Hotshot Rates Per Mile
Rate per mile & line haul
sigh, I only wish we charged like Uber!
The min. pick up rate is assessed the moment they stop to pick up the passenger. In our industry, that would be a “Loading Fee”.
The meter keeps running based on per-mile. And I mean every mile, not the zip-code to zip-code formula that the trucking industry uses.
Plus, the meter runs based on time. Sitting in traffic? At a long red light? You’ve seen movies where the person says, “Wait for me” (cue the horror house & the taxi speeds off!) That little meter continues to add to the final charge. In our industry, that is “some times” attempted to be collected; when a shipper/receiver retains you for more than…usually 4 hours. Many won’t pay for this delay in your time, but if you’re late to their appointment - oh yeah, you bet many charge their fee. sigh.
Unfortunately, we’re not Uber/taxi people-haulers.
When carriers contract a load, it’s an All-In rate, also called the line haul rate. That’s when you’ve figured out your rate per mile, any fees for tarping or the like, permits if needed, and so on. Once you have calculated all your fees, you’ll contract for the total shipping rate.
Let’s break down the Rate per Mile, so you can determine your All-In rate.
Hotshot Rates Per Mile
First, let's talk LTL rates. That's what y'all are hauling “Less than a truckload” or partial load.
In typical LTL pricing, you're factoring in the freight class, dimensions, weight, discount per 100#, distance, and so on. Go ahead and google "freight class" and you're going to wanna pick up a whiskey glass.
but you are not the typical ltl carrier.
If you've googled “LTL pricing”, you might be picking up a drink about now.
Pay Rates Made Easy
You know the line, 'If it fits, it ships"...well, we're going to make it just about that easy here.
First, you want to know what the TL (truck load) rate is, for a flatbed, going outbound from your city. Settle down chief, this is very simple. One place to find it is on DAT. They post the latest rates every Wednesday. You can even subscribe to have the information sent to your email.
Be sure you look specifically at flatbed, in your home area and look at all the highest rates and the lowest rates in the details; don't just grab the biggest number on the main page. Click on your region and take a peek at the deets.
Ok, now you know the TL rate. Here's the easy part.
You’re running about 68-78% of the TL rate - assuming you’re at a full hotshot load.
Don't take less than 67% of that TL rate.
In some lanes, you're going to be able to get the TL rate. There's so much volume and low density of trucks....you can get the TL rate all day long.
Next look at the minimum rate your business can take and still run a profit. (You all better darn well know your costs to run per mile number!!)
So run a budget estimate based on the average rate per mile in your lanes. Hopefully, you're cost to operate is LOWER than the 50% of the TL rate. If not, might want to look at your costs, honey bun.
all rates are negotiable
Wait, there's more money on the table
Alright, you've got your base rate. Now, we're going to increase that rate based on a few things.
First, does the load require a specific delivery date? Even if this is not "expedited", we're going to consider anything with a "must deliver by" as an increase.
Second, does the destination have plenty of outbound loads, so we can keep moving? If not, we're going to figure the miles we have to deadhead to get to the nearest hub.
Now, you're still going to factor in your tarping fees or other accessorial charges/fuel surcharges. When you talk to the broker, you're going to be talking the "All in Rate", the Line Haul.
Know your value.
With a traditional LTL carrier, they are likely going to consolidate that freight. This means that the load is going to be unloaded, then reloaded to a full-truck load with multiple shipments. This may happen more than once, based on what the destination is.
This not only takes time, but it also means the cargo is being handled multiple times.
You, my little hotshot, have a special service in that you are not headed to a consolidation dock. You're going straight to the destination drop off. Your cargo is not being handled multiple times and you can get from point A to point B much faster.
Position yourself as expedited, even when they're not asking for it. When you're negotiating rates, show off your transit times! The typical LTL carriers are going to take longer to deliver, you're not. Sell it!
Plus, you want to reinforce the fact that this load is only unloaded once - at the destination. Not multiple times on multiple trucks. That's where you going to grab that higher rate!
Position Yourself in the Right Area
Literally, position yourself. Areas with more loads than trucks...that's where they need you and we get the highest rates.
Can't see those load to truck ratios? Oh but we can. We pay those extra fees to the load boards, just to get a pair of those goggles.
Size & what you do with it, yeah it matters
Here at LTL RIG, we work specifically with hotshots that can take at least 16,000 lbs and 40ft length loads. This is our specialty. We know it inside and out. We know the brokers, shippers, lanes, and so on.
So if you're in a lower weight class or have a shorter trailer, we're gonna suggest you go on over to the Gymboree dispatchers. Cause baby, this is MMA over here.
Likewise, if you exclusively haul cars, dogs, rvs....then you, too, are going to want to find another dispatch service that specializes in that stuff.
We do dry freight, on a flatbed. Sure, we do light loads at times; and we move vehicles if you got ramps...but not exclusively. That's not our dedicated type.
I know some of you are going to roll your eyes, spit and say, "Hey I thought I'd make a million dollars doing this". Here's the deal. You gotta know your rates before you start a business.
Any business, I don't care if your selling french fries. What will the market pay?
And you gotta know what it will cost you to make those fries. A new truck payment vs a used truck payment. High insurance from tickets to no tickets on your record.
Know your cost to run per mile. Period.
Remember, you can move more loads, more quickly than those common-consolidating carriers. And you can still try to get more than one load on your trailer at a time, when space/weight permits - to double down on your income.
Lastly, don't forget that your GPM (gallons per mile) is much better than running the semi trucks. Your operating & fuel costs are much lower - keeping those Benjamin's in your pocket.
Hey semi driver, hotshots got more in their pockets
A flatbed TL should be making $2.00-$3.00 per mile, on average. The COST of running that semi is much greater than running your 3500 dually.
So hotshots making $1.50-$2.00 per mile are really putting a much higher portion of that revenue in their pockets. And these are just averages. (post read: Freight Seasons)
From that, take off your cost to run. You hired a driver so you can watch YouTube all day? Hey, take off his 25-30% if he's driving your equipment. Got a brand spankin new truck with a shiny payment?
You get the idea. You're going to make more when you spend less.
You're going to make more when you negotiate for the best rates and routes.
You HAVE to negotiate. Don't take what ever is on the table. C'mon, stop taking cheap freight!
Breakdown of CPM: cost per mile
This is an average for all months of the year.
Do you want to see what each month looks like? Take a look HERE.
Your truck/trailer/insurance costs may vary. Heck, all these costs may vary. Maybe you’re heavy footed and run $0.50 for fuel/per mile. Or…your insurance rates are sky high because you had a former wanna-be-Nascar life.
Now, if you’re smart, and I know you are, you’re gonna split up that profit. If you put a chunk of it away, you’ll have your vacation / time-off weeks paid for. See what I mean here
Now that you have determined your rate per mile, added any accesorial charges, you can negotiate for the shipping rate of that load. You should know your minimum you’d take, to still make a profit, and what your optimal rate is (one that you bench marked against current paid rates & know you can actually get).