Its time for a change

[Doghouse]

I am going after the rates brokers charge us. Lets look at housing for a moment. a few years ago the real estate brokers were getting 6-7% and then they were forced to lower it to 3%,..why? because it was not fair that a broker received $7,000 for every $100,000 that you sold your house for. A house that sold for $250,000 was yielding the brokers $17,500 for doing essentially nothing. Sure,..some houses were harder to sell, but most sold themselves. I know, I was in real estate for many years.
So my goal is to create legislation that caps the brokers % at 10% no more. Sure the brokers are doing a service,..but they are also the ones who under cut each other trying to give the shippers a deal and created this whole mess. A shipper looks at how low the brokers are putting the freight on our trucks and then decides to go even lower to keep some profit. This causes a run away train, and it has to stop now. Why should the trucking industry absorb what the consumer should be? This causes the transportation industry in this country to bend under the weight and it will only get worse before it gets better.
This process will take some time. I have to find 2 members of the House of Representatives and 1 State Senator to sponsor and draft bill language to get the process started (before November 30Th2008) to get it into the 2009 legislative session in Florida. Then it will have to go to the specific committees and pass the House before it goes to the Senate for a vote. If it passes there, then we will have some legal ground to stand on.
I have contacted groups like OOIDA and they seem to be unwilling to throw their support behind this, that's fine with me, I have done this before by myself and I'll make the attempt at this as well. Maybe they will jump on board after I get the momentum started.
I'm not doing this to punish brokers,. I believe that they deserve a piece of that pie, that's what this country is all about. Clearly there are many brokers out there who only draw 10% for their services,...but there are many who take double, sometimes triple and then send it to another broker and even another leaving cheap freight out there for carriers to fight over scraps.
I'll keep you posted as to my success.
I welcome any and all professional criticism and accurate information you have about this issue. The more information I have about how you feel about this the better. I need to make sure that this is a change that would be beneficial to the trucking industry, and not another way to cause more harm. Make no mistake, if this is something that will help, I will take this all the way to the end.

[sidman82]

I am for it only if I decide not to become a broker.

[Ridge Runner]

Well this is only MHO.

Why on earth would you want the Goverment to get involved?

Why do you sell something for LESS than it cost you to make?

Should the Govrement FORCE someone to buy it at your price just so you can make a profit?

Should the Goverment put a cap on how much profit you make if the shippers complain???


That is just my $.02 on the subject. Don't haul cheap! There may be someone else that will do it, but they will be gone the next day because they ran out of money.

[Dispatch_This]

Lobbying for regulated commissions is more than an uphill battle. Congress has been working for the last 28 years to UN-regulate that part of trucking.
OOIDA is currently pushing for transparency in brokered transactions, and they do have the ears of a few key congressmen. Transparency is still a longshot at this point. However, it would compel brokers to be more competitive with carriers.

[Ridge Runner]

I am going after the rates brokers charge us. Lets look at housing for a moment. a few years ago the real estate brokers were getting 6-7% and then they were forced to lower it to 3%,..why?

Why indeed??? Did the goverment step in or was it MARKET forces???

because it was not fair that a broker received $7,000 for every $100,000 that you sold your house for.

Why is it not fair if I decide to use their service at an agreed price??

A house that sold for $250,000 was yielding the brokers $17,500 for doing essentially nothing. Sure,..some houses were harder to sell, but most sold themselves. I know, I was in real estate for many years.

As have I. Only because I own some rental properties.

So my goal is to create legislation that caps the brokers % at 10% no more. Sure the brokers are doing a service,..but they are also the ones who under cut each other trying to give the shippers a deal and created this whole mess. A shipper looks at how low the brokers are putting the freight on our trucks and then decides to go even lower to keep some profit. This causes a run away train, and it has to stop now. Why should the trucking industry absorb what the consumer should be? This causes the transportation industry in this country to bend under the weight and it will only get worse before it gets better.
This process will take some time. I have to find 2 members of the House of Representatives and 1 State Senator to sponsor and draft bill language to get the process started (before November 30Th2008) to get it into the 2009 legislative session in Florida. Then it will have to go to the specific committees and pass the House before it goes to the Senate for a vote. If it passes there, then we will have some legal ground to stand on.
I have contacted groups like OOIDA and they seem to be unwilling to throw their support behind this, that's fine with me, I have done this before by myself and I'll make the attempt at this as well. Maybe they will jump on board after I get the momentum started.
I'm not doing this to punish brokers,. I believe that they deserve a piece of that pie, that's what this country is all about. Clearly there are many brokers out there who only draw 10% for their services,...but there are many who take double, sometimes triple and then send it to another broker and even another leaving cheap freight out there for carriers to fight over scraps.
I'll keep you posted as to my success.
I welcome any and all professional criticism and accurate information you have about this issue. The more information I have about how you feel about this the better. I need to make sure that this is a change that would be beneficial to the trucking industry, and not another way to cause more harm. Make no mistake, if this is something that will help, I will take this all the way to the end.

Doghouse,

I'm not trying to brust your balls here. I'm only stating the way I see things. Quit using brokers that offer rates BELOW what it takes to make a profit. They too will go out of business if they can't move freight.

[no_worries]

Real estate brokers didn't start working for a lower commission because of regulation, and out here they certainly didn't start taking less because they were making too much. When the housing market got ridiculous, you saw some starting to accept a smaller percentage because properties were turning over so fast they realized they could make more on volume. All they had to do was get a piece of as many deals as they could. But that was mostly independents and start-ups. The established realtors weren't working for less. At least not until the crash came. Then the cutting began.

As far as freight brokers go, I don't know. Personally, I think in most situation brokers actually reduce the efficiency of the marketplace. But I'm not sure regulation is the solution. I think the ideal situation would be an escrow setup similar to real estate. Very few freight brokers actually fulfill the role of a broker, they're merely a middleman. If all sides are fine with that, fine, but call it what it is.

[BigDiesel]

3 words...... FREE MARKET SOCIETY !!!!!!

[GMAN]

While I admire what you want to do, doghouse, I am not sure that is the correct approach. I don't think we really want the government to start regulating fees we charge. If broker fees are regulated, then the next step could be regulating carrier fees. I would like to see more transparency in fee schedules. I would also like to see a means for all fuel surcharges to be passed along to the carrier or owner operator who pays for the fuel. I would like to see an end to double brokering. Some get away with it by calling it co-brokering.

The real problem we have is too many brokers and too many trucks for the available freight. Another problem, and most important, is that we have too many people who buy trucks without any business sense. They are too willing to take a load regardless of the rate simply to keep moving. They really don't understand why or how business operates. You can operate at a loss for a short period of time, but you cannot sustain your business without profit. This is a concept that many don't seem to understand.

The greatest enemy this industry has are those who continue to haul cheap freight. It isn't the brokers or shippers, but the truckers themselves who are the primary problem. The difficulties we face are more self inflicted than from outside sources.

[NotSteve]

I agree with you Doggy that something must be done. My take is that the brokers are telling the shippers they need more money due to the increase in fuel but my guess is that they are keeping the money and still offering the same low rates.

I also believe the brokers are taking advantage of the current situation knowing that so many independents are on the brink of going out of business that they will take those cheap loads.

What I would like to see happen is a new type of company start up that charges a fixed fee. Same as a broker only the fees are known and proven up front. I think someone like that could make up the loss of income in shear volume. I also think the manpower to run a brokerage house like that would require a lot less people. If the broker were to post every single rate on the load board it would be a simple process of owner operators just grabbing them off the boards.

You could also have a rating system where carriers were rated on their past performance and not allowed to take certain loads that had a minimum requirement for them to take it.

If the load didn't move then the shipper could simply log into their account and up the price.

[BanditsCousin]

I agree with Gman.

If there is a cap on the brokerage rate, then it could trickle into the rates for trucking, on caps on rates.

With me being partially in tune to the freight deal, isn't it legal to demand to know what the rate is being charged to the shipper to see if the broker is stealing on you? I don't think its in the rules that the broker has to tell you the % of his cut, but one stroke of the calculator can solve that issue for you.

Either way, I'm not pooing on your parade, DogHouse. I think your intentions are in the right place.

[GMAN]

There are some brokers who take a flat fee rather than a commission. Those are not in the majority. I have known a couple who charge a flat rate of $50 or $100 per load regardless of what the load pays.

I think it would be a great idea to have all the brokers or shippers post the rate that they want to pay in order to move a particular load. It would save a lot of time. If the shippers had access to the same boards, then they would know right away if the broker was keeping too much of the money.

I agree that some brokers are profiteering at the expense of the carrier and shipper. I don't think the shippers are paying less to move loads, in most cases. I believe the brokers are taking advantage of the current situation and those who don't know how to run a business. Much of the current problem with rates would correct themselves if the owner operators and carriers would just let the cheap loads sit. It is better to deadhead out of a bad area rather than take a cheap load so that you can buy the fuel to move. If you cannot afford to deadhead out of a bad area, then you are hauling freight too cheap.

In a way I would like to see brokers limited to a flat rate of the actual rate. My problem with doing this through legislation is that it gets the government more involved in this business. It could open up Pandora's box. By imposing fee regulations on brokers, it would almost be like going back to when freight rates were regulated. I am not sure that is something we really want to see happen. If freight rates were regulated, some of us might be hauling for less than we have been able to negotiate on our own.

I am not sure that full disclosure on the rate confirmation would not accomplish the same thing as long as it was also made available to the shipper. Sometimes, the broker doesn't want the carrier to discuss the rate with the shipper or receiver. I wonder why?

[arky]

What I would like to see happen is a new type of company start up that charges a fixed fee.

I had a guy just a while back talking to me about starting ap a small brokerage. He was a driver and got forced out of the industry by a medical condition. I mentioned to him that it seemed to me a flat fee would be fair. I would think that the time and work involved in processing a load would be about the same. The time spent finding and dispatching loads would be the largest variable?

[ironeagle_2006]

Instead of a flat rate make them disclose what the TRUE rate of the load is then are they the first second or thrid broker to get the load. Also make it a Federal reg that what the Rate is to the Broker appear on the Bill of Lading plus on the Confirmation sheet and if the Confirmation sheet is lower the Broker has their Authrity pulled and also shows the original carrier it went thru.

[Dispatch_This]

Here's how I see it:
If you decide to sell your house, would you use a Real Estate Broker that refuses to tell you what the buyer is willing to pay?
Would you invest in stocks if prices were not listed publicly, only Stockbrokers knew the seller's price?
It's hard to put a value on your services when you don't know what's on the table.
I support making brokered transactions transparent.

[Rev.Vassago]

Here's how I see it:
If you decide to sell your house, would you use a Real Estate Broker that refuses to tell you what the buyer is willing to pay?
Would you invest in stocks if prices were not listed publicly, only Stockbrokers knew the seller's price?
It's hard to put a value on your services when you don't know what's on the table.
I support making brokered transactions transparent.

Apples and oranges.

When you are selling a house, you are setting the price you want to get for the house, and the real estate broker's job is to try to get you that price. When you are using a trucking broker, the load broker is selling you a load for the price you agree to. They are not the same thing.

Now if you'd like a better comparison, a load broker is like a house reseller. The house reseller comes in, buys a house, and turns it over for a profit. A load broker comes in, "buys" a load, and turns it over for a profit. It isn't your right to know what the seller of the house purchased it for, just as it isn't your right to know what price the load broker "purchased" the load for.

I find all of this somewhat amusing, because one of the things that the independents pride themselves on is that they are just that - independent. They answer to nobody but themselves. But at the same time, they don't want to be too independent, and want someone to take some of the risk away for them. You want the freedom of being an independent, but you want the security of being leased. I say you can't have it both ways. If you're concerned about brokers eating up too much profit from a load, then go lease on with a company where your rates are better regulated.

[Dispatch_This]

Nope. Can't agree with that. Freight brokers, by law, can only function as a disinterested third party. They can't "buy" the load and then "sell" it. And claiming that a homebuyer has no right to ask the seller what he originally paid is irrelevent. It's akin to a trucker asking a shipper how much he spends to manufacture his product so the trucker can determine his rate.

We're talking about the third parties who handle these transactions. Real estate and listed securities brokers are heavily regulated because, historically, these markets attract scammers and thieves.

Congress did a half-a** job when they created property broker regulations in 1980. The laws were too general in scope, and virtually never enforced. That's a big part of the problem, right there.

[solo379]

For those, who want to "cap" the rates, or profiting of any kind, i suggest you move to a communists countries. You might like that!
For me, "free market" and "antitrust law", is fair enough! 8)

[no_worries]

I have to agree with dispatch on his assessment of how a broker was meant to operate. A real estate broker's primary concern is to close a deal. Getting you what you want obviously helps that along, but closing the deal is the only way they make money because they're working on a fixed commission. However, many brokers approach their business just as Rev described. While they don't actually take possession, they often conduct their business as if they had; getting as much as they can from the shipper and giving as little as possible to the carrier with little thought given to their intended role of facilitating transactions and bringing increased efficiency to the marketplace.

[Rev.Vassago]

Nope. Can't agree with that. Freight brokers, by law, can only function as a disinterested third party. They can't "buy" the load and then "sell" it.

I wasn't speaking literally.

And claiming that a homebuyer has no right to ask the seller what he originally paid is irrelevent. It's akin to a trucker asking a shipper how much he spends to manufacture his product so the trucker can determine his rate.

Exactly. So why is it relevant to you what the broker is getting from the shipper for the load? If you have negotiated a rate for the load that you are comfortable with, then the broker has done his or her job. If the rate is something you aren't comfortable with, then don't haul the load. But there is no law, nor should there be a law, that says the broker has to give you what you want to haul the load. If that is too much of a hassle, then go lease to a company where every load pays the same.

[Dispatch_This]

Geez. I give up.