Brokers 101

Discussion in 'Freight Broker Forum' started by help123, May 20, 2007.

  1. help123

    help123 Bobtail Member

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    What's the scoop on Freight Brokers? Is a safe way to go as an Independent Trucker? and who is the best brokers out there?
     
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  3. NightWind

    NightWind Road Train Member

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    Brokers 101
    Most brokers are not out there to rip you off. There are some good honest brokers out there. Why do I say this? Most brokers want you to call them back; they need a truck following to move the loads. They want to have companies and Owner Operators that they can call and depend on. Why, because if they do not move the loads then they loose the customer and no one wins. I do not advocate using brokers unless you have to. I know that sounds confusing, but it is too easy to get good honest shippers of your own.
    When you first contact a broker, there are several things you must do.

    1. Check out the broker on FMCS Safer System, you can bet they are going to check out your authority, safety rating and insurance. Take the time to learn the system and what the information means. Make sure that their broker’s authority has not been suspended. Check for temporary suspensions, name changes, how long they have had a broker authority, the bonding company’s information, if they have had undeliverable mail etc. If you find issues, ask the broker about them, if you do not feel comfortable or believe the responses then DO NOT take the load. Be polite, explain that you are not comfortable, and hang up. Do not waste time listening to any sad stories. Time is money. Do not be rude no matter how mad you get. Brokers will black ball you or put comments on the various load boards about your company and their experience with you and that can come back to haunt you. There are several on- line broker books and directories and printed books that will have the ratings for brokers. They are invaluable and can help you decide if you want to do business with that broker. They are not free, but I feel are worth the expense. If a broker tells you they are blue, gold, or red book rated, you can call that company and see if in fact they have the rating they claim and in some cases they will give you the information for free.
    2. Call the bonding company and make sure that they are still the bonding company for that broker. I had a situation once where the same day we took a load from a broker they changed bonding companies, and I had to track down the new bonding company and find out WHO was paying us on the load. We got paid because I took the time to do my homework.
    3. Verbal contracts are worth about as much as the paper they are written on which is, nothing. In court, it comes down to, he said she said, and normally you will not win. Unless you recorded the conversation, which in some states is illegal, and inadmissible in court or some one else hears both sides of the conversation and in most cases that will not make you a winner. A clearly written contact is the ONLY way you have a chance of winning. Any changes in the contract after the original contract is signed by both parties, must be in writing to be enforceable
    4. Get the brokers contract and read it! You would be surprised how many people do not read the entire contract; they skim it and sign it. Once the contract has been signed by both parties, and you have a copy of it, you both are in a legal and binding contract. Make sure that it states when you get paid, fees for advances, if you have an appointment to load or unload or is a first come first serve situation. Who pays the unloading, tarp pay, and who determines the reefer temperature settings, pallets, etc DO NOT accept UN realistic or unsafe schedules. Most, but not all good brokers know the hours of service. Most will not put you in that type of situation unless you let them. If you take a load and the DOT shuts you down because you did not have the hours to run the load legally the broker can charge you for the late delivery or re-powering the load.
    5. Never, for any reason put a broker or a shipper as an additional insured on your policy. There have been cases of them filing claims without your knowledge or permission. Additional insured means that they have the right to file the claim without your knowledge!
    6. Find out what the brokers detention time rates are. We all know there are unforeseen situations that come up in trucking that can leave you holding a load. Most brokers do not want to talk about this. Each shipper and receiver has a different policy on holding time. The broker may not know what each shipper or receivers policy is on that so be careful when it comes to this. If possible, have someone write down and sign what time you arrived and left. There can never be enough documentation in trucking to protect yourself and your company. I made my own contract that I would send to the brokers that spelled out what we charged for holding and detention time truck ordered not used and rules for contacting us. I did not care if they signed it or not. All fax machines have a log of the date, time, number of pages transmitted and what number they came from and went to which you can print out if you need it. Some did not like the contract and would refuse to load us others did not mention it. I would ask if the received it and if they had any questions.
    7. We did not allow the brokers to call the trucks because some will abuse that privilege and run a cell phone bill up fast or try to get drivers to haul loads under the table for cash. We normally communicated with our trucks by radio and most could not receive calls except from us. That is something you will have to decide how you want to handle.
    8. Communications are vital in the trucking industry. Make the check calls, do what you agreed to do in the contract. If there are, problems call the broker and explain the situation to them. Do not lie to them as it will come back to haunt you when you least expect it.
    9. Never throw the brokers contract away until you get updated information in case you decide to do more business with them. Get updated contracts at least once a year if you do business with the same broker. Be sure to check them monthly on Safer System in case they are having problems.
    10. If you have problems being paid; do not argue, make threats or anything vulgar or un-professional. File on the bond, period. Do not tell them you are filing on it just do it. You will need all the paper work, including load conformations, contracts, bills of laden, and any other documents you have. DO not send the originals but make copies. FED-EX the claim documents so that they get it ASAP. Brokers only have a $10,000.00 bond and it does not take many loads for that to be gone. Contact the shipper as by law, they have to pay you. That is another article I am working on.
    11. Last but not least. I do not care how many loads you haul for the same broker or how friendly you get, it’s a Business relationship and when it comes down to the brass tacks they are going to look out for themselves and not you. Do not say or do anything that can some back to haunt you. Be the professional that you are.
     
    Pawnd, Bob's Buzz, moblue and 5 others Thank this.
  4. Brickman

    Brickman Trucker Forum STAFF Staff Member

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    Back when I was hauling thru the broker racket I would have hauled exactly 0.0 loads without this.
     
  5. Eskimo6804

    Eskimo6804 Heavy Load Member

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    I was thinking the same thing Brick. And no,it hasn't changed since you hauled for brokers. They all still require to be put on your insurance.(or at least all that I have dealt with for the last 8 years or so.)
     
  6. NightWind

    NightWind Road Train Member

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    There is a difference between adding a broker as a certificate holder and additional insured.
    A Certificate of Insurance is documentary proof that there exists insurance coverage to and from any business. People or business entities supplying services or goods to customers make good use of certificates of insurance in assuring customers that the liability, worker’s compensation, property as well as all other insurance coverage exists in order to enforce the numerous obligations as part of the obligations.

    A Certificate of Insurance may be needed by an insurance company from those persons or business entities that provide services or goods to customers.
    Having a certificate of insurance does not mean that it constitutes an insurance contract as it does not make changes to or modify the insurance coverage nor does it spell out exclusions. It only certifies that there existed insurance at the time of issuance. Certificate holders do not qualify to obtain information regarding policy changes during the validity of the insurance coverage. A certificate of insurance simply is "information" regarding the insurance policy, usually the type and amounts of insurance. Such certificates usually have language in the upper right hand corner stating that the certificate "is issued as a matter of information only and confers no rights." The certificates also usually provide that the insurer will give 30 days notice of the cancellation of the policy, but they typically go on to disclaim any liability arising from failure to give such notice.


    Additional Insured is a separate document, and it makes the additional insured party an insured party under the company's general liability insurance and generally makes the company's insurance policy primary over the brokers general liability insurance.
    This in turn typically means that in the event of a claim against the broker arising out of the company's work, the company's insurance limits will be depleted before the insurance of the broker comes into play, helping to ensure that the company has available insurance coverage for future claims that may be made against the same policy.
    If the company is out of business, the insurance company has no incentive to provide a defense for the company. There is no potential liability for bad faith to the out-of-business company. But, if the broker is an additional insured, the insurance company may be exposed to bad faith and typically will undertake the defense of the broker and company, even though the company is out of business.
    Another important aspect of being an additional insured is that the additional insured has bad faith rights against the insurer. This can be a very powerful tool. The most important scenario involves the bankrupt or out-of-business company. Even though the company is gone, the company may have insurance that provides coverage for a claim when the damage manifests several years later.


    To make this simple to follow when you add some one to your car insurance as an additional insured that means that YOU and your insurance company are financially responsible.



     
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  7. Brickman

    Brickman Trucker Forum STAFF Staff Member

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    I see the difference Nightwind and thanks for the clarification.

    I don't remember what the insurance documents read, but it probably was the insurance certificate.
     
  8. NightWind

    NightWind Road Train Member

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    Hey Brickman no problem, most company's, owner operators don't know the difference or the legal repercussions that are involved. Insurance is boring and not something that most people want to take the time to understand, which is sad because at least 10% of your revenue per truck goes to paying it. I made it a point to know these things because of the way that people do business these days. The more information you have the better off you will be and in turn more successful.
    Happy Trails
    NW
     
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  9. Carolina_Beaver_Teaser

    Carolina_Beaver_Teaser Light Load Member

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    You did an excellent job of clarification on the matter.
     
  10. Roadhound

    Roadhound Light Load Member

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    I may be a little different than every other owner operator, but 85% of my loads are brokered loads and I make a good living. I don't see the big deal about only doing business with brokers when you need to. Unless you haven't noticed, that's about the only way a lot of us can get a load due to the fact that we don't have many, if any, manufacturing companies around that are not already sealed up by other owner op's or brokers. You just have to be business smart and not haul something for nothing, but you CAN make a good living hauling brokered loads. I know I can, I've seen me do it!:yes2557:
     
  11. MACK E-6

    MACK E-6 Moderator Staff Member

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    Some outfit called QWE Logistics really tried to put the screws to me today.

    I had a delivery today of about 5000 lbs of Brazilian walnut hardwood flooring coming from Almont, MI. Problem is, the bill said "Do not hold freight for any reason", which conflicts with the standard procedure of calling ahead for residential deliveries. Why? I have no idea, but that also means no appointment, which tends to lead to the following problem.

    I imagine that translates into "Screw it. Let the driver worry about it."

    When I get there I find an empty house undergoing renovations, much to my disappointment. I was afraid I was going to have to get Mickey Mouse to sign for this stuff, since no neighbors were home either. One way or another, this crap was coming off the truck, because I didn't want to have to deal with it Monday, and I had to get to the freight that was buried behind it. Stupid residentials....!!

    Anyhow, I was preparing to unload this stuff when thankfully the customer showed up. I was very glad to see them since the husband helped unload, although it still took nearly two hours.

    Someone somewhere is getting hit with an inside delivery fee for that, which for a 5000 lb shipment amounts to about 200 bucks. If this stuff were standard size and were shipped in standard size pallets, I wouldn't do that to somebody just for putting something in their garage, although that's still an inside delivery. In that case, I would have been in and out of there in under 10 minutes. This 60 cases of flooring, at about 80lbs per box, all had to be unloaded by hand, one at a time.

    For that, someone's gonna pay.
     
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