15 Jul Successful Collaboration Between Carriers & Brokers
Significant tension in 2020 has rocked the United States and even the World. Political polarization; COVID-19; the stock market rollercoaster; record unemployment. Events were canceled; sporting, conferences, concerts, and even the Olympics were canceled or postponed. Even in the transportation world tensions rose between transportation brokers and carriers (owner-operators and smaller trucking companies). The issue being: carriers believe brokers are taking advantage of the COVID 19 situation to increase revenues by paying the trucks less while reaping excessive margins.
The carrier/broker relationship has long been a source of tension for both parties. Carriers believe brokers are taking all the trucks’ profit, driving down prices. Brokers believe carriers book loads, then search for better paying freight, only to give the load back, often at the last minute (to be fair, some brokers do the same in reverse). Brokers often struggle to make decent margins when markets turn in favor of the carrier. Brokers get stuck paying detention, late fees, and truck ordered not used (TONU) when their customer refuses to pay. Ironically, each needs the other to survive.
The broker is the salesperson for the small trucking company who, most likely, does not have the capital to hire full-time salespersons. Carriers often follow the “hot” areas as that freight progresses across the country. How would a salesperson develop relationships with customers when their trucks are there and gone until the following year? It takes months or years to develop new customers. Additionally, most shippers are disinterested in working with a carrier to haul a few loads a year. Brokers have no problem setting up carriers for those few loads or even a single load. Ask a broker how many carriers, they have set up for a single load, never to hear from that carrier again. Their response might surprise you; it is likely around 25%-30% of their entire carrier database.
In my 22 years of working in transportation, I have noticed a declining tolerance between the carrier and broker.
When I started, in 1998, brokers and carriers, mostly got along. As the years passed our relationships have degraded. In March, of this year, owner-operators staged protests throughout the country, including Washington DC, aimed toward brokers. Certain organizations are even petitioning Congress for regulation against brokers.
Is all this avoidable? Maybe not, but there are things brokers and carriers can do to foster a more harmonious relationship.
Full disclosure, I have managed brokerage offices and trucking companies. I currently hold a Class A CDL. I have significant experience driving truck, over-the-road for weeks at a time. I have pulled tanker trailers, pneumatic, flatbed, step deck, over-dimensional, and multiple other types of equipment and trailers. I know what it is like to be on every side of this business. I have had issues with carriers, drivers, brokers, shippers, and receivers; as well as successes from each. In my experience, I have found the biggest prevention for failure is communication…timely communication. There are, however, other things all parties can do to ease tensions.
As a broker, it was my job to become as efficient as possible. Most brokerage offices have steady freight from their customers. Spending the time, upfront, to build relationships with carriers pays off in the long run. Owner-operators or smaller trucking companies are where I focused my relationship efforts. Setting schedules with carriers for year-round pricing and year-round service was the best approach.
For example, in Oregon and Washington Christmas trees run heavily around Thanksgiving until before Christmas. Carriers make solid money hauling trees. After that rush from trees, rates decline through the winter and spring months becoming competitive. I had steady business with multiple loads a day, out of Portland, OR. I worked with several carriers to service that business with the expectation of receiving capacity during the Christmas tree crunch. It worked, my freight was covered when trucks were tight, and the carrier had freight when things were slow. One carrier strayed and hauled trees. Once the trees slowed, he was calling for loads. He was bumped to the bottom of our list and priority was given to those who upheld their agreement. Loyalty is a broker and carrier’s best friend.
Owner-operators and small carriers can look for these opportunities. Find a broker that is reputable and ethical. Ask them for some of the steady business. The key is finding the right broker, once found be sure to provide excellent service.
Stuff happens to trucks, like breakdowns and delays. Notifying the broker immediately where the truck is, what the issue is and an estimated time to be running again. Keep them notified throughout the delay. A good broker may offer to assist with finding help. They are sitting at a computer with access to the internet. It is simple to look for road services from their seat.
Brokers may even help with costs. It’s better to lose some money on a load than lose a customer. I once paid, with a Com-check, to replace a blown tire and the service. It was for a regular owner-operator who just finished two major repairs on this truck and was short on cash. Good brokers take care of their regular carriers.
Detention and Truck Ordered Not Used are some of the worst words a broker can hear. They get stuck in the middle, with a customer, who refuses to pay when the carrier is legitimately owed compensation. Those two fees have accounted for some of the most difficult conversations I have had. When the customer refuses to pay, the carrier and broker need to work something out. Some brokers refuse to pay anything. Some carriers refuse to budge on collecting the fee, in full. Many relationships are broken from fees that are generally around $250.00. The carrier or broker will take a hard stance, burn the bridge, never to work together again. Ultimately, the expense of losing a partner in the industry ends up costing more than the fee for both parties. Stay calm, be professional, and work together.
The biggest single strategy for brokers and carriers working successfully together is to find an honest, ethical broker; and for the broker to find an honest ethical carrier. Work together, foster, and build are prosperous relationship. My best carriers are the first to be offered the best freight. Every broker has emergency loads where their customer will pay “whatever it takes” to get delivered on time. When that happens my first call was to my best carrier, usually an owner-operator. I once paid my favorite owner operator $2000.00 to pick up at 11:00 PM, run 300 miles for delivery as soon as the truck arrived.
Carriers, brokers, and drivers all have unique jobs that come with good and bad. Brokering freight is extremely stressful. Brokers are constantly under pressure to cover the freight. When a carrier gives a load back that stress is compounded. Carriers have the stress of trucks rolling across the country. That stress is compounded with mechanical failures, driver issues, and the liability of 80,000 pounds of steel moving at 65-70 miles per hour. Drivers put in long, thankless, and lonely hours. Sitting behind the wheel for 11 hours a day is tiring. Semi-trucks are not a comfortable ride; they are bumpy and noisy; it is fatiguing. Everyone thinks the other job is easier. I have done all of them; each has unique circumstances that lend to joy and stress. In the end, we are all just trying to provide for our families.
Ultimately working together boils down to a few small things: Be professional and polite. Communicate, communicate, communicate. Build relationships. Provide exceptional service. Be kind.