Brokers 101

Ask them for a copy of all the cost on the load and how it was dispersed. You might have to wait till the load is done to get it but all transactions are public information. If they say no, report them to their district atty. office. Be prepared to see 10 to 20% commission because a good broker is worth it. If you find a good broker stay with them and keep them informed of where and when you are and they can keep you loaded.

 

That's the problem, we lease to a company and have a different broker all the time. We have different numbers to call all the time. Even as a O/O who leases, do the brokers have to tell you about detention pay.

 

Disagree with the public information statement. The details of my business are not public information, why would you think those of a broker would be?

All of this discussion about brokers making too much money is somewhat humorous. I'm not a broker but I do broker out my customer's excees freight so I do understand to some degree what a broker deals with on a daily basis.

Let me throw out some real life examples for you to mull over.

1. Shipper needs load moved. Broker needs to find a truck. Sound easy? Well, not just any truck will do. I won't give that freight to anyone who is a broker and a carrier since there is no honor among theives, so that eliminates about 70% of available trucks. Broker first is going to their preferred list of carriers and if none are available, then the search is on. It takes a great deal of TIME to filter through available trucks in the area and lots of phone calls. Legally the broker can be held accountable for not doing due diligence in securing a SAFE truck. A truck who's safety rating and OOS violations indicate they are close to being permanently OOS IS NOT a good option. OK, so off to find another truck. And believe me, there are a great deal of trucks out there who have bad safety ratings. Check SAFESTAT on your own trucks and see what brokers are seeing. Might explain why they are offering low rates. Ever had a broker ask you for your MC#? Now you know why; they are checking you out BEFORE they commit to a rate.
2. If something goes wrong with the load (cancelled, delayed, etc.) the broker negotiates the additional charges with the customer. Sometimes the customer will pay and sometimes they will not. Sometimes the broker will pay the carrier even in the customer doesn't pay.
3. A broker has to carry a surety bond or trust fund. A bond is an insurance payment; a trust fund is a flat outlay of $10,000. That cost is built into their cost structure, just like your insurance is built into yours.
4. If you are back soliciting customers you found through brokers, don't be naive enough to believe you are getting away with anything. Agents talk to each other. They move from one brokerage to another. They keep track of bad carriers. Shippers may have long standing relationships with their brokers and trust me, they are letting the broker know if you are trying to solicit direct. Besides maintaining your safety rating, your reputation is probably more important.
5. Large brokerages have overhead expenses to support their customers. If they are moving 100 loads per day, then they have a fairly significant staff to make that happen. An individual broker is moving far less freight.

So, you say you want to work with the broker's customer direct? What if that customer suddenly files bankruptcy? What are you going to do? When a broker doesn't pay, you can file on their bond. Your terms with a broker are probably 30 days; a broker may have customers who are paying in 45 to 60 days. When a shipper doesn't pay you, you have no recourse other than the court system (cha-ching!). Did you know that if a customer does pay you and within 90 days of making that payment they file bankruptcy, you may have to REPAY that money to them?

How do you check the credit worthiness of a customer? Or a broker? We all know that there are great many risks in this business. Knowing how to minimize risks is what helps keep a business running.

I know a lot of folks out there know this stuff, but there are probably a great many more who do not.

 

10K bond is low these days. 2 loads of lettuce from Salinas to Boston will eat that up.

Also, I think the brokers who are getting bad mouthed are the ones who hold $3.00 per mile freight, and offer it for $1.30.

Other than that, you make a pretty good post Tex. Well said.

 

I agree that the bond value is way too low. We typically pull loads paying between $4K and $5K, so if a broker is failing, it only takes 2 loads to exhaust the bond. Then you get into pro-rating the bond and depending on the amount of total claims, you'll be lucky to get 20% of what is due and that would be after at least 90 days.

We got stiffed by TEI last year. They had outstanding claims worth almost $1M and had two $20K bonds. My settlement would have been 2%......about $44 on a $2200 invoice.

 

fmcsa part 371 re brokers

 

This is good stuff and the kind of information that needs to be shared. I really thank you for this. However, the contracts of a broker are public information. I believe "if you read title 49 I think you can access it on the net" a brokers information is public information. Brokers get there butts kicked all the time and some deserve it. Keep sharing that information and legalities so we can get rid of these bad brokers.

 

I've read Title 49 and there is nothing that says the broker records are public. What it DOES say is that if you request to see the records, they must make them available to you. Public implies that anyone can view them; Title 49 applies to the parties related to the agreement. So basically I couldn't go to a broker and ask to see the contract/rate confirmation for any loads you did with that broker; therefore, they are not public information.

If you choose to go this route, make sure you know the process to make the request and don't expect the broker to be happy about it. Expect them to make the fulfillment of your request as difficult as they legally can. Expect that you will never work with that broker again or any other broker that agent moves to in the future.

What I don't understand is why would anyone want to see the records? I have yet to hear a compelling reason why this would benefit anyone.

 

What are they lying about? What are they stealing?