So You Want To Be A Freight Broker

An interesting situation arose today between my boss and a freight broker agency today. Since we are an emerging company on the trucking scene, we are still trying to get established and create new accounts with shippers in the Northwest. In the meantime, we use a variety of brokers and load boards to get loads out of the greater Washington, Oregon and Idaho areas.

One of the brokers we use is a well established, international broker who arranges millions of dollars worth of business and assists in the transportation of hundreds of commodities throughout the world. This company, which will remain nameless, started as a produce broker in Irvine, California in 1906. It is a well respected company in the industry and heaven knows they have helped our company in many ways since we started contracting with them several months ago.

My complaint is with an over-zealous, greedy broker agent for this agency based out of a California. When my boss called the brokerage, they informed us that they had two loads set up for us from Seattle to Los Angeles and back. Between the two loads, the rate averaged $1.41 per mile. Not a very good rate to say the least, but sometimes you have to take the good with the bad when winter hampers your ability to find good loads in the Northwest. The load coming back to Seattle was first quoted at $2000 dollars for a truckload, one way. My boss then proceeded to give them our information and was told to call back in 5 minutes for his load confirmation. When my boss called back, he was greeted by the over-zealous, demanding, greedy woman who stated the load was available for $1600! What a jump, $400 dollars in 5 minutes! When the boss questioned why the $400 difference, the agent complained and cussed that we, truckers in general, complained too much about low rates and that we should be happy with what we were offered from her, the $1600 dollar rate.

By now you can see the problem with shipping today. The “big dogs” of brokers are keeping a larger portion of the proceeds while giving the shaft to smaller trucking companies. The rate quoted included the fuel surcharge and we would be stuck taking the load or another low-ball company would swoop down and take the load for whatever rate they could get to position their truck in Seattle. Do you ever wonder why our economy is suffering and freight shipping costs are going through the roof? The poor independent trucker is going out of business and trucks are being repo’ed at record rates! With an administration in Washington DC who cares so much about NAFTA and the companies south of the border, no wonder the rest of us need to start buying massive quantities of petroleum jelly because it’s going to really hurt us all who are only trying to make an honest living!

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5 comments

  1. Just my 2 cents as a freight broker-more than likely they had another carrier or other carriers offer to handle the load at the lower rate.
    Freight brokers base their rates on supply and demand. Truck supply high+freight supply low=lower rate. Truck supply low+freight supply high=higher rate.
    So…using this logic means that freight brokers can be exploited by trucking companies who demand higher rates when truck capacity is low, swinging the pendulum in the other direction.

  2. Ken,

    I understand your logic in thinking every truck company is out to screw the broker. I have seen way too many instances of the broker taking advantage of the trucking company, especially when the broker KEEPS the fuel surcharge!

    I the above example, my boss eventually called back and got the higher rate. As I mentioned above, the average per mile rate for the two loads was $1.41. That is well below the national average and included a fuel surcharge! So who is really getting the short end of the stick?

    Why are there hundreds, if not thousands, O/O going out of business every year? Do you see that many brokers going out of business?

    JB

  3. JB,
    In no way was I trying to imply that every trucking company is out to screw the broker. My experience tells me that there are brokers that try to exploit trucking companies and trucking companies that try to exploit brokers, but this isn’t the general rule; it is usually the exception. The broker is trying to make as much money as it can on the load and the trucking company is trying to make as much money as it can on the load, and sometimes this leads to one taking advantage of the other; be it right or wrong.

    Brokers that adhere to quality business practices see the carriers as partners/customers, because without them, the freight doesn’t get moved. The broker needs the carrier the same way the broker needs the shipper/customer and this approach means that the broker should do all it can to help the trucking company stay in business.
    I can only empathize with the owner operators out there….especially right now, because fuel prices are high and freight rates have been creeping down due to less truckload freight being moved and the economic slowdown we are seeing. It can be extremely tough and I have tremendous respect for the owner operators out there trying to make a living.
    I’m glad to hear your boss was able to call back and get the higher rate-which is the right thing for the broker to do. I do not advocate brokers keeping any of the fuel surcharge, because they aren’t supposed to. The broker’s fixed cost is miniscule compared to the fixed cost for the trucking company/owner operator. Check out my blog sometime and see what I have to say. I try to provide the perspective of a medium size freight broker.
    http://www.truckisontheway.blogspot.com

    I think you will see my philosophy of “We are all in this together,” as cliche as it may be.

  4. I am a broker. I am proud of what I do and I work hard. I do all my own sales, dispatching, and billing. I have a dual responsibility to both my customer and carrier and try to fufill my obligations to both. Let’s be honeest here=shippers are paying less money on loads and agents are usually moving loads for 8 to 20% depending on what their logistics company requires-I find that even when I move freight at 8% carriers are complaining and thinking that I am a thief. I respect my carriers and understand that they play a critical role in the movement of freight, but I think that they fail to realize the work that I put into finding them loads and the insecurity on a day to day basis that I deal with. Somedays I make nothing…..and if a carrier drops the ball on me I have no leverage. If trucking companies are concerned with rates then they need to hire more aggressive sales forces and if owner operators want to use brokers they need to understand that they are paying for someone to find them freight, arrange for the freight to be transported and handle the accouting. I know that 10-15% of the bill is worth that. I work hard-I am not lazy and I am not greedy and I make less than a truck driver and I am comfortable with that. You want to aim blame then blame it at these large 3pls that are moving loads at 30-40% not your small brokerage firms.

    thanks,

    a

  5. Hello a,

    I completely understand where the small broker is coming from. I don’t doubt that you work hard and are sometimes left holding the bag with smaller trucking companies.

    The company I was refering to in my article has since done the same thing again and we had to register as a carrier with them to get the “real” rate from them. Up in the Northwest, freight has been running extremely slow and we have had brokers offer us as low as .91 cents per mile, take it or leave it. I am not sure how any local company could survive on that low of rate. Someone is getting a bigger slice of the pie, it certainly isn’t you and it’s certainly not us.

    Keep up the good work anyway!

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