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Examining the broker-carrier relationship

TransCore panel explores payment terms, the potential effect of ELDs and whether there’s a future for small brokers


WOODBRIDGE, Ont. — Bringing together a large room full of freight brokers and carriers is always sure to create a lively dialogue, and that was exactly the case at the TransCore Link Logistics annual meeting and golf tournament held yesterday.

Asking Mike McCarron of Left Lane Associates to moderate the discussion ensures a little extra liveliness. Yesterday, he asked four members of the carrier and freight brokerage communities to explore the current state of affairs, the broker-carrier relationship and the future of the small broker, among other topics.

Panelists included: Mike Fontaine, general manager of C.H. Robinson’s Toronto office; Bob Cascagnette, vice-president of sales for Highlight Motor Freight; Michelle Arseneau, GX Transportation; and Jon Saunders, vice-president of finance with Polaris Transportation Group.

 

The state of business

To start, Panelists offered a tepid overview of the economy and trucking conditions in general.

Arseneau said business at GX Transport has been “pretty steady” but she said customers seem unsure of what is in store in the future and are being conservative with their growth. “People are doing their best to hold onto what they have,” she said.

Saunders said Polaris, despite the slowness of the overall economy, has been investing heavily in IT infrastructure so it’s able to “right-size” quickly when necessary.

Cascagnette, on the other hand, said Highlight Motor Freight has been growing rapidly and its biggest challenge is finding qualified drivers.

“We still have a driver shortage,” he said. “Every year we’re adding vehicles. In the last three years we’ve added 120.”

 

The carrier-broker relationship

McCarron asked panelists how the relationship between freight brokers and carriers has evolved.

Arseneau said there is still disparity. The good brokers will provide all the information you need up-front to deliver the load correctly, whereas the bad broker will leave out details, “play games on payments and bastardize the whole process.”

She said it’s also becoming more difficult to reach decision-makers. It used to be a matter of getting past the receptions, but now, “there is no receptionist,” she said.

It was also noticed relations have become more formal, with contracts required where in the past relationships were formed without contracts.

 

 

The future of the small broker

There was a lively discussion about the future of small freight brokers and their ability to compete.

“I don’t believe there will be a future (for small brokers),” Cascagnette declared, noting it will be increasingly difficult for small brokers to deal with dragged out payment terms from customers.

Saunders said small brokers will have to provide exceptional service to survive. “You’re not going to win on IT and you may not win on the breadth of services offered but you can win on customer service,” he said.

Cascagnette’s advice for small players is to develop a niche and become the best at serving it. He said Highlight was launched to become the top carrier serving the eastern seaboard and it spent its first five years focused on that one lane before expanding elsewhere.

“Pick an area and service it,” he said.

 

 

How will you be paying?

Panelists agreed electronic funds transfer is preferable to payment by cheque, but said there are still many small brokers who insist on paying the old-fashioned way.

“Sending a cheque is one of the payment delay tactics people still use,” Arseneau said, noting her company now handles 95% of all payments electronically.

Cheque payments add an administrative burden to the transaction and also slow payment times, panelists agreed. Arseneau said there are benefits to paying invoices promptly.

“Anytime anyone can pay us in less than 30 days, there’s an opportunity to do some type of rebate program or it will factor into their rates,” she said.

 

 

The effect of ELDs

Panelists agreed the looming electronic logging device (ELD) mandate in the US and, eventually in Canada as well, will reduce capacity and has the potential to drive up rates.

“It’s going to eliminate a lot of smaller players that don’t have the cash flow available to upgrade their trucks and install these systems and maintain them,” Cascagnette predicted.

Arseneau added considerable internal resources are required as well to implement the devices.

“You need to have the expertise and bandwidth within the company to follow that project through,” she said. “It’s expensive and will consume a lot of resources for companies that aren’t there now.”

Cascagnette pointed out the standard will also force new operational realities onto the shipping community.

“It’s going to turn a few of these overnight lanes into two-day lanes,” he noted.


James Menzies

James Menzies

James Menzies is editor of Truck News and Truck West magazines. He has been covering the Canadian trucking industry for more than 15 years and holds a CDL. Reach him at james@newcom.ca or follow him on Twitter at @JamesMenzies.
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3 Comments » for Examining the broker-carrier relationship
  1. M. Spady says:

    A number of small brokers need to go away. They should not be in the business. Most of them do not have a bond to be brokering freight and are not viable, payments are slow and funds can be hard to collect. There need to be regulations to operate that are enforceable and Carriers need to be paid. Lack of Carrier payment when freight is slow will devastate this industry that is already suffering.

  2. Al Goodhall says:

    “Panelists agreed the looming electronic logging device (ELD) mandate in the US and, eventually in Canada as well, will reduce capacity and has the potential to drive up rates.”

    “Cascagnette pointed out the standard will also force new operational realities onto the shipping community.

    “It’s going to turn a few of these overnight lanes into two-day lanes,” he noted.

    “Panelists agreed the looming electronic logging device (ELD) mandate in the US and, eventually in Canada as well, will reduce capacity and has the potential to drive up rates.”

    So spell it out for us please. How specifically will ELD’s drive up rates and why, specifically, will 1 day lanes turn in to 2 day lanes?

    These folks aren’t suggesting that driver’s have to doctor paper logs in the name of efficiency are they? Hmm?

  3. Chaplain B Swanson says:

    Do I need a Lawyer to see this Stuff

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