Its time for a change
 

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.

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

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.

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.

Re: Its time for a change
 

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.

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.

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

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.

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.

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.

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? :roll:

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?

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.

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.

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.

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! :roll:
For me, "free market" and "antitrust law", is fair enough! 8)

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.

I wasn't speaking literally. :roll:

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.

Geez. I give up. :roll:

[quote="Rev.Vassago"]I wasn't speaking literally. :roll:

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.

QUOTE:

I have to agree Rev. if I dont get the Rate I want from a broker, I dont move his freight.. I really don't care what he is getting paid.[/b]

I guess the problem is that these independents don't want the broker to make too much money. My position is that if the broker made too much off the load, it was because you didn't negotiate it properly. But if the rate was good enough for you to haul it, then there's no reason you should be complaining.

I know everyone loves when I mention Steve Booth, but it is a perfect example. He took a load into Canada about a month or so back that he got $1.80 per mile for. Obviously, that was an acceptable rate for him, and so he moved the load. He found out after the fact that the broker got about $3.40 per mile for the load. Should he complain? No way! (and if I remember correctly, he wasn't) It is up to each individual carrier to know what is an acceptable rate for hauling. It isn't up to each individual carrier to know what kind of markup the broker is taking on the load.

Would those who are complaining about brokers rates feel comfortable disclosing to the broker what your expenses are, so they can decide if you really need what you claim you do? After all, if you expect them to disclose to you what the load paid, then you should be willing to disclose to them what you truly need to earn on the load to turn a profit.

Such a system already exists. It's called Landstar. :lol:

If you lease to a carrier who pays percentage, you are entitled to see the original confirmation sheet which shows the rate paid. If you run your own authority, there are no such provisions for disclosing the rate to the carrier. If you really want to know what the broker is making, you can always ask the shipper when you pick up the load. Sometimes it is the receiver or consignee who pays the freight.

The best way to fight these tactics is to hone your negotiating skills and refuse to haul cheap freight. Be prepared to deadhead out of an area where rates are too cheap. If you cannot get a rate that is acceptable to you, then you should refuse to take it. Just deadhead out to a better area. I think this is where a lot of independents and owner operators have a problem. They go into bad freight areas and don't have the money to buy fuel to get to a better area. If you want to go to a bad freight area you should be getting a high enough rate where you can deadhead out.

If you are not comfortable negotiating rates then perhaps you would be better off either leasing to a carrier or contract with a good dispatch service to find decent paying loads for you. We are in a difficult time in this country. Things should begin to improve due to coming into the summer months. Freight usually move better during this time. Fuel will continue to be a problem, but you can compensate by raising your minimum haul rate where you can offset those higher costs with higher rates.

Doghouse I hope that you succeed.

Freedom without limits is anarchy. Imagine our roads and highways without traffic laws and regulation. Lots of freedom, but also lots of death and destruction. Capitalism without regulation is likewise anarchy. If you have never read the speeches of Teddy Roosevelt on the subject I would submit that he said it all much better than I ever could. Capitalism must be regulated for the good of the nation, the society and ultimately, the Capitalists themselves. Doghouse I think that by pointing out to politicians the similarities between TR's work to reign in the Robber Baron's of his day and your proposals you might strike a chord with some.

CH Robinson is the largest broker in the U.S. and they are earning record profits this year. One reason profits are up is that they have been able to increase rates to shippers because of high fuel prices but are not passing along the increases to the the truckers moving the freight and paying for the fuel. Their stock is doing very nicely. CHR has gradually increased the percentage of the freight bill that they take and it is now over 18%. Gross Profit for 2007 was $1.2 Billion!

These two posts sum it up well. If you can't grasp these two posts then you need to park it (and sell it).

:roll: All I can say is good luck with that thought process.

I hauled a few times for a broker that use to tell me what he made on each load. To be honest though I couldn't understand why he was doing that.

First off I didn't believe him and second off I don't care what he made. I always say I don't count other people's money.

I would like to see some transparency in all of this though. One load sticks in my mind. A guy was offering me I think something like $1200 to go from Illinois to North Carolina. I didn't take it but I got to talking to him and in the end he said to call him back if I want it; that he can pay $1600 as he had it for $1650.

I remember thinking I can't believe that guy just tried to make $400 off that load. True as people say don't haul cheap, and in fact I didn't take the load, but the way this system is set up there's is a lot of room for abuse.

When someone hauls cheap, it doesn't just hurt that person, it hurts all of us. No need to pay a decent rate on a load if some fool is going to work for free. And someone is ALWAYS going to work for peanuts. People have been complaining about others hauling cheap for decades (that is per a friend of mine that had his own authority since before deregulation)

Anyway I like the flat fee rate. I should be up and brokering myself within the next couple of weeks. I have been pretty open with everything so far and will be more than happy to post how that goes with charging a flat fee.

One thing, I don't think it would be smart to post the rate on the load board as someone else would just see what you are offering and then go under bid you to the shipper.

Bingo. Did anyone read what no_worries posted?

Brokers frequently overcharge shippers and underpay carriers, leaving less money for growth, equip. maintenence, and ROI.

Loads are all too often co-brokered 2 and 3 times to preserve their marketshare which benefits only the brokers.

Carriers get stiffed when broker goes under because there is nothing (other than a measley $10,000 bond) compelling them to meet their fiduciary responsibilities.

And I won't get in to how badly they have screwed up the cargo claims process, due to their false since of entitlement.

All of these things create INEFFICIENCIES in the MARKETPLACE.

Brokers are middlemen. Most industries in a capitalist society have middlemen. If you don't want to deal with them, then find a new line of work, or a way around them, because they aren't going away.

Exactly! In the long run they are sowing the seeds of their own destruction and do not realize it. Anybody see the write-up on CHR in Business Week? These guys do not feel guilty about their actions, they BRAG about them!

There is no question that CH Robinson has some loads that are cheap. I usually manage to get decent rates when I haul one of their loads. If I don't then I do not take the load. If you want good rates from them or any other broker, you need to learn how to negotiate. There are some of their offices that rarely call me because they know their rates are too cheap. There are a couple who only call me with good paying loads. I spoke with one of them the other day and he was checking his load board and came across a load that was cheap. Before he told me the rate he said that he knew that I would not take it and he was embarrassed to quote the rate to me. It wasn't one of his loads, but another office had it. I have hauled loads for him before and he usually comes up with a good rate for me. He knows that unless it is a good rate, I won't take it so he won't waste his time or mine.

I don't begrudge any company or broker from making money. Unless they make a decent profit they cannot look for the good loads. They may make less on me than some others, but I still don't mind them making a commission off of me. I doubt that they will make 18% off of most of what I haul for them, but if they do and I get my rate then good for them. There are some brokers who regularly take 1/3 of the rate. I know a couple of them and don't do business with them. Their rates are always too cheap. I don't worry too much about what most brokers make as long as the rate is fair. If it is too cheap, then the broker is likely taking too big of a cut. Either that, or he cannot sell.

I understand what you are saying about posting rates on a load board, merrick. On the other hand, a carrier is going to take the better paying load before he will take the cheap load. If you are the first to move the shippers load then he will want to use you before the other broker. The guy who moves the load first gets the commission.

No, they really don't. They address but one aspect of the issue and if you can't grasp that, well... :roll:

Some of us could care less how much a broker makes on a load. However, those with an overly simplistic view of the industry fail to realize the ramifications when the two primary parties to a transaction are poorly informed. Education, or knowledge of the market, is fundamental to achieving economic efficiency. The more inefficient the market, the more economic waste is created. The middleman thrives in this environment and does whatever he can to perpetuate it.

Rev, correct me if I'm wrong, but didn't you give Steve a hard time when he took his $3.40 load for $1.80? That would seem to imply that he should have had more knowledge of what the shipper was willing to pay instead of simply taking a rate acceptable to him.

Personally, I think any carrier has a vested interest in trying to learn as much as possible about both the bid and ask rates.

As for disclosing operating costs, I am willing and have. Every carrier should be prepared to justify a rate if requested. Justification may be as simple as, "I'm the only truck in the area" but in a competitive situation you'd better be able to come up with something more compelling than that.

That's not true, federal regulations include just such a provision. You want to know how much a broker got paid, you can get that information.

Nobody seems to be able to get past the whole rate issue. I agree with GMAN, Rev, and the rest who say that how much the broker makes shouldn't matter. However, we all have a vested interest in seeing an efficient market. That is the role that brokers in all industries were meant to fill. That role has been almost completely abandoned in the freight industry.

When I had my own authority I pulled loads for CHR from time to time, but eventually I just stopped wasting my time with them. The only bad debt I had in the two years I was independent was CHR! There were a few good brokers that paid well and I tried to stick with them as much as I could while trying to develop my own shipper customers.

Good negotiation skills help, but more important is knowledge of the market. I used to get ocassional loads to Tulsa. If I was in Tulsa on a Friday, I eventually learned that I could demand $2.50 per mile or more because there were more loads than independent truckers available EVERY FRIDAY. It was great. The last time I was in Tulsa on a Friday I posted my truck on Get Loaded, then when each Broker called me I told them whoever offered me the most by 12:00 would get me to haul their load. I got $2.80 per mile on a load with a delivery in Birmingham and a delivery in Macon, GA. I really enjoyed that one. This was in the summer of 2006 when my average rate was about $1.50 per mile.

It must not be too bad or the MARKETPLACE would offer a solution that everyone would jump on in a heartbeat.

Really it amazes me how some people defend this system and I don't mean that in a negative way, but it truly does just make one wonder.

I kept out of the strike debate as this is an internet message board and people take this too serious sometimes but I picture some of the people that defend the current state of affairs (and I don't mean this towards anyone in particular) that if they were Native Americans back in the day being pushed of their land that they would be telling those that were complaining about losing their land that if they can't hunt more efficiently on the smaller land then they should die of starvation. (Long sentence I know )

The same oil companies making billions of dollars in profit (and I don't really care how much they or anyone else makes ) still have tax subsidies or breaks or whatever it was they were complaining about losing the other day. Farmers making a lot also have them.

Yes people should manage their money and affairs better and maybe they wouldn't have to worry about striking or complaining about brokers but don't deny that the deck is stacked against us. If most of us really knew what was truly going on at the higher levels of society... well let's just say we don't and that includes me.

In the end Doghouse I say go for it. Whether things change or not I still feel I'll make it but I wouldn't complain if someone makes it easier for me.

By all means, do proceed to educate me on how the free market works and the role of a broker in said market.

If their business activities impend the flow of commerce and work against the public interest they need to be "well regulated middlemen." Congress decided eighty years ago that trucking intermedairies fall into that catergory.

Here's a link to a legal article that explains it pretty well. In my opinion, trucking is in the same state that it was just prior to 1925, as covered in the "history" chapter:

http://law.du.edu/lawReviews/transpo...no3_edrich.pdf.

Let me state for the record as well that my posts and replies are not directed at ANYONE. Just my take on the way things work in the business world. I've been in small business from '87 and know full well how bad it hurts to lose a job that you really need to someone that got it and lost money on it.

Ridge Runner,

My background is in economics and I worked in commercial banking for over 20 years. I know of no reputable economist alive today that supports laissez-faire economics in the most extreme form you seem to be espousing. Market anarchists do take laissez-faire to its logical extreme but no one takes them seriously. Even Laffer and Friedman, the most notable pure capitalists of our era, acknowldge the indespensible role of regulation to a successful free market.

Perhaps this analogy will help you. If you want to buy diesel for your truck, you compare prices and convenience and can make an informed choice as to where to buy fuel. But what if government did not regulate the exact amount of a gallon? If a gallon at Pilot was different than a gallon at TA, how could you be an informed purchaser? And what if diesel was not regulated as to a precise chemical formula? What if Love's diesel had only half the energy content of Pilot diesel, BUT YOU DID NOT KNOW IT? In the complex and technically advanced society we live in today, the role of government as arbiter is not "interference" it is mandatory to the creation of a functioning exchange of goods and services that benefits buyers, sellers and the community.

Guys look at thing this way right now broker that has been in business for years could decide that I am going to retire and take all the drivers money I can right now. So he stops paying drivers and keeps their payments and ends up with say 500K-750K would not take long if he did alot of loads correct. Closes his doors and all anyone can collect on is that ridiculos 10K in bond money that was put up. It has happened in the past and will happen in the future. The DOT needs to regulate these people better and they are not CHR is one of the worst hell they were bad in the 90's giving 75 cents to the truck out of CA on dry van stuff yet I know that it was paying them 1.40 a mile if not more.