Broker Transparency

Hate to say it but if we could just get another wave of $0.75 per mile paying loads with truckers striking it might get some traction

 

Just caught up on all of this and many other threads! My truck is buried in snow so time for office and forum catching up!

Hope everyone had a good Thanksgiving with the entire family! We had two of them in spite of the fear mongering!

 

Maybe I look at it the wrong way.
More competition = lower rates
Less competition = higher rates

 

This is silly. The shipper's absolutely pay for all the headaches that brokers/3PLs absorb for them every day. Floating million's of dolllars a week to carriers that are freaking out if they aren't paid within 15 days, while customers are paying anywhere from 30-60 days IF they pay on time. Vetting the thousands of carriers that are roaming the load boards every day, many of which can't find their tail pipe with both hands, to make sure the customer gets the TLC they need to be a repeat customer and so that carriers just like you have loads to haul for said broker so that they can come gripe on message boards about the evil and greedy brokers swimming in their piles of money Scrooge McDuck style.

 

That one I look at as possibly going both ways. At least if you're talking about less or more brokerages. Look at your electric company, or your internet service provider. There's no real competition, so they can charge you whatever they want, and provide crappy service on top of it. What are you going to do about it? Move to another town that does the same thing?

So apply that to brokerages. If you have more of them, they could take the same load and offer it to truckers for less and less, and hope they get a bite. Or, they could take that load and offer it for fifty dollars more, and someone will haul for them instead. So that means the first broker has to up the price by another fifty if he wants to get it hauled, and now the rate has jumped a hundred bucks.

Now if you're talking about drivers, I believe you're 100% correct. Too many trucks creates a broker's market, and even though they compete with eachother, there will probably always be some sucker that will haul the cheap freight. So they can safely drive the rate down and still get their loads hauled.

Take it with a grain of salt. I'm still trying to figure out how all this works.

 

How could you possibly decide if a broker was "cutting a trucker's throat" if you didn't understand their operating cost? I'll show you using some hypothetical numbers:

If I charge a customer $600 for a load and pay you $400, that's a 50% markup on my cost to the truck, and seems high right? But if my cost to transact a shipment is $200 based on salaries paid, insurance, fixed cost such as a lease, paying a TMS provider, paying RMIS, etc then I've actually broke even as an organization on the load.

I do agree with you that the catalyst for this whole debacle is that truck drivers / carriers want to make more money when they haul loads, I just don't think this is going to make that happen. What is more likely is that the changes required on the brokerage end will drive up their cost (not by paying more to carriers, but rather updating customer contracts, updating systemic framework so that passing on customer charge to carriers is an easy process and meets government mandate, etc) and will result in brokers needing to pay carriers even less to keep their business a float.

Or maybe every broker will attempt to pass the additional cost onto their customers. And maybe customers will accept that, or a big player like Amazon will absorb the cost in the long run and drive all of the smaller players out of business and then control the market like they do everything else.

Who knows, economics are tricky.

 

When I'm talking about cutting a driver's throat, I'm assuming after the fact of operating costs being covered. Otherwise, why do business? So in your example, you wouldn't be paying the driver $400. You'd book the load for $600, cover your costs with $200, that leaves $400 left over. Then you tell the driver "$100 is the best I can do." And if they don't take it, you wait for another sucker. That's what I mean about cutting throats.

But also a lightbulb just clicked on here, lol. I see what you mean about needing to know operating costs. If the trucker sees you got the load for $600, then he would technically need to know your operating cost on that load before he could determine when the cost of business stopped, and the throat cutting started. So I'm kind of figuring this out as I'm typing. Like I said, I don't really know the business yet. Thanks for the insight.

 

Well the real thing they should make illegal is double brokering.

I never understood why that is legal. Broker a gets a shipper and he will pay a percentage.

If I understand it correctly broker b will take the load from broker a and give broker a percentage, keep his own percentage, and then pay the carrier less.

Sometimes it is even triple brokered.

The other thing is I don't know if anyone really has the answer to any of this. It is all speculative.

I have always thought if there is transparency it would be a better thing for everyone.

Myself I think if that were the case the Brokers will eventually settle down to a regular percentage that they pay whether it's 10% or 12% or whatever it is.

I don't think it would be easy for the carrier to undercut the broker in most cases. As far as other Brokers undercutting I'm not really sure about that either because if a carrier knows the rate unless he goes to other Brokers and tells them what that rate is then it's really not known by the other brokers.

It is not public information it is only disclosed to the parties in the transaction.

A lot of the guys that are against this are veterans and I respect their opinion.

But right now I lean toward transparency until I have a better reason not to.

 

Like a comedy show reading all this. If you saw that someone was making 10% you would pi$$ & moan and say too much. If it was 5%, the same thing. Let's go back to full regulation so 90% of you wouldn't even have any authority.