Freight Brokerage Business. The Staff of Entrepreneur Media, Inc.
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when it becomes necessary—either through voluntary or involuntary departures.
Look around for good ideas and good products that people are already using that you can incorporate into your operation. Everything you do doesn’t have to be original; get ideas from other brokers, carriers, shippers, and even totally unrelated businesses.
Bloomingdale, Illinois freight broker Ron Williamson learned this the hard way when he hired someone to develop a proprietary computer system. “That was a mistake because it was not a totally integrated system that would save us time and make us more efficient,” he recalled. “Later on, we found a packaged program that had all the bells and whistles we needed.”
Get Rid of Carriers That Don’t Perform
Every trucking company will have an occasional service problem, but when the service failures become chronic, drop the carrier from your roster. “You won’t keep your customers very long if you’re having constant problems with your carriers,” said Williamson. Of course, he acknowledged that in the beginning, you probably won’t know who all the good and bad carriers are. While it’s one thing to be understanding and give a carrier a second chance, you need to draw the line before the problems affect your own business.
Maintain a Broad and Diverse Customer Base
You need enough customers so that losing one—or even several—is not devastating. One of the biggest mistakes Cathy Davis ever made when she ran her freight brokerage was allowing one customer to control too much of her company’s revenue. When that customer pulled away with very little notice, she was left scrambling to replace that business.
Because the freight industry is such a strongly relationship- and reputation-based business, it helps to put yourself in the public eye in a positive way as often as you can. Cathy Davis saw a favorable impact on her business from being the recipient of awards and by getting bylined articles published in trade publications. An even easier approach is to contribute content to online publications or well-trafficked blogs that cater to your industry or the shippers you are targeting as your perspective clients.
Though a freight brokerage is extremely lucrative on its own, it’s also a business that can lead to the development of other transportation-related operations, from consulting to buying trucks and being a carrier. Cherry Hill, New Jersey, freight broker Bill Tucker, for example, offers a wide range of logistics services.
Andrews started as a broker, and then created his own separate trucking company to handle moves where the carriers he was using were short on equipment. Williamson also started as a broker and has since created two trucking operations.
“Focus on building the highest-quality reputation you possibly can,” advised Tucker. “When a shortcut presents itself, but it’s a little on the shady side, have the fortitude to pass it by, no matter how big the opportunity may seem. There are so many people in this industry who need good, solid, honest, reputable service—and long term, that’s where the big money is. You survive, and you won’t have a lot of doors closing to you because some bad story got out.”
Tucker compares the industry to a small village. “Everybody knows everybody else’s business. It’s amazing how fast word travels. Nothing will put you out of business or limit your success faster than the story of one bad transaction or one nasty court loss because of bad practices getting out into the marketplace. You’re going to have to sweat for a while, pull your belt in once in a while, and [endure] some tough times. But do it the right way every time, don’t take any shortcuts, provide high-quality service, and maintain your integrity, and you’ll always have customers willing to pay a fair price and good carriers that want to work with you.”
An Industry Veteran Puts the Pieces Together
This book has provided a lot of information, originating from a wide range of credible sources, to help you develop a realistic understanding of what it takes to be successful operating a freight brokerage business.
Angela Eliacostas is the president and founder of Illinois’ AGT Global Logistics (http://agt3pl.com), a successful freight broker that’s been in existence since 2005. Eliacostas herself has worked in the transportation industry for more than 25 years. In this interview, she shares some valuable insight and advice to people first entering this industry.
Eliacostas literally grew up working in the transportation and trucking industry. “From the time I was born, my father worked in the trucking industry. From the time I was a young girl, I would go to work with him and help him in his business,” she explained. “When I graduated from high school, I got married and had four children. I never went to college, but when I needed to go back to work, what I knew was the trucking industry. I wound up landing a job working part-time for a local trucking company.”
As time went on, Eliacostas learned all aspects of the business she was working for and wound up being promoted to hold a wide range of job titles and responsibilities. When her boss retired, she was groomed to become the business and operations manager of the company she was working for.
In 2005, she decided to open her own freight brokerage business. “I was petrified to start my own business because I was a single mother raising four kids. I knew I was a survivor and a hard worker, and that no matter what happened, I would make operating my own business work,” explained Eliacostas.
Over the years, AGT Global Logistics has experienced steady growth, despite the unsteady economy. “We have maintained the mentality of a small, hands-on freight brokerage business, which focuses extremely heavily on customer service. As the years have gone on, we have grown into a midsize company but have maintained our small company values, which I know our customers appreciate,” said Eliacostas.
As of early 2017, AGT Global Logistics had 21 employees, and generated more than $10 million in annual revenues. “Years ago, freight brokerage companies had developed a very bad name in the transportation industry. They were considered untrustworthy, often fly-by-night operations. All a freight broker needed was a computer, a desk, and a phone, and they could operate from anywhere. If something went wrong, they’d close the business and reopen somewhere else under a different name.
“This has all changed, however. Over the years, the industry has evolved a lot, and the overall reputation of freight brokerage companies as a whole has improved. This is in part because of better regulation and the need for brokers to acquire higher value surety bonds, which help to ensure that everyone gets paid,” said Eliacostas. “Today, all freight brokers are held to a much higher standard. These companies offer a specialized expertise that shippers in virtually all industries now rely heavily upon. It’s important to understand that this is a relationship-based business in which offering the highest level of customer service is essential.”
Eliacostas emphasizes that strong and long-term relationships must be established with carriers, who need to know that they will be paid on time. Similar and equally important relationships need to be created with shippers, who need to be able to trust your company. She explained, “By building up strong relationships with carriers, they are often willing to offer more competitive rates versus rates offered to a broker who doesn’t have a close and long-term relationship. These lower rates get passed to our shippers, who rely on us to offer them the most competitive rates