The “sweet” spot market temptation
I am concerned for many operators who are leaving long range goals for the “sugar rush” of the short term spot market. The following article addresses the importance of keeping your eye on your long term goals, avoiding the temptation of focusing only on the “sweet” spot market. If not, that sugar rush could end up in a sugar crash.
Understand and prevent a problem before it IS a problem for your operation . Many a stock broker looked like a hero in a bull market … However the real test is of they are a hero in a bear market !
Last year in 2014, the spot market increased significantly from previous years. Many drivers and small fleets gravitated toward this highly lucrative freight. Rates are higher than many long term contracted lanes. Therefore, it is the perfect time to make some extra income. Many forces are at play when talking about the spot market in our industry. The carrier has the upper hand when the spot market is hot. Let’s keep in mind that the shipper is not just going to sit back and wait for the rates to drop. At the same time, they too are trying to secure long term contracts.
For me, I look down the road and ask myself…”how long will this last” and can I afford to stay in it for the long haul. I think any business requires steady and consistent business from which to build a firm foundation. Once that’s established then you can go after some spot market business in order to capitalize on opportunities. A business needs a well-balanced diet just as our bodies need proper nutrition for the long haul.
Below, is an article which I wrote several years ago in regards to how I built my business to survive the ups and downs of the economy.
Is The Icing Good?
During my time in business, I’ve often compared how I organized my operations to baking a “cake.” You may ask “what does a cake have to do with the trucking industry?”
If you have too much icing than cake, you may become ill. Let me explain: when developing my account base, I first went after businesses which offered year round stability of shipments. These were small to medium sized companies. Only after having a secure foundation did I go on to look for the icing portion of the cake. The icing refers to shipments which were “seasonal, short-term and offered higher pay.”
Often times it seems easy to chase after the icing first. You may get a big “sugar rush” which can fall off when the immediate project is over. Therefore, I find it better to develop the cake first which is solid, then go after some icing to round out your business.
Now all we need to do is figure out how to have our cake and eat it too!
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- The “sweet” spot market temptation - March 1, 2015
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