How important is the role of brokers in trucking business?

I don't think you quite understand the headache a broker goes through just to find a truck.

Shippers aren't going to pay more just because there are no more brokers.

They would have to have a whole logistics department, just like any other brokerage, to coordinate all their shipping needs. Their hired people may make $12/hr but since those people don't have anything invested into a business, like a broker/agent does, they are much more likely to quit, and the turnover rate in their shipping department won't be acceptable, as I see a lot of people quitting that job due to the headaches involved.

And also, you're forgetting market forces are going to apply anyways, and the shipper is going to look for the cheapest truck available. Rates are not likely to go up in this scenario. In fact, it's likely to go down. Because all of these shippers don't have the hundred carrier contacts like their brokers did - it will take them twice as long to ship the goods, the logistics mess that is created will mean less loads on the boards at any given time, as shippers struggle to catch up to the demand, thus rates will go down.

Brokers/agents exist because it's actually needed. It's a necessity!

 

Direct shippers do post on load boards....

 

I'm sure it will work for shippers who need 6-7 loads a week shipped out...but not for huge shippers...there's a reason they use 3PLs...because it's cheaper. If it weren't cheaper, they wouldn't use them.

Would shippers use a service like you describe if that was the only option? Of course they would. But we're not talking "what-ifs", we're talking about the real world market.

 

I have booked loads directly from shipper off the internet load boards.

 

I can see why a small shipper would go directly with a carrier, if they are looking to be more involved, looking to have the control over finding a carrier of their choice, for quality reasons, etc. Nothing wrong with that.

I guess I would define a "small" shipper as one that ships out no more than 10 or so loads per week. Not sure what others would define as such.

 

A shipper who needs extra capacity is likely to be busy. They probably don't have the time to look for available carriers and weed through the applicants. It probably isn't their specialty and they may make costly mistakes.

Or they may have to take time out of their busy day to hire extra help for what may be just a temporary influx. They'll likely offer $12/hour which means their costs are ~ $18/hour after providing benefits ($740/week). And they'll have to train this new employee who won't know rates and lanes and will likely either overpay or fail to attract carriers in a timely manner. The true costs are likely much higher...

A broker in a high-demand area will start cold-calling trucks they've worked with & may even offer attractive rates to get that truck from wherever it is to where it needs to be. Or that broker may sort through the history of trucks posted in that area and cold call to see if any happen to be there or headed that way. A brand new shipper would probably just stare at their phone waiting for it to ring.

A broker then communicates with their carrier and relays information about where it is and whether it will be on time. He may make contingent plans in the event of a breakdown. A shipper likely sits in ignorance until hearing that something bad has already happened.

A broker offers fuel advances or quickpay options which greatly increases the pool of carriers. A shipper pays in 30-60 days (or more) which limits his pool.

The end result is that it often will cost more money and involve more headaches for a shipper to try and add to their duties the specialized tasks performed by brokerages.

 

The flip side of the coin is that I, as a carrier, can easily pull up a town's chamber of commerce webpage and start making cold calls. Given enough time, I may well find and book a load for more than I would have through a broker. But I'll have wasted half a day or more of productivity & have to deal with the shipper's longer payment terms.

Half a day of my time is worth a couple hundred dollars. Waiting 60 days for $5,000 also has its costs. Quite often I will have been better off booking a load with a broker and using my time to do what I do best...

 

Yep and usually cheap as hell!

 

Not always. I've done a few good paying loads direct off a load board. It's especially nice when you go in to get your copy of the BOL signed, then ask you what name you want on the check they cut it right there, and put it in your hand with a smile and a handshake.

It's a bit awkward when they hand you a check for the purchase price of the freight as well, but a phone call usually gets that sorted out.