Broker price gouging and transparency - serious question

Ok so this is half question and half point of view.
Before you crucify me, let it be said that I absolutely agree that drivers need to be paid what they are worth and there are certain brokerages that are scum.

I have been the carrier compliance manager at a small brokerage for almost 8 years now. The transparency push might be great for some brokerages, but I have an honest question on how that would legitimately work for us.

Example:
We have many customers where we will have a carrier pick up, cross-dock a shipment for a few days and then have a different carrier deliver to final destination. The reasons for this are varied, usually because the customer has us bringing in another load from a different location. The loads are all going to the same place but they want it off their dock and somewhere else ASAP. They want one invoice for the entire job, not three invoices for original carrier, warehouse and delivery. So the rate we receive from our customer is for two carriers and one warehouse, but if we are required to show the payment from our customer then the carrier is going to see a MUCH higher rate than what they received and assume we are making way over what we paid them.
What they don't see is that we paid the pick up agent 2k, the warehouse 1 k and the delivery carrier 3k. They just see the 6500.00 invoice paid by the customer.

We also are an indirect air carrier, there will always be 3 parties in that shipment. Pick up, airline and delivery. The invoice the customer pays is for all 3, but if we are required to show what the customer is paying for all 3 portions of the shipment then it looks like we are gouging the hell out of the carrier.


We also have a few customers that we do not quote, we have learned that their loading times can be difficult and they often add stops or request tarps where tarps weren't requested originally. Their 3rd party payment service is a nightmare to get payment from if we quote and then change it to add any additional carrier costs. We do let carriers know ahead of time that load can be difficult but they will be compensated. If there is no rate to the customer prior to the load being complete, how are we supposed to provide that to the carrier?

I've been trying to figure out how we could even work the transparency thing with those shipments and it all comes out looking bad to the carriers.

We have also had circumstances where the shipper managed to damage the carriers truck while loading. Instead of the carrier waiting for the insurance crap and the shipper having to do the paperwork for insurance, we will offer to pay the carrier out of pocket for repairs and spread out the cost across a few shipments. It's easier for our customer and for the carrier. We provide the shipper with the receipts sent from the carrier so they know we aren't elevating costs and everyone is happy. So the next ten or so shipments that have a few hundred added above usual margin would look like we are gouging the carrier since we would make more on those.

I've read a lot about how brokers have no overhead compared to drivers. Expenses might be a bit different, but I can tell you our insurance is insanely expensive. The last time I accidentally saw a bill it was in the six figures per year. We pay 40k a year for an online onboarding system so O/O wouldn't have to print packets. We have to monitor every single carriers insurance, OOS status, conditional ratings, CSA scores etc. Hunting down and eliminating chameleon carriers, double brokers and independent dispatchers is also incredibly time consuming and expensive. We pay to belong to TIA in the hopes that it will assure carriers that we are able to pay them.

We pay all carriers net 30, we generally get paid anywhere from net 45 to 150. There are certain customers that will automatically deduct 3% of the invoice if they pay before 90days as an "early payment" deduction.

Many customers also refuse to pay TONU fees, but we pay them to the carrier regardless. We have 2 people we pay just to do the invoicing in special portals that are required by the customers. 30 different customers require special portal invoicing and we will not get paid without doing so.

I'm not at all negating the cost involved for carriers. We also have our own small cartage company and I see the costs required. I'm just saying some brokerages aren't without significant overhead.

I'm honestly all about getting drivers a decent rate, I know many brokerages don't operate like ours does and drivers often get screwed. You guys are the reason I have a job and a paycheck. Drivers are the reason we have access to anything we buy as consumers.

I'm just wondering what we could possibly implement that would take these situations into account and not leave our carrier feeling like we screwed them when they see the final cost paid by the customer.

 

Hum , may be that you take a percentage of what the shipper pay you . You show to the carrier the original transaction between you / shipper and you negotiate with the carrier your percentage. It is my opinion.

 

So in that case I would need to drag up what I am paying several carriers on one shipment and provide what each carrier gets to come to my end percentage? What about when the customer has asked that insurance expense to be paid out of our pocket and as it to future loads? I then need to provide that information to the carrier as well?
The percentage on multiple leg loads would be really screwed. The carrier sees a huge invoice being paid and doesn't see that there are several other portions of the shipment being billed so percentage is really off.

 

Bro i dont want no excuses which you only make to be able to continue screwing over fleece purchase drivers like myself!
Just be transparent if i not a millionaire by the end of the year it because you aint being transparent about the rates.

 

Hummm , I don’t know . At least we are talking about that. Someone here is going to come up with more alternatives .

 

Uniformity is key.


Lot of costs go down when the industry adopts uniformity.

1 packet for all brokers divided into

different sectors of need be.

Dry Van
Reefer
Flatbed
Os/Ow

there should be no conditions in rates at all.

packet is signed when carrier gets an Mc number

Rates are negotiated.

Detention rate:
Late fee:
Tonu:
Other:


Remember your onboarding that you pay 40k for is essentially doing that but costing you arm and leg.

if MC is active then Insurance is up to date, once Insurance is canceled, MC is no longer active, because insurance notifies FMCSA ASAP.

simple system would be carrier wants to haul a load for you, so carrier calls you, you send notification for approval on fmcsa type system, carrier adds you to their list, you get ins cert ASAP as certificate holder,


Rate is discussed, terms and rate con sent over and accepted and that’s it.

Rate con will have a separate sheet on the back such as a full disclosure.

With Variable costs section and Fixed costs section. Variable costs being multiple legs. Fixed costs being cross docking and other things.

Brokers profit listed on bottom big beautiful numbers.



And mandatory jail sentences for double brokers if convicted.

once rates are published you think every trucker is going to say sure I’ll haul it for $1 a mile?

they are going to look at the brokers cut and say no thanks, most of the time.

shippers don’t want this because they are using you as a buffer to lower prices, they want more and more brokers in the market to undercut each other further under cut the trucker.



As for all the costs you listed I think your on the wrong side.


Double broker I talked to today to see what her costs are and she knows my positions on what she’s doing, literally paid 9k in bond, 5k to start her brokerage firm, another 8k to get her MC.

let me tell you that she’s pulling in more money then you and most of the vets here. Her yearly cost of her operation is around 17k

End winner is the shipper. They are using you guys to fight their battles.

Smart people make money one way, geniuses make money both ways.

Example:

Shipper 1: I’ll work with only one broker because he’s trusted.

Shipper 2: I’ll work with everyone because my product is insured by the broker and or the carrier.


shipper 1: pays good rates for that trusted broker

Shipper 2: could care less who’s the broker or who’s hauling, as long as product leaves the dock, he’s all good. Meaning he will give the new comers a chance to under cut the trusted broker, he has nothing to lose, he’s getting paid for his product. But he’s making money on the shipment.

example:

cost of shipping with trust broker: $6500

cost of shipping with fly by higher broker: $5000


Cost billed to receiver? $6500

profit increase with fly by night broker? $1500


So yes shippers win if brokers aren’t united with truckers.


Oh her yearly take is close to 240k

 

Have mercy.... someone has gotten into x1’s meds

 

People hate me already so I don't care any more but we need to be a bit realistic.

Carrier compliance thanks for your explanation, but what you read from many, not all, who pick on brokers is just poor have business practices. The other group among them have this jealousy about about what others make and what they are missing out thinking that they are the most important in the logitisica chain. It is just like worrying about what costs that walmart pays on a tv and want to give them less because of it.

Many of them don't get that good brokers, which there are a lot of, actually provides one channel of work that they don't have to chase and saves them a lot of money. It is an oppertunity cost. Tracking down their own work costs time, and money.

It can be done but then you are committed to that customer, I've picked up a few because the owner could not cover loads and what they charge is not justified for the wait. As you said, some want the product off their docks asap so they can start their financial clock, and get it out of their hair.

Many of these drivers cry about how unfair it is that they are forced to take a load for $1.45 a mile but no one seems to get to say no then look else where. Many have no clue how to balance their bottom line or worse yet are marginal owners who live paycheck by paycheck in their other work and continue to do so owning a truck. Many refuse to start or attempting diversifying their sources - to them they try to squeeze out every penny from the revenue and ignore the advice to find other sources.

So my biggest pet peeve with brokers and transparency is to show who owns the load.

What I mean is I run into this crap a few times a year, a driver will pick up both a normal and adistressed load through a broker and they run into some issue, sometimes it is trivial. When the driver tries to resolve the issue, the person at the brokerage keeps putting the driver on hold or tells them they will call them back. Many times we find out this is a scraped load off a load board and the broker can't contact the shipper or receiver directly but has to go through the other broker(s) to reach a resolution. The broker denies this when we find out who the shipper is after hours of trying to get a solution through the broker.

The last distressed load we did a week ago was exactly that, a mess because the broker hid the vital information out of fear of a driver will find out how much they get for the load, can't stress this enough we don't care what they make, we care what we make. So after the driver being a ping pong, I talked to the receiver, found out where the load came from and called the shipper direct, explained what happened while they weren't happy they helped us out. The issue was the load came on racks, the racks are empty and left on the truck. The receiver refused to take them, the broker could not authorize disposing of them or pay for a return trip so after five hours we had a run back to the shipper for more than we made on the first load and it put the truck in a great position to get a very good load out of another broker.

What I want to see is a disclosure of where the load came from and contact info for the broker owns the load.

 

Easy answer
Show the whole paperwork trail with all the twists and turns.
Other wise you are or will be seen as playing a shell game.

 

Don’t worry about it, hopefully this doesn’t happen and you can keep running a smooth business. These owner operators wanting this are not businessmen plain and simple. Seems like you try to be fair to carriers. Thanks for that. These protests and these accusations are coming at the wrong time, and it’s from people who can’t run a business or have any business to be in trucking anyhow.