Freight Brokerage Business. The Staff of Entrepreneur Media, Inc.
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any toll-free numbers
• All email addresses
• Contact person (in most cases, the dispatcher)
• Other terminals, phone numbers, and contacts
• Type and size of equipment available
• Motor carrier’s license number
• Federal tax identification number
• Whether or not the carrier offers pallet exchanges
• Carrier’s traffic lanes and backhaul requirements
Beyond the basic information about a carrier that helps you make the selection, you should obtain the following additional data before you actually give that carrier a load:
• Copy of current insurance certificates and updates
• Certificate of authority
• Copy of current general-commodity tariff and updates (if applicable)
There are several online-based services you can subscribe to as a freight broker to help you quickly find carriers, negotiate fees, and maintain up-to-date records. DAT Solutions, LLC’s DAT RateView service (www.dat.com/products/rateview) will help you find carriers and negotiate rates based on timely and localized information.
These key documents prove that the carrier is licensed to transport freight and is insured if cargo is lost or damaged. You should not only confirm that the carrier is insured, but also note when the insurance expires. When that date arrives, check with the carrier for proof that the coverage has been renewed. Certificates of insurance usually include a provision that the holder will be notified by the company upon cancellation of coverage.
In addition to these items, ask your carriers for a statement that they assume full responsibility for paying all fuel taxes, including ton-mile taxes (taxes based on the weight and distance), in all states through which they travel. Also, while on lease or contract, they should pay fines for any and all violations incurred. Though carriers generally make it a standard part of their business operation to pay these fines, you should obtain a written agreement to that effect and place it in your files.
You should also retain any correspondence, agreements, rate quotations, policy changes, memos, etc., along with copies of all contracts, bills of lading, and invoices you send or receive.
There are tens of thousands of carriers operating in the United States. Your job as a broker is to identify the ones that provide services your customers need and to confirm their reliability before using them.
You’ll find carriers listed in a number of directories, trade magazines, and online services. Word-of-mouth is also a good way to find carriers; as you’re out there networking, pay attention to what others are saying about particular trucking companies and follow up on good reports.
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Approximately 90 percent of interstate motor carriers operate six trucks or fewer.
You can also look for trucks at truck stops and on the road. When you see trucks that are clean and well-maintained, speak to the driver and find out something about the company. If it isn’t practical to speak to the driver, make a note of the company name and headquarters location (it will be on the truck or the cab) and give the company a call.
“For 18 years, I’ve written down the names of trucking companies I see on the highway,” says Bloomingdale, Illinois-based freight broker Ron Williamson. “I’ll call that company and ask if it has any extra trucks it can provide us.”
Of course, don’t overlook the internet as a source for carriers. There are a number of online databases that allow shippers and carriers to post their freight and equipment needs. (See the Appendix for a sample listing of these resources.)
Once you’ve found a carrier that might be useful, you need more information before you turn a load over to it. Ask for copies of the carrier’s certificate of authority, current insurance certificates, and current tariff. You should also get references from satisfied customers and take the time to check those references. Finally, check a credit reporting bureau or financial rating service to find out what the carrier’s financial condition is. You want to be sure the carriers you work with are reliable and financially sound.
Avoid using major carriers that have terminals all over the country. These carriers do not take loads directly from pickup to destination; rather, they relay a load from one terminal point to another. This process takes additional time and increases the amount of handling, which increases the risk of loss or damage. It’s better if the driver who picks up the load delivers it.
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It costs carriers a significant amount of money per day to let a truck sit, waiting to find a load to avoid an empty backhaul. “That’s why brokers are so much in demand,” says Bloomingdale, Illinois-based freight broker Ron Williamson. “If it’s Tuesday, you don’t want that driver sitting in town until Friday.”
Some carriers use a procedure called pooling, where loads are dropped and left until a driver with the proper equipment and destination is available to pick them up. Though this may sound like an effective practice, it causes delays in transit time, and you should avoid carriers that employ this method. Such a policy will give you a competitive edge by enabling your shippers to meet tight delivery schedules.
In the beginning, it’s a good idea to handle full truckloads (FTLs), only because they’re easier to deal with than less-than-truckload (LTL) shipments. It’s impractical for many carriers to handle a partial load; you would need to arrange for the driver to pick up two or more LTL shipments headed for the same destination. That may seem a bit overwhelming when you’re just getting started, but as you gain experience, you’ll be able to handle both FTL and LTL shipments easily.
Freight charges are based on a number of variables, but the two main factors are the weight of the load and the distance it must travel. Rates are also affected by the type of truck needed, whether the driver needs to make one or more stops to pick up the freight, and whether the driver needs to make more than one stop to deliver the goods. Each shipment is entitled to one pickup and one delivery with no extra charge; you can usually negotiate the rate for additional stops with the carrier.
Before you begin shopping for rates for specific shipments, get an idea of the current “going rates” for the types of shipments you’re likely to be handling. You can do this by requesting copies of tariffs from several carriers and studying them.
Many shippers—especially large companies with experienced traffic departments—will not leave it up to you to quote a rate but will tell you how much they are willing to pay. If this amount is unreasonable, you’ll need to negotiate with the shipper or decline to handle the load.
Calculating freight pricing is not a simple process. Carriers negotiate rates based on commodity, value, equipment availability, volume, customer-service factors, and payment history, among other things. As a broker, you need to know what the market issues are, as well as what can cause increases or decreases in the per-mile rate, such as driver shortages, fuel surcharges, seasonal changes, toll roads, and so on.
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