If The Carrier Breaks Down, How Do We Settle The Bill? | Final Mile 141

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

🚛 Carrier Breakdown Payment Dispute

🏢 Selling An Inactive Trucking Authority

📉 Broker Lowered Rate After Agreement

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Transcript

Breakdown And Repower Rate Dispute

SPEAKER_02 0:19

All right, we're back with another edition of the final mile. This is all QA from you guys, the listeners. These mostly came from our Facebook group today. We do have our uh special guests, the guys from Togo, Jordan, Mike, and Ed joining us. If you haven't listened to our full-length sit-down podcast with them, the drops on Friday, give that a listen as well. So uh let's hop right into this first question. Uh my customer deducted the full rate because the carrier broke down and the customer had to pay for a repower on their own. The carrier is still asking to get paid. What do I do? So the whole story here, uh and there's there's more context to it, but a the broker had booked a carrier to hollow load. The carrier picked it up, drove like 200 miles, broke down, couldn't get another truck in to repower it. A day goes by and they still can't do anything. Um, the broker couldn't find anyone else to come in and repower it. And the customer on their own had to go and find a another one of their transportation providers to get a truck to go repower that shipment and get it delivered to the remaining like 800 miles or whatever it is. So the the shipper is basically saying, I had to pay more to repower this than I owed you in the first place, so I'm not paying you anything. The carrier that broke down is still asking to get to get paid something because I drove a couple hundred miles, and the broker's like, Well, what do I do? I'm not getting paid from the shipper on this one. The carrier still wants money. Um, my personal thought is I usually am on an error on the side of like passing through any rate deductions from the customer onto that carrier. So um I'm curious what you guys think. Like anybody feel free to hop in. What would you do in this situation?

SPEAKER_00 2:02

I'd take the cost of the rehire minus the rate that I originally paid the carrier, which would be a negative in this instance, and then you know, put a put a negative deduction on onto the carrier because they they caused the original problem from the get-go. I'm with you. I don't know if that's the right approach, but it's it's always the approach that we that I've taken in the past. Agreed.

SPEAKER_04 2:22

Anyone else have to add to I would like I had some I've had a few of these that were very long mileage where it wasn't super clear cut, meaning like I had one that definit went from like Florida up to like I think it's Prince Edward Island. I can't remember. Whatever the island is on the east coast off of Canada. Um that's yeah. And basically the carrier got it all the way up into Canada, but could not get it onto the island, broke down. So like it was a scenario where they did like 80% of the work, but not the final 20%. And like that's literally how we even handled it. It was at TQL back then, was okay, you had to pay the other truck to go grab it, get it to the delivery. And then you just took what was the original rate from the customer, whatever it was like an$8,000 load. It was like a lot of money. And then basically, oh, you paid the other carrier to run the last 20%. They gave them two grand. The original carrier got the six, and you just basically went, Hey, we had to pay this amount to finish it. You get whatever's left. And like that one ended up being harder because the second carrier price gouged us because nobody else wanted to run it to the island and it was in the middle of winter. So they charged us twice as much. And the first carrier yelled and said, You paid too much to the second guy. And we said, Hey, agreed. However, we gave you the ability to send another truck. We gave you a day to resolve it yourself. You could not solve it. This was the best option we had per the customer's delivery requirements. We didn't have a choice, documented all of it, and then that's how it played out.

SPEAKER_02 3:50

Yeah, I think the the caveat I would give there is like the customer, let's say I don't have the numbers on this one, but let's say the rate, let's say that load was paying 800 bucks and the customer's like, well, I had to pay three grand. And it's like, okay, that's not market rate. You know what I mean? Like, um, because further, the customer might say, because I had to pay three grand, I'm gonna hold that overage amount from my original invoice off of other invoices of yours, and then you've got a a kind of a sticky situation there.

SPEAKER_03 4:18

So uh none of that's that's not even allowed. I mean, the carrier has to be paid for the work they've done, which means the broker has to be paid for the work they've done, and the customer has to pay for the work that's being done. It doesn't mean that the repower doesn't entirely offset that cost and result in a net loss to the broker and the carrier, which is what would produce a claim, which is why things have to operate in that way. But as Ben described it and you described it, if there's a comfortable back and forth between broker-carrier or broker-customer, you can deal with it just in simple short pays, deductions, if you all agree.

Selling MC And DOT Authority

SPEAKER_02 4:52

Yeah, I agree. All right, we'll move on to our next question here. Um, if I sell my truck and company, no trucks, just the business name, DOT and MC, how does that work? I haven't operated in a couple years, but still have completely active MC and DOT because I still pay insurance, so I'm not sure the best way to sell it. Is everything transferable? Has anyone done this? This just sounds like someone's trying to commit fraud on our Facebook group right now. What do you guys what do you guys got on selling the double broker playbook right there, right?

SPEAKER_00 5:22

It's MCSA just come out with something in March around this specifically, where you're not allowed to sell your USDOT number. It's it's to the person, not the company.

SPEAKER_02 5:35

I I could be wrong there, but I thought I thought I heard something in the news from like uh Sean Duffy like in the last week or two. Like guidance on that. Basically saying like don't don't sell them at all type deal. Um Ben, we talked about this like in a somewhat recent episode. Um I will tell like I guess my take is if you if you're just trying to sell it because you think there's value in the aged authority, um, it's probably gonna be used for a scam, most likely. But understand that when the change of ownership happens and you have contact numbers and all that stuff that changes, um, that stuff gets flagged on a lot of vetting platforms. And further, if you say, well, oh, I you know, we won't change the name, we'll just sell you the authority and you can use it stone or my name, you're putting yourself personally at risk for being pulled in on some kind of fraudulent uh you know, cargo theft or whatever you want to, you know, dream up, but not a big fan on this one personally.

SPEAKER_04 6:39

Here's here's just for to what you guys said, I just looked this up to see what the recent was because I did hear it, but I couldn't find it. And it says biggest recent development and is a formal FMCSA warning issued in March of 2026 to do not sell, buy, or lease USDOT or MC numbers outside of a legitimate corporate transaction. FMCSA stated if they discover the activity, they may inactivate the US DOT number, revoke the operating authority, or revoke related registrations tied to the entity. But what changed in practice is not necessarily the law itself, but how it is being enforced in public guidance.

SPEAKER_00 7:18

Yeah, it looks like sole proprietorship versus a corporation owning the MC and DOT has some nuance to it as well. Um, so if you're a sole proprietor, you own it. If you're selling a company, then it can transfer with the company. However, there's a bunch of nuance in there, and I'm not a lawyer.

SPEAKER_01 7:34

So correct. I think to kind of to Nate's point is you may want to sell those things because you think they have value, but the people who are in the market to buy the that intellectual property are very likely in the market to buy it for the wrong reasons.

SPEAKER_04 7:48

Yes. And we covered this in a longer question, how these are done legitimately from company to company, right? Because they're basically stock repurchase agreements that happen over time. And then the ownership changes from entity to entity, which is legitimate, and that happens. Like a very big trucking company buys another big trucking company. That needs to be able to happen because there's value there. But if you're just a sole prop, meaning you own that MC, it is not doable because there is no stock, there is no entity. It is just a human with a social security number that is the sole proprietorship. That can't change hands legitimately. And what happens, and what used to happen, and I've had this happen with a client, is if the FMCS is aware of it, they just reset everything. So basically, like I can still buy your MC and DOT, but all of the history restarts the day the FMCSA is aware that I bought it from you. So it's still there, it's still active, but it's as if I have no credit, no history, no anything. So all the value just basically disappears.

SPEAKER_02 8:49

What's the going rate for an MC these days? Anybody anybody know? Don't dabble in those marketplaces, Donnie.

SPEAKER_04 9:01

It used to be like five, 10 grand, I think. Like last year in the past couple years, I would see messages and things anecdotal. I don't know of any of them that sold for that, but like that was pretty much what I would hear people say they thought it was worth.

FMCSA Warning And Fraud Risks

Booked Then Dropped For Cheaper

SPEAKER_02 9:13

Interesting. All right. Uh last question here. Or I guess this is more of a statement than a question. The guy says, Check this out. I called and agreed on the posted rate for a load. The broker then asked for a few pictures of the equipment to verify identity. Broker tells me the load is mine, calls back five minutes later and says they covered it for$150 cheaper. Do you think the broker solicited the next person who called about it to do the load cheaper, or did the other carrier volunteer to undercut me?

SPEAKER_04 9:45

Um that's the wrong question to ask.

Rate Con Ethics And TONU Lines

SPEAKER_02 9:47

Yeah. But I got yeah, so I mean, this is a you know, a fairly common situation. And we see it on like brokers see it with carriers too, where a carrier falls off a load because they found one for a hundred bucks more. You know what I mean? Um, I mean, my my guess here is that it could have been their verification stuff came back shady and they found somebody else that was a better fit. It could be that um they told, you know, another carrier called in and said, No, I already have a guy doing it for this, and the guy did agree to undercut it. But Ben, what was your what's your take on it?

SPEAKER_04 10:25

Well, also, it could be that two people were working on a load and one of the guys booked a truck for 150 cheaper and he didn't know. So, like, there's lots of things that could have happened, but the why I was kind of chuckling is like whether another carrier volunteered a lower rate or not isn't the thing that I would be asking. I would have asked, like, did you get the rate con in the load tender? Because if you did, that you are owed something for. And now they pulled the load back and admitted that they pulled it back. And to me, that is the thing that is like the ethical line that I've always kind of held. It's like, if you agree to it, that's what you're paying. I don't care if another carrier calls you in three minutes and gives you a cheaper rate, unless that other carrier has like better insurance or better safety rating that objectively your customer is asking for, you can't drop a carrier for a cheaper one. Cause to me, that's where you draw the line and that's where you send the Raycon or not. But to me, verbal is as good as the rate con and the way I would operate. Because I always think back to what both of you said. It was making me laugh also. So I remember learning the industry and I was like, so wait a minute. If I give the load of this carrier and they get a better load, they can cancel on me and I get nothing. But if I get a cheaper carrier, I have to pay them$150 truck order not used. Is that how that works? And they went, yeah. And I went, that kind of doesn't make sense. Can you explain that to me again? And like, yeah, but that's just the way the industry works. Like, you don't have recourse, and it does happen.

SPEAKER_02 11:52

But and I think just for like a tip to the brokerage community out there, if you are still shopping for rates, you should not tell a carrier that the load is theirs, um, like unequivocally. It should be a hey, um, it's yours borrowing X, Y, and Z. It could be approval from um compliance team, it could be approval from pricing team, it could be, you know, hey, I've got you tentatively on this load, you know, barring whatever the next step is. But if yeah, if you have, if you have given the go-ahead or the green light to a carrier, I think ethically you should you should um hold to that and not just bail on them last second because someone can do it for cheaper.

SPEAKER_00 12:33

So yeah, that's that's a really good point, Nate. Be honest up front, right? Like, hey, that the the rest of the guys are working on this still, we're going through the vetting process, but it's not yours until the vetting process is done. That would have been a way different conversation post uh you know than than than this one.

SPEAKER_02 12:48

Agreed. Any other thoughts? Jordan, you got anything?

SPEAKER_01 12:52

It's it's a shady move, but it definitely happens, right?

Back Solicitation And Protecting Info

SPEAKER_02 12:55

Yeah, it happens on both sides. Like I said, like carriers, they might tell like I have seen it actually. We had one uh I was talking to a guy yesterday, and he's like, he's like, dude, I don't know if I'm just going crazy. He goes, but he goes, I uh I booked a truck on this load, and I gave them all of the customer and pickup information. And five minutes later, he calls me and says he broke down, and then magically right after that, my customer called me and said the order uh they canceled the order on me. And he's like, What do you think happened? I was like, I think that carrier called your customer and offered to do it directly for cheaper, like it's and you know, you there's no proof on it, and yeah, we've got back solicitation language and a broker carrier agreement, but like this stuff happens on a regular basis, and that's why I'm a big fan of not releasing that kind of information to a carrier until you've got um you know a truck dispatched to make sure that they don't know where to go and and all this all that um beforehand.

SPEAKER_04 14:03

And I there's another upside to being ethical, like objectively, economically, and profitably, right? Because it reminded me of what you were just saying. Like I had a care I've worked with for a long time in Chicago, they were drayage, but um we would tell each other everything. And you when you work together, like you're partners, and you basically are just at different companies, but you might as well work at the same company. And I can tell you at least three or four times over the years where he would call me and be like, your customer literally just tried to cut you out. Like walked out and talked to my driver, or talked to my driver, saw my truck and called me, and he would call me immediately and be like, that shipper is absolutely just trying to backdoor you. And then when you have that relationship, because again, you do it ethically, so you take a little hit once in a while when you got a cheaper carrier, but you stand by your word, over the long run, you end up making more money and you actually end up protecting your business. But most people are super short-sighted, don't see the forest for the trees, and end up creating more work later, just trying to make an extra 50 bucks today.

Carrier Relationships Beat Spot Churn

SPEAKER_02 15:02

Yeah, I think a stat too that I would recommend you check or try to track inside your brokerage is your carrier utilization. And what I mean by that is the difference between being a transactional broker and a uh true relationship broker. Are you working with carriers on a regular repeat basis versus how many carriers did you book last year that ran one load for you? And I I remember looking at this years ago with a company, and they had like maybe five carriers that did more than 10 loads in a given year, and then you know, thousand or more that did less.

SPEAKER_00 15:43

Nate took me back to the days on the on the desk managing his own.

SPEAKER_04 15:47

Well, the thing I would say, that's my next training, by the way. In 10 minutes, it is literally on that topic.

SPEAKER_03 15:53

But the thing I would say is the spot market is a great place to make money. It is not a great place to build a business. Not for a broker, not for a carrier. Unless you want to keep riding waves, the way to build a business is a good balance between contract and spot. You're not gonna get contract free if you're not up to par in your credentials, you're having consistent conversations, you're pursuing the right people. Um but when it gets tight, you can make some really big rips on spot. You just when it loosens up again, you're back to square one. You haven't progressed your business.

Vet Carriers Before Negotiating

SPEAKER_01 16:29

The other thing is, like let's assume, you know, best intent for the broker here, right? Maybe, maybe what did happen was the vetting came back and they just couldn't work with that carrier for some reason. But you know, a lot of these vetting tools that we've seen, whether it be carrier 411, highway, whatever it is, these aggregators of this information, kind of explicitly tell you in your contract, you cannot share the information you see on this platform with the carrier. So maybe rather than telling them, hey, I can't work with you for X, Y, Z reason, they just say, Hey, uh, we got a cheaper option. Sorry. And walking away from it. Which is just reinforces the need to do that vetting up front. Like, don't negotiate with a carrier before you've checked their MC and determine whether or not they fit your safety and you know the CSA requirements, you know. Make sure you're doing that work early.

SPEAKER_04 17:17

Hey, that goes back to our podcast. That was literally what I ran the training on yesterday with half of the carrier sales are up. Is I'm like, I shadow them and I'm like, I want to hear them answer the phone and they'll negotiate and then ask the MC. I'm like, well, if you just switch those, like, hey, what's your MC? When where's your truck empty? You can be looking at the MC as you're negotiating, then you can determine what you want to pay before, not after you find out their out of service rating is terrible and they have no insurance. Like it saves you so much time when you just ask that question first.

Final Thoughts And Sign Off

SPEAKER_02 17:45

All right. Good questions. Keep sending them our way and we'll keep answering them. Final thoughts, Ben.

SPEAKER_04 17:51

Whether you believe you can or believe you can't, you're right.

SPEAKER_02 17:54

And until next time, go Bills.