New Freight Broker Mistakes & More Q&A | Final Mile 83

Ben & Stephen answer your freight brokering questions and discuss:

Dispatching Trucks from Abroad – Challenges and considerations for carriers managing operations remotely.
Carrier Perspective on Rates – The push for higher rates and the costs carriers must cover.
Onboarding Challenges – What happens when a carrier isn’t set up late in the day?
New Broker Mistakes – Common pitfalls when booking the first load and how to avoid them.

Support Our Sponsors:
QuikSkope - Get a Free Trial: Click Here
Levity: Click Here
Bluebook Services: Click Here
DAT Freight & Analytics - Get 10% off your first year!
DAT Power - Brokers & Carriers: Click Here
DAT Express - Brokers: Click Here
Truckers Edge - Carriers: Click Here

Recommended Products: Click Here
Freight Broker Basics Course: Click Here
Join Our Facebook Group: Click Here
Check out all of our content online: Click Here

Chapters

• 0:00 Welcome to This Week's Episode
• 5:19 Listener Feedback and Insights
• 15:19 International Dispatching Challenges
• 45:19 Understanding Freight Rates and Costs
• 1:15:19 Common Broker Mistakes
• 1:30:19 Onboarding Challenges at Late Hours

Transcript

Speaker 1: 0:19

Hey, welcome to this week's episode of the Final Mile. Nate is out this week, so Steve and I will be covering your frequently asked questions, ones that you guys have either submitted on YouTube, sent to us directly and some from our Facebook group. Before we jump in, I was going to share some feedback we got on an episode we did recently. This is how real freight brokers do business. Episode 261, if you haven't checked it out, this is from Michael McCack. It says I've been in sales for a long time and the tactics and strategies they've covered in 50 minutes are evergreen. I've used them, still use them, and they all work. I might have 12 pages of notes just from this episode alone. Great content and I'm looking at joining a sales team at a freight forwarder soon and looking forward to putting these into practice. Thanks again for the great insights. Thanks for the comment. Appreciate it. We appreciate your feedback and your questions and we're going to jump into them now.

Speaker 1: 1:20

On this week we are going to cover would it be a problem with dispatching my truck from abroad? We've got a comment from a small carrier that we're going to break down from Bridget Norman 1605. We've got a comment from PX19230. How does it work when you're not set up and it's late in the day and nobody wants to onboard them. And we're going to cover what is the most common mistakes new brokers make when booking their first load. So, first up, would it be a problem dispatching my truck from abroad? What do you think, steven?

Speaker 2: 1:58

So it's not a problem. I mean, you're within your right to do that. However, because of fraud in the industry, a lot of the issues that you're going to run into when you're abroad and outside of the country is going to be your vetting services. So, like, if you, if you have a brokerage that wants to use you and say they use like highway or something you know, or my carrier packets, whatever you know, these vetting tools are starting to track you know IP addresses and that you may or may not be able to use a VPN.

Speaker 2: 2:34

Um, so there's going to be some issues in that part. Uh, and you know, obviously, time of day. So you're you're going to be on a completely different schedule abroad. Now, great, if you're in Canada or Mexico, you're probably in the same time zone, but if you're, like in Europe, you know it could be two o'clock in the morning when it's I don't even know what time it's like seven hours, when it's like five o'clock here or something like that. Um, so it'll be a struggle. It's not something I would do permanently, um, but like if you're on vacation, yeah, I mean, work's still gonna get done, so you can do it.

Speaker 2: 3:13

You're just there's gonna be hurdles that you have to get through that's correct.

Speaker 1: 3:19

I mean I really don't have much to add. I mean there are lots of companies that use dispatching services abroad Company I'm running right now. We have a large office in Columbia and I've worked with lots of clients that have dispatchers abroad. The biggest issue again, as Stephen pointed out, is like Highway Carrier 411, some of these vetting services flag the IP addresses so you'll have to like contact those services, let them know you have somebody abroad and it really shouldn't be a problem. Next up, this one is from at Bridget Norman 1605 from YouTube.

Speaker 1: 3:57

As a small carrier, I appreciate seeing how things work on the broker side, but I disagree with much of it too. There are a lot of things I'd like to say here, but I'll leave it as. Carriers need more money, period. We have many costs involved and any load that doesn't at least cover those costs is a waste of time. Raise rates, tell your shippers, we all need more. I agree, carriers definitely need to make more money and we're all looking forward to when rates go up.

Speaker 1: 4:27

The first thing I will say is brokers don't have any control over the rates. Shippers do and their control is directly correlated with how many carriers are in the market. If there are less trucking companies, the rates go up. If freight goes up and there's less trucking companies, rates go up. If freight goes down and there's more trucking companies, the rates go up. If freight goes up and there's less trucking companies, rates go up. If freight goes down and there's more trucking companies, rates will continue to stay where they're at.

Speaker 1: 4:49

But the real piece of this that I wanted to talk about is we have many costs involved, agreed right, and any load that doesn't at least cover those costs is a waste of time. The second part of that sentence I think is worth us talking about for a minute. Any load that doesn't cover your breakeven costs is a waste of time. I think average right now trucking costs costs to run a truck are right around a buck 95 to 205 a mile, depending on like how the company's set up, how new or the equipment is. But I would say a good number you could probably go off is right around buck 95, maybe two bucks a mile kind of industry standards on costs, right. So what are your thoughts on a carrier expecting every load they run to be above break even? Is that a reasonable expectation?

Speaker 2: 5:44

I think it's silly, but for two reasons. So the first thing and I thought you were going to say it, but the one thing I wanted to point out and this is a very common thing, you see in the Facebook forums, online, whatever is everyone talks about it's cheap freight, it's cheap freight. There's costs, there's costs. But the one thing they never mention what is their cost? And a lot of that is because we talked about it on that whole episode, the one that just released Friday for anyone listening to this is.

Speaker 1: 6:10

Most carriers don't exactly know what their breakeven costs are. They know it hits the bank account when everything's paid, but not exactly where are the other expenses. How are they managing them? Where could they be improved? What else could you do there?

Speaker 2: 6:25

Right and so, yeah, that's the one thing I wish they would include, or at least do some time on is like what are your costs? Because if you don't know your costs, how do you know you're profitable? And you can go back to Friday's episode. The other thing is there is a velocity is a term that some carriers will use um that while you may get a cheaper rate, you can do more loads in your hours of service window, right.

Speaker 2: 7:01

So, for example, say you're taking a load that pays very well, but it's a two-day transit and you may or may not have issues at the shipper or the receiver. So now you're tied up with your equipment, but the rate per mile was great. Or you could run a local lane, that's say it's 100 miles but the rate per mile is a lot cheaper. But the rate per mile is a lot cheaper but it's a you're dropping hook or you're in and out and it may only take up, you know, two or three hours, and now you can do two or three of them in a day and at the end of your day you have made more money per mile than you would have on this longer load. That maybe goes to Correct.

Speaker 1: 7:49

I think the two things you should be looking at from a trucking company perspective and then I'm going to cover the piece that I also was making me think of this at first is the first is as a trucking company, you should know your break even rate per mile, right? That is mostly correlated when you're driving a lot. So if you're running loads that are coast to coast transit Monday through Friday and you only load for two hours on Monday and unload two hours on Friday, like most of that rate per mile correlates with what you bring in at the end of that week because you are driving most of that time and getting paid for driving. If you are running loads to your point that are every two days and you've got to spend three hours or three and a half hours to unload and load, there's a lot of time you're not driving and you're not getting paid. So the thing that I want to point out right is it's not just the rate per mile, right, it's also the time you're actually driving. So a really quick rule of thumb you can use when you're trying to figure out what is your break even or profitability is you should kind of know what your break even cost would be if you ran long miles and you were only able to keep your truck moving basically the entire work week. And two, looking at your day rate. I think it's really good for a trucking company to try to figure out, like, how much income do you need per day and what are your expenses? If you looked at everything you spend per month to keep that trucking company running, divide it out by your work days, that's your expense per day on a work week and then figure out how much you need to make. Add that to your expenses. That's what you need to earn on a daily basis. Because, like I have trucking companies to your example that I've worked with.

Speaker 1: 9:34

It was years ago but like we ran a ton of drayage loads of cotton in Memphis and it was like really busy time of year. There was a ton of stuff that needed to get to the rails. These guys were running like three loads a day out of the shipper and when I called them I was like hey, can you? I've got like something. It was like a hundred and some loads a week that we need to move. They're like we just can't move anymore.

Speaker 1: 9:53

And I asked a few more questions. I go how many loads a day are you running? And they told me like two to three, and I go, ok, how much do you need to make per day? The number was like basically $1,100 per truck on a day. And I go, okay, well, what if I could help you run five loads a day with that same driver? Okay, and if you figured out the rate, I'm like if I gave you whatever it was, 300 bucks a load or 250, right Times five, or it was like time like five times 300. Right, so you had 1500 a day, I'm like you'd be making $ hundred dollars more than you were running the other guy's loads if you ran mine. They're like, yeah, well, if you can run five loads a day and I can make fifteen hundred a day, the rate per mile doesn't matter.

Speaker 1: 10:34

Well then I asked another question to the shipper hey, you've got a lot of product. You've got to get out of there and get to the rail line. Right, I go, yes, we can't get it out fast enough. And I said, okay, how are you running that freight? Now they went oh, we're live loading all of it. When we get there, how long does it take you to live load? Oh, like an hour hour and 40 minutes sometimes to load each truck. Again, that carrier could only run three a day with that loading and dropping the container I go. Well, let me ask you, if we dropped containers ahead of time and your loading staff could just keep loading containers, leave them in the yard and the carrier can just go drop and hook containers all day long. Drop an empty, grab a loaded load, the next one, drop an empty load, the next one, how many do you think you loaded it Like? Oh, we could load twice as many. So just by asking those questions right, we were able to get the carrier literally 30, percent more money. It had nothing to do rate per mile, it was on a day rate, just by increasing efficiencies, right? These are conversations that as a broker, you could be having with your shipper to increase throughput, right. Or as a carrier, you could be looking at to figure out what are you making versus not making.

Speaker 1: 11:40

And the other point that really stuck with me when I read this is here's the other thing the United States is not the same in freight rates. Different cities produce more things. Different cities consume more things. If you are delivering to a city in a very rural area of the country with no manufacturing and no freight coming out of it, because they just don't make a lot. But it's a city and they need to consume things. There's not a lot of demand to pay a truck to leave there, so rates are lower. But if you're pulling out of a city that has a lot of freight right and there's not a lot of trucks, rates are higher.

Speaker 1: 12:14

So you can't look at a load by load and expect to get paid the same to leave one market and to go to the next on an individual basis. You need to be able to look at it as a trucking company, at least on a weekly basis, maybe on a bi-weekly basis, depending on what your lanes look like. Because if you look at it over a week and you figure out what is your break-even cost, what do you spend per week every one of those days, added up for the work week, right? And look at your rate per mile. Now you can maybe run a load for $1.90 a mile to get into a market that's paying $3.50 a mile. And then when you take both of those together, right, $3.50 plus $0.90 is $4.40 a mile. Now you made $4.40 a mile, right? When you add them both, you divide that by two, your average on those two loads was $2.20 a mile. Right, but understanding how the freight market works in the United States allows you to make more money, even when you've got to take a lower, undesirable rate to get to a market that pays a way higher rate. Because when you add them together, you average those out, you made way more money.

Speaker 1: 13:26

And again, if you're going to scream and yell at somebody for paying you 90 cents a mile, you also got to look at which market you're going to be taken to, of what you're going to get paid on the next load.

Speaker 1: 13:36

It's not just load by load and it's not have anything to do with a shipper or broker. That shipper might pay 90 cents a mile if they're in Florida to get you in, they might pay $4 a mile to get you out into another lane. Right, shippers do not pay the same rate across the board because the country is different and where we need trucks and when we need trucks changes throughout the year based on what is manufactured, what produce is available, where you're building houses, where they're not building houses, where lumber is coming from. All of those things change. That's what makes the market dynamic. And if you're looking at it on a per load basis, you're going to be really frustrated. But if you look at it on a little bigger of a picture seeing the trees for the forest right you can see you actually can make quite a bit of money just by paying attention to which markets you're running, to where you're willing to go and which commodities you're running at what time of year. Right.

Speaker 2: 14:28

Yeah, and one of the things you know. So, per load basis you can, you can get yourself into some, uh, some pitfalls, but the one thing I would point out, and one thing I started doing probably two years ago, um, is I keep track of the locations that I pick up from and deliver to and and I have like a almost like a carrier scorecard right, but it's for locations, right. How easy is it to get appointment? How, how available are the appointments? How fast do they get trucks in and out? Do they do drop trailers? Is it X, y and Z? And the biggest thing I'm looking for is how can I cut time for my trucks, my carriers, carriers, and speed up this process and reduce issues. Because one thing, especially like, if you're a carrier that's working predominantly in the spot market, like keeping tabs on the brokers you work with and how they operate, the locations that you're going to, your deadhead miles and why you're, you know, traveling 200 miles to go pick up a load versus, you know, 25.

Speaker 1: 15:33

Well-timed deadheads.

Speaker 2: 15:35

Right. So those little granular things that you can find in between loads will significantly reduce your overhead costs, but you can only do that if you pay attention to it. I mean, Google reviews are great, but they don't have everything you know, and that's that's something to uh, to definitely keep in mind when you're looking at your costs.

Speaker 1: 15:57

Exactly, I wouldn't have said that. Better right Next up. Let's answer this one first. What are the most common mistakes new brokers make when booking their first load? What would you say are the most common mistakes?

Speaker 2: 16:12

Don't ask enough questions. I think that's probably the most common. As you're so excited you just landed this account, they just gave you your first load. You're like I can do this, I can handle it. And then they send you over the Tinder and like in my case, right it's, I haul mainly reefer freight. So if I don't know what is a commodity, what temp does it have to be? Uh, how heavy is it going to be? Is it palletized? Is it you know? Um, can it ride with anything? What are the requirements?

Speaker 2: 16:45

Scheduling Does the facility that it's picking up to or delivering to do they have a scheduling system? Is it by email? And I mean prime example, is it used to be Retallix, but it's NCR web scheduling now? Absolutely terrible system. I can't stand it. And if you are not set up with a shipper through their portal, you're not getting an appointment. And the only way to get set up is you have to email the shipper and your contact has to give you that information. And it could be a 24 hour process, it could be a 72 hour process and if that load needs to go now and you're responsible for scheduling those appointments, guess what? It's not happening and you're going to have a service failure all because you failed to ask questions to get the whole job done, not just part of it.

Speaker 1: 17:32

Yeah, you want to ask a lot of questions. You want to make sure you get the details correct. I'd say that's probably the biggest common mistake between booking your first load. I would say the other most common mistake for new brokers is not vetting a carrier, making sure one that the carrier you think you're talking to is the carrier you're talking to right. And I would suggest any broker be using at least some vetting software, whether it's carrier 411 or highway, because there's a lot of fraud out there and lots of carriers have been hacked. There's people impersonating other trucking companies and the very, the very first thing I would make sure is the company you book is the company you think you booked.

Speaker 2: 18:11

Yep, I agree, and and I think that's a mistake that you you'll definitely make in the beginning and then, as you start moving more freight and you get busier, it's a that's another mistake that'll come back and bite you as you get complacent, consistency right, doing that over and over.

Speaker 1: 18:27

I've run to that. Every claim this one client of mine had in the past year. They had four of them for a total of like $180,000. Every single one of them was because their senior broker went with their gut and went, oh, we used that carrier before, we're good. And then we'd go back and look like, well, there was a freight guard report a week before you booked them the third time. The carrier said they were hacked and you use them, didn't think to check and all of a sudden that load got stolen. Right, so that is a huge one. Okay, this one's from PX19230.

Speaker 1: 19:03

How does it work when you're not set up, it's late in the day and nobody has the time or wants to onboard you at your shipper, right? So scenario you're a broker and customer prospect you've been talking to for the past month or two calls you at 510 and says I got a load that needs moved, can you help me with it? Your credit department's not in, you can't get them approved, but you've been really telling them and trying to work with them that you could help them. If they need it, they call you. What can you do in this scenario Right? Have you ever run into that one?

Speaker 2: 19:33

So for me personally I work for we're a cradle to grave model, so the shipper onboarding also is handled by the broker. So for me personally, have I ran into it? Yes, but it's just something I do online and especially like during the prospecting process, like we're already. If I'm talking to them and the conversations are going like the credit check has been done and we may not have signed a contract yet, but I kind of know the details on the contract because those are questions I'm going to be asking during cold calling. Pay terms, right, those are all topics that you can start a conversation with out of the blue. Yes, so if you're prospecting and cold calling efficiently, you're going to have most of the answers you need to set these customers up anyways.

Speaker 1: 20:26

Yes, and that's a good point. I wanted to start with that one too right Is like the harder part of closing a new customer is getting them to tender you a load, but like there's a sales technique of like getting smaller commitments on the way to the larger commitment right, and getting a customer to agree to do some things gets them more used to working with you in the process, not necessarily with the money and the load. So one of the things I always try to do is if I've got a good connection with a prospect and I've quoted some freight and it seems like they're considering working with us, but maybe they don't have the load yet, they don't have the need yet, but they will probably consider it at some point, right, I am always trying to get what they call like a trial close and that's hey look. I'm always going to say that same statement is hey look, do me a favor, can you send me over your agreements anyway, one I want to make sure we have all the insurance, to make sure we have everything you need. If you do need something, I want to be able to run your credit to just make sure everything's good on our end, because the last thing I want, and this is how I frame it as a service to them. The last thing I want to do is you need some help last minute and then us to have to do a whole bunch of paperwork at the same time. We're trying to get you a truck in the next 15 minutes, right? My job is to be able to help you when you need it. You're not always going to know when you need it until you need it. Let me get some of these things out of the way before we get there.

Speaker 1: 21:50

Now, the last thing I want to add is, like lots of larger companies run into this a lot, and the policy like that we had when I worked at like TQL, for example, was you had a load waiver, which was basically an agreement it was like a short form agreement, right that you could send to a prospect if you couldn't get them approved for credit in the time, and you could usually do that for like one load, right, and usually you have two options. The customer can prepay with a credit card, which is helpful in that scenario, right? If you don't have credit, you can usually get prepay with a credit card. If you don't have that set up, you can have something created which is called a load waiver Right. And a load waiver Right Is not like a huge formal agreement, it's basically like a one page memo you send to the shipper that they can sign for one load.

Speaker 1: 22:31

And what it does is it limits the liability, meaning it states that the brokerage assumes no additional responsibility beyond arranging the transportation that truck Right. It defines the payment terms, when and how the shipper is going to pay. No additional responsibility beyond arranging the transportation. That truck right. It defines the payment terms, when and how the shipper is going to pay. It details carrier selection. It acknowledges that the shipper allows the broker to choose a carrier on their behalf and it outlines claims and disputes. It clarifies that the brokerage is not responsible for claims or damages beyond facilitating the shipment and it usually outlines that the carrier's insurance will be vetted and that will be the one that would cover the claim. And then last, it's called indemnification and what that does is it protects the brokerage from liability if that comes up and that issue arises.

Speaker 2: 23:19

Yeah, and I think just on the contract piece one thing that I was thinking about is you get into RFPs with some of these customers and they might not be set up because they're just asking you for quotes. But if you're doing it through like a was it Jagger is one of the systems or Coupa, usually all their requirements are included in that RFP process, and if you're not taking the time to download those and put those in place for safekeeping whatever they do like, say, you go through the RFP process, you don't get awarded anything, but the conversation is not over. They can have a carrier that closes their doors, or someone is having a bunch of service failures and now they want you to cover this lane and you need to do it. You need to have those things already in place. The last thing you want to do is like, well, I can cover it, but I need to sign a contract.

Speaker 2: 24:17

I need this as much as that tension is, you can alleviate by the work ahead of time. Exactly that's what solves a lot of this late night onboarding.

Speaker 1: 24:28

An ounce of prevention beats a pound of cure, right? So many little things you can do up front that that reduce the huge pains and problems you have later on. Sweet man, any final thoughts?

Speaker 2: 24:41

Leave your comments below. If you got any questions concerns thoughts, feel free to reach out. Head over to the website sign up for the newsletter. You can send your questions to info at 336.net, or you know, youtube comments on social media hit us up in the DMs, stuff like that.

Speaker 1: 25:04

Sweet, and whether you believe you can or believe you can't, you're right.