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Quebec’s three-headed monster

QUEBEC CITY, Que. - What has one name, three heads and people have no idea what it is?The answer in la Belle Province is an intermediary, according to the bureaucrats who drafted Law 430. In the real ...

QUEBEC CITY, Que. – What has one name, three heads and people have no idea what it is?

The answer in la Belle Province is an intermediary, according to the bureaucrats who drafted Law 430. In the real world, however, the answer could be a third party logistics provider (3PL), a trucking company, or a load broker. And if an owner/operator gets stung and comes-a-looking, he likely does not know which head to ask for.

“Quebec doesn’t distinguish between the three kinds of load brokers. It just refers to intermediary without defining the term,” says Steve Ramescu, president of the Association of Intermediaries in Transport in Quebec and the vice-president of Clarke Logistics.

“The terminology of transportation has not evolved with the changes in transportation.”

Years ago, a load broker was someone who specialized in linking up a manufacturer’s freight with a truck willing to pick up a backhaul at a reduced rate, according to Ramescu.

This kind of load broker, he adds, “coordinates merchandise with a carrier. The customer dispatches his load to the load broker, who dispatches it to a carrier who is equipped properly and is ready to do it.”

Around 1988 the word “logistics” came into currency. Load brokers evolved into 3PLs and began dispatching freight to rail and sea as well as to highway transport companies.

At the same time O/Os with their own trailers came on the scene and started receiving orders from carriers, load brokers and manufacturers. Things started getting complex: who was giving the orders, picking them up, passing them on, carrying them out…?

Today, picture a manufacturer at the top of the page with his freight, but no private fleet of his own. He can deal with a 3PL, a trucking company or an O/O to get his freight out onto the highway.

The 3PL can deal with the trucking company or the O/O on behalf of the manufacturer. Or, the O/O can deal with the trucking company, the 3PL or the manufacturer.

So far there are two sorts of load brokers on the page: the 3PL and the transport company, assuming it has O/Os in its employ.

“Company X is a transportation company. If a manufacturer gives a load to Company X, and it hires an O/O, doesn’t that make Company X a load broker?” asks Ramescu. Company X acts as a load broker, but it is still a transport company.

“Here’s the problem. When someone complains about an intermediary or load broker, the O/O blames the 3PL. Customers know who we are, trucking companies know who we are, but O/Os don’t know who we are. I don’t talk to O/Os. I talk to Company X.”

Now toss in one more load broker subtype. Call him the LB. An LB can deal with regular O/Os, or it can deal with what Ramescu calls, for the sake of convenience, gypsy O/Os.

“There is another group of O/Os who have come out of the woodwork, the O/Os who have lost their job at Company X and want to be free; we called them gypsies in the 1980s.”

They are defined by not having a guaranteed long-term contract with a company or a working contract with a group of people.

For the gypsy the LB is really a transport company disguised as a LB. He is trying not to commit as a transport company.

“Take a scenario where a [LB] has contracts with a group of gypsies. This load broker and the gypsies have bypassed a group of people – the transportation company [with its usual responsibilities]. The obligations have all been stripped away. The gypsy is, in effect, a one-man transportation company. A gypsy picks up his load from a LB, say, over the phone, fax, whatever. Problem: He gets into town and finds he has problems getting paid.”

Ramescu thinks most gripes O/Os have are with these LBs, and they often stem from having no idea with whom they are dealing.

As a 3PL, Ramescu would not dream of taking on a $50,000 load from a manufacturer without first doing a credit check to make sure he will get paid.

O/Os would do well to do the same with their LBs. In fact, with anyone they deal with and expect to get cheques from.

“Before you point a finger, take a look at your own control systems first – what you should do before complaining about your broker.

“The thing with O/Os, you hear these horror stories, ‘I lost $25,000,'” explains the association president. “If you are stupid enough to do 25 to 30 loads [between Montreal and Toronto] for someone and not get paid, at what point do you decide to say, ‘Am I at risk?’ It is very easy to blame, but I think you (should look at yourself).”

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