Brokers are thieves!!!

Discussion in 'Freight Broker Forum' started by Regional, Apr 28, 2020.

  1. JimmyTwoTimes

    JimmyTwoTimes Medium Load Member

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    Here's some more food for thought for the carriers out there that are convinced that brokers are evil and serve no purpose. This info is specific to my company.
    • We do about 1.5 million in TL and LTL weekly.
    • Our customers average about 40 days to pay (we offer 30 day terms and rarely extend longer payment terms)
    • While we have 30 day terms with our carriers, we pay in about 14 days as we understand this makes us more attractive to work with to our carrier base.
    That means typically there is about a 25 day difference between when we pay the carrier versus getting paid from the customer, which obviously severely impacts cash flow. Your average owner operator or small sized trucking company cannot afford to wait 40 days to get paid for work completed today.

    Lastly, I want to share what our actual return on a transaction is after all of our back office costs (TMS, insurance, office space, salaries, benefits, etc) are paid for. We return $0.025 for every dollar we charge the customer. The image you have in your head of brokers diving into a swimming pool full of cash is not accurate in my experience managing a mid sized brokerage for the better part of a decade.
     
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  3. DMTLLC

    DMTLLC Light Load Member

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    Lets talk about the phantom "Quick Pay" brokers offer @ 2-5%....when you go purchase something, you pay for it, right?
     
  4. JimmyTwoTimes

    JimmyTwoTimes Medium Load Member

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    Sorry, I'm not 100% sure what the question is here.

    We offered quick pay for about a year and a half and charged 3%, but eventually stopped because it was actually costing us money. We would spend a flat amount to get a carrier setup to use quick pay, but we found that most carriers that we setup only used it once or twice, and the 3% on 1-2 loads didn't cover the cost of setup.

    I'm sure other brokers have had more success with a quick pay program, but for us it ended up not making sense financially.
     
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  5. DMTLLC

    DMTLLC Light Load Member

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    Why make Carriers pay for their money? I'm sure you get it....
     
  6. JimmyTwoTimes

    JimmyTwoTimes Medium Load Member

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    We don't make carriers pay for their money, we pay carriers in about 14 days typically, which is faster than the 30 day payment terms we agree to when contracting with a carrier.

    The quick pay program allows carriers to get paid significantly quicker if they so choose, but their is a cost associated with that on our end and the 3% was aimed at covering that cost. As I mentioned in my response, that 3% didn't actually end up covering the cost on our end, so we discontinued the program.
     
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  7. ZVar

    ZVar Road Train Member

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    He's not. He's charging for a loan (or expedite fee) to get it faster.
     
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  8. DMTLLC

    DMTLLC Light Load Member

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    NO, you are charging them to get paid when they are supposed to be paid, when the job is done.
     
  9. DMTLLC

    DMTLLC Light Load Member

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    Is that what you do when checking out at a store? take 2-5% off the top and hand it to the cashier?
     
  10. FoolsErrand

    FoolsErrand Road Train Member

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    Its sort of interesting on a sociology basis at how the population sees what they want to see. Truckers dont band together to complain about the profit margin on blue parrot headsets or garmin GPS but i bet its dramatically higher than most people think. Look at an Iphone. Omg outrageous margin i will bet.

    I manufactured a unique niche product for 8 years. When i sold it to my distribution partner he was pretty stunned i had a 300% profit margin. I told him when i started, before i paid the CNC guy to make them and him to sell them, it was in the low 700% range. And that was when i was buying materials retail. Somewhere in the middle i got a discreet call from what i expected to be my primary threat.. An order was placed and only at the end during billing did i realize id been had. So i offered to sell the whole business cheap, right then and there just to get SOMETHING from my enemy.

    Hes like 'na man, we really just need one for shop use, the owner considered cloning them but we cant stop our current cnc production for less than 200% return. '

    Like i said, i never made below 300 some percent.

    They put an image using my product in their calendar that year, maybe as a friendly gesture, and my sales exploded.

    The whole point here is that everyone thinks they know someone elses costs and in my personaly experience, usually have no friggin idea.

    If the grass is so much greener on the broker side, quit whining and jump over.
     
  11. PoleCrusher

    PoleCrusher Road Train Member

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    Net 30, 60, 90 is typical in a B2B transaction. It's been that way for decades.

    If you think 3% is a lot, try being in retail and having to sell accounts receivable in a cash crunch.
     
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