Would you rather move 100 loads for 1 customer, or 1 load for 100 customers?

" Would you rather move 100 loads for 1 customer, or 1 load for 100 customers?

From a carrier standpoint, they both have their benefits... 

100 for 1 customer: 1) building a stronger relationship with 1 customer versus trying to build relationships with many. 2) centralized billing. 3) 1 point of contact that you get all of your information from. 4) allows you the potential to be considered a "house" carrier and when other opportunities pop up, you will be one of the customers first calls. 5) can be stable income.

1 for 100:1) gets your company name out to more customers. 2) gives you more flexibility to just say "no" when something is just not a good fit. 

When I started thinking about starting this company is when 3 of the top 10 carriers went under along with thousands of other carriers in 2017-2019. I wanted to see why and if we could do something different to keep from following the same path. What I discovered is, most of the failed carriers, especially the larger ones had 1 thing in common. They all had 1 or 2 customers that made up 30%-60% of their business. When their customers either A) demanded lower pricing, making moving the carriers trucks a money loser. or B) their customer just shut down or stopped producing like auto parts manufacturers. 

In 2018, we had one customer that made up 60% of our business and towards the end, started squeezing us for lower pricing even though they posted record profits. In 2019, I made the choice to limit any 1 customer to no more of 5% of our revenue and to never be forced into a position to be pushed around by another customer. Yes, losing 5% is hard to absorb, especially when you have fixed expenses, but you can survive it with a couple changes in operations. 

We intentionally run a couple less trucks then we can keep busy. Our guys get a ton of overtime, which they love. When we lose a decent sized customer, our guys lose a little overtime, but we don't have to start laying people off or selling equipment. They still get 50 hours a week or more and we continue to be able to stay in business. 

Over the last 2 years, this model has allowed us to actually fire customers and not the other way around. This year alone, and we are only in February, we have had several customers wanting us to cut rates 30%-60% on their lanes. When I do not agree, some have pulled the work. Some, when they ask, I know they are looking for another carrier and I will let then know we will complete the current work orders we have open, but we will not be taking any more. Sometimes, it is our customers customer that is squeezing them, but sometimes it is just our customer looking to keep more of the pie in a bad market. 

Every carrier runs differently. Different things work for different companies. This is just one of the things we choose to do to allow us to be viable and to stay strong enough to still be here next year. "

This post was writen by Christopher McGrew on LinkedIn - He is the Owner of McGrew Trucking in La Vista, Nebraska. (Feb 28th, 2024)