Five Ways Truck Drivers Benefit from Contract Rates
The trucking industry is well known for its alternating periods of booms and busts, cycling through market changes every three to four years. It can be difficult for new truck drivers to effectively manage the economic highs and lows in order to achieve long-term success in the industry. When rates are high, truck drivers can easily take advantage of the spot market, but when rates decline, how can these same drivers continue earning a quality paycheck? At PGT Trucking, our flatbed truck drivers benefit from our direct customer freight at contracted rates, ensuring their revenue potential regardless of any market shifts.
Spot Rates vs. Contract Rates
Spot rates are quoted within a few days of the planned shipment, accounting for current capacity, pricing and demand in the market. During periods of tight capacity and increased demand, spot rates will be high, raising the truck driver’s earning potential. When the market turns and demand drops, spot rates fall, limiting the driver’s profits, especially when operating costs remain high. Spot rates can change daily, making it difficult for carriers and truck drivers to financially plan for the months ahead. According to FreightWaves National Truckload Index, spot rates have declined 27.6% since the beginning of 2022, with continued rate slumps forecasted in 2023.
Unlike spot rates, contract rates are set in advance of multiple shipments, outlining the length of service, load volume and transport price agreed upon by the carrier and customer. A fuel surcharge may be added to the contracted rate, accounting for any diesel fuel price changes at the time of the actual shipment. Most contract rates are valid for the course of an entire project or set on an annual basis, and because contract rates fluctuate less frequently than spot rates, carriers, truck drivers and customers have added stability.
The Power of Relationships
With contract rates, carriers, like PGT, develop strong relationships with their customers, helping their truck drivers benefit from better communication, increased efficiency and improved quality control. PGT’s Operations Management ensures consistent, safe and reliable service for our customers, resulting in constant, steady work for our drivers. Many PGT truck drivers run the same lanes each week, developing their own relationships with our customers to strengthen PGT’s business connections. These mutually-beneficial partnerships improve over time, and shippers are more likely to contact their most trusted carriers to handle any priority shipments, valuable loads or increased freight volume.
With spot rates, shippers are focused on securing a one-time deal to immediately move their freight at the lowest cost. Without the backing of a quality business relationship, carriers are left to negotiate on price alone. The winner of the spot market is usually the bidder with the lowest rate, which doesn’t always make it the safest, most reliable option. When rates are high, successful truck drivers can take advantage of the spot rate system, booking one load at a time with the instant benefit of a higher profit margin. As these rates inevitably decline over time, carriers and their truck drivers need to secure a strong customer base with contract rates in order to prevail in a down market.
PGT maintains an expansive network of direct customer freight, giving our flatbed truck drivers opportunities to succeed no matter how the market trends. For more than 40 years, our focus has been to build strong, personal relationships with our drivers and our customers, and through these relationships, we set favorable contract rates to benefit our Proud Professional truck drivers.
Five Benefits of Contract Rates for Flatbed Truck Drivers
- Reliable, steady work – Because 99% of PGT’s freight comes directly from our customers, we are not dependent on changing spot rates and broker boards. PGT has a steady flow of contracted freight all year long, giving our flatbed truck drivers consistent lanes to run each week. With our transparent percentage pay system, PGT drivers know their line haul revenue at the time of dispatch, adding to their financial security.
- Less detention time – Thanks to the strong relationships that PGT builds with our customers, we can limit a driver’s detention time at shipping and receiving facilities. Every seasoned truck driver knows that if the wheels aren’t turning, they’re not making money, and PGT understands that every minute counts. Our Operations team will work with our customers to let them know a driver’s planned arrival time, keeping the line moving to get them back on the road as quickly and as safely as possible.
- Fewer deadhead miles – At PGT, we have a dedicated Business Development Department committed to finding diverse freight options for our truck drivers at favorable rates. When PGT accepts a new lane at a contracted rate, our Business Development Managers are already working to identify additional customers along the way, ensuring that our flatbed truck drivers have freight to move in both directions with fewer deadhead miles.
- Increased freight volume – When shippers know the rates in advance, they can commit to providing more freight, and as the carrier-customer relationship develops, shippers will offer more loads, counting on their top carriers to handle any volume increases or priority shipments. PGT customers trust our safe and reliable service, giving our flatbed truck drivers plenty of freight to move.
- Potential for growth – When rates are down, truck drivers expand their routine driving area, exploring new lanes and different commodities to keep generating the same amount of revenue. With spot rates, it can be difficult to enter new territory – how will drivers know if they are setting a competitive market price? PGT’s Business Development Managers work behind the scenes every day to identify new freight opportunities and secure favorable contract rates, making sure our flatbed truck drivers have the potential revenue growth they need.
Make the Most with PGT Trucking
Join PGT and take advantage of our diverse freight options through contracted rates. We’ve been in business for more than 41 years, successfully operating through numerous market highs and lows. With PGT’s percentage pay model, our flatbed truck drivers have the ability to earn more when the rates are high while still benefiting from the stability of contract rates with PGT’s top customers.
Interested in a flatbed trucking job near you? Contact PGT today to discuss your revenue expectations. Apply now to get started.