Who Pays When A Load Falls Apart? | Final Mile 131

Nate Cross & Ben Kowalski answer your freight brokering questions and discuss:

🪪 Why brokers request driver CDL

📊 Essential TMS reports to run

🚛 In-transit breakdown: who pays loss

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Chapters

• 0:38 Community Q&A Kickoff
• 1:06 Why Brokers Request Driver IDs
• 3:43 Shipper Requirements And Liability
• 6:03 When ID Requests Go Too Far
• 6:16 Transition To TMS Reporting
• 6:23 Preventing Fraud And Advance Payments
• 6:23 Weekly Summaries And Aging
• 8:35 Load Volume And GP Metrics
• 10:26 Lane-Level Analysis For Profit
• 12:59 Breakdown, Repower, And Who Pays
• 16:38 Vetting Risk And Market Reality
• 18:34 Communicating Solutions To Shippers

Transcript

Why Brokers Request Driver IDs

SPEAKER_00 0:19

Hey guys, it's another edition of the final mile. We got all of your questions. Thanks for submitting these today. They're all coming from our Facebook group. We're over a hundred thousand folks in the Freight Brokers and Carriers Network. So if you're not in there, check it out. Um, there's a link in our description or show notes. And um, if you just look for freight brokers on groups on Facebook, we're the one that has the Freight 360 logo at top and has 103,000 carrier uh members at this point. So, all right, Ben, our first question Why would a broker ask for a driver's photo ID or CDL when they're booking a carrier? And the question went on to add like telling telling carriers like, don't do this, it's a scam if they're asking for it.

SPEAKER_01 1:01

I saw that.

SPEAKER_00 1:01

Um I'm kind of curious your thoughts on this. Like, I I'm gonna debunk it right now and just say, like, no, it's not necessarily a scam, but what's your take on um asking for the the ID? Because keep in mind, like highway, for example, as an onboarding platform, like when you register as a carrier, they're doing like facial recognition and uploading of your ID. So, what's your take on when is appropriate and how how should you go about that verification process?

SPEAKER_01 1:28

I I mean some shippers like absolutely require it, right? Like, I mean, military loads, there's lots of government loads that require it. There's lots of things that absolutely require secured facilities, yeah.

SPEAKER_00 1:39

They're gonna want to know who is going to be coming into my area.

SPEAKER_01 1:42

Airports, depending on where the warehouse is related to an airport. So, like, it is really common and has always been common practice for specific shippers that require that, right? For various reasons. So, like, I don't think it's ever been a bad thing. My guess is looking at that thread in those comments had more to do with maybe a carrier that was trying to get brokers to not be as scrutinizing with his trucking company. Probably seemed like the underlying motivation. At the very least, every comment basically said something to the same effect of like, this has always been common practice. And and I don't think it's ever, I don't even remember it ever being a negative thing until we started learning about people that shouldn't be driving. Like 10 years ago, like I I would ask for it for, like you said, military loads and certain facilities were like it's just common. Like, I never got pushback ever on asking a driver for their ID to be able to verify it for a customer. So, like other than not doing what you're supposed to be doing, I don't see why a carrier would ever have an issue with it.

SPEAKER_00 2:44

Yeah, so like we don't we don't ask for it on every load, but there's definitely a time and a place. So, like they're gonna like like I said before, like a lot of the carrier vetting platforms, if there's an ID verification portion to it, they might be required to give that ID to that provider. And in turn, I guess you could say the broker is verifying their ID that way. But the other thing, like, if we're if I'm gonna advance somebody money for a load, like free vants or lump or whatever, like I want to know that I'm giving it to the right person and that someone's not trying to scam me. Because like, think about this, right?

Shipper Requirements And Liability

SPEAKER_01 3:14

Like, where else do you get money without an ID? Like, you can't go to a bank, you can't, you can't like you can't get a wire. Like, I don't know where else you would get money without having to provide verification of who you are. And the other thing I want to add too is like recently the legal landscape's changed. Like the FMCSA, the DOT have said like they might start enforcing this on shippers and saying, like, you might be liable if you use a truck that you shouldn't be using, which no one knows how they would actually do that or if they would. But some I would say more shippers now are going as a broker or even directly with a carrier. Like, you got to show me that like you're legally and legitimately able to drive our freight because if something happens, we don't want looped into a lawsuit. Which by the way happens if you hire any employee, you have to show that you're legally allowed to work in the United States to get a job. I don't see why like a contract job would be much different.

When ID Requests Go Too Far

Transition To TMS Reporting

Preventing Fraud And Advance Payments

Weekly Summaries And Aging

Load Volume And GP Metrics

SPEAKER_00 4:05

Yeah, I'll give you another example too. Like um let's say um you got a driver that just got fired, right? And but he worked for 10 years at this carrier. And he knew that every Tuesday they picked up three loads from I don't know, some orange juice manufacturer in Fort Pierce. And um, you know, he knew all the load details, right? He gets fired, and what does he do the next Tuesday? He tries to call into the broker that they get the loads from all the time and say, Hey, I'm here, can I get my my fuel or my fuel advance, whatever? Like, we we do this stuff, we check ID in a lot of cases to make sure that if we're going to be paying somebody, we're paying the right person. Because the last thing we want to do is like, yeah, we you know, the carrier's like, we never got an advance, and we're like, Yeah, like Jimmy called us, he's been running that lane for years, and it's like, well, we fired him. So, well, we didn't, you know, we didn't know that. So, um, yeah, like I usually that's what I would say is like you you let your carrier know, hey, I need the driver's name and information, and if we're gonna do it in advance, we're gonna get their registration, their ID, and assigned bill of land. Like that, that's another example right there. But um as the caveat, like, yeah, don't don't go out there and ask for every driver's ID because you're like, I don't know. You you can go like the uh like if you're trying to hunt them down to see if they have a non-domiciled or an expired or if whatever, like there's there's other ways to verify people. Um, there's a time and a place, is what it comes down to. Um, so it's not necessarily always a scheme. All right. Um, but you could have maybe you get a bad actor that's trying to steal someone's identity, send me a picture of your ID, and then they've got your ID to you know pose as you, so I can see that argument. But all right, next question. What kind of TMS reports should I have my team running on a regular basis? Um, we've never had this question before, and that's why I saw it and I picked it because I was like, okay, good. This is good. So I think it depends on what that person's job is. But I'll give you some of the common ones that I set up for um all of our folks that they get on a regular basis, and then we can create custom ones if they want them. But at the beginning of every week, um, I have all of our brokers get a weekly summary from last week. So it's gonna show all the loads that picked up, and you know, it's basic information like origin, destination, customer carrier, ARAP margin, right? So they can just kind of get a weekly summary of all right, I did, you know, 2,500 bucks in brokerage profit last week. Um, I'd have a couple more reports. Another one that I'd do is aging. And this is maybe dependent on how you operate and who deals with collections, but I like our brokers to know if their customer is getting close to falling behind on payments or has already fallen behind on payments. Um, so that that, you know, if if it's something that they see, oh, that's weird. This customer normally pays in 28 days, and this one just hit like 36. Let me call them real quick and see, like, hey, maybe they missed the invoice, right? So then that that way they can get ahead of it before the accounting team maybe freezes credit or tries to reduce the credit line or does a collections call on the customer, which can be embarrassing if it's a total mistake. But I do the aging one for that reason. Um, I also do unbuild orders, and the reason I have this one is because our brokers are paid on invoice. Um, if your brokers are paid on receipt of payment, that you know, that aging summary is gonna do the job for them. But if they're paid on on invoice, um, this will let them know hey, these loads haven't been invoiced yet because we haven't gotten paperwork. And again, it just depends on who is responsible for you know the collections part and um how they're paid their comp on the different loads and whatnot. But um, what are some of the um what are some reports that you personally run or that you've received or you think are beneficial?

Lane-Level Analysis For Profit

SPEAKER_01 8:16

Um, from like a broker standpoint of view, like I I think you should be looking at this daily, weekly, and kind of like month over month is like just load volume per customer, like which customers are doing how many loads for you so far this week and that week in total? What is your total load count or load volume for that week and your GP per day, gross profit per day, and per load even per load averages for each of your customers, as well as your overall book? Seeing is like, is that going up or down week over week? And then comparing that to kind of like looking at your averages, right? Because you want to know like, are things getting better or things getting worse money-wise, and just number of loads you're moving, right? And then you really want to be able to look at that on a customer basis. Like, is this customer getting slower or busier? Is this one slower or busier? Does this customer have more loads and I'm moving less of them, or do they just have less loads and I'm moving more of them, right? You're just trying to evaluate like how much business you're doing with each customer you have, I think, on a weekly basis and comparing that to like what it has been. So you've got an idea on like, okay, how are things going with my existing customers? And to your point, from like an oversight point of view, as like management, I'm looking at all of those things, but I'm also looking at per rep. I'm looking at um the accounts receivable report for sure, right? Like, where are my customers aging? Which ones are paying the bills? Do I have invoices that are late? Another good report are like missing PODs, because a lot of cash flow issues are related to the fact that like you just haven't gotten the PODs from your carriers for loads that look like profit last week, but you haven't even gotten the POD, so you can't even invoice it this week. So, like it looks like you made money for the past two weeks, but you don't have any money because none of your invoicing is caught up to like what you're actually running.

Breakdown, Repower, And Who Pays

SPEAKER_00 10:07

Yeah. So here's uh here's something that I like doing. And I would um if you're a team leader or if you got anybody that works underneath you, like I highly encourage this. And you could even tell the rep to get this report or data for you, bring it to you, and talk about it from their perspective. And this is looking at um a lot of those metrics you just named, like load value, like so load count, revenue per load, revenue revenue per mile, I think is a better indicator. Um, profit per mile, I even break it down to that so we can kind of analyze it. And look at that on a customer level overall. And then if you want to really drill down, go to a lane level, right? Because if you're not aware of um what's going on overall, and you if you just if you just see the big picture and you don't see like the fine details, there's oftentimes a lot of missed opportunity for improvement. So, like if I see, yeah, one of the guys on my team is doing 3k a week in profit, he's at a 17% margin. It's like, all right, on paper, that sounds good. But if we actually drill down to it and we realize one of his customers is running really thin, they're a high problem customer, and um, you know, we're taking a loss on some of these lanes. Like, there's an opportunity to either just get rid of that business altogether and focus your time on the profitable stuff, or what are we doing wrong in that on that customer or in that lane that like we can improve on to make it a more profitable customer so that 3K at 70% can become a 4K at 22%, right? Like there is, and that's something where like when you've got a lot of people on your team, it's a time-consuming thing, so it's not like a daily, but I usually like on a monthly basis, I'm running for all my teams. I'm looking at all the way down to the um like the finite overall levels. And if I see a weird trend, I'm then I'm gonna drill down further to a customer level. And then if I identify a customer that's an issue, I go down to the lane level. So um, but that's one that uh, you know, you could say like if you've got a one-on-one weekly with some of your new reps, say, like, hey, I want you to um, here's how you're on the report, here's what I want you to look at. Run these, have them ready to talk about at our meeting, and I want you to give me your thoughts on, you know, kind of where our wins are and and where we can improve. Like that really gives ownership and a lot of development to your younger brokers. All right. Final question here. Had a carrier breakdown in transit, but could not recover the load with another truck. Customer found another truck to repower the load and finish the delivery, but ended up paying more than what they originally agreed to pay me. What do I do and who's responsible for the loss? I actually had one of these. I mean, this happens um, you know, periodically. I actually had one of these recently where because sometimes, like, let's say a truck breaks down and you go, let's say I'll give you numbers, right? Let's say I'm paying a truck a thousand bucks, they break down halfway, I'm able to hire another truck to finish out the load and pay them 500. Well, what I do there is I just say, all right, well, I paid the recovery driver 500, so that comes out of the original driver's pay. Like, that's just usually how it breaks down. Um, I've had a situation though where like a truck broke down and it was like, I think there's 300 miles left to go, and the customer's like, I think we were paying the truck like 850. And the customer's like, all right, we we re you know, since you couldn't find another truck and the carrier couldn't repower themselves, we booked through another broker for 1400 bucks. So you guys gotta pay us the difference. And it's like, we didn't just become an open checkbook because a truck broke down, like so what I would say is like um depends on the customer, right? Like, I if I want to salvage the relationship, I'm gonna probably say, like, hey, if if that was a true market rate and you can prove that that's what you paid, like I'll work it out of your next few loads, like an I'll make you whole type deal. Um but that could be a cash grab situation for like a sketchy customer. Like, if they're just like, yeah, I had to pay somebody else two grand, so like you owe me two grand, it's like, huh?

Vetting Risk And Market Reality

SPEAKER_01 14:30

I've seen yeah, and again, I for sure wouldn't just take it on face value what your shipper's saying to you. Like, I've seen some absolutely ridiculous, shady things that for sure aren't true, shouldn't have happened, are unethical. So, like, that's like point one. Point two is like, what actually happened here, right? Like, could the did something just happen? Like, what is related to the breakdown? Because where I think the responsibility falls on the broker, right? Is like, did you book a carrier that has a really high out of service percentage, knowing that and still took the risk anyway? And then the truck broke down, which you that risk is kind of on you. So more of it's on you than the carrier. The carriers, you can see what their out-of-service percentage is, what their vehicle maintenance is, right? The next is like, what is the market rate for the next piece of it? To get it from wherever he broke to wherever it's going, right? To just get an idea, what is that rate per mile that I would expect to break this lane into two legs if I had to, right? The third piece, which is also related to the shipper, is like, okay, like what's in the truck and how urgent is it and why, right? Like, if you've got something super perishable or something that receiver absolutely can't wait because they've already been waiting for it and it's super valuable to your customer to get it to the receiver faster than waiting for another truck, like you have to take that into account too, right? Because in some of these, I've seen it where like the cares, like, hey, dude, like you can deduct some of the pay out of mine because like I didn't make it there and I'll work with you. And then I've been able to find a truck where we were able to pay a little bit more for that truck than the first truck when you added them together. And I was able to take some out of the first truck, and they're like, Yeah, look, dude, it's on me. Like my truck broke down. You can reduce my rate to get someone else to pick it up. I don't have another truck. And then they kind of work out that way. I've had some where like I've gone back to the shipper, right? And I've done the best I can with the second truck, the first truck, and it's still been really expensive, and given them two options. Like, hey, to get it there on time when you need it, I gotta pay an extra 400 bucks. It's coming out of my pocket. And like, that's kind of on me because I chose the first truck, right? Like, they didn't hire that truck, and I need to make it to the delivery when they expected to. The part that gets a little sketchy is like the shipper going, well, like I just found another truck for twice what you would find one for. And we're like, well, okay, like I've got another one coming in anyway. We don't need that one. That's really where I think I I would focus because like that seems a little strange to me. Like, how is your shipper able to find a truck faster than you can as a broker?

SPEAKER_00 16:59

And like so that that's what I had asked when I was talking to one of our guys in a situation like this. I was like, I was like, how was your customer able to find a truck, but you couldn't? And I think if I remember correctly, it's I think that what they were saying was like, oh, well, they just basically made it open checkbook and to get a truck. And it's like, Wow, that's fine.

SPEAKER_01 17:19

Like, why didn't you go to them with a solution in the first place? Like if you got a truck that broke down and you talk to that driver, and then the dispatcher goes, I don't have another one that can get there until tomorrow, and you know your load's got to get there tomorrow. The first thing you should be doing is posting the load, trying to get another truck going to your customer, going, Hey, I'm working on getting another truck to transload this to get this to your receiver. I'll have an update shortly. I'm guessing they just took the problem to the shipper with no solution, and the shipper went, Well shit.

SPEAKER_00 17:48

Like Yeah, another another option too. I'll just hypothetically here. Let's say, you know, if you're in a bind and maybe the reason you couldn't find a truck is because you know you need trailer interchange and an agreement in place, and you're struggling to find a carrier that has that, but the customer just took anybody that doesn't have the insurance, right? So, anyway, interesting questions. Keep sending them our way, and we will continue to answer them. Final thoughts, Ben.

Communicating Solutions To Shippers

SPEAKER_01 18:12

Whether you believe you can or believe you can't, you're right. And until next time, go Bills.