Freight Brokerage Business. The Staff of Entrepreneur Media, Inc.
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it is the broker who creates and introduces the contract. Though the carrier may negotiate certain points, it is typically the responsibility of the broker to handle this administrative task.
• Note the carrier’s motor carrier (MC) or license number, full corporate name, and address.
• If you will be working with this carrier on a contract basis, state that the freight and rates will be negotiated for each shipment.
• State that the carrier is liable for any damage or loss to the freight that occurs while the carrier transports it.
• Note that the carrier is responsible for any personal injury or damage to vehicles or equipment that occurs while the freight is in the carrier’s possession.
• State when the carrier will receive payment and what the carrier must provide before you will pay (such as bills of lading).
Figure 3–1 on page 40 shows a sample Carrier/Broker Agreement.
Load Confirmation and Rate Agreement
Once a carrier agrees to move a given load, you should complete and send a load confirmation and rate agreement form. This should include the name and address of both the shipper and the consignee, a trip number (for tracking purposes), any information on extra pickups or stops, pickup and delivery dates, a brief description of the commodity to be shipped, and your commission or brokerage fee structure. See Figure 3–2 on page 41 for a sample Load Confirmation and Rate Agreement.
At the time of the pickup, the shipper will provide the driver with a bill of lading. This form will include information on the nature and size of the load, its destination, and any required special handling. The driver signs the bill of lading as an acknowledgment of receiving the load described by the shipper.
The bill of lading is prepared and handled by the shipper and the carrier. As the broker, you will not be directly concerned with it, but you need to keep a signed copy in your files. The carrier usually sends this to you, along with its invoice for transportation services.
FIGURE 3–1: Sample Carrier/Broker Agreement
FIGURE 3–2: Sample Load Confirmation and Rate Agreement
Drivers may occasionally work with contract laborers who unload trucks once they reach the consignee. If they do, the laborer will give the driver a contract labor receipt, which the carrier sends to you. The driver or carrier pays the laborer and turns to you for reimbursement. If your shipper is willing to cover this cost, pay it. Even if your shipper doesn’t want to pay for contract labor, you may want to consider absorbing the expense so you can maintain good relations with the driver and carrier. See Figure 3–3 for a sample Contract Labor Receipt.
FIGURE 3–3: Sample Contract Labor Receipt
After making the delivery and obtaining proof of delivery, the carrier sends you an invoice, along with the bill of lading. With these documents, you can prepare your own invoice to send to the shipper. (Unless, of course, the carrier bills the shipper directly.)
stat fact
According to the American Trucking Association, motor carriers collect 87 percent of total revenue earned by all modes of transportation.
Your invoice should include the billing date, the dates of pickup and delivery, the origin and destination, what was shipped (commodity, pieces and total weight), and additional fees (such as fees for exceeding weight limits or charges for contract labor). Bill your shipper as soon as you receive the complete invoice and bill of lading from your carrier.
If the shipper is sending the delivery “collect,” then you bill the consignee rather than the shipper. The shipper should provide you with billing information on these shipments. See Figure 3–4, page 44, for a sample invoice.
A contract of carriage is not a document itself, but it’s important that you understand the concept and what it includes. Many otherwise well-informed transportation professionals view the bill of lading as a contract of carriage—a common misconception. “A bill of lading is certainly a receipt used in a contract of carriage, but there are many elements required by that contract that are generally not stated on the bill of lading,” explained Bill Tucker. “Some examples: the price agreed to in the contract, all the services to be provided, rules to be used to handle exceptions, and accessorial charges that may be applicable.”
What makes up a contract of carriage? “A contract of carriage between a common carrier and a shipper (with or without a broker being involved) usually consists of some form of bill of lading, whether ‘standard’ or not, plus all the tariff provisions, pricing, rules, and service descriptions,” Tucker says. “Also part of the total contract is the intent of the parties; the regulatory rules that must be followed, whether federal, state or local; and all the other ‘usage of trade’ and precedent within which this transaction has occurred.”
At any given moment, most business owners have a very clear understanding of the mission of their companies. They know what they are doing, how, and where it’s being done, and who their customers are. Problems can arise, however, when that mission is not clearly articulated into a statement, written down, and communicated to others.
FIGURE 3–4: Sample Invoice
Even in a very small company, a written mission statement helps everyone involved see the big picture and keeps them focused on the true goals of the business. At a minimum, your mission statement should define who your primary customers are, identify the services you provide, and describe the geographical location in which you operate. A mission statement should be short—usually just one sentence and certainly no more than three. A good idea is to cap it at 100 words. Anything longer than that isn’t a mission statement and will probably confuse your employees. Your mission statement doesn’t have to be clever or catchy—just accurate.
To develop an effective mission statement, ask yourself these questions:
• Why does my company exist? Whom do we serve? What is our purpose?
• What are our strengths, weaknesses, opportunities, and threats?