broker-group-ceo-warns-full-transparency-will-put-3pls-owner-operators-out-of-business

Discussion in 'Freight Broker Forum' started by Dino soar, May 23, 2020.

  1. Dino soar

    Dino soar Road Train Member

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    You seem to be on a huge kick about these brokers being regulated but then some of the other threads I see you starting sound like you aren't even in business yet?[/QUOTE]

    I am a new owner operator. Right now I am self quarantining because I have been exposed to covid19.

    And just to say it I am fine with money and the rates are what they are. If the transparency issue came up when the rates were high I would still have the same lean. It is more of a philosophical issue with me than an issue of oh my God I'm broke government help. No no no no no.

    I have no interest in brokers being regulated. The rule is already on the books. They should enforce it or remove it in my opinion, nothing more, nothing less.

    With that being said, the reason that I have posted these articles is because I want to hear the discussion. I'm not intrested in fighting with anyone I'm not intrested in pushing my point of view down anyone's throat. Quite the opposite.

    I want to hear the different opinions about it and if I see a valid reason I have no problem changing how I feel about it.

    There are 3 main arguments that I hear.

    The 1st argument is if they enforce the rule that's on the books somehow that will lead to more regulation. That doesn't make sense to me. If they had to sit down and re write the regulations definitely bad idea. Never should you cap what the broker makes.

    The 2nd issue is underbidding. That has been going on forever in every industry and I do not see it will be better or worse. It is like the world's oldest profession. It just continues on and on.

    The 3rd argument is that if anyone is for transparency they are flat broke they have no business in this business there losers they're idiots they're morons and the hell with them.

    It is definitely true that there is a segment of owner operators that are flat broke and if they can't work this week to pay bills from the last 2 weeks they will go under. I get that and it is very true and accurate. However there is not a 100% correlation between flat broke owner operators and business owners that feel enforcing the rule that is already on the books would be beneficial. I know that some of the guys right here on this site that support transparency are not flat broke bums.

    So I just want to hear good factual reasonable arguments that are not shaming or blaming or generalizing.

    It is very interesting to hear the arguments and maybe someone will say something I've never thought of and I'll see it the other way. Who knows?

    The discussion is the interesting part.
     
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  3. chimbotano

    chimbotano Medium Load Member

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    Great! I can’t argue with that.
     
  4. Sirscrapntruckalot

    Sirscrapntruckalot Road Train Member

    What an interesting thread.

    An you all are keeping it civil.

    Back to popcorn.

    I salute you with my popcorn.

    Sirscrapntruckalot - Enjoying the conversation.
     
    Cattleman84 Thanks this.
  5. Arch Stanton

    Arch Stanton Light Load Member

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    I think big brokers and carriers already know what each other charge within a few % and they know this because employees come and go from these companies.
    You can look on freight waves and see what the big trucking companies and brokers are making per truck, per mile, per year, and % of profit all the info is there to see what is being charged on average and all of the big publicly traded companies look at each others numbers.
    They also know who each others big customers are all theses dry van box billboards running up and down the highway and then park 50 of them in a shippers warhorse woohoo big surprise JB hunt hauls for XYZ widget company.
    I do think the brokers could work with say a 10% to
    15% fee and I think some harsh enforcement of existing laws and not allowing a carrier to sign his wrights away. it should be Fairly easy to police the big brokers by taking complaints from small truckers and going to brokers office and if the rules were not followed the trucker gets 50% of the 500K fine at that point it will be self policing for the big carriers and brokers now the 1000's of small brokers and carriers will be harder to get inline but could be done with the inter net we can easily report the shady players
     
  6. Rideandrepair

    Rideandrepair Road Train Member

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    There’s Competition amongst Brokers, Megas, and small Carriers. I don’t think new rules are needed. But if it comes to pass, I doubt that Megas would be any bigger a threat than now. The Competition would be more about Service among all Carriers instead of price. I highly doubt it will happen. Price Rules, Supply and Demand should be the only thing that dictates price. Can’t make it? Find another Bussiness. That’s what I’ll do, if needed. Fair enough.
     
  7. gentleroger

    gentleroger Road Train Member

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    You can figure out AVERAGE rates from public data, but can you find the rate on a particular lane? What about other details of the contract?

    An intermodal company "owns" a train - they have contracted with the railroad that there will be enough freight for that train to run. If other intermodal companies figure that out, they will leverage their knowledge to get a better rate for their containers.

    More transparency isn't really going to change the underlying mechanisms.
     
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  8. D.Tibbitt

    D.Tibbitt Road Train Member

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    U know i have only been at this for 6 months . I dont claim to know anything about what im doing but i swear if some ppl would put as much effort into making more phone calls and building NEW relationships and trying to find good paying freight, as they did complaining and protesting about nonsense, it might actually get them some new business and/or new customers to work with.

    rates are down industry wide, but i think it would be important to use the bad times to build relationships and make new connections so u already have somebody to call when rates start picking up. And u really never know what ur gonna find if ya dont look for it.... Granted i have only touched the load board 1 time in the past month..really been using this time to build new relationships with the agents in my company and finding whos got good paying freight ...hauled alot of stuff this past month i never have hauled before.. And been to places ive never been... makes u feel like a rookie all over again .... I hate it , making those phone calls... but id say our business relys on it right now if ur new like me, or running spot market, or dont have ur own freight, u got to grind it out and put in the work .

    Theres still plenty of money to be made out there, but u wont find it when ur to busy protesting about stuff that is really out of ur control ... just my 2 cents on the matter, i dont have a pony in this race .. I do think more regulations would be a big step backwards for this industry and at all costs should be avoided
     
    Last edited: May 25, 2020
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  9. SteveScott

    SteveScott Road Train Member

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    The 3PL's are more afraid of other brokerages undercutting their contracts than they are of O/O's finding out their profit margins. Don't confuse what this is all about. I've seen freight contracts that shippers sign with large brokerages, and they can and are just as restrictive as carrier contracts. They all have non-disclosure agreements because they don't want their competition to know how much they need to undercut their rate. It also became very clear from this article that the FMCSA is in bed with the 3PL's. In the other thread with the article about the White House meeting, and the article attached to this thread, the head of the 3PL association and the head of the FMCSA both cited the same straw man argument. Both used Pepsi not wanting Coke to know how much they spend on shipping as some kind of example for why this is a bad idea. Ya think they compared notes? Sheesh. Carriers have been getting regulated into the ground by the FMCSA for decades, while the brokerages have flourished with few if any restrictions on how they do business. The average profit margin for a motor carrier is 6 cents on the dollar in the US. That's about as slim as you will find in any industry in the world.

    What really scares the #### out of the 3PL's is if they're forced to disclose their profit margins to shippers and carriers, there will be much more competition in their own industry, and from new technologies like Convoy and Uber which will explode as shippers flock to them and leave the brokers. Most Convoy and Uber loads charge a flat fee to the shippers, and most of the work is done automatically, so the overhead is a fraction of the brokerages.

    This is going to get interesting.
     
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  10. scott180

    scott180 Heavy Load Member

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    Shipper pays $1000 to move load.
    Broker A charges 20% = $200
    Broker B charges 15% = $150
    Due to transparency carrier uses Broker B whenever possible.
    Broker A still moves freight but needs to put in more effort. Not cost effective.
    Broker B is on speed dial. Less profit per load but more loads means more profit.

    At some point it is not worth the brokers time to move cheap freight. Shipper needs to find cheap but still competent broker to move freight or rates need to go up.

    To every action there is a reaction. This is how I think it will play out in the long run.
     
  11. wichris

    wichris Road Train Member

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    Apply the same logic to a truck. No, wait. Less miles(less loads) More money(higher percentage) I guess it should only work one way.
     
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