Date: Wed 29 Mar 2000
From: Jim Clowers <>
Subject: AMS-Forum Base commissions on the gross instead of net
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I believe the way to get pricing in control is to base commissions on gross charges instead of net. This could only be engineered at the van line level. What I'm proposing will be very upsetting to the high booking/high discounting national account agents, but a blessing to haulers. Eventually though, I think the whole industry would benefit. Let's face it, there are some contracts out there that could use some updating, but we don't want to upset our accounts. Under this system we can upset our accounts or work for little or nothing. We are losing drivers quickly and something needs to be done.

Example idea is for a van line to pay the hauling agent 30% of TODAY'S GROSS LINEHAUL, and the van line would retain 4.5% of TODAY'S GROSS LINEHAUL, with whatever is left to be booking/origin commission.This way a driver is unaffected by discounts, and can count on a pay increase when a tariff increase occurs. The van line is also unaffected, but the booker can decide their own fate. Some scenarios:

Gross linehaul = $10,000

  50% 55% 60% 65%
Net Line Haul $5,000 $4,500 $4,000 $3,500
Van Line Retains $450 $450 $450 $450
Hauler $3,000 $3,000 $3,000 $3,000
Booker  $1,550 $1,050 $550 $50

As a booker, you'd have to decide just how much you want this order, or for that matter, this account with 3 year old frozen rates. If one courageous van line would do this, the best drivers would flock to them, and eventually all van lines would follow suit. A lot of thought would need to go into discounting. I only showed a range from 50-65% discounts. Imagine the booking commission on a 35% discount.

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