sub-brokering - is this common ?

I've often thought about this Bill so let me ask you some questions if I may. Let's say I have a pretty good reputation for on time delivery in a niche market but I must work with a broker because I cannot handle all the freight that the shipper produces. After much thought, I have always decided to stay small and book through the broker so I have the flexibility of cherry picking the loads that high want (the most profitable lanes for me...i.e. least DH).

I know a few trucking companies that I could have "partner with" but,:

1. How do you split the money with the other trucking companies....after all, I have done all the work developing the customer, why should we get equal shares?
2. Who pays in the event of a freight claim?
3. What reciprocity agreement did you come up with with the other carriers? I can see how they would be more than happy to take your freight but not so eager to send you to their customers.
4. Did you and the other carriers sign a non compete agreement not to steal each other's freight?
5. Do you think any such non compete agreement would be worth fighting in court or by the time a carrier like Covenant got finished dragging it through the legal system you would have more in legal fees than it was worth?

 

You are looking at two types fo work plus risk. Selling the account is the hard part (and the part that many independents discount as worthless) but covering freight can be just as hard. We have had several people working all day just to cover a single load and make little to nothing on. Just part of the business.

The other side is risk. We decided to go as an agent for many reasons but one of the big ones was risk. If a company doesn't pay or takes 90-days to pay, I still get paid so that I can pay my dispatchers and the carrier still gets paid. No cash flow games and allows me to focus on building better freight for my drivers and then to broker if needed.

Typically the carrier will pay but that brings up something that we looked for when shopping. Contingent cargo and liability insurance. You would be stunned at the number of brokers that don't carry this type of insurance. So if the carrier doesn't pay then Covenant has insurance to cover this. No risk to me. And most larger agent based brokers have this as well. But something that you need to look for.

We are big into expedite. We had a program called "Say YES and mean it!". So many brokers will say they can do everything but really only do one thing. So when they get LTL or expedite they really can't move it. So we asked that they send that business to us.

These are worthless to me. Freight is going to go where freight is going to go. If I don't have a good enough relationship with a costomer that the next time some low rate wannabe darkens the door of my customer and they switch then I am not doing my job.

One of the reasons that I like Covenant was that while they had a non-compete to keep me and them from seeing what I was doing and going after the business they had no protected accounts. When you are dealing with large companies they have likely dealt with every account already. But if we get an in on an account they are working they will not keep me out.

Not really. Very hard to prove these things unless the offending party if very stupid.

 

Great questions with great answers!!

 

The 3PL companies often get the big contracts with big companies or the government and then can broker it out to someone like LS or whoever. Most of those big 3PL companies don't want the hassle of dealing with so many small carriers and just use some of the bigger brokers. Smaller brokers don't usually ever double-broker but Landstar will often take broker loads and re-broker them if they don't put them on their own trucks.

The main thing is, when you call on a load or get offered one, you figure out the miles, tolls, expenses, etc. and the work involved in the load and come up with the rate you need to do the job (even if you have to put them on hold or call them back). If you get the load for the rate you want, don't worry about what anyone else got for their part. I was getting loads from one broker that was paying me $6 mile. The shippers people had a conveniently close discussion within my hearing (coincidentally) about how they were paying through the nose on these hot loads and mentioned how they might need to look for new carriers. I wasn't going to play that game by giving them my number. I also found out later that, though I had $350K Cargo Ins., the freight was worth $500 - $1M - the broker covered the rest. He also had to field numerous phone calls continually, including after hours and weekends when the customer needed a truck right away and things were constantly changing on what they needed. A job I don't need. So, the broker was really working for his money and I was getting top dollar on pretty much easy freight that just had to be done right and on time. Gotta love it.

Though I am a carrier, we also became brokers back in 2000 and have been right up front with everyone with what the loads entail.
We don't haul or broker cheap freight.
We respect the truckers/carriers since we know what they have to go through (I have 35 yrs trucking and my wife has put up with me for much of that time).
We pay the truckers for all their time if things go wrong. That's why we always have loyal and dependable truckers to haul for us.
If you're a professional, you don't have to deal with low-life bottom feeders.
If a broker talks disrespectfully to you, that's a sign to hang up on him or her.

 

It is amazing to me that I have people take crap from a broker and then call me to fix things when they go wrong.