The Truth About Load Brokers
Mention the words “load broker” and you’ll conjure up images of a guy sitting in his parents’ basement looking at his old Pink Floyd posters and pimping freight for a living. Lets face it: talk to a couple of buddies from your old-timer’s hockey team who have some freight to move, buy a surety bond (it costs about the same as one truck tire), fire up the computer, and presto-you’re in business.
Operations like this will always exist. But in reality, small load brokers represent a very small percentage of the third-party market. Big players dominate-customs brokers, multi-national logistics firms, sales agencies, and even trucking companies (we call it interlining) are brokering freight and boosting their bottom lines.
These third parties control a lot of freight. To dismiss them all as basement operations and bad credit risks is an approach I just don’t buy. (I don’t think a third-party source is a greater credit risk than any company that gives you business. In fact, my guess is that you have a better chance of getting your cash from a low-overhead operator like a third party than one with the large overhead of a trucker.
How many truckers have closed the doors and filed for bankruptcy in the past year?)
Let’s face it. Truckers need third parties. They have something we want: access to freight. What a lot of truckers don’t do well is manage their relationship with the third parties they’ve come to depend on. Here’s how you can do a better job:
Get the rules straight before you move a shipment. Will you haul freight for a customer you know nothing about? I won’t. Know your partner and agree on terms ahead of time. Resist the Friday afternoon temptations to just “get the truck home.”
Create a rock-solid credit policy. Establish credit polices for your customers-especially in times like these. Get signed credit applications from all third parties, and don’t bother phoning the references they give you; they won’t list customers they’ve stiffed. Instead, call around to some of your trucking cronies or suppliers. A great question to ask when setting up credit is, “Am I getting paid for this load when you get paid?”
Establish rates. You don’t want your dispatchers negotiating on every shipment. You’ll lose. Establish rates for the lanes where you need third-party business and stick to your guns. Don’t give deals of the day: you’re not selling stereos.
Treat third parties like customers. Forge long-term relationships by giving good service. The result will be a base of consistent and profitable third-party business. Yes, you might even have to make the odd sales call.
Prospect for lanes. Find third parties who offer freight where you need it. I’ve never been a big fan of using the Internet to find freight, but you can use online load-matching services as prospecting tools. When you find the freight you’re looking for, put on your best Florsheim sales shoes and get a commitment to haul it every week.
Don’t work for free. If the third party decides not to bill their customers, that’s their problem not yours. Set the precedent early and insist on full payment of extra charges-sorting out paperwork problems, dock delays, etc. Make sure the third party re-faxes you the newly agreed-upon rate-it will eliminate memory laps 30 days down the road.
Don’t wait. Third-party sources aren’t going away. Accept it, and build relationships with reliable partners.
If you don’t, you just might find yourself in a place where a few truckers have gone recently-the dark side of the moon.
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