Transparency of Broker's Cut, Does It Exist?

I know many one truck operators that have their own customers, or at least their own out and broker back.

Problem is, you don't want to do what the customer wants, just what you want so you're stuck with brokers.

 

When times are good the trucks do better. When times are bad the Brokers do better.

I don't think that on the upside we see Brokers closing down left and right, but on the downside you'll see trucking businesses closing down left and right.

The answer that you will get for that is learn how to run a business and in some aspects I certainly can agree with that.

And then in the midst of all of that you have the transparency question.

At this point I think I'm not on either side of it but I will say that certain arguments like you don't care what a car dealer makes on your car or you don't care what a supermarket makes is not relevant.

I mean argue about it as you wish but I think that those are both terrible arguments.

If you've ever gone to more than one dealer to buy a car then you care what they're making. If you've ever been in a supermarket and said you know what I'm not going to buy this cuz I know if I go down the street it's going to be a hell of a lot less money, then you care about it.

And there is also this argument of, do you want the broker to know what your costs are? I don't get that argument either because is Trucking some kind of a business that you can literally set up a computer and sit in a chair and make money? Not that all Brokers only have that overhead but that to me also is a silly argument when you have a $200,000 truck and trailer you have whatever your expense Insurance expenditures are if you want an engine it cost $50,000.. I don't think any broker in the world has those kinds of expenses.

And of course the Brokers don't care but I can't see the problem with telling the broker, hey I've got a $2,000 insurance payment up I've got a $5,000 repair I've got to make I got to go buy another trailer is going to cost me $70,000... and you want to pay me $2 a mile?

And the argument is not about cost, it's about profit. I don't see many owner operators with giant colossal plazas of Office Buildings filled with people selling. But you see that in brokerages all the time

And if you're going to point to these giant colossal Office Buildings as overhead, that they have staffed with hundreds or thousands of people around the world, then all you have to do is take a peek at the earnings and see the billions that have been generated.

So the point of all of this is, in life we generally are concerned who's making money on the things that we buy. Like I said if you're going to buy a brand spanking new vehicle the first thing you do is go online and spec it out and compare it to 20 different dealers. What is the difference in the price that you're looking at? The amount that they make per vehicle...

Now whether you think that it's relevant as far as Trucking goes that's a completely different conversation.

 

Good analogy about shopping around for the lowest price when you’re purchasing goods. That’s exactly what brokers are doing when there are way more trucks available for the loads they need moved. But somehow it’s an issue when they do it but not when people do it in their day to day lives.

There’s always the argument that brokers don’t have the overhead a trucker does and that’s simply not true. Anyone offering quick pay has a pretty decent overhead because they’re fronting money to all the people who can’t wait to get paid. If quick pay and factoring didn’t exist you wouldn’t see this large influx of new carriers every time the rates are good because they wouldn’t have the fuel money to run for 30 days or more.

 

The caveat on that first part is: what they are making isn’t the part that concerns you when buying a car- its what price you and said dealer can come to an agreement on. You price the same vehicle at several dealerships (unless you’re buying off the lot) and see what they’re willing to do. That said, some dealers have a lot more buying power than others, and can sell a vehicle at a profit at a price that other dealers are buying at.
Same idea goes for any line of business.
McDonalds french fries get sold at a bigger profit and a cheaper price per volume than a local hamburger stand.

Point being, if a purchaser is shopping on price vs service or relationship: that will be a bigger factor. And what whoever is selling is buying for is only relevant in relation to what they can sell for. Same way a load might be posted for 5 different amounts from 5 different brokers: the cheapest $ doesn’t mean they are double brokering- they may well have bid the load lower than the others in hopes of impressing a customer. Or they don’t know what a lane is paying- but really: who cares? If they don’t know what a lane needs to pay, or if they want a different profit margin; neither is an issue for me if I can get more money from someone else on the same or another similar load.

I have customers that use brokers as well as carriers/ they blast off a given load to everyone, and see who can cover said load at what price. 3 brokers will come back with 3 different prices, all hoping to find a truck for as little as possible and keep the difference while maintaining some semblance of service. I get those blasts as well, and I ask what brokers are pricing it at after I come pick the load up. I’m always quite a bit higher than the highest broker bid. I don’t always get the work, but when my name is on it it’s because they want a guarantee that the job will be exactly right: and that’s what I offer. If whoever is paying shipping on the product is less concerned with a timeframe, it goes to a broker with a cheaper price.

 

Direct freight. Go get your own customers.

 

Is that really feasible though...are there enough customers out there who are willing to do business direct with a single-truck OO? They would likely have to do business with multiple single-truck OOs, just to cover their logistics need. I would think they would rather work with 1 broker, than X amount of OOs.

 

Yes
Yes
Maybe
Depends on the person making the decision


A lot of those questions aren’t really specific to any given person’s situation. And will have varying answers depending on the scope of the business one is looking to service and the persona of the one making the call on the other end.

 

A lot of shippers only deal with Direct O/O's so yes it can be done. Will everyone be able to do it of course no. Anyone that really wants to do direct freight will go out and do the home work and knock on doors. I honestly don't care to do it but have considered it.

 

Difference between a broker and a customer.

Broker has a load, needs a truck, you have a truck. No sales involved. Just negotiate the rate.

Customer has loads, has someone doing them already. You have to sell yourself to them, not just negotiate a rate.