Renegotiating Failed Bids | Episode 295

Speaker 1: 0:19

Welcome back Freight360 community. It's episode 295 of the Freight360 podcast. As always, if you are looking for all of our content or any specific content, go right to our website, freight360.net. We've got a searchable library in there. Our YouTube channel also is a great way to find. We've got all kinds of different like what do they call them? Like playlists, right With like some sales stuff, the final mile Q&A, the full length podcast, et cetera. Freight broker basics course for an educational option. It's great training for your team. We've even white labeled it for certain companies by customizing what they want their folks to see or not see, for that matter and share with your friends. The uh. Help the movement. Keep on growing. Um ben. What's happening, man? How we doing?

Speaker 2: 1:11

doing well. Man, it's getting pretty hot down here. Last couple days, dude like high is supposed to be like 86, normal it's been like 95 96. I had tennis last night oh my god, it was, was horrendous. I can't remember last time I was that hot, that tired.

Speaker 1: 1:27

It's actually surprisingly not good weather. Well, I don't know if I should say surprisingly, but everyone here is complaining about when are we going to get 70-degree weather? We had a bit of a nice warm stretch, kind of felt like an early summer and it's like been in the 50s and 40s and rainy this month.

Speaker 2: 1:48

This is.

Speaker 1: 1:48

it's like April weather, but in May right now. But anyway, today's Josh Allen's birthday, it's May 21st as we as we record. So happy 29th birthday, ja, number 17. Anything sports.

Speaker 2: 2:08

Did you watch the PGA?

Speaker 1: 2:08

championship. I did, it was pretty good. Did you watch it? Um, I had drill, so not total, I caught up. I caught a little bit here and there. I literally had drill thursday, friday, saturday, sunday, so the entire tournament. Um saw that scheffler won.

Speaker 1: 2:19

Here's something interesting though, because I'm in a monday night men's golf league and one of the guys um that I was playing against um, he's like man, I love my driver he's, and you know we're all asking like what is it? Blah, blah, um, he's like you can hit it, you know, open face, closed face, straight on he goes. It's like self-correcting, he goes scotty scheffer, literally. They literally pulled it from him at the pga championship, and I was, like what I didn't realize? Like, apparently, it's like they're like 50 different. This, this could be totally wrong. What the guy was telling me is that, like in these big tournaments, when they go around and like check people's clubs, like on average, like 50 golfers get at least a single club pulled from their bag by the inspectors or whoever's in charge of it because it doesn't meet the pga specs.

Speaker 2: 3:05

Oh, um, so I don't know if there's any accuracy to that, but apparently yeah, scotty scheffler confirms use of backup driver like rory after the originals uses replacement driver en route to pa championship when his driver failed testing.

Speaker 1: 3:21

I wonder what kind of driver it was I don't know, but like when he was telling me this, my first thought was like where do I get one of those that's?

Speaker 2: 3:28

where my brain went.

Speaker 1: 3:29

You know what's funny. So I've been using my old, old driver the last like year and a half, like I got this driver legitimately in 2007. I bought a new one like five years ago. In 2007, I bought a new one like five years ago and I think it was it might have been that it might have been last year that like the club had, or the head of it snapped off and I was like I'll just go back to my old one and I'm like an old faithful. I just I had it consistently, so I just had you know most important thing I got another driver.

Speaker 1: 4:01

I'm using my old R5. So yeah.

Speaker 2: 4:05

Yeah, I don't know why I was thinking about that last night for some reason, just like when I got my golf clubs. I mean, I don't play nearly as frequently, so like I haven't replaced them in probably six or seven years and I was thinking about that last night for some weird reason. I'm like, yeah, my driver I got when I worked at TQL. Like that's how long I've had that driver. But to your point, I'm like I'm consistent with it and like I would rather hit consistently than get an extra five or 10 yards.

Speaker 1: 4:32

Yeah, I didn't like trying to mess around Like the one that I ended up buying. Um, I think I bought it because when I was in, when I was on my honeymoon, I rented, rented clubs. It's like in Hawaii years ago and I rented clubs and the driver that I ended up buying was basically a version of the one that I rented and I really liked it, but it has like all the weights on it and I couldn't you could like slide them back and forth to like adjust draw, fade and elevation and all that stuff. I'm like couldn't figure it out. I don't golf enough. Like I literally golf nine holes once a week, um, for a few months in the summer and that's about it. So, but anyway, um, that's, that was the big sports thing. Uh, news like there's just a lot going on in the freight world.

Speaker 2: 5:17

We got like what do you got?

Speaker 1: 5:19

the and this is kind of like you get conflicting reports because people are talking about different things but you hear like, oh, freight volumes are down. And then you hear, oh, freight volumes are going to be up. It's the whole like whiplash effect from the tariffs and now it's like we had uncertainty so we had a surge of imports before this presidency came in and then you've got tariffs going to place, so stuff is sitting in warehouses and freight volumes are down. We do have actual reports of imports through Ports Valley and Long Beach. That's the busiest port area in the United States. They're down like 30% in May.

Speaker 2: 5:57

Yeah, I saw that orders were down, like what they're expecting to come in to be down 30%. But the thing I saw today was that as of now they're down 14%, I think in Long Beach 10 or 11 in LA, and they're expecting them to continue to go down. I think what nobody knew was how much of that cargo was in bonded warehouses to be released from the tariffs because there was a huge push and they call it a my brain blanked like a push forward, like every company to avoid the tariffs order as much as they could that some of that stuff that did hit was sitting in bonded warehouses. Now that there was the pause in the tariffs, they thought a large portion would be released. But I'm not seeing a ton of changes in rates coming out of Cali. I would have expected, if it was going to be that significant because orders are for sure, down.

Speaker 2: 6:52

I definitely read that there are a lot more blank sailings, meaning empty ships coming back from China over the next few weeks. For sure I know that ocean rates coming from China into the US are up 41%. So not only are orders down, the prices to ship from China into the US is up and tariffs even though they're at 30 and not 145, it's your point of reference. They've never been 30% before either, so they're still higher than they've ever been, even though they're not this obscene 145.

Speaker 2: 7:21

And then the third or fourth point on that, like Genlogs put this out, on shipper data, they've seen Walmart, amazon and Target. All of their load volumes are all down and again, if the larger stores are seeing a decrease in shipping volume, one of two things are happening People are buying less stuff, or they're expecting people to buy less stuff, or they couldn't get enough stuff. I mean, it could be a mix of all the three. But and then the last point I saw yesterday is consumer confidence is at its lowest point since 2023, right after the pandemic, when the entire basically world economy, global economy, expected us to have a recession. So there is nothing that I could find that seems to be a silver lining and more freight coming into the country in the next rest of this year.

Speaker 1: 8:06

Yeah, here's a. I just pull this from Reuters. This is a good explanation of how bonded warehouses work, if you're curious. So bonded warehouses, it says the US has more than 1700 bonded warehouses, which are facilities where imported goods can be held without immediate payment of customs duties such as tariffs. Such fees are only paid when the goods leave the bonded warehouse along businesses to manage funds more effectively at a time of extreme trade policy volatility. So, basically, these imports can come in and they're not they're like in limbo pause.

Speaker 2: 8:41

It's like you don't pay a tariff until it's released. So it's literally.

Speaker 1: 8:45

And cleared of from customs, yes, you don't have to pay a tariff. So that's why when people see huge tariff, they're like put it in the bonded warehouse, we'll see how this shakes out. And now that's why you're seeing when, with tariffs coming down, I thought I saw a stat the other day that was like the number of shipments that were expected to be released out of the. It was like twenty thousand or something like that. Containers worth, or does that even? Does that sound like ballpark accurate? You think sounds right.

Speaker 2: 9:13

I have no idea how much went in there. I know that they basically you couldn't find one. So like all of the capacity of bonded warehouse on the West Coast was sucked up. But also East Coast ports volumes are all down. So even if those do get released, there's just a lot less stuff being purchased.

Speaker 2: 9:29

And again, like it's really kind of a simple reason, Regardless of where you sit politically, like when there's uncertainty and you don't know what's gonna happen, consumers buy less, even if things turn out to be good. Because when you're worried about the future you don't spend as much. And companies do the same because, like you can't plan for it. So companies are like, does it make sense? Like I've heard large companies like, does it make sense to invest two billion dollars over three years to start making something in the US? Well, what if this all disappears before the building gets built? And then we can source from another country and that's a bunch of wasted money. So until anyone really companies or people, I think have some stability, you're going to see a lot less cargo being moved, which is not great for carriers.

Speaker 1: 10:14

Yep. Other quick headlines. And this is you can always get our newsletter at free360.net. Always get our newsletter at Freight360.net. There's a sign-up link there. 4% of truckers were found to be unlicensed. That is scary. One in 25 drivers did not have a valid CDL.

Speaker 2: 10:35

Didn't have a valid CDL. That is insane.

Speaker 1: 10:37

This is like the hot talk this week, so I'll just read you the blurb from ours. A new analysis by trucking safety expert Adam Wingfield has revealed a jarring stat About 4% of commercial drivers on US highways are operating without a valid CDL. It might sound like a small number, but an industry that moves over 70% of the nation's freight, it's a dangerous liability, both in terms of road safety and public perception. Drivers behind the wheel of a 26,000 plus pound machine often hauling hazmat or navigating congested areas with very little margin for error. It's not just about paperwork. It's about the lives, liability and trust of public places in our industry.

Speaker 1: 11:15

Deeper dive into the 2025 road check week shows the issue runs even deeper. Over 56% of trucks inspected had violations and nearly one in five were placed out of service. Combine that with 645 fatal truck crashes in Q1 alone, each estimated to cost $7.2 million. It's clear that noncompliance is hitting both safety metrics and bottom lines. Some point to relaxing hiring standards in response to the supposed driver shortage, but critics argued that that's led to corners being cut. Tougher enforcement, especially on licensing, could tighten capacity and nudge rates upward, but it could also restore the image of truckers as skilled professionals and help keep America's highways safe. So that's a big deal, man Like, we just finished up the road check last week and that's the kind of stuff you find out. So here's a big deal, big deal.

Speaker 2: 12:04

Here's the thing. I'll say a brief into politics and back to this. To loop it in is that I think you know, Leffler, really point out is like the FMCSA is just drastically underfunded and understaffed to try to keep up to date with all of the things they're responsible for, whether it's fraud and trucking companies or brokerages that are operating fraudulently, that are being reported and they can't do anything about to drivers driving around that don't have licenses. To what did he say? One in four, one in five trucks don't meet the safety standards set out by the FMCSA. Like I mean, by any stretch of the imagination, that government organization is an abysmal failure at what is expected of them.

Speaker 1: 12:53

The S in FMCSA is safety.

Speaker 2: 12:56

Yeah, and now you have the Secretary of Transportation I was reading Free Caviar is again, I don't think there's anything wrong, but, like, makes a public statement that you know we're going to pull drivers that can't speak English. Okay, like, I'm sure there's a significant amount of them maybe that need addressed, but that is nowhere close to 4% of every truck driver that doesn't have a license, or one in four trucks, or one in five trucks not meeting the safety standard. It's like, hey, we're gonna deal with this little small issue that seems to be really big in the news. That is like a drop of water and this giant bucket of just I don't know ineffectiveness and it's like I don't think it could be both and, like you, can address for sure issues and prioritize.

Speaker 2: 13:43

They're not mutually exclusive but nobody's talking about the things that we're talking about about 4% of unlicensed drivers. I didn't see anywhere in mainstream news. I didn't see anything ever about one in five trucks not meeting the safety standards. It was never on the news. That's just like an accepted thing now. Like, ah, we're just okay with that, right, there's no need to address this. Like, just okay with that, right, there's no need to address this. Like.

Speaker 2: 14:03

There were two things in the news. Yesterday A truck was stolen, like moving in a PA highway, literally. They hijacked the truck like in a movie Truck, slowed down in front of them Fast and Furious style, got the truck to pull over. They stole $267,000 worth of Apple products. The police report said they were caught and they're facing charges now. And then there was one busted on the news yesterday. There was a guy in Fort Lauderdale, an Armenian, it said organized crime ring, and in California that had stolen some obscene amount of cargo from Amazon. They were also charged with I think I saw murder, kidnapping, like it was not a small list of crimes and it's like everybody knows this is happening.

Speaker 2: 14:50

And I see reports in mainstream news that it's a billion dollars a year. What did TIA say? Like it is definitely more than a billion dollars a year. Like I feel like I know a people of all the stories I hear, in a year I could add up to more than a billion dollars of just the cargo of people that have talked to us that has been stolen. Like there's no way that number isn't way above there.

Speaker 2: 15:08

Nobody's talking about any of these things and the thing politically that bugs me about it is right now I think and again, I don't really follow politics that much, but I'm pretty sure they're trying to pass the next year's budget. To pass the next year's budget and from what I've read the budget is bigger than last year has nothing allocated to increasing the size of the FMCSA or the Department of Transportation to address any of these issues. Doge was supposed to cut $2 trillion a year. I heard that number has been adjusted now to $250 billion, if that, and they're spending more, so they're spending more. The debt's going up. They're spending no money on driver safety. They're yelling about people that can't speak English and no one's addressing the fact that, like this agency gets a billion dollars a year, might need five times that. But that's nowhere to be seen because every congressman and senator is just arguing to get whatever they can for themselves and it's just a giant shit show still.

Speaker 2: 16:01

It didn't change anything.

Speaker 1: 16:05

It's just a giant shit show. Still, it didn't change anything. It's exactly the same as it's ever been. So here I'll segue here into something. I don't know why that made me think of like drivers doing things that they shouldn't be doing. But here's one that came across this week and I'm curious your take on it, and I guess I would pose this as where do you draw the line between double brokering and interlining?

Speaker 1: 16:27

Interlining, for those that don't understand it is when you know, let's say, I'm a broker and I'm going to hire two different trucks to complete a shipment for me. One's going to take it part of the way and then the second one's going to take it the rest of the way. That's, in its most basic sense, interlining. So here's what we had. Happen is, a load was going from California to Texas. We gave it to carrier a and carrier a got it from California, california into Texas and then, for whatever reason, couldn't get it to the delivery. So they hired a second carrier to then take it to its final destination without our approval. We found out about it after it happened. So I'm curious your take on it. Had we known about it and approved it and vetted that carrier and it was transparent. I would say that's fine interlining, interlining happens all the time.

Speaker 2: 17:25

I've had it happen many times. Well, here's my second question. One would be was it pulled in the same trailer and did they have a trailer interchange insurance?

Speaker 1: 17:33

No, totally separate equipment and everything.

Speaker 2: 17:37

So they transloaded it, put it in another trailer without you guys being able to verify that they had the proper insurance to do that. So if something would have happened like nobody knows if there was insurance to cover it. So that's the first.

Speaker 1: 17:48

So basically the first carrier drafted at a depot in Austin and the second carrier got loaded at Austin and took it to Waco.

Speaker 2: 17:57

Yeah, and it was at someone else's property Nobody was aware of so for sure. That to me is rebrokering the load, or unauthorized brokering.

Speaker 1: 18:57

Right now to your point like we're going to obviously Right, yeah, but how do you? How do you go about? How would you pay? How would you make payments in that situation?

Speaker 2: 19:09

Both of them. I would pay and pay to pay?

Speaker 1: 19:12

pay carrier B, or do you pay some to each?

Speaker 2: 19:16

Well, I would pay some to each, probably because there's a chance that carrier A doesn't pay carrier B. Carrier B causes issues with the receiver that you then have to resolve later. Now again, I'm dealing with a few of those right now with some attorneys. Like where things happen and like, at the end of the day, like it's not, like it's going to go to court for a few hundred dollars or a few grand, but like that second carrier, if they deliver the load and carrier A doesn't pay carrier B, they can cause you enough problems to basically make you pay that second carrier, which means you're out that money. So that's why I would chop it in half and pay them both.

Speaker 2: 19:55

Now my last thought was like again for anyone out there on how this should happen. If carrier A has an issue, it needs another carrier to take it to delivery. The carrier should communicate that to the broker If they've got another carrier. Great Brokers are like great, you already have an option. That's fantastic. I don't have to find one. Send me the MC. I'm going to check. Trailer interchange insurance Need to verify where it's going to be transloaded, to make sure it's one insured to transition it from one to the other, and then two to make sure carrier B has the right insurance should something happen at delivery Right, and if all those things are okay, there's no problem. Both carriers get paid, there's no issue. Right, right Now, the only caveat would have been had that second driver been, like, temporarily leased on to carrier A. Now it's technically one carrier and in that scenario you don't need to know about it technically.

Speaker 1: 20:48

Here's what they told us before we figured it out. They told us hey, I'm going to take it here, I've got another driver that's going to finish it. They, they gave us the impression that they had another, another driver in their fleet that was going to do it, and the reality is that's not what happened, right. So for those reasons, I'm saying DNU the carrier because of their you know, mishandling of the situation.

Speaker 2: 21:14

So, um, interesting you got any crazy stories going on this week on your end? Um, really, to be honest, I mean one or two that might turn into a pretty good story for a later episode I'm in the middle of. One is a similar scenario where carrier, double broker to load, didn't pay the second carrier from like months ago and then one of the two infamous companies that, like, represent those carriers going after a shipper trying to say that, like, the shipper owes them the money. And I'm currently in a back and forth with that council as to why I think they're incorrect with that counsel, as to why I think they're incorrect, as of yesterday, I asked them for the cases that they said. They had precedents that they could cite and I dug into it.

Speaker 2: 22:02

And the FMCSA's guidance is every party in a transaction is responsible for vetting who they do business with. So just because a carrier books a load with a fraudulent broker doesn't mean all of a sudden they can throw their hands up and go, okay, broker, now you pay me too, or go after my shipper to pay them. They have a responsibility as a business owner and under FMCSA guidance, to vet the broker that gave them the load, which didn't happen. The second thing that didn't happen is our shipper didn't have any agreement or contract with that carrier, and I think the term is privity, which is some legal term for like having a direct agreement between that carrier and the customer, which they didn't have. The third is, as a broker, we vetted that carrier that double broker the load. They were legitimate, their FMCSA was in good standing, they had the right authority. Their equipment was listed on the insurance. There were no freight guard reports and no alerts anywhere in the industry. So we did our due diligence, vetted that carrier correctly.

Speaker 2: 23:01

Just because that carrier committed the crime of double brokering the load, stealing the money and not paying them, doesn't mean we're responsible. And that was the first point I made to the attorneys. I was like he said to us well, we can't find them, so the only people we can reach are you and the shipper. And I argued back and I went you have a due diligence to find the person responsible, not just to threaten lawsuits at anybody. You can find email addresses for that's the criminal. We did what we were supposed to. It's your job to go find them. Here's the bank account we wired. Here's their information. Go to the FMCSA. It's their responsibility to know who they gave this license to. That's not on us. Go to the government agency and find out who that is, or go to the bank and use whatever you need to to find out who actually stole your money, because that's not on us and that's certainly not on our shipper.

Speaker 1: 23:56

Yep, wild, so development. I'll give you a couple other ones that popped up and then we'll get into a big discussion on bids that don't go as expected. So last week I was telling you about the credit circumvention, you know, building a load under one company and moving it under another. So this thing has played out to be way more of a scheme than anything. So what we found out there's like 20 loads and four different customers. So it's all messy. We're trying to figure out what's what I just decide. I'm going to call every single customer. So I called them all, talked to their shipping department and found out that none of them none of the ones that that, uh, we approved ever tendered a load to us, never had us in our system never gave our broker a load.

Speaker 1: 24:54

They all, every single load, was for this unapproved customer. Further, we see a bol for one of these loads that has the. It's a load that was tendered to uber freight and we're like, where does uber freight come in? Like they're a brokerage. So then we find out this customer the name of the customer is Delta Freight Solutions out of where other than Glendale, california? That's who is allegedly our customer. That we denied in the first place. They are clearly a double broker. And here's what happened then is they took loads at least a few of them we can verify at this point. They very likely, I would imagine, went on the load boards posed as a carrier, took loads, double brokered them to a guy.

Speaker 2: 26:58

Your agent.

Speaker 1: 26:58

Trying to an agent in our company who, like this guy's gone. Now we got rid of him clearly.

Speaker 2: 27:04

And then he triple brokered them out.

Speaker 1: 27:06

And what he's actually trying to do is like no one's trying to steal money, they're just all too lazy to get customers. It's like the old school version of double brokering, like, yeah, I'll just find someone for less. So it's like we uncovered this like big scheme. So what we're, luckily, what we're able to do, is like we can, we're hoping we can just fully remove ourselves from the situation and say like hey, we should have never been involved here, neither should have the guy that double brokered the first time. But at a minimum we can get all the carriers to go directly to who gave the load to us and just remove us and ideally get them back to the original broker whose load it belonged to.

Speaker 2: 27:44

So again, do not take legal advice from either of us. We are certainly not attorneys. But an attorney I talked to about a similar situation, for a client said first question do you have an agreement with that chipper Right? Did your?

Speaker 1: 28:00

agent or whatever Like this guy, started taking loads without having a co-broker, exactly.

Speaker 2: 28:05

And he says well, if there's no agreement, like as the intermediary, basically you can kind of step back and let the carrier that moved the freight Now they can go at the shipper that benefited from moving the freight if there were no agreements them the load, but your contingent cargo likely will cover your legal bills so that when the carrier loops you into the lawsuit at the shipper, who ultimately should pay them? Or maybe the broker upstream from you, depending on how that plays out in court, like theoretically, what you're saying I think should work based on a few instances I've worked through, but I'll be really curious to see how this one plays out for you.

Speaker 1: 28:47

Yeah, We'll, uh, we'll, we'll get to the bottom of it, but what's?

Speaker 2: 28:51

what's hilarious is like keep pulling that thread and find more shit, I talked to this like fraudulent agent.

Speaker 1: 28:57

And I'm like dude, like I'm like I've been in this business long enough to see what you're doing. I'm like so then I got him to admit like, yeah, he fully intended to circumvent credit. His goal was to eventually move the customer back over once he got him approved. And he's like, I wasn't here long enough before you guys can be to even do that. He goes. I'm like did you know any of this stuff was double brokered? He goes yeah, I'm aware of it. And I'm like is there any other ones that are double brokered? He's like yeah, there's probably a few in there. And I'm like, dude, like literally, I'm like what you did was double brokering. Um, you know, technically. I'm like so we, we can't, you know, we can't be involved in that. And he's just like he's still trying to like stick to his story. That like what what he's done is is not bad. Um, so I'll, I'll, I'll let you know how that pans out.

Speaker 1: 29:46

Another one that popped up yesterday I got a phone call from a brokerage in Canada. They're like hey, I wanted to verify if you had somebody working for your brokerage that's also working for us. Our highway profile got flagged for someone logging in or the IP address type thing. So someone's logging into two accounts with the same IP address and sure as heck man, I log into ours and I see it and it's this girl that we fired last month and and my guess is, as she kind of saw the writing on the wall like it was probably a couple weeks of like this isn't working out before we were, I finally was like, yeah, we gotta just, we just gotta stop, we gotta be done with that.

Speaker 1: 30:27

Um, my guess is she. She got hired on to another brokerage in the meantime, working remote as an agent, and was logging into highway with both sets of credentials. They're like, yeah, you know we're working with Highway just to explain the situation so it can be not presented poorly on their system. It's just an insight, like it's not, like it's a identity alert or anything like that. But it is like, hey, why is someone logging into this brokerage and this brokerage from the same address on Highway? So that was an interesting one. But the real meat and potatoes that today we're going to talk about bids that don't go as planned. So, unless you got anything else, I feel like we've been negative nancy's this entire episode.

Speaker 1: 31:18

Yeah, just so we talked. I I think I briefly like teased this one um last week, um, maybe not, I can't remember. But here's what. Here's. What's all happened is like big project, we've got rented trailers, we've got drop trailers going on and I remember this one.

Speaker 1: 31:39

The agent, just like quits, like I'm done, and so we're trying to pass it off to someone else within the company. Because here here are here's. What we're up against is the rented trailers. I think we've got six right now that are rented and each one of them is on a 90 day rental before it has to get taken back to the shop, inspected, maintenance done on it and re reissued. If we choose to renew it, all right. And there's like varying dates of when, like some of them end this month, some of them end in July when they're up for renewal. So we've got either way. We've got trailers that are currently being rented that we either, you know, pay for and don't use, or we pay for and still try to use, you know pay for and don't use, or we pay for and still try to use. The other part that we're up against is we have a contract with this customer that we're required to give them a 60 day notice of cancellation before we stop doing business for them. And some people might say, well, why don't you just stop doing business with them and, you know, say, screw it. Well, they have our trailers that are being rented, so, like they legally, contractually, have the ability to use those trailers. So we can't just stop because we have to get the trailers back, et cetera. So now we're like all right, we're transitioning.

Speaker 1: 32:56

I got this other guy looking at all right, how do I do these loads? Does it all make sense? Can I understand how to? How to do it properly? So he's going to, he's going to try it out and if, if he doesn't feel comfortable with it after about a month, then we'll go towards the hey, let's find a way to get out of this within the confines of our agreement. All right. So he finds out he's you know these, the, the rates that are contracted. There's thin margin on some, there's a good margin on some and there's losses on some. Overall, and with the previous broker that is resigning.

Speaker 2: 33:39

So you, know he's like that group of it. To give me an idea, like if you take the losses, the break-evens and the wins, is it a?

Speaker 1: 33:46

net positive it's a net gain, but it could be. It could be healthier, so, like it might, I'll just guess it might be a net like eight percent overall margin, which, for all that work, and yeah, jude, saying we're to squeeze man which is why we're having this conversation now.

Speaker 1: 34:02

Um, because I'm thinking a drop trailer program. We are renting equipment from a third party or staging at a customer's facility. We're coordinating all this stuff to make it happen. You should be getting 20 at least on something like that for the amount of time it takes and the cost savings to your customer overall, because they're not having to pay detention and layover. They can literally load at their convenience and ship out every day with no, like your carriers love it, because there's no, like you know. They don't have to worry about sitting there for two hours getting loaded or unloaded no dwell time.

Speaker 2: 34:35

Right, they can just go in and drop a trailer and leave Increased inventory space, which is another added benefit where they can just leave cargo in the trailers preloaded. It's not taking up space in their staging area, which allows them to more efficiently keep more inventory at lower cost. Like there's a lot of benefits to this to the shipper yeah, so.

Speaker 1: 34:55

So the reality is like yeah, we can spend some more time because I think the the person that resigned and I spent a significant amount of time with them going through these lanes previously because she had a tough time. Um, she had a tough time on the carrier negotiation side, like, not so like sourcing and finding the right price point with these carriers. Because, if you think about it, if I may, if, as a broker, I've got an empty trailer to move and I can go to a power only carrier and say, hey, I want this trailer moved from here to here, you can use it for whatever you want for the next 10 days, just make sure it gets dropped off there. 90% of the time, you can typically find a carrier to do that for free or a very, very, very little cost. We've got other brokers in our company that move carriers. I've worked with at no cost.

Speaker 1: 35:50

The carrier will move it for free, um, and it's like really, really high margin for that reason. But in this case she was having a tough time sourcing power only carriers to move it because she just didn't know how to use the tools effectively. And on top of that, she's paying them market rate for full truckload when it should be, you know, an empty trailer that they can use.

Speaker 1: 36:13

Maybe pay them $50 or $100, right, so that's the one side of it which you know. Yeah, if you fix all that, we have a seasoned guy now who came up through a big top 10 brokerage, well-trained, so that should take the margins from eight to 25, give or take, so that still won't get us to where I think it should be, because market conditions she quoted it too thin too.

Speaker 1: 36:37

So, like I went through the bid process with her and I was like, hey, I'd be aiming for 20% margin on this stuff and I think she bid it like her estimation was like 12% is what she went in and she got. Naturally she got awarded all of their freight right. Yeah, like so, luckily so okay, I guess that. Then that begs the question what do you do in a situation when you bid low and rates are higher than what you expected? That's kind of the general discussion we can have today and I will give the I will preface with this with this specific customer. Uh, they did say, hey, we prefer to be with a sole provider who can assist us and has the bandwidth, you know, in case someone sickers out. They've got a team and infrastructure to be able to manage this project. Solely because one point of contact for us keeps it simple, we're happy to do a revisit the pricing and invoicing issues are cheaper for them.

Speaker 1: 37:36

We have, yeah, invoicing singular right, and there's a clause in there that states, if there's any, you know anything I forget the verbiage but there's a clause in the contract that we executed with them that states, like we can do a 30-day notice of price changes if unexpected things happen, such as market changes, et cetera. Like we have the ability to renegotiate throughout the year under this clause. Yes, but what you have to do then is like how do you approach that customer and have that conversation, because that's what needs to happen, and that is happening today.

Speaker 2: 38:10

Let's go back a step.

Speaker 1: 38:11

Yep.

Speaker 2: 38:12

So to back up right. So to back up right, anytime I'm working on a bid that is of any extended period of time, like more than a quarter, I would say. If it's a six month to a year bid, right, I ask that question 100% of the time. Hey, have you got? The first question I was asked is hey, is this typically standard? Have you guys been running annual bids for the past few years? Is this something you guys are doing this year? And usually the answer is no. We've been doing this way for a while.

Speaker 2: 38:49

My next question is always okay, do you or is there a way that you've handled in the past market fluctuations where you have a big rejection rate from your carriers on a lane because something unexpected happened, whether it's, you know, a hurricane for a month or whatever, to you know, changes and import tariffs, who knows? You just ask that generally like, hey, because if they've been running a year bid, the thing you almost know for sure is nobody's able to predict the rates accurately for a year. There's just too many things that can and do happen across a large number of lanes. So, and I'm literally I have to do one this afternoon and I'm in the second round and I asked that question and the one we're doing starts in July and goes all the way around. So even with rate cast, I can only go out 12 months. So even with you know the best tools available, I can still only predict a year from now. This doesn't start for two months, right? So, like, I'm still never going to be able to definitively guess this.

Speaker 2: 39:44

And then the way I always say this and I think it matters how you ask this and explain it is I frame it as a benefit for them. I go well, like hey, like I know you guys don't want to be given a lot of loads back in any way. Like that just creates more work for your team. How have you guys handled this in the past? Like, do you have procedures? Is there a time to request rate increases, should they occur? I just want to kind of understand how you've been doing this Because, again, if I'm going to give you a rate, I want to stand behind it for a year if possible.

Speaker 2: 40:13

But in worst case scenario, like what has happened in the past and in this one, they're like yeah, like usually once or twice a year, we'll accept a rate request for an increase If it's justified, and we see that in the market we will grant them most of the time. Sometimes we don't. I'm like, okay, because again in the one I'm doing rates drastically changed from summer into winter and it's like a flatbed one. I'm like, okay, well, like then, at least I know I want to make sure I don't have to request this until the fall or in the winter, when rates might drastically change to things no one knows, right, I don't know, maybe steel production in the US doubles or triples some miraculous way and like all of the capacity gets absorbed because we don't bring it in from import. Who knows? Right, yeah, so I kind of try to factor that in and I always ask that upfront.

Speaker 2: 40:58

And the reason I ask it upfront and this is important, not only that you ask it, you write that shit down in your CRM, who you talk to. When you asked it, what they told you. So you got that date, because if I've got to ask a request in whatever December or November, like I can go back to that person and reference that conversation. Hey look, we're seeing a huge change in this lane. It's up 40%, like we just we can hold it for another week or so, but we just can't take this many losses for any extended period of time.

Speaker 2: 41:31

Remember when I asked you this in June, prior to the bid, you had said once or twice a year you do this. How can I go about that? Because when you can reference to the person that told you this, when they told you it and how they told you it, it makes this conversation a lot smoother to resolve rather than just going and sending an email like I've seen people do. Hey, I need an extra thousand dollars on this lane. No matter how that customer feels about that lane they might even know that's true. They are going to be incredibly irritated that they got an email about their bill going up. It'd be like, hey, my gas bill's 80 bucks a month and all of a sudden my gas company sent me a $400 bill. Like, I don't care how justified that is, you are going to be angry. You got to present the context and the understanding before you ask for it.

Speaker 1: 42:12

So here's actual verbiage that we had in this contract. That we have in this contract. This is like a sub paragraph under the pricing clause, but it's in the event that there is any catastrophic occurrence so that's like your hurricane Right or extreme changes to market conditions occurring prior to the annual pricing revisit Broker will provide a 30 day written notice to. Broker will provide a 30 day written notice to that these events deem an increase to be the you know. Yeah, I won't read the whole legal, but basically like, if there's an, if there's an Isolated incident or if there's extreme market changes, we can we have a 30 day when we have 30 days now instead of a year? Um, so then you got to go through and say, like what, how do you define extreme right versus, uh, you know whatever? So we had to go back and look at when we did this last year. Um, what, what did what was forecasted versus what actually?

Speaker 2: 43:11

when was it done? Last year.

Speaker 1: 43:12

It was like last fall, because it was um okay, so you got about half a year left.

Speaker 1: 43:17

Yeah, so it's. It's a three year contract with an annual pricing revisit scheduled in then with a 30 day like protective clause if there's anything extreme. So they want you to. They say, hey, we want to partner for it for three years, we want you to price in one year chunks and if anything is out like it's way off, you know you have a 30 day 30 day waiting period to revisit in those extreme events, which I think is fair. But I also would kind of. What I don't necessarily like there is that the customer pretty much has all the control in that situation, right, like. So you know you feel like, yeah, we have three years, but what's the stop that from just being like no, I'm not going to use you like somebody else, we don't have any recourse, right, same thing if we want to increase our rates the next year and they say, no, I don't think so, we need somebody else.

Speaker 1: 44:17

No, I bet there's some recourse in there for damages, since the fact that, like you're leasing trailers on their behalf, there's probably some company who just decided they didn't want to, didn't want to, uh, uphold their head and uh, we, we try to um send them a bill and they're like, nope, like basically, what's your attorney say, what's that? That's all basically not not worth. The legal sent them a bill and they're like nope, Like basically trying to say what did your attorney say?

Speaker 2: 44:39

What's that?

Speaker 1: 44:41

Oh, basically not worth the legal fees. Yeah, yep.

Speaker 2: 44:45

So well, that's the other question. It's like can you get it? Even if you win in court? Is it worth spending to get it back? Like now in this scenario, right Like knowing they want to use one point of contact, knowing that you've got trailers all over their property, knowing that some of those trailers are likely loaded with their commodities. Right Like, even if they did want to stop, there's a cost to that In time getting a new company. In getting it through bid, they might pay more, they might not get the same service. Like there's a lot of risk for them walking away, even though it can happen to your point. So I wouldn't say you have no leverage. The way I would frame this back to them is listen, we had some change over in personnel. Like was there a personal relationship with that agent?

Speaker 1: 45:28

Oh, yes, I'll tell you through what my, my strategy is. That, I think, is a best practice and we can talk through it. So and this can apply to any bid that's not going as planned is you don't want to go at it and just say, like our rates are too low, we need to increase them, right? It's the same way that you have a conversation with any customer about prices. You want to set the stage and give perspective as to why you are either asking for more money or why you're asking to change something, right?

Speaker 2: 45:59

So, and here's the other thing- and always do that over the phone.

Speaker 1: 46:03

She still hasn't told this customer that she's like intending that she's resigning, right? So it's like there's a whole bunch of stuff. So we need to go into it very delicately like, hey, we're going to lay it all out here, we're going to explain exactly what the situation is here and you have to admit some some fault, like we. You know this was definitely a responsibility.

Speaker 1: 46:26

Exactly Like you know we, we definitely miss, you know, misestimated, and we can explain like the reality is um, this individual is struggling to work independently, really to succeed and to develop, is going to really need to be in in a, in an office setting um, with oversight and supervision, and, you know, guidance and hasn't, you know, does not have that right now. And, um, you know you know we'll take. You know we does not have that right now and you know, you know we'll take. You know we're going to take ownership on, you know, agreeing to this situation and this contract.

Speaker 1: 47:05

She takes ownership on miscalculating what the market was going to look like, with the whole goal of like, hey, we want to serve you, we want to meet the original goal, which is to have a cost efficient, single source solution for you, and then we believe we can do that. We just seem to. We're just asking that we can, you know, sharpen our pencil and revisit the pricing for this to be worth everybody's time, focus and energy, and I think if you can go into it with that, it's a win-win for everybody. Customer still gets what they want, just at a more realistic rate, which is still cheaper than if they didn't do this altogether. They don't have to change providers and we can actually get the pricing that we need. So we're not asking for a ton, but just enough to put us in a fair pricing level, because they're getting a deal on top of a deal right now and they're the only one that's winning, and that's probably why they were happy to give 100% of their business to us.

Speaker 2: 48:06

And I think I'll boil that down into like first principles, three steps take responsibility for whatever it is and, however you do it, Reassure them that your objective is still to fulfill the agreement and to get done what you committed to doing. And then always bring a solution to the table, ideally more than one right. Hey, this is on us, this is why it occurred. Want to let you know full stop, we will take responsibility.

Speaker 1: 48:31

Secondly, our objective I want to pause right there because that is a principle that I love and I always in the army. I use this all the time with any of my junior leaders or anyone that I'm in charge of, and I always say, when I, when they first start, when I do like a you know, I've called it counseling that's kind of like you're like, here's your expectations I always say, if you're going to come to me with a problem, I welcome that, but I ask that you come to me with that problem, that you come to me with possible courses of action or solutions to that problem.

Speaker 2: 48:58

Well, going back a second, there's nothing that irritates me more than when someone comes to me with a problem and they're blaming everybody and taking zero responsibility Because now I got to spend twice as much time going. Is it really everyone else's fault? Did the carrier really do all this? Did they really have all the right information? Did you really ask the customer for everything you should have? Did you get everything the customer sent you to that carrier? Did you get it to him in a reasonable amount of time?

Speaker 2: 49:21

You mean to tell me, in this entire scenario, there's not one thing you could have done differently or more effectively the next time? That would have maybe avoided this? Because I think people talk about growth mindset Like all that really means is when something goes wrong, you first have to look inward before outward. Even if it's not just you and there were multiple people that did things you can't change what anybody else did or ever going to do. The only person you can ever change is yourself, and you can't learn from what went wrong unless you first look at.

Speaker 2: 49:52

Even if I ended up and I wasn't at fault as to why it happened, I need to learn how I could prevent that thing from screwing me next time. And I can't learn unless I look at myself and take responsibility, that, no matter who's at fault, what can I do differently to prevent the next person that's at fault from screwing me? Right, yeah, and you can't learn unless you take responsibility. Unless you take responsibility, so like to me, like that's your first. And also you go to a customer and you're blaming the market carriers, them, the company you work for this, and that they're looking at you like so where are you on this? You're just this innocent victim that put the whole deal together and somehow you're just, you know, sitting in the corner like, oh my God, it's everyone else's fault. People can see through that, they can sniff that bullshit out from a mile away and they're way less likely to work with you moving forward unless you own up to it.

Speaker 1: 50:41

Right, and then again, what's that book with the old uh fbi negotiator that we talked about uh?

Speaker 2: 50:48

chris, voss, chris. What's the difference?

Speaker 1: 50:51

I think yes, so he. I used to have his little. See if I still have his cheat sheet at my desk here. Um, there was a uh, yeah, I do. It's like takeaways from his book. Um, he had a yeah, neutralize.

Speaker 1: 51:08

The negative is what he calls it, and I'm just reading this verbatim, but he uses the phrase uh, look, I'm an asshole, if you remember that one. Basically, you have to say like, look, we screwed up here. Like you, it's. It legitimately neutralizes that instantly, because there is no, there is no doubt in your customer's eyes that you're taking responsibility Correct. Whereas, like, if I go in and I, like you just said, if I just start giving problems first of all, when someone comes to me, like you just said, like nothing bothers me more than that, right, if someone comes to me and I've had this happen in work situations where someone comes and just starts saying this is screwed up or this is messed up, and that said, I get frustrated because I'm like my head goes right to like what did you do wrong and why aren't you like admitting it? It speaks to your character. The reality is you have to learn that skill, right.

Speaker 2: 52:02

Well, it's funny. As a parent, right, the first thing I do, right, when my daughter does something and I know she did something, she knows she did something she wasn't supposed to is I don't get upset and I calmly try to get her to do that because there's a fear, right, like hey, if I tell you I did something wrong I'm going to get yelled at. I know I wasn't supposed to. You told me, right, like my daughter knocked, like two flower vases over in the living room the other day and my wife's like don't move the big couch, pitch couch pillows in front of the TV without me because, like you might knock a lamp over something. She did it.

Speaker 2: 52:34

My wife walked away when I was in the office so I ran out and she just looked at me and I could see she for sure knew she did what she did was wrong. She looked at me, knew she wasn't supposed to and whispered like do we have to tell mommy? Cause? I'm sure my wife told her like, right before this happened, right, and I'm like, honey, it's okay, like I'm never going to be upset with you for admitting when you do something wrong. The important part is you understand that, you learn from it and you don't do it again. Me yelling isn't going to help you learn, it's just going to make you scared and you're not going to gain anything from it anyway.

Speaker 2: 53:08

And it's the same thing in a business context. Right, like the customers, again I've been yelled at for my customers in this conversation, or I've called them and like, hey, like this is on me, I absolutely thought I checked this truck, had this right equipment. I definitely missed this piece. I know they got rejected, I know it was an important load and I know you probably got six emails and three phone calls yelling at you already. That is for sure on me. I've gotten literally yelled at. But I also know, even as scared as I was to make those first calls every single time on the other end of it, when that person calmed down later that day or the next day or two days later, they appreciated me owning up to it and they trusted me more moving forward, because they know everyone knows everyone makes mistakes.

Speaker 2: 53:52

Not everybody does is take responsibility for the shit they make mistakes for, and that is character and that's what people look for in people they do business with. Everybody's going to screw something up. Not everybody takes responsibility. So when you do that, you set yourself apart and position yourself to work towards a solution and, like in your case, like I think that's exactly how I go about it I think I would really think through how I frame the first person telling them they're leaving and I think you're right, as in like hey, I bit off more than I can chew. This is on me.

Speaker 2: 54:23

I thought I was going to be able to oversee all of this, but the reality is is I'm going to need more administrative support to provide the service you expect. I don't want you to get less because I made a mistake. I think the service is the most important Customer's likely going to agree. Then it's like well, okay, can we review this and possibly resubmit some rates and subjections so that we can give you what you're expecting in a way that doesn't collapse us, Because me trying to do all this your service is not going to be what you expect. I can't pay one or two people to do this all day with me, unless I readjust this in some way, Can I look at this work through some suggestions and bring them back?

Speaker 1: 55:01

Yeah, because I think, like you just did exactly what I'm going to describe, which is like the bottom line up front, or bluff, if you've ever heard it called that is like hey, we screwed up, we'd love to continue doing business with you, and in order to do that, we're going to need to revisit pricing. It's a bottom line, up front, right, so there's no sugarcoating it or any of that, and then you can break it down. You're not?

Speaker 2: 55:24

burying the lead all the way in the back going well, this and that, and I think like the admins and the other people using the computers and another person might cost me like a thousand bucks a week. And then I got to go into the office, so like I might need like one and a half people, and then you know like Pierce is going to have to deal with a little bit of insurance. Like no one wants to hear all that shit up front, they just want you to tell them directly to your point, right up front. Hey, it's probably going to cost more. I don't know what that number is. Let me see what it'll take to actually support your expectations. And can I bring that back to you for us to discuss?

Speaker 1: 55:57

Yep, precisely so. And then you know you can. You can also talk through like hey, I understand, like if this isn't going to work with you and we're not the right partner we're not a good fit.

Speaker 1: 56:09

It's on me to understand, that's on us. You take an ownership, right, but it it sets the tone and the expectation that that, like you, are there to work for them, not just take from them, right, and I think that is a key way it's all about. Like we can't tell you exactly what to say in these situations because they're all situationally dependent. It's the overarching principles here are like going into it with a mentality of trying to reach a solution, not just take from that customer. So, and the reality is too, like if you screwed up on your pricing and you underbid, the customer might tell you to F off and you'll never haul a load.

Speaker 2: 56:50

You got to be able to accept that.

Speaker 1: 56:52

And that will serve as a learning lesson for you in your career.

Speaker 2: 56:55

Here's one. Here's a similar conversation that I see a lot, and this is a scenario where the broker is not at fault. The customer caused the problem. But you need to have a similar conversation, right? Yeah, customers that are telling you flat out they want the cheapest truck you can find all day. Then, three hours later, they're calling and screaming at you because the truck's not there at the exact moment they expected it. Right, and they do this over and over, and it's probably one of the most common things brokers deal with, right? What I always do in that scenario is like I'm going to pick up the phone and have a conversation and I'm going to say hey, listen, I understand you're frustrated. This guy's a little late. Yeah, this is ridiculous. This guy's supposed to be here at one, like you told me. He's going to be here at one. Hey, I totally understand that.

Speaker 2: 57:40

But what I do want to explain is that when I am paying the lowest price to move your shipment which is what you asked there are going to be scenarios, more likely than not, where the guy's going to be late. Here's why they're late Because, in order to run your freight cheaper than what a different carrier would run it for, they are booking their loads as close together as they can, which means that that last place that guy's unloading at he was supposed to be out of there at two hours. He didn't do anything wrong. That facility didn't unload him for three hours, which made him a half an hour late to your place. The carrier is doing everything he can to meet your expectation of being the cheapest but at the end of the day you get good, you get cheap or you get it fast. You get to pick two of the three and if you want cheap he's not going to be fast, or he's going to be cheap and good but not quick, like there's something that has to give.

Speaker 2: 58:33

And you can't scream at drivers that are trying to make your ridiculous rate work every day and then yelling at them because they can't drive faster and do things that they can't predict. They're doing the best they can to understand when they expect to get delivered and to drive there. But you've driven places. I'll bet you've gotten to work late a few times in your life and it's the same route you take every day and went home because somebody got into an accident, because there were more traffic lights, because somebody was driving slow in front of you, this guy's driving 80,000 pounds down the road. Like, let's give him some grace, let's have some understanding and let's work towards something that makes more sense.

Speaker 2: 59:06

If you need these guys here, one then one. I either need a little bit more money or I gotta book them earlier. Right, like we need to work together to get you what you're looking for, because just yelling about price and then yelling you're not getting the service isn't going to help you solve your problem either. Whether it's me or another broker. You can fire me today, but the next guy you get you're going to have the same conversation with tomorrow. So, like, can we work together to understand how these things affect each other? Now, I usually get more business from them and sometimes they'll give me more rate.

Speaker 1: 59:39

Sometimes they just kick me out the door and I don't work with them again. But you know, this reminds me of and I'll wrap up with this is we did an episode on all about how to have hard conversations, and we get into more specifics. Like you mentioned, late pickup, right, or you know, late could be late anything delivery, whatever we talked about breakdowns, storm delays just claims, anything Right when, when things don't go as planned, there are definitely tactical ways that you can go about having those conversations in a manner that will not put you in a casket, metaphorically speaking, with your customer. So definitely check that one out. I think it's very, I think, will. It's a great tool to have in your uh, in your portfolio, as you, as you go down through your career, as you go on through your career. So definitely check that one out. I think this was a good, good discussion. I'll definitely have to keep you posted on, uh, how this all pans out, along with the other wild scenarios. So you got any?

Speaker 1: 1:00:52

any other thing you want to wrap up with.

Speaker 2: 1:00:57

Not particularly All right.

Speaker 1: 1:01:01

Final thoughts.

Speaker 2: 1:01:02

Whether you believe you can or believe you can't.

Speaker 1: 1:01:06

You're right, and until next time, go Bills.