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6 Questions to Ask Before Accepting a Contract Load

A contract opportunity can seem very exciting, but you must take time to ask questions, do your research, and evaluate compatibility with your business goals and operations. Let’s discuss 6 questions you should ask yourself before you say YES to that next contract load.


Is this profitable for my business?

Calculate the expected revenue from the contract load and compare it to your estimated expenses, including fixed and variable expenses. Ensure that the load offers a reasonable profit margin that justifies the effort. Subtract your cost per mile from the rate per mile to see your estimated profit margin per mile.


Does this meet my long-term business goals?

Consider how the load fits into your long-term business strategy. Does it align with your target market, preferred routes, and customer base? Evaluating the load's compatibility with your business goals is crucial for sustainability and growth. For example, getting back home every night at the end of your workday may be important to you. Don’t accept a load that might pay well but will keep you away from home for several days at a time.


Are there any challenging variables?

Is the load cross-border? Is it oversize? Is the securement of the freight complicated? Is it hard to get appointments? Is it driver unload? Be sure to gather as many details about the load and lane as possible. Your price should also reflect the extra service, effort, or accessorials.


Can I meet the volume and delivery requirements?

Examine the expected volume and delivery schedule commitments to determine if you have the capacity to cover each load without sacrificing service quality or safety. For example, as a single owner-operator, accepting a contract lane with 200+ loads a year and 3-4 shipments a week may not be feasible.


What are the backhaul opportunities?

What does the destination look like in terms of outbound loads? How are rates in this market? Are there any recurring loads available that will bring me back home? Be sure to research the destination market ahead of time to ensure you aren’t entering into a contract that will leave you stranded on each trip.


What’s the reputation of the shipper or broker?

Do they pay their suppliers on time? What are their payment terms? Are they known to be professional and easy to work with? Research the reputation of the shipper or broker offering the load. Look for reviews, feedback, or references from other carriers who have worked with them.


You may be tempted to accept any contract load that comes your way due to fear of missing an opportunity, but not all loads are the right loads for your business. Ask questions, stick to your strategy, and do the research so you can make informed decisions for your trucking business!

 

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Soshaul Logistics LLC and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. It is meant to serve as a guide and information only and Soshaul Logistics, LLC does not assume responsibility for any omissions, errors, or ambiguity contained herein. Contents may not be relied upon as a substitute for the FMCSA's published regulations. You should consult your own tax, legal and accounting advisors before engaging in any transaction or operation.

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