New Broker Problem...Please help!

Pretty easy. Just like a carrier building relationships,works the same way. Just one in this office does 60+ each week and she still screws off. Do have some agents that struggle to do 10-12 loads a week and others that have never posted to a load board. Just two people in the office for billing ect for both brokered and company loads.

Doesn't happen overnight though.

 

Back in 2006 I remember talking a broker that I booked a load with. He was just an employee of the brokerage. He told me he was a broker by day and a black jack dealer at the casino by night. I asked how much a dealer makes he said ~$20/hr. Then I asked which pays better black jack dealer or broker he said they paid about the same.

 

Many people think they can sell but mostly they are just average. I've hired many who could sell but just couldn't close. Fear of rejection mainly.

 

Yes, I admit, it was just one week of the year involving a large project. 20%? This was not spot market freight. It was contract with a large customer, with an excellent payment history, equals low risk.

Yes, an agent. His 7% is his gross revenue. There was no cutting that in half.

I have digested a few quarterlies and annual reports. I began analyzing and trading stocks in 1997 in my spare time as an investor. This is not true for all sectors, some are much more profitable, many 30% to even 50%, but with less volume and certainly in niche or otherwise "protected" areas. Now, in the transportation sector, yes, 5% net profit is about average and 15% is a heck of a year. There is much more operating costs and capital costs in transportation, I know, that's my personal business; but, even in mine, due to low volume, low operating costs in relation to revenue, I see margins between 25% and 30% annually. However, this also translates into obscene time doing work "stuff". As any small business person knows, it becomes you.

Thank you very much on this part, this is what I'm trying to pry into -- details of a freight brokerage business. However, with low operating costs and little capital tied up in equipment, albeit less volume and lower economies; I find it hard to see that net profit margins are only 15% at best. Could you please delve into the details of the operating costs? Perhaps, when you say they have 15% margin, you mean that is their cut of the total gross pay from the shipper? And, only 5 loads per day for each agent? Is this the norm, or just a bad first year at a start up brokerage? All businesses need a couple years or more to become established and break free from those start up costs, I know, my first two years were crap, you know buying $100000 of equipment.(and brokers are crying over a little $75K bond? At least that bond won't depreciate like my equipment will!) But, this portion of your post just sounds a little exaggerated toward the negative. I'm still listening though.

Please explain why they would expect to break even or loose on 15% - 20%. Are you talking about how the broker will find trucks, or capacity, for the next week's loads? I think it would balance out over time. This 15% - 20% sounds like loss to deadhead miles in my business, which is expected and calculated into my rate. Actually more in some parts of the country and different times of the year. That's why the brokers get so pissed, they don't understand estimated deadhead percentages for many areas. I refuse or counter-offer, they balk, and so, I say "OK then", and I keep running my usual short, high rate, bread and butter type stuff in the Midwest. Let them find a sucker to go to North Dakota for just a bit too little and loose his butt deadheading back to Chicago.

But, really, this is something new to me, trying to see things from the broker's side of the deal. Explain, "sucking up a lot of capacity in a short period of time. I know I was dreading competing with all that extra capacity after I got empty in the middle of 300 trucks in a bad area, but I planned for it and it worked out ok. Not the best, but I got out after sitting 2 days and only deadheading a little farther than normal.

Yes, you're right, and again, this is new to me, and I want to learn more. That's all I have, as an O/O to gauge the "other side" sometimes, since brokers are so tight lipped vs. truckers. It's starting to sound like the "Cold War", LOL. Which, it is to many. But, when brokers are so secretive, What do they expect us to think? They are in pitiful shape? Heck no! It makes it look like they are "killing it, and dragging it home" to use a sales phrase. To many owner operators, it feels like we are doing the bulk of the work, have committed most of the capital, and endure most of the risk, while these shysters are laughing all the way to the bank! This is the honest truth. And honest people I know, are not that secretive. Secretive people have something to hide for a reason.

One last thing. I respect Rollin Coal's posts on here a lot. He's got heart and is a fighter. However, I run a debt free business;and, I can't sit too much or I loose the volume I need; I can't run too hard and for too cheap, keeping my capacity maxed out at cheap rates while missing higher rates. If I can't do better than a company driver; I'll sell it all tomorrow.(it gets too close to that point, too often) But, I understand his point, I just find a happy medium between rates and miles. I do ok, I guess, but I'm the type that is never happy, and fairly competitive. The biggest frustration is I've chosen a field, which I still love enough to keep doing It needs more barriers to entry to be healthy though. It's full of ignorant operators as well as company drivers whom will not find enough financial stability in their financial lives to be able to dig in their heels from time to time and say HELL NO!! Thus they are by and large being railroaded into what they get. Why do I care? Because, I must compete with this crap! How do you compete with a never ending repetitive cycle of stupid? It makes me think about other business alternatives where I can escape the insanity. And, so, this is partly why I sincerely do want to hear more about the details of the brokerages.

For all my driver brothers out there. The best thing that driver's, in general, should do first is get debt free. How? You have to get really dam good and fed up; you have to get mad enough to sell it all and focus on one thing. But, it gives one options, and leverage to hold fast in a negotiation. This is why companies constantly roll over drivers, they know they can wait them out. Sadly for most drivers, that's about 1 week, if that.

That's about it for tonight. I've got to get up at 4am and go unload this steel.
Thanks Bill.

 

Agreed. As long as there is debt, someone will be pulling freight cheaper than they would like to. There is nothing in the world like the freedom of being able to say no. And the odd thing is, the more you sit the higher your rates will get because;

1. You will have a better safety rating
2. You will have lower insurance rates
3. you will have more reliable equipment, which will improve your on time delivery
4. you will be available when the phone rings

The most important ability is availability.

 

Thanks for the kind words Rocky. I know sometimes I tick people off or they think I'm full of it lol. That has never been my intention though. Several years ago these business sections of TTR inspired and educated me and that's all I've ever tried to do myself. If I could help one driver figure out how to leverage a broker for first class rate, that maybe that being a weakness, then it's worth the time and effort. Bill might even recall how I once hammered a CHR agent for almost $5 a mile on 600 mile team load round trip to help one of our trucks. The email was shown to the young dispatchers, ok, this is how you do it, and they were stoked - a few days later one of them took it of his own initiative to pretty much book a load for me from TQL paying over $5 mile on 600 some miles. The point of that is not to pound my chest although I am proud of it. I am prouder of the fact he didn't really think such was possible from TQL or CHR, after he saw how it was done he went and one upped me getting a higher rate per mile on similar miles. Now that was cool even funner because I rarely work with TQL and respect them as a challenge. Sorry to get off topic. There are many other things as well, agree 100% about debt free operating as well.

 

So you haul loads at an industry average?

 

No, but who creates a business plan based on beating the industry average unless you have something already set to give you an advantage.

 

Some use a shotgun approach, others use a sniper rifle.

 

Oh boy...Yes, in the most simplistic sense. However, there is a thing called mutual cooperation in some parts of this grand free enterprise system. No man stands truly alone, and does it all himself on his own. This is why small farmers joined co-ops, workers joined unions, affiliated businesses join trade associations, mega-carriers join the ATA, and owner ops join OOIDA. It's also why, in the collective interest of safety, we let our competing drivers know about a flat tire or a blown light, etc.

Do you sit back and watch a truck back into something or do you get on the radio to warn him or blow your horn? In a pure capitalist sense, I guess we would be jumping other competing truckers in the parking lot or sabotaging their equipment with no other regard but for our own individual profit. Not a world that helps me get ahead. Cooperation towards a common goal is a good thing.