Shippers don't need brokers?

It's true there are some resident brokers in here who think the world revolves around them and that nothing in this country would move without them. I laugh whenever I see those comments too. The argument that brokering is expensive, difficult, and unnecessary is flat out wrong imo. If that were true there would be no brokers out there anywhere. Markets do not support inefficiency.

I think the shippers out there who prefer not to use brokers don't. And the ones who do, use them. Each see's value in whatever way they choose. As far as the world would be great without them. I'm sure we would all just get along fine without brokers. Of course I am not naïve enough to believe that direct customers are stupid and have no clue about trucsk, capacity, markets, rates. They know how competitive trucks are and use that to their advantage. And do the same with their brokers. It is the nature of things. If it was all direct that would still be - the same.

And I've said it before, in my preferred segment of trucking the rates I get from brokers are way over the top superior to the rates that I get from 3PL's dishing out the excess freight "direct" to us. That stuff usually has good rates on it, you can bid tariff and get it 9 times out of 10, good profitable rate - most guys would be tickled to see those rates, for me it's just ho-hum busy work. It's competitive though. Bid 50 or 100 over tariff and you will likely get the load 1 time out of 10, if that. This freight when co-brokered or double brokered, I have seen it and hauled loads like these dozens of times, way over the top rates - much better rates than "direct from the 3PL's". I don't know the how's or why's but for my one little truck I've gotten double or triple tariff thru brokers that I've never seen driect from 3PL. Of course there are trucks out here hauling those very same brokered loads for nothing, less than nothing at times. I miss a lot of that freight because I actually put my money where my mouth is and leverage my truck. And never whine about some big bad broker making money off my truck either. Completely satisfied with the rates I pull. Not real happy with the competition but it is what it is. Nothing I can do about that.

Now, before someone says, well if you were truly getting that freight direct from the shippers.. ..that just ain't the real world driver. Maybe so in your chosen segment, but not in mine. Bottom line here, my truck NEVER rolls unless I am completely satisfied with the rate. NEVER. Most of my competition out here though, they aren't so picky about rates. I face the same problems as any broker out here from his fellow brokers. Cut throat competition - and it will never go away. Even if you outlawed brokers.....

 

I am sure I will take some flak from the its not fair, pro Obama, please give me more government regulation so I can make something of myself crowd here. Pretty much the way I run the broker side of my business is when I have a customer who we cannot have our in trucks in position we broker it out. I have never gone into a customer with the thought of I would just broker out there freight. With that said if a customer has a bunch of excess freight I have co broker agreements with large brokerage companies and I still take a cut (I know it is not fair) that help me move excess freight. Now you ask why do we do this because our customers want to make one call and know that there freight is going to go and we make sure this happens.

Also for those that think brokers make 50% on loads you are wrong our year to date is 14.5 % and that is just the spread of between what a customer pays vs. what we pay a carrier.

 

At least you have trucks to be able to haul that load. Most brokers don't have any trucks or trailers. And they don't have a clue on how much it costs to run a truck. Yes we have tracked some loads on the load screens . The closer to the due date the higher the load pays.. And it didn't just go up 10 or 15%. Then there is the broker that will cut the rate to shreds because they want the customer.. And try to get us to haul it as a BACKHAUL.. What ever that is.

 

There you go, the direct load pays 15% more than the brokered load. And if he hands these loads to another broker, then 25% or more.

 

So you think the shipper just has people sitting around doing nothing? Is it possible that the shipper knows his business better than you and actually did the calcualtions and figured that they can reduce overhead by outsourcing compared handling things in house.

Every shipper that I have spoken with that is looking is evaluating how they handle shipping (and good business people are doing this all the time even when they are currently using brokers or have a dedicated carrier) look at two main numbers. First is over all shipping expense. This includes all the overhead that is going to be required if they handle things in-house. Then they look at transportation spend. This is the money that they pay the carriers. And the difference is significantly greater in most cases than the 15% a broker makes.

Now, the double brokering when no value is provided is a problem.

 

We are a carrier and a shipper. We run 3 trucks but sometimes I do hire trucks in two situations.
1. Occasionally we will get too busy to handle them all and I will just post the loads on Truckers Edge.
2. The other time I will hire a truck is if another trucking company that we've used before (usually a neighbor in need of a favor) happens to call wanting to use me as a head haul to reposition their truck.

In both cases, I will ask the ask the company what they need and I will pay it. I could probably gouge the daylights out of them but why? That is no way to run a business IMO.

Also depends on where your business is located and where your deliveries are. If you are in a good freight lane then yeah, you can probably find trucks dirt cheap. But if you're in the middle of nowhere, maybe you're better off having your own fleet.

I will only give away loads with easy deliveries and ones that are not time sensitive. Yes, I can usually save a little money by selling the load, but I can lose way more in the long run due to late deliveries, detention pay to the truck and drivers being rude to my customers. There is a reason WalMart has their own trucks.

I stand by what I said earlier that the main reason to use a broker is not to save money on trucking, but to transfer liability onto a 3rd and 4rth party (broker and trucking company).

I suppose another reason is insurance...sometimes we all need a reminder. If a driver starts to give me attitude (shocking I know but it does happen), sometimes he might benefit from a time out while I broker a few loads.

 

Shippers are. Doing the same thing today that they did 100 years ago. Move their product. And are doing the same thing today. Whether with a trucking company or a broker. It doesn't make any difference to them. Nice little story I heard today. Some broker went in and told a oilfield company that they would move their freight for about a third cheaper. That's right.. Oilfield truckers were at about 5,000 and you can haul it for 1800. And somebody will jump right on it. Go into the job with their 12 chains, and all of those straps and aluminum trailer. Not be able to tie down the load properly, all of that Steel just loves aluminum and you will really like it when you get your brokered load tied up for 2-3 days waiting to get unloaded. All for a grand price of 1800 bucks to go from Utah to Oklahoma .. That's what brokers do.. So here is proof .. Now it is time to let a little air out of those swollen heads.. And come to a reality that things like this are what's brokers do..cut rates.

 

Bill,

Your company hauls some loads direct and you sometimes broker loads. Do you do the direct loads 15% cheaper because all the "extra" work the shipper endures with no broker ?

 

You guys act as if drivers are immune to foolishly and/or ignorantly cutting rates to the bone. And also as if brokers always make 15% or better and don't have to deal with that very same problem. And how in the world is it that shippers would never stoop to such levels?

There's been a broker or three in this forum tell me before that if I was getting the rates I claimed I was that I am doing better than a lot of brokers themselves on their rates. I, a few of us actually, were even labled as "vultures". That's a badge of honor it gets no better than that.


I'm not here to defend nor prop up any brokers but I ain't never worried about what any of them makes or has made either. Cause if you let it that stuff will eat at you, needlessly. Know what you need and always stand firm.

 

15% is the number the brokers have been giving, not me... I would suggest that we put on our thinking caps and consider what a 15% average entails. We know some loads are going to be more than 15%, and some less. I don't know and brokers can correct me if I'm wrong but I would think that "big loads" coast to coast $5k plus the broker often has to take less than 15%, only makes sense, most truckers are paid based on our expense in the matter so we wouldn't think a broker would make 15% on a 5k load and 15% on a $500 load. So those "big loads" are going to fall into the less than 15% category.

I would also expect that often times a broker gets a call from a large carrier with many trucks and uses that bargaining power to cover several loads at a time. And if the broker has a large volume of loads to cover agrees to less than 15% to knock them out in one deal.

So what does that mean to the O/O working short to medium hauls booking one load at a time ? Your friendly broker is probably getting 20% or more off of each load you haul.

To me this is especially painful when most of the loads I call on are within about 15% of making a deal, but alas, can't quite get there so make a few more calls. Unlike brokers, I do not factor the time I spend on the phone with them into my rates. To rollin coal, maybe he get's $4/mile on every call, I don't know, but I'm still willing to bet he would rather make $4.80/mile than $4.00/mile. and that's facts jack.