Brokers

Exactly Bob, and hence lies the problem most brokers are as ignorant as are most of the truckers. Without having an understanding as to the shipper's cost how in the heck are they knowing how to bid their services?
I am amazed at how many truckers tell me such varying rate per mile that it cost them, without once thinking about how much could their customer do it for. They in effect are eroding their own marketplace, I was guilty of this as well when I first started. Then one day I sat down and created a shipper's line item cost calculator in a spreadsheet, took my cost and compared the two, even put a broker in the middle at let's say a 20% markup on my rate. There was a lot of coin left on the table and we were still giving the shipper a better deal than they could do it themselves. I went one step further and did this for all segments of our industry, and I will tell you what there were not one segment that was below $2 per mile. This amazingly enough changed the way I negotiate our loads with brokers and shippers alike. I don't expect them to loose money for me but I will be dog gone if I am going to loose money for them. I am not their friend, and like wise they are not mine, we are all just in business to make profit (some more than others).

Angela if you are planning on being a solution to the problem and not just anther burnt out trucker that has decided to make money off of other truckers. You will find out the answers to the questions I proposed and this will indeed make you a better broker agent creating a win-win-win.

Shippers should make products and ship
Brokers should broker trucks to shippers
Truckers should truck
all parties should be able to work with one another and make money as well.

That is a true Win-Win-Win.

 

powerhousescott,
Agreed 100%, here's the thing that I see,(especially in the last 10 years or so)

Brokers become CONFIDENT, I cant etch that in stone any better, their confidence and relaxation coincides with the ol beat up motto, "We'll get it moved" I don't need your services.

As an independent carrier myself, It kills me these fellow carriers are so ignorant and novice on what it takes to make everyone happy...(knowing your costs and throwing a profit)

We have far too many ."Ok I do load,I have truck" out here. Its ruining business for folks everywhere..And Brokers KNOW this, They don't want anything to change.

I simply have discontinued relationships with many brokers due to the fact that there is simply not enough profit on my quoted lanes..They "Don't have it" Is all I hear anymore,And Yes, Im under Market on many lanes, They don't fool me for a second.

Yes,Their are Good Brokers,3pls out there, But their gaining knowledge them selves.

Remember 1 thing folks,The Carrier always dictates the rate. Don't seem like a factual statement anymore does it?

Like I say,Their is too much confidence in transportation....Shippers know this,Brokers certainly know this and until either carriers start smartening up, Or 1/3rd of these trucks disappear, Nothings changing.

Its too easy for the 'novice' to take a second mortgage out ,fork over $120,000k for a truck, Send the FMCSA $500 bucks and "Hey Look,Im a Trucker"

De-Regulation ruined this industry..But that's another topic for another day!

 

My two cents, as someone fairly new to the industry. I am not however new to business, having over 20 years in management, to include business ownership. I (think) that with the amount of inexperienced O/O's out there, that these folks "really" do not understand a Profit and Loss statement that well. From what I can see, is:

1. Shipper has had lanes for 30 years, and they know what rates they will pay (adjusted for fuel etc.). Some of their trended rates, are based off carrier use as well.

2. O/O has a tremendous amount of overhead, that brokers don't have. So the O/O will at times allow a lower profit margin, or none at all, just to eat and put diesel in. Terrible way of doing business, and as much as someone will tell you that this is just how the industry works, is dead wrong. The reason why it has become the "norm", is due to a lacking of education by a large bulk of O/O's out there. First, and I don't convey this for all drivers out there, but a large amount of new O/O's do not start out with a proper business plan, which includes what margins will be their initial benchmark, their quality control, how they negotiate rates, overall business structure, etc. They just see that they have just purchased $80K worth of an asset, and it has already cost them $5K in repairs, so all they want is money money money, without looking at WHY they are already in the hole.

3. The Broker sees all of this, and they know they can find PLENTY of drivers out there who will take this hit, and they take advantage. Sorry, that's all we have in this load, has been heard loud and clear from hundreds out there. Well, that's all we have comments would soon be in your favor, IF you just all work together. I am a percentage guy, so if you had over 50% of O/O's out there, that would STOP taking these low ball hits out there, the industry would wake up to this fact. DAT and other entities out there would have this as their top story on every web page out there. Again, no truck, no product.

So, if you take all three of these elements , and do some REAL math, most obviously you will find who is taking home more bread, on the backs of the drivers out there. If every Mom & Pop operation out there was equipped with a very easy to use MS Excel spreadsheet, or some other program, that revealed every single incurred cost, projected costs, gross profit margins, etc., and they intended to follow the rules of profit, it is in my belief that these O/O's would stop taking the beating, and stand up for a better rate. Once the majority of O/O's became a little more Warren Buffet on running their operations, then the shippers and brokers would be reluctantly forced to move more towards the OWNER OPERATOR rate average. I mean, without the truck, you have no product right? Who holds the upper hand there? There are of course several factors to be considered as well, such as the mega carriers who work off volume, which results in offering lower rates to the shipper. But...the mega carriers are only a small percentage of the overall industry, so there is plenty of room to educate the overall market. Again, I am just an outsider looking in, and I am still doing my best to learn, so I can help not only myself, but maybe others out there, who are new, and would like to EARN, rather than LOSE.

I have yet to start a brokerage, as I am doing just that, learning. I am just using a common sense approach to a VERY sophisticated industry, but when you take out all the red tape, is there something more than those three elements to be considered? Not that I am stirring the pot, but I do recall a news item a few weeks ago, and it was at a port somewhere on the west coast I think. The independent drivers were on strike, because XPO and other company's were not classifying them as employees, because they were driving the company's trucks, and not their own, from my guess. I don't know what happened there, but if this country's O/O's all took a stand together, just simply by using good business sense, with an intent to get better rates, the industry would listen. However, one negative effect would be that most of the company drivers would start to see their CPM's go down fairly rapidly. It would be interesting to watch how that would play out. At any rate, good luck out there, and hopefully next year I will be more engaged.

 

Cowgirlchaser, that is a long time debate. "Why don't the truckers organize or go on strike?" The problem is that there will always be people with a lower quality of living and see everyone wanting to make a living as greedy so they will be happy that "stick it" to those greedy truckers trying to get rich while making everything cost more for everyone else.

 

Truckers will never go on strike. Herding cats would be easier.

 

I am not advocating that the O/O go on strike, I am merely saying that "if" the O/O just start turning down loads that offer little to no profit rates, then eventually you will see the rates go up. There are several reasons for the rates on the boards out there, but looking at it from the perspective of a business owner, it IS the truck that carries product right? The broker may take ownership of that load on a legal basis, but the owner of that truck has much more at stake than a broker sitting in front of his computer all day. Herding cats sounds fun actually. I use to work on a farm growing up, and those hogs would knock me over almost daily at feed time.

What PSUMOOSE stated, I can agree with this. I had a friend who owned a Landscaping business years ago, and what he stated, applies to many businesses out there. There is always a fly by night business owner out there, who will cut your throat on bids, rates, quotes, etc., just so they can just make it. But they won't last long! They are just one reason why this industry is lacking drivers. Then you have an educated business owner, who understands finances, or has a good CPA, that would be driven to stick to the business plan and profit margins. However, the market share that he wants has been catering to the lower rates, either by the fly by night company, or the mega carriers who use volume, or the massive amounts of brokers that try to get too much off the loads. 1978 and 1980 were not good years for this industry!

There were an estimated (400) bankruptcies filed by O/O's just in the first quarter of this year. Even though the national average (all industries) have been dropping in bankruptcies, it seems that this particular industry (transportation), is increasing. The trucking industry is now square in the middle of the high volume / low capacity convergence. So if I were out there as an O/O, I would certainly be paying great attention to how I could plan and migrate into the success lane, rather than the failure lane.

 

I have 10 years experience as motor carrier as I transition to the broker side. So I have a pretty good understanding of the needs for all sides of the equation. In my first partial month of doing this I have noticed the carriers owned by non usa individuals seem to take freight at whatever I quote them.

 

Here we go again, immigrants are the worst and responsible for this industry going down the hole, but not the fellow Americans who go work for megas for 30cpm and not the American O/O driving 200k Petes covered in chicken lights

 

I don't think they are the worst. I love Dilbad. Every time I have to move a cheap load I give him a call and he picks it up or calls a friend to move it for me.

 

Here's the story with immigrants.
Our country taught us how to survive in extremely difficult circumstances, 6 months without pay and very very low wages and much more to that.
And we came to USA very much equipped with all of this knowledge, skills and experience.
And majority of us doing great in this country.
But, in the meantime those third party businesses, starts see how they can take advantage of whole community of immigrants.

Most of these brokers willing to work with immigrants, for a good reason, we don't complain too much.
We're willing to take a risk and go an extra mile.
We're in the back of our minds subconsciously comparing present with what we had back than.

Americans has high expectations and standards in this industry, rather then immigrants has a different set of minds.
We have passed a deep skilled school in Sovet Union, and it's extremely helpful for us to live in here.
On the other hand you American guys pretty much took it easy all of these years.

I agree it's not fair for those young brokers to make more money than a driver behind a steering wheel.
It's a sad story, when I see on a Facebook and other social networks that lots of people asking how to become successful freight broker rather than a truck driver.
It's a new generation, who wants to make easy money and doing nothing.
That's not the way this great country was build.