Are Freight Brokers Necessary?

Brokers provide a service and sometimes I need that service and they should get reasonable profit to provide it but there are some that I think are just nuts
I used to do work for one direct shipper and in 2010 I was getting 2.80 a mile out of them well I would recognize one of there loads and so called about one on the board the other day 1.53 a mile from the broker and as I doubt there rates have gone down it is just an example of greed
Brokers are not even the real problem its those that run for peanuts

 

Brokers compete for freight just as truckers do. A freight source can use multiple broker establishments to create competition in pricing and insure good service.
If an agent strikes a contract for 1000 loads it does not necessarily mean all those loads are priced the same. It's all a part of making the deal and finding the profit in that deal. There are many variables the average trucker will never know about or understand and this is where the broker and the shipper makes out.

 

When you stop and think about it, this is a question better asked of shippers. Because it really doesn't matter what we think. The broker is an agent for the shipper.

 

379 Pete you made a heck of a lot of sense with every thing you said. I didn't see any answer to why it takes so long to get paid. I also use a few guys that I know and skip out the broker whenever possible but I'd say 70% is through brokers. Another question I've always had was when you broker a load why is it always in the fine writing that you agree NOT to haul for the shipper for a certain time after you haul that load?I don't really mind them getting a cut but it would be nice if I didn't have to use them at all. I've gotten a pretty good reputation around me and don't use those boards much anymore but still have to at times

 

That's how bills get paid in the business world - it's not just a trucking business thing. That's how businesses pay their utility bills and everything. Which sucks, in this age of the internet, but that's how it is. A bill comes in, someone has to process it, a check has to be cut then mailed out - which probably doesn't take all that much time. But if they can wait extra days before spending that money to pay a bill it helps them out cash wise. Doesn't make it right, but that's how it is.


Admittedly if a broker has a good relationship on a particular contract, they probably get paid relatively quickly, maybe within a day or few days at most. And for them to get paid like that.. ..then turn around and charge you a quickpay fee.. ..is just wrong, but how will you know and what can you do? On the other hand with a new contract they might have to wait 30 or 45 days to get paid themselves, the same as you.


Maybe things were all rosy 35 years ago but this is reality in 2011. I don't understand how a company even 35 years ago could justify paying someone $35,000 or $40,000 a year to sit in an office and waste time all day making contacts and dead end calls with trucking companies trying to cover 15 or 20 loads in a week's time. That employee could be doing something else productive. Paying someone to sit in an office all day dealing with that is a drain on the bottom line of their core business. It makes absoultely no sense. Businesses that need freight moved are no different from owner operators running their business. Each one has a different operation and different needs. Take a company like Wal Mart for instance. They figured out a long time ago it was best to outsource the trucking operations for their refridgerated side.


I can see a time in the future when they get rid of their company trucks and outsource the store delivery stuff on the dry side as well. Trucking is not their core business and it makes no sense for them to waste resources on that when there are companies out there who's business is trucking that can do it just as well, maybe better, at a lower cost. Compare Wal Mart to some small time company that might ship 5 loads a week. A company like that is not going to waste resources on their own trucks, why would they waste resources on dealing directly with truckers to move their freight? The days of companies like Wal mart having their own fleet of trucks are numbered. Broyhill figured that one out. Emerson/Schneider. Wagner/Federal Mogul getting rid of their trucks and outsourcing to Averitt Express. It's reality and why brokers, 3PL's are necessary.

 

There is brokerage that I did business for many years. The owner died and his widow took over the business. These people would advance money at no charge if you need the money. They would pay upon delivery or receipt of the signed bol and take 10% of the total. No hidden fees and no charges for quick pay. That is the way this business used to operate. The widow sold the business a few years ago and the new owner operated the same as the founders until about 2 years or so ago. He started playing games with the money and started charging for things that he never did before, so we no longer do business with him. I have a friend whom I put in touch with him and he also no longer does business with this guy.

Are brokers necessary? No, providing you are willing to solicit your own accounts and do all the subsequent paperwork and customer service yourself. In some respects I would like to see the age of brokers come to an end. On the other hand, there are some good, honest brokers around. They do take a cut from the rate. Everyone who provides a service should be paid for their service. I think the problem most have with brokers is the amount of the cut that they take. More transparency would help to build more trust in the relationship. And, contrary to what brokers contracts state, they are not an agent of the carrier, but of the shipper. Brokers charging to pay a carrier within 24-48 hours is much different than it was several years ago. It was common at one time for brokers to pay upon receipt of the bill of lading and with NO hidden or extra fees. It was a good way to do business. I think that technology has been a boon and curse to this industry. It has enabled too many to be able to enter the business with little more than the cost of a telephone. Many are under funded and could not afford to operate the same as these old brokers without the benefit of factors.

It comes down to whether you feel that you are getting a good rate from a broker or not. If not, then you can always solicit your own accounts and leave the broker out of the equation. If you get a decent rate then it really isn't that important what the broker makes.

 

Get in with Buyers, cut the "Freight Cut Throaters" out.

 

When I started with my own truck in 1976, I was leased to a "farm lines" company. We were supposed to only haul exempt freight, (which we rarely did), as authority was hard to come by back then. I was only on a 30 day lease at a time so I could pull their freight out, and sometimes back. If they didn't have anything, I used other brokers.

I have seen many of these farm line companies and brokers that would start out paying as soon as you turned in the bills, then a week later, then, if you were leased to them, maybe after every two loads. Then the checks started bouncing for about a week before they were good. Next thing they were closed down. The week after that company closed, a new trucking company/brokerage opened in the same building with the same people, under a different name. The bad checks you had would not be honored, because that was a different company, but, you could haul their freight now and get paid as soon as you got back.

Then the cycle started all over again. Some people did this about every 6-8 months. One company I know very well did this for close to 30 years.