Most brokerages shoot for 20%... And, they'll grab more when they can. Know your lane, know your commodity.
I think a lot of truckers are missing the point here with the investigation. Not saying brokers can’t make a living, can’t take their cut, can’t essentially make a buck off the back of those actually doing the work, can’t be fast talkers and BSers, etc etc etc. making money for nothing, right? It’s become the American way, we all get it. What they’re saying is during a time of crisis they took advantage of the situation and are “price gouging” which is illegal. What they did, and are doing, is no different than stores trying to charge $35 for a roll of toilet paper. Or a gas station trying to charge $10 for a gallon of unleaded gas. It’s price gouging. And that? They can do something about. I don’t think their goal here is to interrupt the free market. Me? I just personally have a problem with people who make money for nothing. I.e. realtors etc.
A question: Could a broker contract with a shipper to haul 10 loads a week out of Plover going to Elmhurst, 2 day with appointments at both ends. Each load pays $1,800 but if all loads are picked up and delivered the broker gets $2,000 a load. If all the pick up appointments are made on time, the broker gets an additional $5,000, same for if all deliveries are on time. In total the contract is worth $30,000, potentially yet each load only pays $1,800. The transaction record wpuld show the $1,800, not what the broker is actually being paid. Basicaly what happens if the brokers strip money out of the line haul rate and hide elsewhere in the contract that carriers have no right to see? Is this possible? What about being paid $20,000 for the 10 loads with no breakdown per load? Can the broker show you 9 rate cons for $1,500 and yours for $2,000 to make you feel good? Again dont know is this is possible, just thoughts running thru my head as a i read.
What do you think trucking companies do when the market swings the other way? When Harvey and Irma hit in 2017 there were a ton of trucks posted with notes like "LF Fema loads $5 PM" or "Fema only $$$$$" Trucking companies raked both shippers and brokers over the coals during that time, which lead to the massive upswing in drivers joining the workforce and people starting their own trucking company. Which in turn led to the change in supply/demand forcing rates to fall again. It's not price gouging if its simply the effect of a volatile market that both parties actively work and take advantage of at any given time.
Realistically I don't think it would work. 85/15 (or any set markup) assumes that cost is a pass through charge with a standard markup, but that isn't the case. The charge to the customer is often set in advance through an RFP or RFQ and needs to be good through the course of a year. If its a particularly rough day for capacity, brokers often lose hundreds or thousands (We typically lose around $10k a week on our biggest customer during produce season) to make sure their customers freight continues to move, with the intent to make it back up when the market is in their favor. You would need to include legislation that also limits the amount a trucking company could charge per mile for the legislation to work, or brokers would go out of business. And while I know that your average truck driver thinks that is a good thing, in reality it would be pretty devastating to a huge chunk of the trucking companies out there. Brokers provide a ton of value in the form of customer sourcing, liability absorption, and cash flow that would disappear and ultimately drive small to medium size trucking companies out of business.
I’d probably sit back and see who has more influence in DC when it comes to “laws” before I championed for a law about how to split things. OOIDA probably isn’t squat when it comes to the likes of TIA and other business groups. Your government help that you want could very well end up 75/25 and we’d all sit back and laugh.
@JimmyTwoTimes mentioned cash flow. If brokers did away with quick pay and went to 30 or 60 day pay that would help more to thin capacity than anything.
