Freight broker agent says what?
Unless the company you work for has literally never sent or received a shipment of any sort in its history, chances are strong that you have gotten a call from a freight broker agent. If one of those companies happens to be a big boy like TQL, Landstar, Echo Global or the like, then you have probably gotten at least one phone call every day you have come to work since you opened your business or started your job. Freight brokers are inescapable and, at times, pestering. But are they useful? Well, the good ones are. The problem is separating the good fit from bad fit. This post will provide you with ideas for questions to ask a prospective freight broker agent to help qualify them.
1) What is your MC number?
You want to make sure the person calling you at least has a basic understanding of the company and industry they work for/in. One of the first things you must obtain to operate legally as a freight broker is a surety bond. You’ll aslo need an MC number from the FMCSA. The FMCSA gives MC numbers in ascending order. The higher the number, the less time they have been in business.
It is also the main way the industry identifies us (along with our USDOT). Transportation authorities or a prospective business partners will need this information. As such, it should be a number an employee or freight broker agent knows well. Would you trust someone to haul for you who doesn’t know their company’s MC number? It’s not cut and dry, but the answer is up to you.
2) What are your standard assessorial fees?
The job of a freight broker agent doesn’t end when the shipment is secured and tendered to a carrier. Well, at least it shouldn’t. At times, there will be issues in transit that a broker will have to deal. They will have to negotiate fairly as a representative of both the carrier and the customer. If a carrier is made to wait for 6 hours to load, the carrier will likely charge detention. The party responsible for paying those charges, unless otherwise negotiated, is the customer. Efficiency is part of profitable trucking operations, so when trucks are made to wait they lose time. As the old adage goes, time is money.
Brokers with published rates for additional fees are more predictable than brokers who negotiate with carriers only when these situations arise. A good freight broker agent should be able to list these fees and tell you the rate at which they are billed should they arise. You should have an understanding of what circumstances justify these charges. You will also want to know how much you it will cost you. This will help you determine your liability in these potentially expensive situations.
3) What is your standard profit margin?
OMG no he didn’t! Yes, I said you should ask the freight broker agent what his/her standard margin is. I can write an entire post on this topic separately. Before you give up reading here, let’s unpack this notion a little further.
A broker will add a profit percentage on top of the carrier rate when quoting a customer. That is no secret. This is not shady business practice or fraud, it’s just the nature of brokerage. That being the case, it should be okay to discuss the margins we look for as brokers. If we want to average 15-20% profit margin on our loads, that should be acceptable if we are truly providing a valuable service. Keep in mind that you probably won’t get a straight answer from every person and the goal is not to determine what they are actually making on each load, but to see how they react to the question of that nature. If a broker is a tight-lipped about their margins or reacts negatively, what does that convey to the customer?
What ultimately matters is that the paying customers are happy with the rate and, accepts the rate given by the freight broker agent. If the service has value that justifies it, who cares what they make? Eliminating another position could be worth tens of thousands each year to the business owner (again, another topic). But, would this person be truly operating with long-term mutual benefit as the end goal, if he/she was making 30-40% on all your freight?
4) How long have you been a freight broker agent?
This is a testament to the person’s knowledge of this crazy industry in general and the important aspects of brokering freight specifically. As one of the owners of Interstate 48 Transportation, I have been with it every day of our 10 years. I starting out assisting my father answering phone calls part time while I was in college. I can tell you that every day I learn something new in this business.
The process is fairly simple. With a few hours of training and some software, literally anybody could broker a shipment. The devil lives in the details here. An inexperienced freight broker agent can leave you open to risk financially and legally. Brokers MUST check safety ratings and insurance records. They must convey vital load details and ask proper questions of the shipper. Also, they must set and confirm appointments, negotiate fees, verify the truck has the proper equipment. This is all of monumental importance. Failure to have a complete understanding of the importance that lies in the minutiae might make the difference between a happy customer and a lost customer (and with it, lost revenue) for you.
5) What makes you uniquely suited to help me?
This question is incredibly important. Why? I had mentioned under the previous question that with a few hours of training literally anybody could coordinate a load for a customer. There are two or three ubiquitous freight-matching software programs that most companies utilize and dispatching systems are now so user-friendly that the process is relatively easy to learn. Because of this there are countless freight brokerage companies touting the ability to “move anything, to and from anywhere.”
This is not a bad thing (we stand by our ability to do so as well), but, if a freight broker agent is a dime a dozen and they all can handle anything, what benefit would it serve to add this one specifically? The answer to this question will also show how much this freight broker agent knows about the business you work in and about your company. Do they honestly believe they can help you, and if so, why? If they don’t have a specific answer to this question then it likely will not be a good fit for you.
These questions are not designed to be a one-size-fits all list for qualifying every freight broker agent. You may want to ask more or fewer questions depending upon what you know of the person or company they represent. After 10 years of dealing with brokers and carriers, hearing the pain points of customers dealing with brokers, and dealing with some myself, I have come to learn that these answers will illuminate quite a bit about the person and company with whom you decide to work (or not).