there is exactly it.
And, and that is the difference, I think, between a lot of people who've ran dedicated customer freight before is like when you need to get back and you need to service them, it's service at all costs.
Right.
Like they look at it is that's an investment in their business if they deadhead back empty.
(14:14):
And especially if you're talking about guys with an RGN and stuff like that are at least five to six hundred grand rolling down the freeway, you know, like they're not going to take something for $2amile.
Are you kidding me?
Speaker 3 (14:27):
Yeah, yeah.
Well, you mean trucking isn't just about miles, it's about math.
Speaker 2 (14:31):
Yeah.
Speaker 3 (14:32):
And part of the equation is since ELDs came in, it's about time.
And what they're saying is it's not worth my time.
The reality is that if you've only got 15 hours left on your 60, you got to be very careful about how you choose that towards the end of the week because it could put you in the wrong spot for your 34 hour reset.
If that 34 is not at home, puts you in the wrong spot to start next week.
(14:54):
Because if you're not in the right spot to start that load that you need for your prime contract, that spotlight could actually cost you a lot more than the money that it generates.
And that's the reality.
Speaker 2 (15:03):
No, I agree.
And so from your perspective, Dean, what is actually driving things to remain where they are for as long as they have?
Right?
Like what?
Because like, again, if you, if a lot of people out there who listen to the show, they're on social media, everybody's got an opinion on this.
And you know, it's either, oh, the drivers don't know how to price their freight, or though the brokers are keeping, you know, rates this low, the brokers are taking all the money.
(15:30):
There's a bunch of, in my opinion, just a bunch of false narratives that's out there.
So, like, what actually drives this in its simplest form?
Speaker 3 (15:39):
I think I'll stand by this.
We've been saying this for probably almost two years now, so this is not news for anybody.
That follows Ken, Adam, myself, which is that the pandemic generated a cohort of smaller fleets and owner operators that made an excessive amount of profits.
Remember, this was one of the most profitable periods in maybe carrier and broker history by a long shot.
(16:04):
And the smart money paid off a lot of debt.
So what we've got is this big spread in operating costs because normally carrier operating costs traded in a fairly tight margin.
Fuel, tyres, filters, all were put in at a pretty tight range.
Remember, I'm someone that owns a truck, so I'm buying stuff all the time.
The costs are fairly similar, but since the pandemic, we've got this big range.
(16:26):
So if I said to you that it costs, you know, $1.86 to run a truck in the spot market, I know that if you paid off your own truck, you can run for a $45 today.
Now, if rates are $1.70, I'm making a good profit and still paying myself $60,000 a year wage.
So there's a cohort of carriers that can run and be profitable and pay a wage and make 34 to $40,000 a year and survive quite okay in this market.
(16:57):
Now, I'd put to you that the carriers that have got a much lower level of debt is a much bigger cohort of carriers than we saw before the pandemic because of the profits they made during the pandemic.
Now the Runway is getting shorter and shorter because if they own their own truck and trailer and they're not generating a serious amount of profit, that truck is aging.
(17:21):
And if you're not getting a return on the capital that truck is involving, right, you start to get to a point where you trade down.
If you're not generating enough profit, you can't trade up to a newer truck, right?
So the economics start to work against you.
I'm not saying they're at that point yet.
But if you own your own truck and trailer and you have, let's say, cost you a buck fifty, you can run at spot rates all in the current market.
(17:47):
If you're in our top 50 lanes, Chris, and our top 50 lanes are running at I $80.90amile, you're actually doing really well today.
So there's a wide range, but if you're a guy that's a guy or a girl that needs $2.12amile because you've got an aging, you know, truck that's got high mileage, you paid too much during the pandemic, you might need $2.12amile.
(18:10):
And they're the ones that are really hurting.
So for the first time, you know, in the 25 years I've been here, we see this big spread in operating costs.
So I think your bid strategy as a broker is really dependent on the debt levels of the carrier, which I know you don't get into when you're talking to the carrier because the truck's a truck.
A truck.
But I think there's a difference in bid strategy depending on the viability of the carrier, which is driven largely by how viable they are based on their profit and loss sheet.
Speaker 2 (18:36):
Yeah.
And what you're describing there, I think, is something, you know, I've heard a lot, and it's something that I kind of stand by as well, is freight moves for what somebody's willing to take it for, like, at the end of the day.
Right.
And what you're describing there is like if there's a, an individual who can take a load for A$40 or A$50amile, they might still be making a small profit, albeit, but a profit, and then it repositions them back into the market where their core customers are and stuff like that.
(19:03):
So is, it's like, again, I think, like, you know, just for some basic numbers for people to put it into constant context.
I believe it's like, is it 95 of the trucks on the road, 20 truck or less operations?
Speaker 3 (19:16):
Correct.
Speaker 2 (19:17):
95.
Maybe even 96.
997, I believe.
And it's like, if you think about that, though, like in comparison to the freight that you're moving.
And then Dean is describing the vast operating costs that are out there.
You have a majority of those fleets that are out there that have paid off or extremely low debt ratios out there.
And, and then you have another group of individuals who bought at peak, they were a company driver in 2020.
(19:43):
They said, boom, I'm going to go out on my own in 2021 and buy a truck and trailer.
They bought $100,000 truck for 200 grand.
And anybody who had saw that, you know, they saw the sharp increases in pricing.
So those operating costs are vastly different.
So it's like I, I look at it as, like, I think in its simplest form though, Dean, like, this is how a free market will always operate.
Speaker 3 (20:06):
Right.
But the thing is, you know, when I say it's if it's A$80 to break even, the reality is for those carriers, this is where the market's a race to a bottom.
You really need like something like $2.20 to be profitable long term.
Speaker 2 (20:19):
Yeah.
Speaker 3 (20:19):
And this is the economic reality because if you're not making 40 cents a mile on top of your break Even you haven't got the money to throw an in frame rebuild.
Speaker 2 (20:28):
Yeah.
Speaker 3 (20:28):
Three or four years down the track.
Right.
Because I know a good friend of mine just had an engine go.
His X15 went on his Peterbilt.
He's had to refinance 70 grand because it was 40 grand for the motor.
Then he had the towing costs and a whole heap of other stuff went.
And now he's into this truck for like 70 grand on top.
You always had it paid off, Chris.
(20:49):
Like so.
And this is the sort of stuff that breaks.
I got another guy that's got like this big truck with a big motorhome type sleeper on it and he's like, he's broke and he doesn't know what to do because he hasn't been getting a return on the capital that the truck's been generating.
Like the economics of running a truck is so hard.
And so when it comes to these numbers we're talking about, it's extraordinary how generally carriers don't think about the business of running a truck.
(21:20):
Like it's not about the rate per mile.
They focus too much on that, not the revenue per truck day.
This is where the time factor comes in.
Because if I was running a truck, I would say to you, Chris, as a logistician, I need $1,200 a day.
I don't care how you get it, give me 1200 a day.
It's not a rate per mile question.
(21:40):
I got to run 600 miles at $2amile.
That's it.
Because if the rate per mile doesn't give me 600 miles, I'm behind.
Speaker 2 (21:50):
Yeah, you, no, I, I, I get it, Dean.
And I look at it as, like all, like what you said earlier too.
It's all math at the end of the day.
And I, I know that, you know, lessons that I've learned in being self employed, you know, like balancing a budget, you know, because it's like if you're not generating enough revenue for your business and then your expenses go out and it's like this is why I tell people the most important thing you can do as an entrepreneur.
(22:19):
And if you're an owner operator, you are an entrepreneur.
You have to work with a bookkeeper, you have to work with somebody to help you keep your cash flow or have a send you a P and L profit and loss statement.
You need to see and track your expenses.
Because I think a lot of individuals assume that everybody operates this way.
And I'm actually alarmed at the amount of people That I know that own businesses that don't have a P L Like they don't, they operate on, oh, I made a thousand and that's all I know.
(22:50):
And I think that's like the big, the big thing here is like when it looks, when everything boils down to it, everything's a system.
All right?
You need to, you need to build a system and follow a system in your business.
And if you don't have any back office support at all and you're an owner operator, you're not tracking your expenses, you don't know what your fuel bill is or you, even if you're a broker, I mean again, you people assume you don't know what your technology spend is every month.
(23:18):
Like I am literally going through my PNL Dean with a fine tooth comb every single month.
What are we spending our money on?
Did we use this piece of equipment this month or not?
Can we get rid of it?
Can we sell it?
What do we actually need?
Because like this isn't like a game to me, you know, Like I've come to realize that I have my break even point.
(23:40):
I know what that is.
I have my profit where I can pay myself to be able to do that.
Because like again, I can't work for free.
I got a family to feed.
And then on top of that there's money that comes in that I have to stash for a rainy day fund.
On top of that, in the event, hey, I have a drop in revenue for a couple of months, for whatever reason, I need to be able to continue to pay my bills and operate.
(24:00):
And I think like a lot of people hear this and they say it's not that simple, but it is that simple.
Simple to start tracking your expenses, find out what your break even point.
Every business has that number, what their break even is a 10 profit, 20 profit.
They need to see what they're spending money on.
And again, I was alarmed when I started going through it and I'm like, I'm spending how much on what?
(24:24):
And, and it's not the one time purchasing.
It's the 1050amonth subscriptions that you're paying for that you don't even realize and you forget, right?
Speaker 3 (24:34):
Well, imagine a lot of truck companies come into the business without a good business plan or a good understanding.
Little things like not amortizing your fixed expenses or your finance costs over 10 months instead of 12.
That's a really easy way to give yourself that two month buffer if you accrue your expenses over 10 months instead of 12.
But here's what most people do wrong, I think in trucking is they don't get the return on capital employed into the rate per mile.
(25:02):
Like.
So if you've got 50 grand down on a truck, that 50 grand has to be giving you a return on capital from the rate per mile equation that equivalent to what it would get in the bank.
So if it's giving you 3% in the bank and that's equivalent of 2 cents a mile, it has to be giving you at least 2 cents a mile.
Otherwise you might as well keep it in the bank.
(25:24):
Right.
So that 50 grand will be eroded over time.
And I think that's where a lot of carriers come unstuck, is you're not getting a return on that 50 grand that's in the truck.
And what happens is you end up trading down over time.
I've done it.
I did it in Australia.
I made this fatal mistake.
Cause over five years I ended up with the inability to have enough capital in my business, appreciating to the point where I could buy a new Kenworth, ended up having to buy a used truck.
(25:51):
I think that's what carriers do.
Your advice was very sound because you've got to get good at being in the business of being in business, not a truck driver.
And a lot of carriers don't know their cost.
And then that means they don't know how to talk to you with the bid strategy.
Because if you don't know your costs, how do I know how to negotiate?
Where do I start?
(26:11):
And I kind of accept anything just to keep the wheels moving.
And that's kind of.
It's a false strategy.
Speaker 2 (26:17):
Yeah, no, it really is.
I feel like it's just a guess at that point.
Point.
And again, everybody starts somewhere, but you got to learn at some point, right?
And because there are companies out there that have lots and lots of money to burn in times like this, they spend more on coffee in a month than some people make in a year and stuff like that.
(26:37):
And that's really what you're competing with out there.
But again, I look at it as if one company can do it, another company can do it.
And they.
I guarantee and I say this often and I need to say it again.
I would love to have owner operators come on this show and talk about what they're doing, like what makes them successful, so we can put that information out there.
(26:58):
But again, like we can sit there and talk about knowing your costs.
Putting together a P and L all day in and day out.
And then unfortunately there's going to be people who are think, oh that's not the case.
These people are just ripping us all off.
And that, that's just not it.
Again, in its simplest form, I feel like the freight market will always be driven by supply and demand.
And then ultimately, Dean, which you were talking about, there are carriers out there who can run for significantly cheaper than others at certain times and they will get the freight right.
(27:26):
Like at the end of the day.
Speaker 3 (27:27):
Yeah.
I always looked at freight brokers as my best friend.
Like, because you have access to a market I know nothing about.
Like, I don't understand the animosity and I've always taken it as, like sometimes when I go into a market I know nothing about, I'm happy to pay for that because time is money.
(27:48):
Like, so that's where the 13 to 15% I'm going to pay you.
I could quickly recover that cost by turning and burning.
Like if I lose a day, if my fix, if I'm looking for fifteen hundred dollars per truck day I can't afford, like if I'm going to pay you 150 on a load, I, I can't afford to lose 1500 dollars revenue per day because it's not that, it's not the 1500 dollars revenue I lose, it's the fact I'm out of sequence for my next contract load in the other city.
Speaker 2 (28:19):
Yeah.
Speaker 3 (28:20):
So it's the sequencing.
And that's why I think that's where a lot of carriers get hung up on this.
So I think, you know, the service that brokers provide is an invaluable service because the actual cost to do that marketing itself is far more than the brokerage fee itself.
But I think I want to make one more point before we wrap up here because I think if you can survive these times and control your costs, I think it sets you up for what's about to come next year.
(28:44):
Because these are, I think, Chris, the worst of times in the market.
This is like the bottom of the bottom.
And I think that's where control is absolutely critical.
Speaker 2 (28:55):
No, I agree, Dean.
And I think like, ultimately at the end of the day, this is where, this is that time.
And I've been saying this for a few years now, but like, this is that time where you need to start approaching your business, get that back office organized, hire a bookkeeper, whatever it is you do, factoring company Whatever.
Do something to where they can look at it and be like, hey, you are generating hypothetically $10,000 a month.
(29:20):
You're spending $11,000 a month.
Here are some things that you're paying for that it looks like you are not actively using.
And I feel like you can start uncovering some profitability very quickly that way.
And again, I've done it.
You guys.
All right, I don't own a truck, right.
So you could sit here and be like, oh, you just pay for software for your show.
And that's true, right?
(29:41):
That is.
But again, I paid for stuff that I wasn't using.
And it's those small fees that you don't think about that pop up on your credit card that are 80 bucks or $40 and you don't notice them because you're spending $1200 on fuel every three days.
Right.
Get buried down there.
But it's those little expenses that add up quick.
Speaker 3 (30:01):
Or food in truck stops instead of cooking your own food, like I'd imagine if you looked at the amount of food you spend in truck stops on a 34 hour reset.
Well, God forbid, like on a long weekend, like I think that would be a huge expense for a lot of carriers is their food expense.
And I'm sure a lot of people don't track that.
But I think that's probably where there's a big black hole, dude.
Speaker 2 (30:22):
As somebody who makes all of their own food and brings it to work every single day, Dean, I, I can tell you exactly how much money you save out there to go out.
But Dean, thank you so much for your time today.
How does anybody reach out to you?
Any drivers or who's like, Dean, I like what you're saying.
Can I just like pick your brain here?
Speaker 3 (30:38):
Yep, yep.
LinkedIn.
So Dean CRO at LinkedIn, if you want any data, our IQ shows 10:00am Eastern on YouTube, DAT Freight and Analytics every Tuesday.
If you got any Data questions, ask iqdat.com perfect.
Speaker 2 (30:53):
I appreciate it, Dean.
If you guys can't find any of that, hit me up.
I will gladly put you guys in contact with Dean and my friends over at dat.
But that's going to be it for today, ladies and gentlemen.
As always, if you got value in what you heard and you're not subscribed, subscribe to the show.
You guys.
And if you're feeling ambitious after this one, which you should be, rank the show on itunes and Spotify.
Because if you see value, your network's going to see it as well.
(31:14):
I appreciate you guys.
I love you guys and we'll be talking to you.
Speaker 1 (31:22):
Came back with a bank to the metal when I'm get to the back a got the foot on the gas pedal to the metal when the lane moving fast a Let them all cross if they hate and let them hate them make a bigger boss a.
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
Cardiac Cowboys
The heart was always off-limits to surgeons. Cutting into it spelled instant death for the patient. That is, until a ragtag group of doctors scattered across the Midwest and Texas decided to throw out the rule book. Working in makeshift laboratories and home garages, using medical devices made from scavenged machine parts and beer tubes, these men and women invented the field of open heart surgery. Odds are, someone you know is alive because of them. So why has history left them behind? Presented by Chris Pine, CARDIAC COWBOYS tells the gripping true story behind the birth of heart surgery, and the young, Greatest Generation doctors who made it happen. For years, they competed and feuded, racing to be the first, the best, and the most prolific. Some appeared on the cover of Time Magazine, operated on kings and advised presidents. Others ended up disgraced, penniless, and convicted of felonies. Together, they ignited a revolution in medicine, and changed the world.