Load brokers take a lot of criticism. Some richly deserve it, but others are actually a benefit to small carriers. Despite what some industry members may say, load brokers provide an important service to the trucking industry, whether you run a small or large trucking company.
No carrier can always find a compatible load on its own. This is especially true of small carriers, who may never go to certain areas until a customer requests it with little warning. Travelling new lanes with little warning or no regularity, you can’t always generate your own loads – both directions of travel – from your own customers.
The trick is to find out which brokers to work with. At times, you will have to balance your pride with your financial needs. Some of the biggest snakes in the industry will, at times, be your only viable source of freight. Do you swallow your pride, and allow shoddy business practices to continue, or run empty? Only you can make that decision.
Some large shippers use load brokers, and it can actually be to your advantage. They can’t efficiently ship all their product while dealing with all the individual trucking companies that would be required, so they turn dispatching duties over to one or several load brokers and let them absorb the headache of arranging shipments or pick-ups.
Live with it, because if load brokers were not utilized, the work would go to a short list of large trucking companies and you would never have access to the freight. Usually in these cases, rates are still acceptable. If the broker has the responsibility of moving large volumes of freight, they can’t lowball the price. Ensuring they move everything on schedule and retaining the contract is too important to risk failure by cutting rates.
Watch for the rates to fluctuate, however, based on truck availability. A typical rookie mistake is to base your rates one direction on the assumption the brokered freight the other direction will always pay the same. It will change regularly, and it rarely increases.
Other load brokers will work for smaller shippers, who have no regular shipment dates or locations. Their needs are constantly changing, and they may not be able to set up working relationships with a short list of carriers. Rather than keeping another shipping person on staff just to arrange this potential mess, it’s cheaper to let a load broker charge accordingly and to deal with it on demand. Some of our best paying work that doesn’t come from a regular customer is conducted in this fashion.
Many of our customers send out regular e-mails to their carriers detailing their needs. Within minutes, the online load boards light up with the same loads offered by umpteen load brokers, or in some cases, carriers who are wandering outside of their area of expertise.
These are the brokers who give the rest a bad name. Commonly referred to as vultures, bottom feeders, or other such names, they add no value to the industry; they usually just drive rates downward. They may never move one of these loads that have already been offered to regular carriers, but the surge of apparent interest typically drives rates lower.
Some are very hard to reason with, even difficult to insult. Many will phone carriers and try to give away a load the carrier was already aware of and turned down. I’ve told these brokers “This is also my customer; if I could do the load, it would be for the customer, not you.” They still don’t take the hint, and continue calling.
These types of broker relationships add no redeeming value to the situation. Avoid them. Often, the broker’s offered rate will be far below acceptable. These types of brokers are also the type who have no knowledge of the commodity being hauled. Origin, destination, and rate are often the only details they can provide. Some get cranky when you ask for more information before you reject or accept the load. The good and the bad have been covered, now for the ugly.
Many huge, multi-national brokers have become a real problem since our latest recession. The CEO of one particular load brokerage took a lot of heat two years ago for bragging about his company’s increasing success, claiming the recession was allowing it to increase its profits because of the desperation of some trucking companies. I doubt he gave any thought to the fact that all of us in the trucking industry would also read this quote, and avoid its freight, but in his urge to boast to shareholders, he exposed what is a cold, hard truth.
Our own company – and nearly every other carrier large or small – has, at some point, lost customers to this type of load broker. We were undercut, according to one ex-customer, by about 90 cents per mile. This often destroys, not just damages, relationships with your customers. Most don’t understand our industry, and just assume you have been abusing them with higher rates. They eventually learn. As a side note, consider that these large load brokers are usually quite profitable, so even though they underbid you, someone obviously hauled the freight for them for even less. Despise the brokers all you want, but remember, one of your colleagues or competitors helped them succeed.
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