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Discussion in 'Freight Broker Forum' started by brokerguy, Feb 7, 2018.

  1. rollin coal

    rollin coal Road Train Member

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    The thing is a load can pop up brand new on truckersedge, you call on it right when it posts, and it's covered already. How can it be? Because it was already posted on the higher tiered DAT boards minutes earlier and has already been seen and picked over. Now in a hot market this isn't such a big deal. Of course stale loads that never come down and a board that doesn't auto refresh is annoying. But when the tables are turned and trucks are begging for loads it's all the difference in the world.
     
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  3. Broker42

    Broker42 Bobtail Member

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    What gets lost in the discussion is that ELD's and driver shortages help brokerages not hurts. In the short term, contracts rates will suffer some losses. In the long term, a higher cost for the load means more margin (15% of a larger number = more margin).

    Driver shortages increase demand for brokers. If capacity is easy to find, there is less reason for a shipper to use a broker. When drivers are scares and the rates high, shippers increasingly rely on a broker to do the hunting for them.
     
  4. Broker42

    Broker42 Bobtail Member

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    One more thing. The margins for publically traded brokers are part of each quarterly earnings call. You're generally going to see 12%-17% reported. I've never seen a broker report a 20% or higher total margin on their truckload brokerage.
     
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  5. TallJoe

    TallJoe Road Train Member

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    So that's it ? 15- 20% is the honest broker's cut? So after all, brokers are not such monsters as sometimes depicted here, keeping 50% or more?
     
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  6. boredsocial

    boredsocial Road Train Member

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    I’ve averaged right at 12% my whole career...
     
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  7. PPNLE

    PPNLE Road Train Member

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    14.2% myself.
     
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  8. boredsocial

    boredsocial Road Train Member

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    I haven’t had a claim touch me in two years. My margins wouldn’t work otherwise. Let’s be clear about that. Because I prefer low risk freight my margins tend to be lower than other brokers. I'm completely fine with this. I absolutely wouldn't trade my 'worst case I lose 5k' freight for someone else's meat or ice cream with 15-20% margins. Mine ends up being quite a bit better over a thousand loads than theirs... and I'm way way way past the 1k loads mark.

    Remember guys it's not what you make... it's what you keep.
     
    Last edited: Feb 12, 2018
  9. TallJoe

    TallJoe Road Train Member

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    Under what circumstances would you have to pay claims? Or perhaps I should ask, are these cargo claims? I thought that cargo claims were on carriers or shippers mostly.
     
  10. Broker42

    Broker42 Bobtail Member

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    When the uber-like freight apps hit, it will probably be a broker app. Everyone seems to forget about the credit lines. Any shipper that has been in business for more than a year is not going to pre-pay by credit card for a truckload. If you are looking for the app to front the money and do the collections, that's basically a broker.
     
  11. boredsocial

    boredsocial Road Train Member

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    Mostly damage claims. I move a lot of produce so what I have going is actually very rare for that space. Every time a customer decides to do something ####ty to the truck and we can't find a way to pass it on the brokerage ends up eating it.

    Every time an insurance company doesn't cover something (and they frequently spend a ton of time and money trying to wriggle out of bigger claims) the freight brokerage ultimately ends up taking the hit. I can't talk in detail about the claims my brokerage has seen on over-dimensional stuff, but those stories are wild. I also can't get into detail about the ######## I've seen in produce/meat/dairy but it was quite a ride my first couple of years.

    Trucking companies can, and frequently are sued by freight brokerages over claims.... And they frequently just go bankrupt and walk away leaving the broker holding the bag. Remember that the customer typically owes us quite a bit of money when things go wrong, and usually will just deduct it from what we are owed. We can sue them if we like, but that's obviously the end of that income stream which is also bad. Very quickly you're trying to do a cash flow analysis of whether it's smarter to sue a customer (and spend a lot of money on legal bills) or to just eat the loss and keep earning.

    Bottom line is that there are a lot of things trucking companies are actually shielded from by freight brokers. For every trucking company that got 30k deducted by some random brokerage over a ######## claim there's quite a few brokers who had a trucking company not even bother to turn on the reefer to save fuel money (because they were circling the toilet bowl cash wise) and then couldn't pay anything toward their not-covered-by-cargo-insurance claim that was 100% their fault.

    There's a reason why the most efficient way to trigger my spidey sense is to sound desperate. Sound desperate and I'll literally take a load I've given you back. If you want a fuel advance you better sound super chill or I'm going to be on one butt cheek the whole time the load is on your truck.
     
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