QuestionQUESTION: Hey Don,
I am looking to start up a hotshot business ( hauling 18k max)very soon and after talking with someone who had worked in the dispatch side of the business in Atlanta Ga., they advised me that their loads weights and their pick up times at the shipper were never accurate due to the shippers indifference to get it right and to be punctual; this person indicated this was pervasive throughout the industry and should be something I should take into account when considering my business model.In your past experience did you find this to be true and if so is it widespread? How would you minimize delays to maintain your profitability?
Thanks in advance for you comments.
ANSWER: Thanks for the question....
From my experience, I'd have to agree shipments are quite commonly misrepresented, especially in certain freight categories. The issue is more of *****"just how much of a problem will it be for you?"***
The diminished use of the NMF classifications (density, stowability, handling and liability) is one contributing factor. If used properly and accurately, the classification can be very helpful to the carrier in determining the "should cost" rate for a given shipment and if it is one they can legally and safely transport.
More recently, the tendency of simply describing a shipment, opens the door to both intentional abuse and honest errors. Again, in some commodities, it is more apt to be present than in others. For example, a load of lumber may be described as approximately 22,000 lbs, requires 40' of deck space, (W=8' X H=8' X L=40') rather than by the freight classification based on weight, volume, & density. Myself included, many carriers find the latter method easier and more convenient to use. I'm one of those, although I recognize the risk of the shipper representing an inaccurate weight estimate.... I still prefer the description method.
In this business, as in any other business, we do deal with the full spectrum of honesty, ethics, knowledge, and ignorance. There are a few brokers and shippers that will intentionally misrepresent a load in hopes of getting a lower freight charge. There are many more that would never do that. And of course, there are always the unintentional errors when posting a load. Those that are consistently dishonest and often intentionally deceive the carriers, rarely stay around for a long time.
Although it may be somewhat common for a load description to be less than perfectly accurate, my opinion is that it will not be a serious problem for you in your chosen business area.
If the load characteristics, especially weight, are near or at a carrier's available capacity, it can be problematical. If you have an LTL on the trailer and want to complement it with another available LTL load that has the potential to place your total over your limits, it can be difficult to decide. As you gain experience it will become less and less of a problem.
More to your point using your capacity at 18,000 maximum and specifically in the "Hot Shot" component of the business, it does take more vigilance, although it isn't necessarily a daily problem. The only shipments that do present a issue are those that may make you borderline....i.e. ...if described accurately it's okay....if the weight is under reported by a couple thousand pounds..... potentially a big problem for you.
Here, you may want to consider reducing your maximum weight capacity for planning (and business plan) purposes. Reduction to a safer margin of 20% below your technical "maximum" may be prudent. Your gross weight can change substantially between origin and destination and for a variety of reasons. Among many other things, a driver must allow for fluctuations in weight for different quantities of fuel on board. Where and when you're operating can be a critical factor also. Operating in the northern states in winter weather can present some unexpected surprises. If you load out to near maximum weight in Florida, say in February, destined for Montana....you could potentially pick up enough ice and snow to make you seriously over weight. Just an example to make the point, but it can be expensive.
For illustration purposes, I'll tell about a personal example of mine. Years ago, I loaded near Hereford, AZ with a near maximum load of citrus bound for Calgary, AB. At loading, I scaled about 2,500 lbs below the maximum allowable weight and with half empty fuel tanks. I scaled in Montana at more than 5,300 lbs. total over weight and also over on every axle. Needless to say, I sat behind the scale house for quite a while chipping off ice and snow.....and praying for the temperature to climb. An additional 150 gallons of fuel had increased my weight by over a thousand pounds...plus ice and snow build up accounted for the rest. Lesson learned...experienced gained.
However, for the most part, misrepresentation of the weight of loads will NOT be much of a problem for you. That's because a high percentage of the loads available to you will likely be far less than your maximum weight capacity. If it is at all borderline, question it and weigh it immediately....or reject it entirely.
Here is an unrelated point that I throw in just for discussion. I would suggest that there's a difference between smaller capacity operators generally hauling for hire, as opposed to true "Hot Shot" operations. You may find that a large proportion of your loads do not meet the true definition of "Hot Shot" freight. Lately, the smaller capacity operators and "hot shot" have almost become synonymous....but there is a difference.
I do wish you the best of luck and hope your venture is successful. If I were you, I wouldn't be overly concerned about this issue and it shouldn't be much of an impact on your business plan. Your costs for transporting 12,000 lbs, or at your maximum capacity of 18,000 lbs. will be negligible.
If I can be of any assistance as you progress with your planning and operations, please feel free to ask additional questions.
....Don
SEMO Motor Transport Service
---------- FOLLOW-UP ----------
QUESTION: Thanks for your response;
Your ideas are very helpful and insightful.
I had not considered ice and snow as a weight factor;
Running a little light to stay under 18k sounds like a wise course of action.
Are shippers chronically inaccurate with shipment availability times? My concern would be to arrive to pick up a 10k load on Monday afternoon only to find that it is actually 12k and won't be ready until Tuesday morning. That's going to hurt your bottom line (not the weight as much as the delay) especially if you need to be somewhere else to pick up or drop off a load on Tuesday. Based on your experience did you find this to be true? How would you minimize delays to maintain your profitability?
Thanks
AnswerThanks again....
I wouldn't characterize it as "chronic", but it does happen that a shipment may not be ready when you arrive. The best way I've found to reduce the occurrence of this is to continuously communicate with the shipper. The misrepresentation of weight happens, but as I said earlier, it shouldn't be a significant problem on a daily basis. It is not as rampant as some have been lead to believe.
One of your primary defenses and protections is to prepare a comprehensive and very detailed contract for your company. It should be used religiously in addition to including details of every shipment's terms for delivery on the bill of lading. In your contract you can address and minimize most damage that results from the situations you've described. I don't give legal advice, but when I'm able, I will provide guidance and direct you to some of the statutes and regulations that provide some protections for the carrier. First of all, as odd as it may sound, a broker works for you, not the other way around. He provides a service by finding and making shipments available to the carrier. Your contract as a carrier is between you and the shipper, not you and the broker. Since a broker never takes physical custody of the shipment, by the same token the broker rarely has any liability for damage to a shipment nor is the broker responsible for schedule issues.
The regulations do contain protections for the carrier. It is up to you to invoke them by using a well written and legally defensible contract. It should be prepared by an attorney that specializes in motor transport law. One of the fundamental provisions that addresses the concerns you've mentioned is DETENTION. It provides for a penalty charge against shippers or consignees for delaying carrier's equipment beyond allowed time. See DEMURRAGE below. It applies to cargo; detention applies to equipment.
And to a lessor degree, the provisions for DEMURRAGE includes a penalty charge against shippers or consignees for delaying the carrier's equipment beyond the allowed free time. The free time and demurrage charges should be documented in your company's contract terms and agreements. This is more used in the marine transport of goods than in motor transport, situations but it does have implications for you as a carrier also.
It is unlikely that you will ever need to resort to the provisions of protection of detention or demurrage, but they are there and should be addressed in YOUR company's contract. That is the binding contractual terms between you and a shipper.
Reducing your standard maximum weight expectations/limitations by the 20% we discussed, will go a long way toward eliminating any surprises or problems resulting from a load being represented as weighing less than it actually does. Very rarely will a load be off by that much. You need to run loaded for a high percentage of the miles, but not necessarily loaded to your maximum. For smaller trucks and trailers, the capacity in terms of volume and deck space, will more frequently be the limiting factor rather than weight.
Establishing and maintaining clear communications with the shippers, you can drastically reduce the misunderstandings and complications resulting from those concerns you've discussed. There can be problems, but it isn't something that should be an upper most consideration in how you approach your business plan.
I hope this helps some.
...Don
SEMO Motor Transport Service
