How New Freight Brokers Win In A Loose Market | Final Mile 123

All right, it's the final mile, our listener QA session here, where we answer all of your questions, send them through YouTube comments or on our Facebook group, um, or just hit the contact form on our website. Make sure to share us with your friends, leave that review, the whole like, subscribe, share thing, and uh check out the sponsors in the description to help support the channel and check out Frey Broker Basics too. That's a good training option for you. Um, all right, Ben, our first question today. Do you think or do you still think there is enough freight out there for new brokers to make money? Um I love your the analysis you've used of is it War Dogs, right? Such a good one, right? If you look at the sheer size of the freight, the freight industry that's out there, it is so massive. And when you look at the amount of players in the business, right, we've got less than 30,000 um brokerage companies operating in an industry that has what is it, like 800 billion dollars worth of freight spend or something, you know. It's it's massive, right? And sure, you've got your your mega brokers out there like your CH Robinson and TQL and whatnot, but um if you think about it, if you can just get yourself to a place where you're more effective than the 50 percentile, right? The 50th percentile. So like if you're if you're just making enough extra calls or refining your skills this way, or improving your ability to network with carriers and source them a little bit better than just the sheer average, right? You've now wiped out half your competition. And your war dogs analogy is like you don't need a whole slice of the pie, you just need some crumbs, right? So you can you can legitimately you know get into this business, find yourself a good niche to lean into, get a couple of solid customers over time, and that's gonna be really your your bread and butter, and then you keep doing your prospecting activities, and you'll continue to thrive and and grow. The reality is the amount of turnover in our industry is is so uh high that your competition, it's like a revolving door. Like they they keep coming in and they keep leaving, right? So if you just stick with it and do the right things, you're eventually gonna be more tenured and experienced than the average broker that's out there. So yes is my answer. There's enough freight out there. I think people have this recency bias of like, what what did like 21 and 22 look like? And literally, like, you didn't need to have any skill. You didn't. Like you just like any customer would take your call because they had problems getting a truck, right? Rates were so high that you didn't really need to have a lot of business to make money in a margin-based industry. So I think that kind of like masked the idea that there really were a lot of subprime brokers out there when it comes to like their level of competence and their level of skill because there was just so much to go around. And now, yeah, we're in a we're in a very loose market compared to that. But this kind of thing like has historically happened forever. Like it's just a more elongated version this time. But like I, you know, I remember seeing like um through the the the 20 teens, like market cycles and like this stuff happened. Like people would come in when the market was hot and they would naturally get turned over and washed away when the market cooled off and they just weren't good. And those that actually put in the effort and the time and do the things that we say um end up succeeding long term and being able to ride these the the roller coaster that the market can be. What's your thoughts there?

Yeah, I was looking, I could only get the paraphrasing of that quote, but he's like, people assume he's like the defense budget, because he's talking about their going into defense contracts. Like, we go into shipping contracts. Like, there's pretty pretty good analogy, but I always thought that's why it always stuck with me, right? And he goes, People assume success means taking a huge slice, but that's the wrong way to think about it because the pie is so enormous. To your point,$800 to$900 billion is the pie and freight. Even the crumbs falling off the edge are worth a fortune. You don't need to dominate the system or win the biggest contracts. You just need to position yourself to collect a few small overlooked pieces, and that's enough to build serious wealth, right? And to your point, like there's plenty of business out there. And to be honest, most of the competition is mediocre at best, even at some of the biggest companies. So to actually grab those crumbs, honestly, like you don't need to be the smartest person in the industry. You don't need 10 years of experience. Like you can just outwork the competition and make more phone calls and grab enough crumbs to build a significantly successful freight brokerage. Yeah. Like you don't need the name brand companies, you don't need to land Walmart or all grandes. You probably don't want to land Walmart or Coke Foods. Like you don't, you don't even want them because like they're not even serviceable from a small company and they're not even the most profitable accounts, right?

You know what one of the things I love about this industry is over the years, I have learned about so many cool smaller companies and like just commodities that I never would have learned about if I wasn't in our industry.

Our interview with Freightbroker guy.

What's that?

Our interview with uh I forget what his moniker is, Freightbroker guy that moves horses in the equestrian world. Yeah, right. Like literally makes a living just servicing this very small niche that like most people are completely unaware of. And to your point, like that's what I always thought was so cool about this industry is like one, it's super interesting for me to just be curious and learn about these things, but like it's also really fun to coordinate and work on some of these projects, whether you're like literally shipping stuff to like concerts, right? Like you and I have done that or worked with brokers that have done that. Whether you're moving super valuable horses and everything they need to the Kentucky Derby, which is pretty cool to be involved with, right? Maybe like I've some of the core projects I was quoting and looked at were like stuff with a DOD, like literally moving a rocket engine from like one military base to NASA so that they're gonna literally put it in space, right? Like again, just being involved in some of those things to me makes it really fun to kind of work in to like super expensive art that is like white glove. Like I remember the one, probably the most interesting thing I ever quoted. I don't think I moved it, was we moved a dinosaur fossil to the Smithsonian. The problem was nobody could figure out what the value was because it kind of was priceless in a way. And it all of the work went into actually insuring it and what that commodity was, not necessarily finding the truck or the right carrier. So, like, there's so many cool things to do and to learn about in the industry that, like, one, they're profitable when you spend time to learn them. And two, like, I just always found that super enjoyable to kind of learn and be involved in some of that cool stuff, whether you're doing a troop movement for you know 150 trucks from one base to the next for some deployment, or you're shipping fireworks for the 4th of July to some really cool event, and like you've got to work through all the ins and outs of it.

Yeah, I'm I'm thinking like some commodities over the years. Like I learned a lot about heat exchangers. Um that like there was one we did, they were they were on nave for Navy ships, and we even had like we did it, we set up a warehousing thing at my old company, and I all the old like so this this company made heat exchangers for you know various things, right? Um But because they had a contract with the Navy and they had parts and things for like old ships that are no longer in production, they had to keep like old wooden casts in case they ever had to make a repair part. And like just seeing how like the old casts work and how they had to get stored and all that, what the value was, that was cool. Um, apples, like I remember learning this is a few years back, like how apples basically can get injected and like fall asleep so they can be available year-round. I don't remember we used to have uh Blue Book on to talk about different commodities. Potatoes, I went to Potato Farm. I've probably told this story that does potato chips, but like seeing like how they're harvested, where they're stored, the conditions, um yeah, like really just some of the craziest stuff. And then like we had a guy um that he did the um the Raptor engines for SpaceX, and like he sent me a picture like I don't know, a month ago of like a conestoga loaded up with them strapped down. I was like, dude, that's crazy. That thing's going to space, like it's insane. So yeah, that's the kind of like just it's fun, right? And there's so much out there, but and again, when you're new and you don't know what you don't know, you're like, all right, I gotta go move like lumber and steel and Walmart and grocery store. It's like, no, there's so much out there, so much out there. So all right.

Well, here's the thing that is cool too, is when you're new, you don't know anything. Which means every day you get to learn something. Like, there is a huge upside to just being curious and not knowing anything. Like to me, like that was the most fun aspect of getting into the industry. I'm like, this is so cool. I'm like, I don't know about any of this, no idea how this works, no idea how this works. But like, that's why we did that episode super early on on prospecting with a purpose, because you can turn your ignorance into an asset just by being curious, being curious and putting in the effort, right? Yeah. Because every one of these shippers is more than happy to tell you about actually how they make money. Where they're less likely to talk to you is when you just want to talk about shipping lanes and what you can get from them. If you call any shipper and start to ask actually curious questions on, like, hey, like, where do you guys get this stuff from? How do you make this? I've always wondered how the potatoes end up in a bag. Like, do you do that all there? Is there another building that does that? Like, how does that actually work? You will have a far better conversation and be more likely to get business, and you will learn a ton. And now you could look at literally prospecting instead of like a chore of you trying to convince people to give you business of like, I have an opportunity to call anybody I want to learn anything I've ever been curious about, about how they make anything I use in my entire life or eat, right? Or anything like service and anything you're curious about, like you can just call that company and talk to them about it in the context of shipping and learn a vast amount of different things on every on any given day.

Yeah. So many opportunities out there. All right. Next question Why are brokers so quick lately to flag or penalize carriers just for a few follow-up emails or calls on loads? Everyone seems ready to freight garb, blacklist, or leave negative notes over normal communication. And it goes both ways. If a carrier asks a broker to send load offers by email instead of flooding text, that somehow turns into a reason for removal. So that basically, um the way I take this is like communicate with people in the way that they want to be communicated with. Because I I don't think that every you can't like generalize the way that every carrier should should talk to every broker and vice versa. Um it goes with customers too. So I think the the main thing here is like if you don't want someone to be texting your personal cell phone about, hey, you got any loads for me, got any loads for me? Don't give them your cell phone and make it very clear. Like, hey, if if you are looking for loads that we've got, um here's our our internal load board, I can get you added to it, or I can get a I can have our TMS send you out a daily list of available available loads that are uh need to be covered still. Like your technology can do that. I had a guy that used to work for me that he's not an brokerage anymore, but like he preferred his carriers with Texum. Like that's how he that and his customers too. Like, that's how he did business. He was all about it being so personal and not feeling like business, but just feeling like a bunch of friends working together. And that worked for him. And then you get other people that feel like it's an invasion of their privacy, or you know, hey, this this uh carrier's calling me too much, looking for stuff, or emailing texting me too much. It's like, well, just set an expectation up front. Like, if you don't, and even on like data now, you can set all of your communication to email only. Like, if you don't want your phone number posted, you can have it go to your email. Like, that's that's a thing that some of our folks do now because um when capacity got super loose, you'd post a load up, and sometimes you get like 30 carriers trying to call you on it. And next thing you know, they're go they're emailing the boss, like, hey, this person's not responding to me. And then they look bad. And it's like, well, I can't field 30 phone calls at once. So set it to email, right? Um, so to me, it's just a communication thing, it just depends on how it is. And like I said, the automation too. Like, if you can create that internal load board or have a load list that gets sent out to your preferred carriers, um, those things exist, right? You can also have like carrier management suite in DAT now. You can set it to like where it only goes to your preferred carriers or to carriers that meet X, Y, and Z criteria. So you're limiting the um playing field of who can actually see the loads that you've got out there. So yeah, I I think threatening people with a freight guard or to put them on DNU is a it's gonna get you a bad reputation. Yeah, just play nice, be nice to one another. We all need each other to make to make this industry work. But you have any thoughts on that on like just communication expectations or overstepping boundaries?

Yeah, I'll just even simplify it. Most frustrations are the result of unmet expectations. And most of the reason expectations aren't met is because they weren't clear to begin with. Yeah. And if you just do that first, then you usually don't run into any of these issues. Hey, my customer expects tracking to be on this load the entire time. When would be a good time for me to reach out? Do you have any issues with that? How do you prefer me to communicate with you? Like just asking, hey, these are my customers' expectations. This is what I got to do. What is the easiest way for me to facilitate that with you? If something goes wrong, do you want to call me, email me? What's the best way to communicate? You do the same thing with a customer, you do the same thing with the carrier. And if you're a carrier, you do the same thing with a broker or a shipper, right? Hey, I'm driving. Text messages aren't great because then I got to stop what I'm doing. Maybe this one prefers a call. Maybe this one prefers a text message. And like I've had drivers where like you get good relationships with them, they're like, hey man, listen, like I'm usually gonna take my reset and sleep till about nine in the morning, and then I'm gonna drive through the rest of the day. So like, do me a favor, don't check call me at seven in the morning. Like, I don't want you to wake me up. Let me finish my reset. I'll give you a call when I'm up and rolling, and then you just make a note for it, right? Like really treating these case by case, I think resolves a lot of these. Because like in some some instances, like they're legitimate and in some they're not, right? Like, hey, I need the POD in 48 hours. Okay, well, talk to the driver. Hey man, like, even can I give you a call when you're lo when you're empty? Okay, great. Yeah, give me a buzz when I'm there. I just want to make sure everything gets delivered. There's no claims, no issues, so I can go and make sure I let my customer know we're all good. Great. Hey, I'm on the phone with this driver. He's there. Can you just text me a picture of the POD while you're still sitting there? Now I have it. I don't gotta wait, right? Like there's so many simple things you can do to get ahead, to avoid these things that I just I don't think enough people actually just sit back and think about it. Like you're just doing business with another person. What would you do with somebody you knew that was your friend? Hey, you're gonna go do this thing. When do you want me to call you? What's the easiest way to do this? And what would be helpful, right? Like that avoids so many issues that people end up yelling and screaming. And I do think freight guards, for sure, are used unfairly, illegitimately by plenty of unethical people that are just frustrated. And I don't think that is right or okay in any way, shape, or form. I do think it also happens the other way, but that's a whole other discussion. For sure, for sure.

All right, last question here. This is about a comp plan. They said, what do you think of this comp plan? It's a$800 a week salary plus commission. Commission is 10% of weekly gross profit up to$1,500, 20% of the$1,501 to$5,000, and 25% if it's over$5,000. Is that fair or no? I will tell you that that the commission plan is pretty on point for a lot of W-2 models out there. The salary, I mean, that kind of feels like in the ballpark for a W-2 role. This is for someone that's brand new, right? That you're they're gonna be trained. Um now I I'll I'm gonna caveat to an experienced broker, then then circle back to this plan. If you're an experienced broker or like you're an agent, like these these numbers are kiddie rides, right? You should be expecting um, you know, a if you're straight commission, like a much bigger piece of the pie if you're coming in experienced with your own book of business, like 70% is what we pay our agents. But they they come to us already experienced and they've got you know a customer base to bring to the to the table. Now back to this plan, if you're the one setting this plan, I would have an expectation on at what point do you need to be past that 10% tier, right? If somebody's doing$1,500, let's say they're doing that under$1,500 a week in profit, right? So let's call it$6k a month, and you're paying out 10% and you're retaining 90% of it, and then you're paying a salary and their benefits and their seat costs and their software and all the things. Is that person costing you money to be employed? Right? Like, what does success look like? And I know uh TQL, I think has done a great job at their training and expectations. I was talking to a guy on Friday who um years ago worked there. I was telling you about it. And you know, he was talking through like we had an expectation to to graduate training to be averaging X amount per week by week number, whatever. And if you didn't get there, that that that was considered unsuccessful, right? And if you can get there sooner, that was considered ahead of your peers. Um I I would always say, like, when someone comes to me and says, like, hey, what size do I need to be to be an agent? And I'm like, we don't have a contractual requirement, but I'm like, realistically, like long term, if you're not doing 10K a month, so call that like 2K to$2,500 a week, like really, like you're you're not making a ton of money, we're not really making a ton of money, and you know, what's the point of doing this, right? Uh, because like$800 a week base salary, and then you're paying 10% commission, like you got to figure out what's your break-even point to cover your seat. And I always recommend anybody that's new to a role that's on commission, figure out what level of production you need to get to to be at least know that you're at a minimum covering your salary and and commission, um, let alone all the other expenses, right? And then how long do I have to get to that point before like someone's raising their eyes at me? Um, so what's your what's your take on on kind of that?

And you know, would you set like a the one question is is the one you put out, which is like does this person have training or is the Company training this person.

Because if the company's training this is someone that was brand new going to work and get trained as a W-2.

Yeah, which means for your first four to five months, right? Like the company is just losing money on you while you learn. Right. Like that's the first thing. So like from the company's point of view, like your first four months, they are just paying you$800 a week or$3,200 a month.$3,200, we'll we'll do, we'll do five months.$3,200 called three grand times five. Basically$15,000 the company's going to pay you and get no return for that.$15,000. Plus, maybe they pay the recruiter, maybe they paid for health insurance. Like maybe that bill's$20,000. Okay. Now that's the number the company's willing to invest in your future to hope that you make it. At$1,500 loads a week, even if the brokerage is at$50 a load for costs, right? Okay. Let's say they move 10 loads at$150 each to make$1,500. Okay, 10 times$50 is$500 the company spent in expenses to make that$1,500 plus your$800. So you brought in$1,500 and the company spent$1,300. So they didn't make any money, like$200, and they still got to recoup the$1,500 over the first four months. So to your point, until you're probably doing three, but probably arguably about four grand a week in gross profit, like the company's really not making money. And also you're going to have to do that for three months before they even recoup the investment in training you. That's why, to your point, at TQL, it's a T12 rolling average. It's not a coincidence. 12 weeks, right, is three months that you've got to be able to hit 4K a week on average for 12 weeks, because that makes up for what the company invested in training you before you get the commission or you get an assistant. And that's why also, even at like TQL, like your point, like I always did kind of like this, even though I definitely have other opinions for other reasons. But it's like, okay, I'm going to pay you four grand a month in salary. You don't earn commission until you make more than your salary in commission, which ironically is 25%. That's the commission split. But you got to make$4K a week in gross profit just to cover your own salary. Like the company has not made any money. They just literally broke even. And that doesn't include health insurance or what it costs to train you and recruit you. So like the break-even for your seat at TQL is$4K a week in gross profit. And you don't earn any commission until you go above that, right? But like that's real economics. Like there's a lot of money that goes into running the company, the licenses, the insurance, the software, the training, like where I can for sure say that when I sat in that seat, I took that for granted and looked at it like they're just making all this money on me. But now that I've spent years on the other side of it and look at the expenses that it takes to put the business together, I'm like, yeah, like I was definitely not making money for anybody, myself included, or the company, until you get over that$4K a week, which to your point, whether you're an agent or not, like that's really got to be your goal. Like, what are you trying to get out of this? I would be far less concerned on what I make or don't make leading up to that. Because the whole point for most people coming to the industry is like, you want to make at least six figures, which is like eight grand a month. So, like, to me, as long as you can survive, just figure the first two tiers at 10% and 20%. Like, that's just your training. And like, you just got to hustle to get out of it because you didn't have to pay to invest in your own business. Someone else did that for you. You got to be able to make up for that investment before you and the company wins. Because, like you said, it's got to work out for both the employee and the company for it to keep going on. Otherwise, nobody has a job.

Yep. So let's say you're doing, you know, if you do 4K a week with this comp plan, right? You're gonna get a hundred and fifty dollars commission on the first fifteen hundred. And then you've got another twenty five hundred being paid. So that's another$500, and then$800 a week, right? So you're at$1,450 a week times 52 weeks. You're making$75,000 if you're a$4K a week broker at this company.$75,000 is not bad when you're entry level at a at a brokerage that took the time to train you, provides you with all your tools, insurance, benefits, etc. Um, you obviously want to be way above that, right? The you know, if you can get to that$5 to 10K a week, right? That's where you start making some real money. Um and everybody's happy. So good question though, good discussion. And uh I think that, yeah, I think that's a pretty standard um commission plan. That's you know, when when I see a smaller base salary, but uncapped commission, those are really designed for people that are hungry and want to um want to write their own check, right? So good stuff. All right, final thoughts, Ben.

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

And until next time, go bills.