Seriously what does an auto transport broker really do ?

Can't speak to the car brokering side, but brokering in general- we provide a service to shippers, and somewhat to carriers. We fill in so that they don't have to hire 1 or more people to arrange shipping on their freight. One can make the argument that freight'll still move without us, and it's not necessarily a wrong argument. But for price conscience or overhead conscience shippers, there's a certain value into having brokers available to work with.

On the flip side of that- we're able to spend time developing leads and prospects that individual owner/operators will have difficulty getting at because they're doing their jobs. So, we connect you guys with freight, and the shippers get their product moved. It's just what happens, and how the industry has developed.

 

All good.

We do bear at least some liability as well- we carry cargo and liability insurance as well for that reason. You'll have seen some brokers getting roped into lawsuits here of late, and getting hammered as hard as the carriers.

As far as rate fluctuation - that's a bit trickier. It's also a matter of other involved parties within the freight industry bidding against you. If you suddenly start losing lanes you'd been routinely winning bids on, then rates have gone down and you'll have to bid with that in mind. That drives rates down for you guys. This can be anything from a local small carrier getting in the ring, to another broker coming in and fighting you in a price war. That actually affects us because on top of that, we have to thin our margins out to remain competitive. I lost two loads yesterday with a customer that I've been working with for years - I suspect the new competition ran them at break even or a loss, because I couldn't even touch the loads at the quoted rate. Which is also a tactic to earning business.

So, there's a lot that goes on that you might not necessarily be seeing from your perspective.

 

Guess you'd have to ask the other drivers around here about that. I'm on the other side of a computer screen sitting at my desk and locking in trucks for loads all over the place for a wide range of customers. I can't speak to their experiences, or what's making them successful or stay in the business.

 

In a free market economy the existence of freight brokers alone proves their value. Also, I have never heard of a freight broker kicking down a carrier's door with a 12 gauge shotgun demanding their business. All carriers and owner operators, from my understanding are free to take over all freight brokerage responsibilities and absorb them into their organizations at any time.

 

To be clear, brokers arent trying to screw or break carriers. they are trying to win business against other brokers. Competition drives down shipper price which is 100% good for any buyer in any scenario. What that does is drive down rates when carriers still book with the winning broker. shippers set the rates, brokers fight for the biz & carriers solidify the rates when they book loads.
This is my opinion, I do not claim to be an economist.

 

Shippers try to set the rates but they dont have a gun either. If they did the rate would be zero$/mile or.. You pay us to haul it since we have the gun. Since truckers are free to take it or leave it the rate has to be the minimum to get some carrier to take it. You only need one yes to move the one load, so one dummy hauling cheap can skew the occasional shippers perspective on appropriate pay.

My analogy for the wife is that free markets are a lot like hydraulics. The fluid pressure in the circuit is dollars. The job needing done is the load in your bobcat bucket. Say the system can make 3000 psi but theres only a few cinder blocks in the bucket (an easy load.) Move the control valve and watch the gauge. It doesnt jump to 3000psi for no reason. In fact it cant without resistance. That load will start raising at like 100 psi, because thats all it needs to raise a light load. Put 4000lbs of cinder blocks in the bucket and it wont budge until 2800 psi because thats the minimum force to do the work. Nothing less is sufficient.

Freight is similar. There no need to pay $10/mile on easy peasy no tarp legal loads so no one will. Post oversize tarp loads to deadzones at $2/mile and it will sit forever due to the refusal of sensible drivers to haul it at a loss. The refusal of trucks to haul cheap, creates the resistance necessary to make the pump (the shipper) raise the pressure (rate$) to move the load.

When the phone starts to ring you are getting close to the minimum $ to move that load. When its ringing off the hook even after you took the load down, you priced it too high.

Equilibrium of supply and demand for trucks. Since my wife doesnt get hydraulics she also still doesnt get freight rates.

 

That might just be the most over complicated analogy I've ever heard in my life. LOL.