Freight broker stories
 

Think it would be fun to hear some broker stories. Here's one from yesterday (although it happens all the time).

Same load posted by two different brokers.
Broker #1 pays $770.
Broker #2 pays $650.

:roll:

Double brokering. Alot of that is going on.

There is way too much double and even triple brokering going on. One reason there seems to be more right now is because freight is slow. Another reason is that some brokers take a bigger cut than others. You can even find differences in such brokers/agents like Landstar. Perhaps we need to start shedding some light on those who double broker their loads. :D

I like that idea Gman.

Speaking of landstar, here's a story from a few weeks ago.

I call Landstar (MRE) about a load from Baltimore to Erin, ON. The voice on the phone is johnny.

Johnny: "it's lumber. needs 8' tarps, weighs 48,000lbs, pays $650 on 466 miles"
Me: 466 miles? What's your route? My best route over the Appalachians with 48,000 on is 540 miles.
Johnny:I show 466.
Me: Thanks anyway.

Then I call a Landstar guy I know. I ask him about that load. He looks it up and says,

"He's just being greedy. It's supposed to pay $900 and Johnny would get $63, but the way the Landstar system is set up, if Johnny can cover it for less, he gets half. For example, if landstar Johnny covers the $900 load at $650, he gets $125 instead of $63 ((900-650/2). As you can see, the Landstar system is built to screw the truck".

In my experience, Landstar offers the WORST rates of anybody (although I cannot speak for the leased guys). 4-6 weeks ago, the best I found from them was $2/mile for 3 drops and hold it over the weekend. Now those loads are $1.69. I am not impressed with them.

I'd say they were just bottom feeding. If they don't catch a sucker it must go to the leased guys.

I'm new... and dont' pretend to understand about the brokering part of it, but something about double brokering just plain doesn't sound right.

If another broker is brokering another agent load, then the brokers should work out a split out of their fees not chop off and take another cut into the pie. (Since there is no benefit from the second broker doing anything.)

It's alot of the shippers fault. To many shippers notify their brokers (they seldom put all their eggs in one basket and use just one broker) that they have a truckload going to so-and-so and the 5 brokers jump on it and start shopping it and thats why you see alot of the same loads posted by different brokers at different rates. There is no loyality among shippers. Whatever broker gets the cheapest truck to move it gets the load in most of cases unless the shipper is in a time crunch or some other bind.

none of that sounds right. Why do people always wan to screw over someone else just to make a buck

Oh, boy... so there really isn't anybody looking after the best interest of the carrier, except maybe the dispatcher to some degree. The brokers only represent the shipper and their loyalty is to get the product moved for the cheapest rate and make a commission for themselves.

Are the rates quoted set prices or can the carrier successfully negotiate a higher price? Does the broker know what the shippers target or top price is? Can and does the shipper net the difference between what the carrier invoices and the shipper's top dollar was?

Is there any particular reason a shipper may not be loyal to brokers? Isn't that part of the brokers job to be there johnny on the spot for their client, the shipper. Sounds like many brokers may just be playing the numbers game at the peril of the trucker.

Hum?

We negotiate every load, period. My girl bagged an extra $450 out of a broker the other day. He started at a grand, she got $1450.00. The load worked out to 1.40 a mile (actual driven miles), and got me rolling. I hate this time of year, things are tighter than usual.

We actually had a guy offer us .60 a mile the other day! I about fell over. She got me $2.00 a mile out of the same area.

Everything is negotiable. A shipper has a figure they want the load moved for. The broker is generally much more in tune with the current market rates than the shipper is so if the shipper is way off the broker will try to squeeze them for more money. Then with that figure they'll chase trucks to haul it minus the 10%-20% commission depending on what they can get it moved for. The less they get it moved for the more in their pocket.

The better brokers have contracts with shippers. Seldom does a larger shipper use only one broker. A shipper will allot so many loads per week/month to a broker. You perform they might increase your volume. You falter and end up with some lame yo-yo slacker who arrives/delivers late etc you get docked and might lose some freight volume. Do it to often and your soon looking for another account. So it's a good idea for a broker to establish good relationships with quality carriers with upstanding drivers and it's a win-win-win for everyone.

Supply and demand plays a roll as well though. From one week to the next the rate can vary $100 +/- from the same Point A to Point B as a week or two earlier. The tighter the trucks the more the broker or shipper has to cough up to move the same load whereas if there is a glut of trucks the rates are cheaper and they can get it moved for alot less meaning they end up pocketing more.

So the moral of the story is less trucks = higher rates.

So, the load boards don't mean anything... they are just fishing holes. That is only a starting point. And even if you say yes, you still may not get the load if another broker on another board somewhere has also posted the load and gets nibbles on his bait, too.

Are there boards that post the available carriers, destinations, services and fees, similar to the load boards?

I know it's free enterprise, but on initial observation the business model has some problems.

-

No, some load boards are legit. Depends on who the shipper is and how large an operation. If they're loading 25+ trucks a day they most likely use numerous brokers who then bait the boards.
If it's a smaller shipper who might only load 1-6 loads a day for example, then that boker load you see posted is most likely the real deal.
The key is to find and work with one or two good dependable brokers who fit your parameters and have loads where you travel. Then that way you'll seldom be relying on load boards anyhow. You just call your broker and tell them you'll be delivering in Hooterville on Tuesday and to get you a load back home.
The more brokers you deal with the bigger the chance your eventually going to get hosed at some point. Talk to some O/O and ask who they use/recommend. Talk to other experienced drivers who lease and ask what kind of freight their brokers book, what traffic lanes, who they recommend etc.
Build a good network and you'll eliminate alot of headaches down the road.

You are right on that. I know how I operate my truck, communication is key.

You don't yell, scream or bitch. I see these guys everyday, they give us all a bad name. If you think you are getting screwed, DON'T TAKE THE LOAD! And let the shipper or broker know why you are refusing the load. And do it in a respectful manner, even if they do not deserve it.

It takes time to establish yourself with brokers and shippers. If you do the job, you will reap the benefits. We have watched our per mile rates increase steadily. Sure, we get that one run that you would cringe at, but it still makes you a profit. And it gets you positioned to make that rate that just makes you smile, sometimes from the same broker. Imagine that?

There is money to be made out here, and every broker is not out to screw the O/O's. It just boils down to doing your job, and doing it in a timely and efficient manner. That means knowing the best and quickest routes, checking the weather, knowing your freight lanes and areas, etc...

And no cheap freight. I know that is hard to say right now, it is that time of the year. But there is some fool out there that took that .60 a mile load that I was offered the other day. If things are that bad, get out of trucking, because you are screwing all of us. Along with making yourself out to be an easy mark to be taken advantage of.

This is a business that just happens to entail driving a truck. Treat it as such, and you will prosper. Treat your brokers and shippers with respect and reap the benefits. You want to play Mr. Big Stuff, your going to get screwed. I know a few of those guys, and things aren't going very good for them right now. And they want to know my secret.

:wink:

There are some good brokers out there. At the same time, there are some who would steel the coins off their grandmother's eyes. (old saying). I have been offered some really cheap loads the last few weeks. Only a few days ago, I was offered rates which wouldn't even break a dollar. I have a load on my truck now that pays more than $2.50/mile. There is nothing special about it. I have done business with this shipper before. They called me with the load. They asked for a price and I gave them what I considered a fair price, for where it was going. They accepted and I loaded this afternoon for a Monday delivery. I pick up a check when I deliver the product. I don't have to give any discounts to get my money early and don't need to worry about getting my money. I think that if brokers need to wait to pay a truck, then they should pay a penalty. Instead, they charge as much as 8% to pay earlier than 30-45 days. I found one broker who had already been paid, before the load was on the truck, and he charged a premium for paying in a few days. I have a broker with whom I have dealt and he pays the same or next day after receiving the bills. He will even overnight it to me if I pay the shipping charges. The problem with this guy is that his loads are seasonal. I just had some seasonal loads cancel on me because of the weather hitting Washington and the Midwest. This guy pays as soon as I hand him the bills. He lives close enough to me so that I can hand him the bills and he writes me a check while I wait. If I want to mail the bills to him, then he sends out a check the same or next day. His rates are over $2/mile and are usually not a problem to handle. I wish all brokers were like these people.

The time to pay. If there is one gripe I have, it is the time to pay.

In a perfect world, we would get paid on delivery. Because like you said, allot of this has already been done, the money exchange. Except we are left out of the picture as that money sits somewhere collecting interest or whatever.

We are truly the read headed step children out here in the food chain.

That is why I like CH and dealing direct with shippers. You can normally have your money in a day or two. And yes, CH charges 1.5%, but that is peanuts to me right now.

I don't haul a lot of CH Robinson loads, because many of them don't pay as much as I need. However, you always know that the money is there. The same when brokering through Landstar. While both charge an extra fee for early payment, it won't break the bank, especially when the rate is good. Landstar is supposed to pay the carrier 80% of the rate. I know this is not always the case. If I find that ANY broker is trying to scam me, then I will not do business with that agent or broker. I have a few Landstar agents whom I feel have dealt fairly with me. I will haul for them when the rate is decent. Unfortunately, one of them isn't getting much business from an account that I used to deal because another broker went in and raped the rate to get the business. If an owner operator who runs percentage refused to haul cheap loads, all rates would come up. If Landstar, Maverick or any other carrier or broker can't move a cheap load, then the rate comes up. I have a minimum rate that I will haul a load. If I don't get that minimum rate, then my truck doesn't move unless I deadhead to the house or to a better area. I spoke with a broker the other day who told me that they were paying less than $1/mile for a load. He told me that the shipper knew that they would probably need to pay more, but they would let it sit and raise the rate slightly until it moved. He said most of them were moving at about $1.20/mile. I asked him why then didn't just raise the rate to $1.20? He told me that sometimes it moves for less.

When I got into trucking, you didn't have so many brokers who made you wait for your money. You turned in your bills and you got paid on the spot. You didn't have to wait or play games to get your money. You performed a service and should be paid for your work. There are too many brokers who have marginal means and cannot afford to pay until they receive their money. Some will sit on the money and earn interest or make extra on the carrier or owner operator if they want to be paid within a few days. I know one large broker who charges 5% if you want to be paid within 24 hours from receipt of bills, and $25 extra if you want a Comcheck. Frankly, I think that is a lot of brass. Remember, a broker doesn't make money unless they move loads. If we refuse to haul loads below a certain rate, say $1.50/mile or more, then all rates would come up.

Factoring cost some money for brokers. This is reason why you pay % for fast money

This is one of the things that amazes me about this industry... in actuality the trucker has more control over the price than most believe they do. Some must feel they are at the mercer of the broker or the shipper; some may need to hone their negotiating skills... (some jobs may just be from crooked or cheap brokers/shippers.)

It appears that unfortunately, for various reasons, some truckers are not in a position or want to move somewhere else and are willing to crumble to the cheap price.

Which brings me to another thought... what value added to the service do some carriers consistantly hold over others for some carriers to always be the ones that recieve the premium paying jobs? Is your truck newer/shinier, is your trailer cleaner, do you drive faster, do you have a smile on your face, do you arrive on time, do you wear a clean shirt, are you not confrontational, etc?

What additional value added, from the shippers point of view, is for them to pay you $$2.50 when someone else would be willing to do it for $1.35? What makes them pay extra when they may not have to?

I realize that shippers and brokers will always have their favorites because they know they can call when they are in a pitch and get your help when needed in an emergency or whatever.
-

I understand that factoring costs money, but some brokers use a factor and charge more than what the factor charges. Others use it as a means to generate more revenue. I know of some who get paid up front but still either hold on to the money or charge an extra fee for paying early. It is not up to the carrier to pay for the brokers cost of doing business. If the broker doesn't have sufficient capital to run his business, perhaps he should close the doors. I think the carrier should be paid upon receipt of the goods. It isn't up to the carrier to finance the broker's business. That is one reason some want brokers to put up a $100,000 bond instead of the current $10,000. If a broker can afford to put up that large of a bond, then they should be more solid. If a carrier does business with a broker rather than the shipper then the broker is the customer. It is the responsibility of the broker to pay the carrier regardless of whether he has been paid or not. There didn't seem to be so many brokers a couple of decades or so ago.

I run another business, I had 29 employees relying on me to pay them every Friday at one point in time; routinely I have slow payers. I have had to go to the bank to get a short term loan to get my folks paid. That's the cost of doing business.

If a broker says he will pay you at a specific date or upon receipt or whatever, if the broker needs to liquidate his receivables accounts at a loss to pay you, I am sorry, but would have no sympathy for them.

Pay the man or women what they are owed when you said you would (period).
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I agree with the part about the shippers having some responsibility for all the low freight prices.

Take for example some machinery that Landstar moves from PA into Canada for $1.70/mile. I never accepted one of these loads (we always go home empty when it gets to that point) so I figure the shipper is fair game. I give the shipper a call to offer my trucks (called him three times actually because he wouldn't return my calls). I tell him we travel in that one particular lane 2-3 times per week and we can do for $2.25/mile. He told me, "I get guys calling me all the time offering $2/mile. You aren't even moving my needle of interest". This guy was a real jerk. Now I won't pull his junk at all.

So not all Landstar guys are getting rich on every account, but it seems some will go in and undercut.

If you are in business, you do what is necessary to take care of your suppliers or employees. If that means paying them before you get paid, then that is what you must do. It isn't the responsibility of the carrier to be a bank for the broker. It is the broker who commits to pay the carrier within a specified time frame. Remember, if the broker fails to pay you as agreed, then the shipper is fair game. If you signed an agreement to not call on his shipper, then he must keep his part of the agreement. If he fails to pay as agreed, then he breached the contract, not you. If he does, then you can call on the shipper direct because there is no longer a contract in place.

I always try to be courteous to everyone, whether I do business with them or not. There was no need for him to be rude to you. When things pick up he will likely need to pay more because fewer trucks will be available. I never sell on price. I don't play that game. I provide a service and do it well. I pick up and deliver in a timely manner and get the product to it's destination in one piece. If you provide a better service then you should be compensated for that service.

I hope I am not repeating myself here, but there is an account in Georgia who makes tractors. The rates were not bad. Not great, but not too bad. A Landstar agent went in and cut the rates to about $1.35 including fuel. Now they have a difficult time covering the loads. I have been told that even their BCO's won't haul them, so they broker most of them out to other carriers. They were getting at least $1.65+ fuel before this agent went in and killed the rates. Now, they expect anyone who wants to haul their loads to do it for the same rate as Landstar. She called me a few months ago. I was less than 100 miles from where these picked up. I would not touch it for that rate. I wound up deadheading home rather than taking something that cheap. In fact, this agent is such a poor business person I won't haul ANYTHING for that office. Frankly, I would not haul for that office at $5/mile, just on principle. Some Landstar agents do a good job of getting decent rates. There is no need to undercut the rates so much that no one makes money. If the load sits, the broker will either lose the load or the rate will go up. I opt for letting the cheap loads sit.

I have to say that if I was a shipper, I would be amazed at the efficiency with which the trucking business operates. I don't believe there are many industries that are as competetitive as this. It is extremely easy to lose money, but at the same time, for the savvy business person who knows his costs and operates smart, this is opportunity.

So, I didn't want to start a broker bashing session... just wanted to here some stories. Besides, IMO low rate cycles are good for the trucking business....they clear out the high priced carriers, provide affordable expansion opportunities and best of all, encourage manufacturers to send more trucks.

If rates were sky high, shippers woule be more inclined to build more factories to cut shipping costs.

Gotta love low rates. :shock:

No, low rate cycles clear out the "low priced, cheap freight hauling outfits".

The high priced carriers expect this seasonal downturn, and are financially prepared for it. It is the little guy with a truck or small fleet that gets screwed. And that is usually the little guys own fault for not running his truck(s) as a business.

By high priced, I meant carriers with high operating expenses. Guess I should have said high cost carriers.