Freight 360

Back Office Fundamentals in Freight Brokerage | Episode 283

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💰 Back Office Basics for Freight Brokers

In this episode of Freight 360, Benjamin and Stephen break down the back-office fundamentals that keep a freight brokerage running smoothly. They get into the nitty-gritty of invoicing, payment processes, and the headaches that come with detention and accessorial fees. Cash flow is king in this business, so they talk about how to keep it moving, streamline operations, and avoid payment delays.

They also dive into rescheduling fees, why solid communication is a game-changer in logistics, and how a good TMS can make or break efficiency. Mastering back-office ops isn’t just paperwork—it’s the key to running a profitable freight brokerage.

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Speaker 1:

Welcome to this week's episode of Freight 360. If you're a fan of the show, please share us with your colleagues. Appreciate all the likes, comments. If you have any questions you want us to answer on the Q&A on the final mile, please put them in YouTube. We try to get to them as quickly as possible. Also, if you haven't signed up, do a favor and jump on our website. Sign up for our newsletter. It goes out twice a week, has a bunch of content, tips, videos, stuff that we share that's hopefully helpful in your journey. And Nate's out this week because the National Guard got called up to deal with the prison strike in New York, so Steven's going to be with me.

Speaker 1:

But we're going to have a pretty good episode. We are going to jump into back office fundamentals things that you need to understand to keep your freight brokerage running, things that we've run into from problems and things that we've had to fix that we probably should have been able to catch earlier, as well as just common things that you'll need to understand when setting it up to make that I don't know more efficient a little faster. I would say it's probably one of the most overlooked aspects of freight brokering. I don't think we ever get questions related to this, but I will tell you that when I've been building brokerages, it is the thing that is the most unexpected time suck. You end up spending so much more time than you think you will, both invoicing customers, tracking down bills of lading with carriers, organizing this, making sure that you're reconciling accessorials from detention to lumper charges.

Speaker 1:

So we're going to break down from a really good 101 level how to set this up and things to keep an eye out for when you are getting your brokerage off the ground, because if you're one person or a hundred people, again, this is a really important aspect of running a business the cashflow it coming in and going out. Being able to keep your thumb on what's happening is super important. But let's jump in first. What do we got on sports? I didn't have much, but I know you threw something in the show notes.

Speaker 2:

Yeah. Yeah, I didn't have much, but I know you threw something in the show notes. Yeah, yeah, I didn't see anything. I mean, it's that time of year there's not a whole lot of sports going on, but I did join a flag football league, uh, and we got wrecked. It was 89 to 0. How does?

Speaker 2:

that even happen well, we uh I met half my team for the first time that night no practices, I barely understood the rules, as the most rest of the team it was our first time ever doing it, um, and then we're all like mid-30s kids and the team we played was like all college athletes, fair enough. Like the three kids that I went up against were lacrosse players at their college and they're like D2, d1, something like that, and they were all-star lacrosse players at their high school. So I was like cool, well, that makes sense, yeah, but it was a fun, fun. I can't wait to go back this week. It was a fun, fun. I can't wait to go back this week. It was a blast.

Speaker 1:

That's awesome, I mean. I think playing any sports and doing activities like that are super worthwhile, no matter what the score is. Funny story Last time I played flag football I was in college intramural league, obviously and went to grab someone's flag, got my finger caught in their belt Because you have, like, the belts with the flags on it and pulled the tenant in my finger, which I then had to have surgically removed, so the tip of my ring finger.

Speaker 2:

I still don't have attended and from playing flag football like 20 some years ago yeah, it was, uh it was different Cause I like I played football in high school and it's a, you know, it's a seven on seven model, so it's much faster paced and and, uh, one of the rules that none of us knew until like halftime was the a gap. So you have the center and then you've got the space between the guard on either side of the gap and flag football. You're not allowed to blitz that gap and you're not allowed to rush through that gap. So the whole time, like we're lining up tight to keep people from coming in down the middle For no reason At halftime, yeah, at halftime we realized we were just running around them.

Speaker 2:

We were just running around, we didn't even have to so like no wonder they were getting to us so quickly. Because we didn't space out Easier, yeah, because we didn't space out Easier, yeah, we made it easier on them.

Speaker 1:

But yeah, it was a blast. What do we got in the news? I know the first thing you threw in there was the port fees, stir, supply chain chaos. What did you got on this?

Speaker 2:

Yeah, so it looks like. A couple days ago, the Trump administration announced that they would be leveraging port fees on Chinese vessels, so on the 24th, they aim to impose hefty port fees on Chinese built vessels and related measures to address China's growing influence in global shipbuilding and maritime sectors. The initiative follows a US trade representative investigation that highlighted China's unfair practices, initiated by US labor unions in March of 2024. The proposed fees and measures are structured to target both Chinese-built vessels and operators with significant ties to Chinese shipbuilding. For instance, a Chinese-built vessel could face a $1.5 million fee per port call, while operators with over 50% Chinese-built fleets may pay an additional $1 million per visit. And it looks like the charges, just depending on your mix of operators and vessels, it could be anywhere from half a million to $1.5 million per port call for a vessel, which can significantly increase costs on imports and exports. Yeah, I mean those charges are typically passed through.

Speaker 1:

It's not like that company is going to pay that bill and keep their charges the same. So if you're reliant on a carrier, I got to imagine that's going to drive up those costs, at least initially.

Speaker 2:

Right, and I don't know if you're familiar with John Conrad over at G Captain, if you've seen any of his stuff, but he actually wrote a book that became a movie about the Deepwater Horizon. I can't remember. I think mark walbert starred in it, um, so he wrote the book on that and he's been very active, uh, in the freight space and, uh, his kind of contention is that, you know, the us has gone away from shipbuilding and it's negatively impacting our military and our navy, like, like the Navy. According to him, the Navy has three ships that are ready to go, but because of various regulations in California and federally, we can't even get those ships off the port.

Speaker 1:

Military ships that are there for cargo for freight?

Speaker 2:

No, those are Navy military ships. Here's the other question, though.

Speaker 1:

I guess about that, though, because, like I'm also reading that, like you know, obviously they're trying to cut the DOD budget, I think, like 8% year over year. Is that like, basically, a $10,000 drone now can take out like a $2 billion ship? And I think the argument from the military is like hey, you still need the presence of having the steel and the boat. You, you still need the presence of having the steel in the boat you know somewhere in the world. However, it's not exactly seeming like an efficient use of funds.

Speaker 2:

Yeah, I think I don't know. I mean, being the Navy guy, I'm kind of sympathetic to you, know the shipbuilding and that kind of aspect and having that the sea power and presence, because there is. I mean, if you look at like, uh, the cold war and and different times in our, our history, you know the presence of um naval fleets around the world, especially like nuclear submarines and stuff like that, being able to sit off the coast it. It is a force of power that can drive decisions.

Speaker 1:

Yeah, I think it's a deterrent right.

Speaker 1:

But again, I think, if warfare shifts to more autonomous drones and autonomous boats, I mean, like I've worked with some companies that are doing everything from like autonomous submarines to autonomous jet skis and things jet skis and things it's like if you don't have to put a human in harm's way and that at least the other side is aware of that force, regardless of seeing it. I mean, does that matter as much as it used to? I guess would be the case that I would make, especially from a finance standpoint of view, right, like if we're looking at cutting the budget, the deficit, and being able to get the government back in line from a budgetary standpoint, it seems like a lot of money to spend for a pretty subjective upside that historically, to your point, has existed. But if that's not the way we're fighting wars into the future, how much longer does it make sense to spend? Massive amounts of money gets funneled into all these contractors because that's the way we've always done it right, like I always think about that saying right, the most damaging or harmful statement in any organization is well, this is because that's the way we've always done it right.

Speaker 1:

But if the landscape is changing. You should be changing the way I think you're approaching the situation. I don't know.

Speaker 2:

Curious to see how this plays out. Yeah, I don't disagree. I think there's some aspects to it too about you know bringing some of the the main effect because, like, we obviously have some of the capabilities to build ships here and so, like you know, spending that kind of money on a, on an aircraft carrier and whatnot, yeah it's a lot of money, but you that's going to go back into the community if we're building it here, versus, you know, overseas or some of it.

Speaker 1:

Yeah, Some of it will, but how much of it is waste and bullet. And again, like we go on a whole episode and discuss this from like drone regulations and why other countries are ahead of us versus where we are, but also in the news, we've got the Trump tariffs coming up. He just said this week they will be happening on time and on schedule. I think March 3rd or 4th is when they're supposed to go into effect for Canada and Mexico. Mexico's president, claudia Scheinbaum, is working to negotiate a deal, while Canada. Canadian foreign affairs minister Melanie Jolieley vows retaliation.

Speaker 1:

Targeted goods, oil, auto parts, electronics and food imports will bear the brunt, affecting industries across the us. I will tell you, on the ground, we move a lot of food here, and I mean perspectively, I mean like we do a lot of. We have a lot of customers that do move food and things and auto parts, and so many companies have reached out to us in the past week or two trying to expedite goods from Canada into the U S ahead of this, like ramping up their shipping, trying to get things out and into the U S as fast as possible just in case this happens. And I'm also seeing again from, like you know, practical standpoint what we're seeing on the ground. We move a lot of like aluminum metal.

Speaker 1:

We've got quite a few scrap customers too that feed into that industry and that is also being affected by what's happening in the auto industry, because it seems like, from what I've read, jason Miller put a bunch on this is that like when the auto industry is doesn't know what is going to happen in the future, they don't really know where they're going to buy things. So they're holding off on orders or they're probably hedging and trying to figure out what is the best way to reduce costs, if it does happen, while making sure they have enough materials. That's already going all the way downstream into, like, the metal industry, where we're seeing load volumes you know, definitely slow down. The customers are telling us that orders are slowing down because their customers don't really know and aren't really sure what production is going to look like 45 days from now, two months from now, so everybody's more of like a hold and wait. So it's certainly not increasing transportation or freight in the way, I think. Well, at least craig had promised back in november.

Speaker 2:

Yeah, yeah, that's a fact, I know it's, uh, it's been a slow uphill climb based on, you know, the different uh talking heads and accounts that are putting out there were dat kinatimo sonar truck stop. You know, yeah, they were all kind of excited for the uh, the bolstering of the market and it's uh, it's been a slow burn.

Speaker 1:

So yeah, it was all a bunch of hype nobody really looked at. And it's funny because, like all the people that looked at it fundamentally and didn't seem to be buying into the hype made some pretty good arguments that this is what it was going to look like. And it's funny because, like all the people that looked at it fundamentally and didn't seem to be buying into the hype made some pretty good arguments that this is what it was going to look like and it's kind of playing out more, more in line with what, I would say, the academic people thought this would look like, with the things they had said they were going to do, versus what is actually happening. So we'll see what the future holds.

Speaker 1:

Also, trump on USPS the postal system transfer to the Commerce Department, sparking privatization concerns. Trump is planning an executive order to transfer control of the Postal Service to, again, the Commerce Department, stripping of its independent status. You know the case they're making is like USPS loses a bunch of money every year. It's certainly not profitable. I don't think they've ever raised their prices in line with their costs. So I mean, I think there's a good economic argument to do this. However, what that will look like in practice, who knows it said it followed the Postmaster General's surprise resignation. Critics say that you know and the union workers, workers that this will increase disruptions and higher costs. Well, I think, at the end of the day, like nobody wants higher costs, but like we're paying for that no matter what, like you're paying for it in taxes, you're paying for it in the budget, you're paying for it in interest rates. It's not a free ride to subsidize shipping with government. It does not get cheaper or more efficient.

Speaker 2:

Right, so I worked at Amazon for a year before I got into this.

Speaker 2:

One of the things they always talked about was how Amazon effectively subsidizes USPS, because they leverage a contract to have the USPS deliver on Sundays for them and they pay them a lot of money to get that stuff done. I don't know, I would have to have this checked, but I know they were talking about how it's like it's a profit loss to have them do it, but at least for the Sunday deliveries, the next day deliveries or whatever that the USPS does for them. But um, but yeah, I know that that was. One major thing is that if you took amazon away, or if you took the usps away from amazon, it would effectively destroy the postal service.

Speaker 1:

I'd be curious to see. Well, let's jump into the topic. So you have spent a lot of time in the past week working on accounting and back office stuff. Do you want to dig in at first on like kind of outlining? Let's outline what the process looks like from a simple point of view and then talk about some of the things that you were running into right? So I think for everyone out there, right, the basics of what we're going to talk about today is like what does back office mean? And when we say back office, we're going to talk specifically about invoicing, billing, collecting money and paying money. So more in like the accounting side as opposed to like tech, hr, things, back office that are also kind of in that bucket.

Speaker 1:

But from just a very simple standpoint, right, steven, your trucking company runs a load for me. You're going to run that load. You're going to get a POD proof of delivery. It's signed at delivery. Your trucking company is going to send that to me, hopefully, when you deliver the load, so that I can check for a few things. Did the load deliver clean? What does clean mean? Did it have detention? Did it have a claim? Did it have any other fees associated with it. That might have happened either in transit or at delivery. Once I get that invoice, I can let my customer know one that it was delivered and I know that it was delivered, not just that someone said it was delivered right, because that's an issue in and of itself sometimes. Secondly, I can let them know there were no additional charges.

Speaker 1:

So then once I take your POD, you're also going to send me the rate con that I sent you right, which has the rate we agreed for that shipment. It's going to have the POD and usually your trucking company's invoice. So I'll get three documents back. I will take those three documents that usually come over as like one PDF. Some companies will split them up, but usually the trucking company send them over as like one file. So then I've got to take that file as a freight brokerage split them up. I'm not going to send my rate con to my customer. I only need the POD, right, and I don't need your invoice. So once I split those documents I will save them separately in my TMS. I'm going to save the trucking company invoice which has your company's invoice number on it. I'm going to save the POD in there and the rate con I've already had. You're just sending that so I could match it up with the correct load, in case maybe you ran multiple shipments on the same days with the same trucking company and I can match up exactly which one was, with which load, which truck, which rate, what situation right Now.

Speaker 1:

This is the important piece. I don't think lots of companies do. You should save this for sure in your TMS. One not only does it make it easier for your accounting department, or everybody, to work from one system. Two, your operations team needs to look at this to communicate with your customer.

Speaker 1:

Like I said, that it was delivered with no additional charges to the accounting team can go and see what is where and then you take the, the POD out. Then the freight brokerage if there's no factoring company is going to create its own invoice attach the POD and sometimes the load tender from the customer right, which is the contract between the shipper and the broker. We're going to send that POD. We're going to send the invoice to our customer with the load tender which was their agreement and what they agreed to pay to us, to them, which starts the clock. That's the important piece. As soon as they get that invoice, that 30-day term for that customer starts when they receive it, not when the load is delivered. And I don't think a lot of people realize that If you deliver a load today and don't send that invoice to your customer for 30 days and they're on 30-day terms, you don't get paid for 60 days.

Speaker 1:

The second thing that happens is when the trucking company sends it to me, that starts the clock on the days to pay the carrier. Why is that important? It affects the brokerage's credit rating. It affects your rating on DAT for days to pay and your credit score, right. So then I've got to set up my payment to you on the terms. Maybe your quick pay, maybe your standard I would say industry average is probably around 21, 22 days. Some brokerages pay on 30 days, some pay 14, a little earlier, and if you opted for quick pay, usually there's a fee Maybe it's 3%, 5% to get paid in a day, three days or seven days. You get your money faster. There's a little bit of a premium the brokerage charges to pay you quicker and then again they wait to get their money from their customer, right? So did I miss anything on just how this process needs to work from like a simple point of view?

Speaker 2:

No, I mean that's. I mean that's pretty much the one-on-one level and kind of how I've always explained it. You know the simple balancing of a checkbook.

Speaker 1:

Right, it's money in versus money out, and what processes are in the money in and what processes are in the money out, and how do you?

Speaker 2:

identify and tag all those so that yes.

Speaker 1:

Now here are some of the common things that arise in this process that we'll dig into. One detention Okay, let's just talk through detention. So detention the way it should happen, right, is that carrier should have signed at both the shipper and the receiver check-in time, check-out time Not just the driver's signature but also someone at that facility, right? Because without someone at the facility, your customer doesn't know whether or not there were two people that saw that or just the driver's word. They usually want someone at their location signing when they arrived, when they left, right?

Speaker 1:

Every shipper has different detention policies for carriers out there. You should ask this before you run the load, not after how many hours free what is the rate on detention on both sides pickup and delivery Because they might be different, right? Then what the broker does is we have to take that document, then send it over to the customer and wait to have it approved, right? And then, once it's approved, then we will send the carrier an updated rate, con, right, which then you've got to invoice. Change your invoice as a trucking company on your side to make sure you account for the more additional money coming in for detention on top of the load. The broker should make no money on this. It's just an addition on the rate con to the carrier and an addition to the bill to the shipper right. So what are the common issues you see related to detention that tend to come up?

Speaker 2:

I mean the biggest one, especially with those carriers that are strapped for cash and use a factoring company. They're they're going to get their paperwork, they're going to send it to the factoring company and you're going to get an invoice and then, um, and it's not going to have the detention on it, but they're going to be hounding you for detention, right. And then finally you'll send them a revised rate confirmation for the detention, but you never see an updated invoice. And then you pay them at 30 days and you get an email why did you short pay me? Why did you do it? I was like you guys never resent the invoice.

Speaker 2:

You got your rate confirmation, but a rate confirmation is, while it's a promise to pay, there are still steps that you have to take to get paid, and so then they'll send the updated invoice and that starts the timer again for 30 days, right? So just because we you made a mistake doesn't mean I can necessarily pay this out today. Accounting's got its own processes. They've got other bills to pay first, so it's all in like this. You know, first come, first services. I mean, granted, if you have different pay terms, quick pay, whatever, obviously those get priority. But yeah, that's a huge common mistake and that goes with any asset serial fee, whether it's lumpers or detention or whatever.

Speaker 1:

Yes, Any additional charges right. If you're on the carrier side, listen to this. One of the things you can do to get paid faster is to make sure you are doing this process consistently right. Your driver runs a load, this process consistently right. Your driver runs a load, he gets detention. Right. Wait until you get the detention approved. Then send the invoice to the broker, right. And if you get the bill of lading over to that broker when that driver delivers even if it's like a photo right of the BOL and then the dispatcher sends an email, hey, here's the check-in, here's the checkout, here's the attached BOL. Please request attention. The sooner you get that, the faster the broker can get it to the shipper, the faster the shipper can get back to the broker. Then you can invoice the brokerage, hopefully tomorrow or even later that day, with the whole invoice, not just the load, but the load and that attention. Same thing for lumpers and in dreads. There's lots of accessorials. We're not going to go into all of them. But any additional charge. The faster you get your paperwork from your driver, get it to the broker and state in that email what it is, the sooner you can get the invoice over and start the clock to get paid.

Speaker 1:

And to your point, right, if you're a trucking company using a factoring company, right, a lot of times the trucking company will just, like you said, send the rate con over to the factoring company to get paid on the line haul and the fuel or the spot rate. But then, like, they wait to get the detention and then they send that to the broker but then the factoring company doesn't get it. And remember, the factoring company sent that brokerage a notice of assignment. That letter and that document from that factoring company states the brokerage cannot pay the carrier directly. So then they've got to wait for the factoring company to get the additional charge, for the factoring company to now invoice the brokerage before they can pay that and before the factoring company is going to approve the advance on the detention. Right, all of those steps Right. If you're consistent, you get the money faster. The more you wait to do these things a few days, the driver will get it to you when he's, you know, three days or back to the office that Friday, like the longer it's taking you to get money. And for small trucking companies, getting money quicker is one of the most important aspects of running that business. Cashflow is crucial to a trucking company. They're thinner margins. They need that money as fast as possible. The faster you can get your documents together and invoice correctly, the faster the broker can pay you. Now the same thing with a broker and a shipper, right. If a broker is using a factoring company like, you need to be able, as a brokerage, to update the terms, the invoices to your shipper, to your factoring company, whether you use Triumph, whether you use Hall Pay, whether you use any factoring company right. The sooner you get these documents, the easier it is Some factoring companies for a brokerage it is much more difficult to add an additional charge once you've already sent the invoice through factoring Like if you're a broker.

Speaker 1:

In some factoring companies I've seen, say, I submit my normal invoice to my shipper and then five days later I get a request from the carrier for another charge, accessorial lumper, detention or whatever. I have to create a whole other transaction in my factoring company system with another PO which then goes, sends two bills to my customer. Then my customer has to figure out okay, why am I getting two bills for the same PO? When they have to figure that out? That slows them from paying the factoring company right. And if there's no factoring company.

Speaker 1:

Sending two bills with two different POs sometimes makes it harder for the shipper to actually reconcile and pay these bills and they seem like things that are really simple and they are, but like they're not easy, in a sense that like you really need to organize these every day. If you're running 20, 30, 50, a hundred loads a day, keeping track of when you have additional charges, which POs they're associated with, can get really messy very quickly and then all of a sudden, a week later you're spending every Saturday and Sunday just trying to figure out what happened. And I would say one of the most common things that I see with newer brokers is they don't put everything in the TMS, they just leave it in their email. But then when they go to invoice Saturday or Sunday at the end of the week, they're spending five times as long trying to invoice every load, searching through their emails rather than just going into the TMS, where the documents would have been saved if they did that while it was happening.

Speaker 1:

And invoicing Like it shouldn't take you more than somewhere between probably a minute and a half and five minutes to invoice a load if you are efficient and you do this over and over again. Right, I see companies. It takes 20 minutes to invoice a load no-transcript right To the carriers. So much faster your time. And they call it like cashflow conversion cycle. It's just a fancy word for like how long does it take from when I do work or sell something to when the money goes all the way around and comes back right? The tighter that circle is and the faster you can do that process, the more money you have on hand to run your business, whether it's to grow it or to just pay yourself, to make sure you have enough money to pay your mortgage and your grocery bill at the end of the week.

Speaker 2:

All right.

Speaker 2:

So yeah, and to to like asterisks right to that, uh, to what you just said.

Speaker 2:

The first, when you, when you're talking about the ass serial fees, to like the carriers and and uh, and getting the invoices done properly for detention and whatnot, the biggest thing I could point out is, if you're going to be requesting detention or at serial fees or anything like that, read the fine print, understand what the broker because every brokerage and every shipper has different requirements when it comes to detention versus a lump or fees or anything like that. And if you don't follow the rate confirmation that contract that you signed properly, there is a good chance that you won't get reimbursed. And they're just going to send you a snippet of that part of the contract, like you didn't do what we told you to do. Yes, you, you're going to get upset and whatever, and that's that's very easy to do in this industry because it's just it's a very chaotic job field and so it's easy to miss those things, but that's one of the key things when you're working with brokerages or shippers, like know what the requirements are.

Speaker 1:

Here's a few examples yeah, so let's go through a few examples of those, some that I've seen very recently and there's really good justifications, but they cause lots of issues because people aren't reading or paying attention to the details, right, a lot of shippers I've seen in the past year have put in additional charges that they will charge both the broker or a carrier if they work with them directly, right, one is like a missed appointment without 24 hour or some timeframe notification. If you let them know within like three hours or four hours that you need to reschedule the appointment. In some cases, like, there's no charge. But if you missed that appointment and didn't communicate to the shipper, if you're just a carrier working with a shipper, just take the broker out of it, right, and you tell them a half an hour, 40 minutes before your appointment, you need to reschedule it. I've seen these as high as $300, right, rescheduling fees. Okay, so when a broker is working with a shipper and that contract says to the broker hey, if you've got a rescheduling appointment, we need just call it four hours notice, right, you've got a rescheduling appointment, we need just call it four hours notice, right, some are 12, but let's just call it four, something that is reasonable, like you should probably know if you need to reschedule this within a few hours.

Speaker 1:

And most shippers, I will also say, are pretty lenient on enforcing this. Like we had one that had very stringent ones. They were like 24 hours to reschedule or 300 bucks. But if we sent them an email at least an hour before the appointment, or maybe two hours, and said hey look, the guy's a little delayed at his last receiver, there's traffic, we need to reschedule this, they would never really charge us for that. But when a carrier would tell us, hey, we're good for the appointment and a lot of the cases I can assure you the dispatcher just didn't call the driver. And here's the other where this comes up the driver wouldn't accept tracking, right. So like the broker has no idea, the dispatcher is telling the broker carrier's on time for his one o'clock appointment. He shows up at 145, right Now here's what comes into play.

Speaker 1:

One, the broker gets charged 300 bucks which we need to charge the carrier for because, like we didn't know, we tried to find out, we tried to send tracking. They didn't accept it. Dispatcher told us, didn't bother calling the driver or thought they could just get it worked in if they were 45 minutes late and just hoped right. That happens sometimes. Sometimes it doesn't to your point. Every shipper is different.

Speaker 1:

Just because one facility will work you in if you're late doesn't mean like a Costco facility is going to Now. Here's the second thing that happens. So now you're 45 minutes late for your appointment and this is where I have like a lot of empathy for drivers, because I've worked with dispatchers that know that driver's late will lie to a broker, tell the driver there'll be a work in. And then when you talk to the driver, the driver's like hey, man, I told my dispatcher I was going to be late. Did he tell you? We're like no man, he sent an email so you're going to be on time, but I can't get you unloaded now. Like you're going to be a work in, it might be you were supposed to unload at 10 that morning. They might not get you worked in until six o'clock tonight. Second thing the driver's upset because the dispatcher didn't communicate right or made a mistake, maybe just missed that detail.

Speaker 1:

Here's the second problem that now comes up. That driver is not getting paid attention because you missed the appointment and you didn't communicate, which means you're not eligible for detention and you might be there six hours, say they don't get you worked in by six and they got to unload you the next morning. Most of these shippers won't pay a layover because you missed the appointment, which means now the driver wasted a whole day all because the dispatcher missed this. They didn't maybe accept tracking, nobody communicated to the broker and the shippers like hey look, I told you these policies. And then you get the carrier, sends the invoice and wants to file against the broker's bond. Right, because there's a deduction on the load, right. And now, as a freight broker for anyone out there, if you work with shippers that have these types of policies, if they're not in your rate con, guess what that carrier is going to win? And you are not able to charge them the $300 for the missed appointment because it wasn't in your agreement to the carrier. For the missed appointment because it wasn't in your agreement to the carrier, which is just another really good reminder. You're talking about making sure you look at the details in your agreements as a carrier to a broker, which is your rate con, but you also need to be doing this as a broker If you have different shippers and one has completely different policies for charges for things like missed appointment, detention, visibility and tracking.

Speaker 1:

There are shippers that will deduct money because they don't have tracking on the load for a day. $150 a day of tracking is not there, right, because that creates more work for them. That's why they charge this and then you try to charge this to the carrier or reduce their fee by that. If it's not in your rate con and that carrier files against your bond, the bond almost always will side with the carrier because it wasn not in your rate con and that carrier files against your bond, the bond almost always will side with the carrier because it wasn't in writing. The one tip I will say is if you have a shipper with lots of charges for like just missed appointments, for example, it's much easier one for the carrier and driver to understand that if you line item your rate con, a lot of people just put the words deep in the fine print of the rate con 300 bucks for missed appointment, $150 a day for tracking, and then we'll get to this one in a second $150 if we don't get the POD in 24 or 48 hours, right, then you charge them and they go.

Speaker 1:

Well, what is this? I didn't know what this is and the broker goes. Well, it's in the rate con and dispatcher's like. I see 40 of these a day. I can't read every one of these to book these trucks, I don't have time. So one of the things that I think is it's service right. Like that a broker can do to be more transparent to both the carrier, because at the end of the day, brokers don't want to charge these, they're more work. A shipper doesn't want to charge them, they just want to know what's happening and they want communication. So where these fees come from is to try to elicit or create more communication, because it creates more work for everybody when nobody knows what's happening. Right. So the fees became or were put in place originally just to be able to elicit more communication.

Speaker 1:

So if you have a rate con, right, say it's a thousand dollar spot rate for a load, right. And let's just say your shipper says I need tracking for both days, I am going to charge you $150 if I don't have tracking one day. Instead of your rate client saying $1,000 and it's a two-day run, it should be a $700 charge for line haul and fuel and $150 for day one tracking, $150 for day two tracking, because that way at least when the dispatcher sees it. Even if they don't read the fine print, they can see they are getting paid $300 out of that thousand for tracking. And if it's not on one day when you reduce it, it's very clear. You don't need them to feel like they need an attorney to read a rate con and then when you send it, if a problem arises, there's no miscommunication.

Speaker 1:

The driver usually has a rate con too. So if the driver sees that, he realizes, hey, tracking is really important to this customer, the shipper. If I can't get it to work, next time you stop, call the broker and say hey, man, help me figure this out. For whatever reason, the tracking doesn't seem to be live, help me fix this. And even if you can't get it to work because there's a tech issue on your phone, a broker will usually help you. Hey man, just shoot me a text like my customer needs it every three hours. Just ping me every three hours, let me know your location. I'll manually send tracking to my customer so that you don't get reduced.

Speaker 1:

If both the carrier and the driver, right, are working with a broker. Most of the time, 99% of these fees never come up right. Even if things go wrong, you break down, stuff happens. You're stuck at a receiver. If you're communicating ahead of time with the broker or as a carrier working directly with the shipper, they almost never charge these. They only charge them when they feel like nobody told them what was happening. Their customer called and yelled at them when where the hell's this truck? He was supposed to be here two hours ago and nobody had any information about it. That's the thing that everybody's just trying to avoid, where these you know these things actually arise from fees in the first place.

Speaker 2:

Yeah, and one of the things I wanted to point out, especially like with the, like the rescheduling fees. Right Cause, so 90% of my business is in the refrigerated space and uh, companies like lineage and americold and you know they, yep, they are. I would say they probably created half of these fees, but they did it for good reason, because, if you think about it, a lot of these warehouses, especially lineage, um and specific, you know when, when they get a request to ship a load, right when that truck's getting loaded, they're not going back to the racks for each individual truck pallet, they're staging that product ahead of time and it's in order based on when the truck arrives. So those late fees like if you're a half hour late, right it's, it's not because they're trying to grab money, it's because now you've added extra work to that dock worker's day because he has to get that stuff out of the way so he can load the next truck, because you're right or like for the reschedule.

Speaker 1:

Explain that to somebody, Cause I want to stop on that one because I want everyone to really visualize this. Right, there are shippers right that, before your truck arrives, are literally taking every PO, every, sometimes pallet, sometimes every box and crate, putting them on a pallet, taking those pallets out of a warehouse, putting them on a loading dock and lining them up for that truck. So if that truck doesn't come in at 10 and they've got to load the one coming in at 11 first, somebody has to physically take all of that product and either put it back on the shelf or move it back into the warehouse, then get the other one to put it on that dock where that one was right. So the fee to your point isn't to generate more income, it's to pay the people there to do twice the work that they had to do because nobody communicated that ahead of time.

Speaker 2:

Right, yeah, and it's really. I mean it's to cover a loss, right, because you know time is money and they're having to put extra time into it. I mean one of the facilities I ship out of all the time, just to get even more detailed into it, this facility, I normally will have two to three stops coming out of that warehouse. Now this warehouse is automated and it's a cold storage. So, for example, the places that these stops go to normally all deliver in the morning and you can't get all three stops off on the same day but depending on what appointments come through, we have to adjust them. However, if I don't let the shipper know within 24 hours, the warehouse has already, in its automation, has stacked those pos in order and they can't adjust them when they look. So now I just have to, you know, work a truck in or whatever.

Speaker 2:

Um, and those are those experiences that you kind of. You have them once and you try to never repeat it again because it's such a pain. Yes, um, but yeah, that's, that's one of those things that you know. Um, a lot of people don't take into account, like Costco, for example, a lot of Costco's frozen freight that goes into Costco. A lot of those facilities have shifting bulkheads so they'll only take frozen product, say, monday, wednesday, friday, right, if you've got a Wednesday appointment and you miss it, they physically cannot take it on Thursday because the amount of space has been physically shrunk to take refrigerators. Yep filled up and now you have to wait until Friday. And a lot of drivers are like, well, why can't they just take it? Why can't they do it? This needs to go to a cold storage. It's like nobody else is going to pay for that mistake because you were late.

Speaker 1:

And again things happen.

Speaker 1:

If you communicate, you can usually work through it in a way that keeps and helps everybody, Because everyone I think anybody I've ever really talked to that works in this industry at a shipper, at a broker or on, like, the carrier side. Well, let's go broker and shipper side right, like if they've been in the industry more than a year, give or take, and kind of know their job and have been doing it. Like. Everybody knows and expects things to go wrong. Everybody knows things happen when you're driving around the road, right, whether it's a blown tire, a mechanical issue, traffic, weather stuck, for whatever reason. Nobody ever I've ever talked to since I've been in this industry has yelled at me because something happened. What they always are upset about is that they didn't know about it when it happened. Right, like nobody's ever getting upset because things go wrong, because most, I would say, and almost every instance, people are fairly understanding it's the work it creates that then they get frustrated, right Like I run into the same thing.

Speaker 1:

You're talking cold storage, tanker stuff happens all the time. Like we have a customer we deliver product to. Well, they have different days that their tanks can receive different products. They can't just change out all of their pumps, reconnect them to a different part that is receiving it, because the guy didn't get there yesterday and he's going to get there tomorrow or today, right? Like, no, like food grade comes on these days of the week, these days of the week our non-food grade product comes in. We can't change our pump pump lines out. You can't run a non-food grade line through a pump that you put in through another one. Like, they need to be sterilized, they need to go through cursor certifications. You can't just switch them out just because things were a day late. Like. The facilities also have to be efficient, right? Whether you're taking stuff out or taking stuff to any of these places.

Speaker 2:

Right and, and so one of the things, like you know so the topic is office right and one of the things I really like it's something I've been dealing with very intimately for the last week is you know, we talk about the serial charges and all these different things, but your TMS system is very important when organizing your back office Because a lot of these, especially newer brokerages are going to look at the TMS as a tool to do operations, which it 100% is. It needs to be able to help you in sourcing carriers and sending rate confirmations and communicating with your carrier base. Those are all great. However, if you don't take the time to understand your TMS, you're going to make very critical mistakes in the back office piece.

Speaker 2:

So one perfect example one thing our TMS does, if we use it properly, is all those things we we talked late fees, truckload, not used attention, labor. They're all separate fees. They all need to go to a different place so that you can see them, itemize them and understand what the money in and the money out is. Also, in the case like if you use an EFS, so if you have a lump or fee, right. So if you have a limper fee, right if you, if you as a broker, pay that limper fee for the carrier, that's a different accounting procedure than if the carrier pays for it. And you were in person Yep, what a lot of mistakes people do with any software is they get it and they say, oh, I got it, I can figure it out, yes, and then they do what our company did and all of those accounting transactions went to the same bucket.

Speaker 2:

So for the last three years our accounting person has just been printing off a list manually and separating each charge into an excel file and then doing reconciliation on. We've got 125 trucks plus give or take 500 less to the brokerage. So if you look at the year, you're looking at 38 million dollars in transactions, 1200 invoice. So like that's, that is a ton of work, and all of that can be done in two minutes if they had set up the codes properly. If you put it in correctly, yes, the TMS does it all itself. But, people, there's two problems with the current industry.

Speaker 2:

So the software is a little bit too complicated or convoluted for your average carrier, operator management or the brain carrier or the TMS that you purchase from. They don't really explain it effectively because a lot of the TMS providers some of them have a freight background, not all of them do, and every carrier is different. They have different trucks, they have different situations. So not every organization is built the same or will account the same. So it's one of those things that you really need to spend that extra time to make sure that your back office is running just as smoothly as your operations is.

Speaker 1:

Yes, and I want to give you an analogy. Right, like, setting it up correctly is time consuming and nobody likes to do it, right? However, when you set these systems up correctly and you spend the time to either train your employees or, if you're just yourself running a brokerage or a trucking company, right, just spending a few days or even a few weeks will save you so much time in the future that it is really hard to explain, right, like, think of it as an investment. Except investing money that grows in an account, you're investing time that you get back every day in the future. Right? So, for like, from the accounting side, right, I'll give everyone an analogy that, like, you don't need to understand McLeod or to set up an accounting system for a trucking company or 150 trucks or even a brokerage, but, like, we did this for our personal finances. We used Monarch, right, and basically it's an app where you put all of your bank accounts in it and all of your bills, and then it tells you, itemized, where your money comes from and where your money goes from, like a personal family standpoint. So, like, we have a few businesses and different bank accounts. So for me it was really hard to figure out, like what we were spending on, which categories, how much you spend on, like, delivery food versus takeout? Right, and at the end of the month, it's helpful to know because, like, you can't improve these things if you don't know what is happening, right? So, even if you're just a family, think about this, right? Like it took me literally probably two days over a weekend, a couple hours each day, to go through most of the transactions and it buckets them like, hey, these bank accounts, these are this, this is what we think it is, but you have to manually go in and call those transactions what you want them to call so that you can see them as a group every month, right? So I went through all of our stuff and I went, okay, anytime it sees this charge that is, takeout food, anytime it sees this charge or Uber Eats that was, we ordered food because we didn't want to drive right, all of these charges are grocery stores, so they all sit under food. But having them sit under food doesn't help me improve our finances as a family, right, I'm like, okay, like, if we spent way more on delivery food one month, we want to look at this and go, okay, well, like, maybe we need to just plan a little better on the weekends to make this a little smaller, right? Maybe not get rid of it, but to just do this a little less, right? Oh, I didn't realize we spent this much.

Speaker 1:

Take Amazon Everybody just looks at Amazon and charges. This is what I spent on Amazon. It's not a surprise. Amazon doesn't give you an itemized bill to tell you where you spent your money, because they want you to just keep spending. But when you look at what we were spending in Amazon, some of that's business stuff, stuff for businesses, the office, some of it was personal stuff, right?

Speaker 1:

So literally categorizing these things allow us to have visibility into what is really happening in our family. It's the same as your business, right? If every transaction you have is just categorized in one bucket, like you just said, one. How many times did we have to fix our truck Because maintenance all of a sudden just was lumped in there with fuel which was lumped in there with every other driver driver expense like food, driver eight versus driver at a tire fixed versus driver. To this I have no idea which went where. Which one do I need to work on? Do we need to maintain our trucks a little better so we have less breakdowns.

Speaker 1:

I don't know, because everything's in one bucket, right? How do you figure out what is associated with what if you don't put these things in correctly, right? So, just as like, the TMS is only as good as the information you put in it. That's why we're talking about putting PODs getting these things in the first place. You can't get them out If you're running your accounting system, if you aren't properly categorizing what's happening. You don't know.

Speaker 1:

I can't tell you, stephen, in the past two years, if I probably worked with 40 different trucking companies as clients, I would say 90% of them had a TMS and 90% of them put all of their loads into, like a Google sheet or some Google drive rather than putting their trucks, their loads and their expenses in the TMS. And then we go, hey, they're like we want to be able to make more money, we want to be more efficient. And then I look at their records and I'm like I don't know what you've done because, like, we have no way to get the information out. I'm like I don't know what you're spending on maintenance. I don't know how many miles a week your average driver's doing. I don't know what the rate per mile is that you guys are getting on a weekly basis for a driver. I don't know what your maintenance expenses per truck. You just have one bucket. This is what we spend on maintenance every month. We've got 25 trucks in some instances.

Speaker 1:

Which trucks were getting more maintenance? Are they just the older ones? Is it one driver has a lot of maintenance because he's beaten one truck up and you need to work with him on like whatever? Is it because you just deferred maintenance on a few of these and they're like oh, I kind of have it in my head. Well, just because you kind of remember, it doesn't mean you have the details. You need to actually improve it right, like there's this cheesy saying like, measure what matters. If you don't have measurements and categories of what is happening with your money both coming in and going out, you don't know where you need to fix things because it's all just blowing out the window and you have no idea which window to close or to pull a little bit shut or to figure out where you need to focus to improve things if you don't know where it's going in the first place.

Speaker 2:

Right and just to like add on to that right is, you know, and this is, I think this is common for anyone, regardless of the industry. But you know, companies like Newark Brokerages ask all the time what software should I get, what should I do? And you can give them whatever answer you want. But the biggest problem is, if you don't take the time to understand the software, it doesn't matter. Yeah, because it doesn't work.

Speaker 2:

Right, because what most people do and I'm guilty of it too, because I mean, I'm a, I'm a tech nerd I like to download the newest and greatest things and I'll spend 20 minutes on it and I'll put some stuff in there. All right, this is great, this works. And then I come to find out like two months down the road, that I wasn't using it at all correctly and it's causing me more pain than good. So, for example, like the TMS system kind of what you were talking about with maintenance and tracking and trailers and whatnot is you know there is a cost to, like a lot of carriers will purchase, like McLeod, for example, that's a half a million dollar TMS system.

Speaker 1:

And use 5% of it.

Speaker 2:

Exactly, and the problem is, you know there is a cost to transitioning from an old system to a new system, or paper to a TMS, but somebody on the team has to dive in the deep end and figure this thing out, while maybe you're, you know, for two months or three months, you're still using this old system. But if you're still like using two systems, or you've transitioned from your old system to the cloud and Google Sheets and you're still at a year or two years and you've got half your information in Google Sheets and the other half in the cloud because, well, this is just easier, you're doing yourself a huge disservice and it's really just wrecking the back office.

Speaker 1:

And I'll give you two practical things right. Just because you save the information does not mean one, you can retrieve it. And two does not mean you can retrieve it in a way that you can use it. And I'll give you an example. Right, lots of trucking companies will do things on paper. They'll be like I have clients, I got a whole file cabin of every load I run. I'm like great, well, one of the best ways to prospect is to go through the places you've delivered to.

Speaker 1:

That wasn't your broker's customer to say, hey, like we've been to your facility, like drivers are familiar with it, you guys are close to us, it's a good lane, we'd like to be able to talk to you about possibly working with you directly, right, and then they go great, well, I got all this information and then you know what happens. I'll talk to them every other week hey, how's it going getting all of this paperwork out so we can get a list of the companies you want to call? Oh man, I just don't have time to do that. Nobody has time to do that. You're running a business, right, so you might have saved all this information, but it's literally useless because you can't get it out without paying somebody to go through all those and put them into a sheet. Even if you wrote it on paper, you either got to spend hours taking all that out, writing down each one on another sheet of paper, or typing them into a spreadsheet to be able to do anything with it, right? So again, like there are lots of things that you could do to improve your business, to make more money, to improve cashflow, to improve efficiency, to figure out where you're making money and where you're not making money, you can't even start to think about where to make those decisions unless the information is readily available.

Speaker 1:

If you're a broker, that's your TMS. If you're a trucking company, it's your TMS. And both of them and your, both of your accounting systems, whether they're connected or not, like they need to be categorized because a business lives on cash. The same way a person's blood flow, right. Like you can't figure out why your arm hurts and you realize like you have poor circulation, you can see that in a business.

Speaker 1:

If you don't know where your money went, you don't know where things need to be fixed. Because that is the diagnostic tool Doctor gives you a bunch of tests to figure out what's wrong with you. If you bring in a business consultant I don't care if you bring in McKinsey at you know a thousand dollars an hour. They can't help you if they don't know what's happening. The first thing they're going to do is charge you 10, 20 grand to get all of your stuff organized, to just understand what is happening. And if you're a business owner, even a trucking company, even a one person owner, op right, you really don't know how well you're doing, unless you not just look at how much money hits my bank account to spend every month. But where are you spending money? Where are your expenses going? Can they be improved? Do you need to look at other lanes to run other regions, different equipment types? You just have no idea because none of that information is there to be able to make any decisions with.

Speaker 2:

Yeah, and I mean yeah, the. The biggest thing I point at in the last couple of weeks when we've been dealing with some of the issues on our end, is, like, how can you know your true costs If your true costs are spread out amongst three different systems? Because the only way to get an actual calculation now is you have to run three different reports, copy and paste them into excel and then cross your fingers that the ai macro that I had built is doing math right, so it's like correct, and, and even that takes, you know, hours to build, so it's yeah. It's very important to make sure, especially when you're doing any kind of purchases and tech and whatnot, like if you don't understand it or don't want to spend the time to understand it, at least hire somebody or have the TMS provider or whatever software that you're buying, explain it to you in detail, because you're just going to cause a mountain of problems down the road Exactly and again, like these are the simple things.

Speaker 1:

They're not easy because they take time and everybody's tired and everybody's doing their best to try to make more money and I know whether you're a carrier or broker. The market hasn't been great for three years. And nobody wants to think like, oh, I am going to spend a few more hours every week doing something that doesn't make me money. Like nobody ever wakes up and goes boy, I'd love to dig in and reorganize my accounting and finance and my books. Like nobody wants to do that. However, like it is a requirement of running a successful business. Like it is a necessity.

Speaker 1:

And the longer you put this off, the more problems are happening that you have no idea about. Like it'd be, like, hey, I'd love to be, I'd love to be able to get diagnosed with cancer when it's still treatable, but basically everyone's business is waiting until it's stage four. They're going out of business and they have no idea what happened and they want to point their finger at everyone else, right? Like everybody is responsible for the businesses they run and whether or not they're doing well or not well. And almost most companies only look at one metric how much cash is hitting my bank account. That is just the result. That is telling you nothing about what is happening in between the work you performed and the money you get, and a lot of times I would say most there's more money there that is going out of door in a way that you don't realize. That you could probably be better at and more efficient at if you spend more time on these things.

Speaker 2:

Yeah, the two worst times to figure out that you have a problem is tax season and when your bank account hits zero.

Speaker 1:

Yeah, it's too late to do anything to fix it at that point. All right, sweet man, any final thoughts?

Speaker 2:

No, make sure to like, share, subscribe. Leave us some comments below. Let us know what you think about the conversation. If you have any questions, you know, hit us up on.

Speaker 1:

Uh, on all the socials we're active on x, facebook, linkedin, instagram, so yeah, sweet, and whether you believe you think you can or believe you can't, you're right.

People on this episode

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Benjamin Kowalski

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Nate Cross

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Stephen Ruhe

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