Survival in a Changing Market | Final Mile 106

Speaker 1: 0:19

All right, welcome back. It's another edition of the final mile. We got some good Q&A here today from our audience. Mix of this comes from email questions, youtube comments, and I did pull one off of Reddit too I thought it was. It was an honorable mention that I figured we could give our take on. So, but first make sure to check out all of our other content. There's a whole searchable library on the website. You'll also find the freight brokerics course in there If you're looking for a good training option. If you're starting a brokerage, you're looking to help train your team, and please check out the sponsors in the description box. That always helps this channel. So, ben, we're going to get right into it.

Speaker 1: 0:58

Our first question someone had emailed us asking is demand for freight brokers declining? Are small brokers still relevant and what does the future look like for our role in the industry? So the first thing I wanted to say here and we haven't talked about it in a while, but we've mentioned it a handful of times is that one of the greatest things about our industry is that the small guy versus the big guy. There's really not a whole like. You don't have a whole lot of competitive advantage if you're like the big guy versus the small guy. Further, you might actually have a harder time running a scaled out company as profitable once you add that overhead in as a smaller company, but in return you also might be able to afford some of the better tools out there. So I wanted to at least start off with that. But what's your take on the demand for brokers and what kind of dictates when we come into play?

Speaker 2: 1:46

That's the first thing you said, because I thought about that a lot, right, and it was like working at a really big brokerage. You have some advantages, right, like there's more support, there's readily accessible legal advice on things, the tech carrier base training and just your tools, right, and brand recognition for sure. But there's a huge disadvantage from a broker's point of view, meaning, like when you first try to find prospects, you're actually competing with the other 5,000 people that are there that are already tagging those companies, working them or already doing business with them.

Speaker 2: 2:25

So it's like there's like a giant moat around the entire business where, like, you've got to first find a niche or a way to just literally just get the ability to call a company Right. Like that is like a giant hurdle and its first hurdle before you can even start calling and even doing business. Hurdle. And its first hurdle before you can even start calling and even doing business when smaller company it's like blue ocean you can call anybody to do anything, to ship anything at any point in time, no friction, little less brand recognition and some of the other. I mean there are some disadvantages in regards to, like tech, some support and things like you're just going to have a little bit less resources. But, like to me, I mean I definitely prefer the smaller companies over like the gigantic ones, like 100 million. If you're an actual broker and you want to go earn income and do the job to me, I'll take that all day long.

Speaker 1: 3:16

Yeah. Now the other part you know we and this actually came up today is like when do brokers? Because he asked, like is the demand dropping right? And we, we do kind of uh flux with the market. So like if you look at post-covid versus now, five years later, like the initial post-covid, right after the shutdowns and everything went haywire and the market went wild. You could a new broker could hop in and start like getting customers and quote on stuff and because everybody had a hard time finding a truck and that's where he came in. So like these contracted carriers started rejecting all their contracted lanes and said, nope, I'm going to go out there and chase higher paying loads. So then what happens? All that freight that was already pre contracted falls to the spot market. And that's where brokers are like all right, here's a load that's got to go today or tomorrow morning. It's my job to go search the market right now and find a truck right now for this load. And when that happens we come into play. And if you look at the market now, where it's a softer market, a lot of companies are trying to weed out some of their onboarded brokers to refine and kind of get their bullpen of transportation providers down to a core set of like a dozen or less, depending on what it is like I had. So basically to answer the question, the demand is is it declining? I think it's it's not declining. It's probably just kind of flat, like plateaued right now, but it always kind of moves with the market.

Speaker 1: 4:38

I had a guy that was looking to come join my brokerage that you know, today he was asking actually it was yesterday that was looking to come join my brokerage, that you know today he was asking, or actually it was yesterday. He was asking like do you guys work with, you know this specific company? And I was like, nope, we don't. You're in luck, like they're available for you. And he's like, no, actually I'm not in luck because they're not onboarding new brokerages. I was hoping you guys were already in their system. And I was like, ah, like that's a. That's a pure example of like a lot of companies are saying we're not adding anybody right now because we're fine, there's less problems right now. And when there's less problems, let me reverse engineer that when there's more problems, there's more opportunities for us and the spot market as brokers. Would you do you have any other insight to that? It's pretty much our doctrine that we've spoken for years on this show.

Speaker 2: 5:26

Yeah, I think at the end of the day we talked about this in last week's episode is like I was telling you I was talking about that story from um uh war dogs, right, where he's talking about, like just they're competing as a small business, yeah, against, like you know, hundreds of billions of dollars, you know size companies. And he's like look, man, this pie is so big that, like you don't need a slice, like you need a crumb, right, and the pie in our industry is roughly somewhere between 800 billion and a trillion dollars.

Speaker 1: 5:50

Hundreds of billions of dollars, yeah.

Speaker 2: 5:52

Big or small, growing or smalling, to me like what we're trying to be able to get out of it and to be successful. And, honestly, like almost any size company, like there's always opportunity. You just have to look a little harder. Sometimes you have to find a more specific of a niche, but, like there's always a problem, there's always somebody that needs more help. It's just a matter of putting the effort in to find it.

Speaker 1: 6:12

Speaking of niches, our next question leads right into that. Someone asked I'm a broker looking for carriers to handle two to three pallet frozen LTL loads weekly Any tips on connecting with reliable owner operators or carriers? So that is definitely a niche and it's a nut that I have rarely been able to crack, which is that reefer LTL. The first thing I would tell you is, if you're looking at frozen LTL, your traditional LTL carrier is likely not the option. So this person's at least looking in the right direction. They're saying hey, I want to go find a full truckload carrier that can partial a bunch of frozen things together and that's a very good niche.

Speaker 1: 6:54

The tough thing is finding enough freight to fill up a full truckload where it saves cost on the shipper and it makes sense for the carrier that they're going to have enough money in it to haul it and still be profitable. So that's why there's consolidation carriers that have I've worked with a couple over the years where that's their niche is they try to take all their costs. They basically they're a co-brokerage Right and they try to take all their other customers who are brokers that have this reefer LTL and they try to consolidate it and then put it on their carrier network and match it up and make money and save money for the customer at the same time. So also you've got companies like Expedite, all who have leveraged the smaller truckload market of temp control with your refrigerated sprinters, box trucks, straight trucks, things like that, to save on the full truckload cost and still be able to give that LTL size shipping capability. So any other thoughts on the Fresh X?

Speaker 2: 7:54

Fresh X is a pretty decent one. I think the guy's name is Lance who's running that company. I've met with him a few times. They're doing similar things to Expedite All, except it's primarily going to be like your small refrigerated trucks, able to pick up a pallet or two, being able to book similar loads like this, and it's a really good platform to start looking for carriers out of it.

Speaker 1: 8:16

Yeah, the biggest risk that I've seen with people that try to do reefer LTL and they try to do it all in-house themselves, is that they might say, well, I've got this one customer that does ice cream and another customer that does frozen seafood and another customer that does frozen whatever, and the temperatures are all similar. But the issue comes with the sensitivity during unloading, when that roll-up door is open or that swing door is open and all of a sudden that ice cream got just a little bit too warm and melted and it can't be exposed to that at all right, whereas another commodity may be able to be a little bit more resilient during its loading, unloading time. So it's it's tricky, there's a lot of risk there, but there's a lot of opportunity as well.

Speaker 2: 8:56

And here's the other one. The other one is that's on the frozen side. But if you're doing like the reefer, like fresh control, like that fresh like, then you can also run into. Certain produce can't be loaded with other produce because one emits whatever chemical that actually ripens the other one Ripens it, I think like tomatoes and bananas are one that I think I remember that like if you put them together, like, literally, potatoes and onions are two that definitely you don't want to put together.

Speaker 1: 9:22

I remember you just put them on your, put them in the same bowl on your counter and all of a sudden, like your, your onion starts growing like Sprouts, sprout, whatever out of it, and it's like, yeah, you're, you're, you're right. I remember when we had uh produce blue book on an episode in the past they talked about it's the, the certain chemical that's emitted from one ethylene.

Speaker 2: 9:43

I think. I think it's right, I think it's ethylene from tomatoes is the one that ripens a banana faster. Again, I'd have to go back and look at some of the very specifics, but there are definitely things you can't load without compartmentalizing.

Speaker 1: 9:54

Think about the sensitivity of something like avocados right, like you always look for the perfect avocado in the store. Imagine if you got there and they're all mushy like too ripe. You know it's bad news, so all right. Next question as an owner-operator wanting to transition into brokerage, what's the best way to get started? And I think further on. The guy said he had been. He had been driving for like five years and wants to get you know away from being behind the wheel and more behind the computer and on the phone.

Speaker 1: 10:28

My best advice to anybody that's looking to get into brokerage, that it's worked in trucking before, is, first of all, you have a leg up on anybody that's brand new, because you understand what it's like to drive. So your communication with carriers is going to be very, very, you know, more relatable than the average broker out of college that has never done that job before. What I would tell you, though, is it's a totally different world, and you really need to learn how brokerage works versus just operating a truck. So definitely educate yourself. But then, if you've hauled in or out of certain facilities and you've made some contacts there and it's not against a solicitation agreement that you have, I'd start with that Like if you're, if you're, delivering somewhere.

Speaker 1: 11:00

I'd just be like hey, start asking questions in person Like are you guys, have any any issues outbound with with people not showing up, looking at branching out into the 3PL side? And I've got you know would love to grow a carrier network that outside of just me I might be able to offer you additional capacity and remain as a single point of contact for you. Outside of that, you're pretty much in the boat as everybody else. You're going to have to do a lot of prospecting, learn what the brokerage side of the business looks like and get to work. Any any take on that. I mean we coach a lot of folks from TIA who they're in this boat. Right, they've managed a small fleet or a single truck for a while and they want to branch it you know, branch off into it.

Speaker 2: 11:41

And also, like I feel like the other advantage for folks that were driving one is that, like you've probably got a pretty good idea of the places you didn't want to load at or unload at, right. Well, like that's a pretty big signal that other carriers don't want to go there and that if you keep pulling on that thread, there's a pretty good likelihood that that shipper is always having a hard time getting new carriers because they're not managing their operations well Too long a dwell time, too long to load, not a great facility to load at right, Like, when those things happen, that means that shipper probably has more turnover in their direct relationships with carriers, which in turn, means they're probably using more brokers than another facility, right? So there's signals that you likely probably already know that you could use to your advantage just by paying attention to honestly, like think about the negatives, Because if it's a negative for you as a driver, it's a negative for other drivers. That means there's less likelihood that shippers able to retain their carriers long-term. And also, I had a carrier that worked for me not carrier, but like a driver right, that was a broker. We interviewed him the one time and like when he would get on calls with facilities he'd gone. Being able to speak from that perspective allowed him to get rapport so quick. He's like yeah, like I know your facility really well, Like I was there, I could tell you exactly who I dealt with and what some of the issues I ran into.

Speaker 2: 13:01

So it wasn't even just getting loads to move, which is, I think, what people think is like. This is where I'm trying to get to. It was being able to give them feedback on like, hey, you know, like if you are still running into the issues we kind of outlined, here's some things that I think might be helpful. And again, hey, not trying to tell you how to run your business, but you might be able to retain some of the carriers you guys are spending so much effort to get in the door and to work with you. Just finessing and changing a few simple things that you might not have noticed from a shipper's perspective mean the world to a driver and might help them actually do more efficient service, faster loading.

Speaker 1: 13:43

Yeah, think about if you're a driver that's picked up at a certain facility on a weekly basis and you could have a conversation like to a carrier, like hey, I know the broker normally says these guys will load from 730 to 330. But I've, I've been able to get myself in there an hour early and they're willing to load me, right. Or these guys have told me on the dock that they wish someone would just drop some empty stage, an empty trailer, the night before, so the the overnight shift can get it loaded and they can come hook it. And brokers never telling you that, right, but you know, when they have those interactions in person with the folks on the dock, you get some really good insight into how that operation works.

Speaker 2: 14:16

There's so many disconnects between what happens at a loading dock and the person tendering their freight and the person overseeing the people on the loading dock right, and just so often the people that are arranging the freight are just disconnected enough from what's happening when it's getting loaded that even just communicating that upstream can add value and lets them know, like okay, like this is a valuable relationship for me to have. It's not just hey, a rate in a truck, it's oh, this person can actually help me understand what makes my job easier, which is, at the end of the day, like that's the Holy grail as a freight broker in sales.

Speaker 1: 14:51

Yep, absolutely All right. Last question I misquoted a load and I don't want to take a loss. What are my options? And more more specifically, this person had mentioned it was a. I think it was an oversized load that was like going to result in a $2,000 loss.

Speaker 1: 15:07

I got a couple thoughts here. The first one is if you made the mistake, you've got to make a business decision here, like either A, you eat it and you own up to your word. B, you tell the customer, sorry, I can't do it. Or C, you find some kind of middle ground in between where you can go back and just with humility, like look, when I originally quoted this I didn't factor an x, y and z and unfortunately that's where the market is. I I can't move this at the current rate. Do we have any wiggle room here? If not, I totally understand. You know I'll, I'll take a beating here and I'll own this myself. But just having that humility and that, that honesty with a customer I think can help build trust. Um, what are your, what's your take on it? I mean there's some danger.

Speaker 2: 15:54

The higher value stuff I would make C my A option meaning like that's the one I'm leading with which is first taking responsibility, admitting to what happened, what you saw or didn't see or missed when quoting it, and then immediately coming back with a solution, like have that in your back pocket right Of like hey, this is where I thought it was gonna be, this is why I thought it was gonna be. This is the thing I miss, and I just wanna be totally upfront with you that like that is on me. Here are my thoughts on how I think we can resolve it. Are we able to meet somewhere in the middle? Would that be a huge inconvenience for you? And if they come back and they're pushing like like I've already 10, they're just you. I've already canceled all my other options, like I need you to move this or I'm in a bad position.

Speaker 2: 16:40

Now your last option is like okay, great, well, like I will help you out with this one. What else do you maybe have that I could move that might help me make up for the $2,000 loss? Do you have two or three other loads I can move at maybe your target rate, which helps me at least break even on a weekly basis? So, instead of moving one load at a $2,000 loss. Maybe I'm moving five loads and it's break even across all of it. And yeah, I'm going to have to work harder to cover the other four loads that are theoretically just making up the two grand I lost over here. But now that's a win for your customer. It's a win for you because you're doing more business with them and you're showing them that you're willing to stand behind the things you're saying and admit you're wrong when you're wrong and like to me. That's how you can wrap it up as best case scenario in a situation like this.

Speaker 1: 17:22

Absolutely Good questions, good stuff. Keep sending them our way Again. You've got the website with a contact form. You can email us info at Freight360.net, check us out on YouTube and leave us comments. We try to respond to as many as we can and we'll see you guys in the next Q&A session here. Final thoughts, ben.

Speaker 2: 17:41

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

Speaker 1: 17:45

And until next time go Bills.