A $350 fine on a $500 load?!? | Final Mile 117

Welcome back. It's another edition of the final mile where we answer your questions. Today they're coming from a variety of places. We've got our Facebook group, we've got YouTube comments. Um, there might be a Reddit one in here. But uh, if you're brand new, check out all the other content, Freight360.net, including the Freight Broker Basics course to help yourself establish a new brokerage or help train up your new team members, and please check out the sponsors to help support the channel in the description box or uh down below if you're on YouTube. So all right, Ben, our first question How do the terms shippers and receiver differ across various contexts, such as manufacturers, distribution centers, warehouses, job sites, retail stores, and raw material suppliers? And where can we assist each of them in the supply chain process? So um, all right. So I'll start with shipper versus receiver first, and then I'll break down the different types of locations that were listed and identify as a broker where you can kind of come in. So the shipper or sorry, your customer as a broker can be a shipper or it can be a receiver or it can be just a third party that has you know an unrelated shipper and receiver. Um the customer is I is ultimately gonna be the one that is responsible for making sure product is getting shipped from one place to another. Now, I'll simplify it. Oftentimes our customer is the shipper, right? A lot of times it's their product and they're shipping out the door to their customer, aka the receiver. And I'm it's an oversimplification, but that's generally how it works. And um in that instance, um, you're gonna have various job titles, like it could be a traffic manager, logistics coordinator, etc., that is responsible for um getting loads booked and sent out. And they'll work with different trucking companies and with brokers, and that's who you'll want to target. Now, a receiver could be a customer too. So if you ever get the objection of, oh, my my uh freight is customer routed, meaning that that shipper doesn't actually control the trucks that that come pick up the freight, the uh receiver does. Um in that case, and that's it's less common, but it does happen. Um, you can target a receiver who's who's purchasing and bringing goods into their facility, and they're booking the truck that's going to pick it up and bring it to them. Yeah, anything else on those two points? Uh usually I would say like 90% of the time it's the shipper, is who we're dealing with as a customer.

I I will say it like I I'm gonna rephrase what you said from a different point of view. Say I am a broker's customer. That means I am arranging transportation, right? What does that mean? I am making sure I'm scheduling, negotiating, or paying to get that thing picked up and delivered. So I could be a company that sells things to Nate, and I'm arranging the trucks that go from my facility to Nate's. I could be a company that buys things from Nate, but Nate says, I'll just sell you the product, you send your own truck in to pick it up. That's why I'm arranging it. I'm the receiver, Nate's the shipper. The third example, right, is any company that buys from something is the beneficial cargo owner, can theoretically arrange to have it picked up and delivered it to somewhere else. So, like, let's say I'm like a third-party produce broker and I buy a truckload of tomatoes today from a farm in Texas, and I just pay for the tomatoes, and I'm shipping it to a grocery store in Washington. I'm arranging the transportation. I am not the shipper or the receiver. I just bought it from one place and paid and arranged to have it shipped to some other place, which is my customer. So what you're really asking in your prospecting calls is like, hey, we want to understand who's responsible for arranging the transportation, whether it's inbound stuff you buy or stuff you sell.

Yep. Now I'm gonna break down the different examples of um locations that they asked as well. So manufacturer, that's gonna be someone who creates something and ships it outbound, like our primary example. A distribution center is typically where um a lot of things um come into the distribution center and then get distributed out of the distribution center. So picture like um um a retail, a retailer, for example, uses distribution center. So let's I'll I'm gonna totally make this up.

It's probably Amazon is Amazon is also theoretically just an entire distribution center. They don't make anything.

I'll use a I'll use a basic one. Let's say Best Buy, right? Best Buy, their stores sell a bunch of stuff, right? Um so to what would oftentimes happen is let's say they've got computers from one manufacturer, they've got TVs from another, they've got um Blu-ray. Uh people don't even use Blu-rays anymore. Uh microphones from another one and appliances for another one, and they those all get shipped into a distribution center to centralize Best Buy's stock. And then those distribution centers send out, you know, a truckload of a bunch of different stuff to one store, a truckload of a bunch of different stuff to another store, et cetera. So the distribution center sits in the middle of the supply chain. Okay. Warehouse, very similar. So we'll just kind of keep those the same. Um, a job site, that is picture like where something is being constructed, right? They ultimately become the end user of the product. So if a um, let's say there's a new residential building going up, and the the job site is where all the lumber's going in, all of the HVAC equipment's gonna go in, it's where all of the um construction equipment that's being rented or leased or used, whatever, is gonna go there, get shipped there, and then shipped back out of there. So that's a job site. Um, retail stores, you think like um I gave the example of the the Costco stolen load, right? Like of apparel. Um retail stores are ultimately an end, I'll call them like an end seller, right? Like the finished product goes to the retail store. I think we all know what a retail store is. Um they're they're not gonna be your customer, they're gonna be a receiver in in the vast majority of situations. Um, and then raw material suppliers. That's like we had a great episode about lumber with with Blue Book uh a couple years back where we talked about um literally the they are the origin of of whatever the product is. So like it could be a uh a quarry where they're doing silver mine, like rock. It could be Yeah, exactly. Right? It could be the raw lumber after it gets, you know, uh the trees are cut down and they're shipping, you know. You see like those, like I think of Final Destination, the movie where there's like all the logs or whatever on the on the flat pad that fall off and hit the cars. So those are um different shippers and receivers that you're going to be dealing with, as well as different types of customers. So great question. I don't think we've ever broken down the different like types of locations before, and that's a good question. Next question Has anybody had success getting a shipper to remove or reduce excessive fees? We've got a short 60-mile Texas to Texas run that hits us with a$350 rescheduling fee if the pickup is late. And the lane itself only pays around$500. Curious if anyone's been able to push back on something like that without tanking the relationship. Um we actually recently dealt with something like this with a government customer that had what I would consider like egregious fees for like you know basic clerical errors. Um so the issue was twofold. Like one, the broker was making preventable clerical errors, but number two, the uh penalty didn't really like the sentence didn't seem to fit the crime, if that makes sense. Like they were gonna charge like$700 for like a administrative, like the wrong number was typed into a system, or you know, late pickup, for example, you know, you know, just things like that. And the way we worked it out is like just have a conversation. Like, what is the what is the real intent here? Is the intent to penalize it, or is the is is the intent for you guys to save money, is it or is the intent for you guys to to encourage a certain process to happen? Because if we understand that like you just you it's really a deterrent and you're not looking to find people, um, we were able to get them to work with us to refine the process so that we could prevent the errors in the future, and then they in turn waived um those fees. I'm curious, have you ever had a situation remotely similar to that where there's just crazy fees?

Yeah, I mean, that one's pretty extreme for a$500 load. Um, but it they're all solved in the same way, which is exactly what you said. Having a conversation, trying to understand what the company needs and why the fee is there, and trying to get them to understand why you may need to reschedule them and when you've rescheduled them, right? And then trying to find somewhere in the middle that works for both, right? Whether it's a reduced fee or a little bit of flexibility, or maybe you give them a heads up when you know you'll need to reschedule as far in advance to maybe make it easier on them, right? At the end of the day, like the conversation will lead you to some path in between these two extremes of the customer needing things picked up on time. So maybe they're not like literally staging these loads, unstaging them, and restaging them again. And maybe the carrier that is a really good fit for this lane gets held up at the last place they deliver to once or twice a week, and they need a little flexibility. There's probably some way to work into the middle. You just want to have a conversation and explain, like, hey, this lane works. We like working with you. This has really become an issue for us. How can we find some way to make this work for both of us? Because obviously we can't take a$350 hit on a$500 load. And obviously, you guys need things rescheduled less or more notice or more time. Here's where we're running into issues in a carrier, meaning, like, this is when we're aware we will be late and how late is that enough time to notify you guys because this is what every shipper does. And then a lot of them will do this, which is ridiculous from my point of view. Drive rates down so low that carriers are basically having to bounce from their last delivery to their next pickup in such a short time window that like anything that happens on the road creates an issue for a reschedule. And then the shipper goes, Well, this is weather you're like, okay, well, then you got to pay some time for dead miles for me to get there early so that I'm not rushing from my last pickup to my next one to be able to make this lane work for you, right? And again, this is where the conversations are gonna be super helpful. For sure.

Next one can a trucking company and a brokerage operate from the same address? I'm setting up two separate entities, a carrier and a brokerage, but they'd share the same physical address. Is that gonna raise red flags or cause issues when I'm trying to book loads with other brokers on my carrier side? It can. Um, my brokerage and our trucking company both on paper share the same address. Um, and we actually have rules in highway set to like flag a carrier that has a brokerage at the same address, just because we not to say that we won't do business with them. We just want to verify and just reiterate hey, we this is going on one of your trucks, correct? Um, versus you're gonna put it through your brokerage. So um it'll it can definitely cause a hurdle, but it's not anything you can't work past. So, you know, if you're if you're if a k if a brokerage is like, uh, hey, you guys have a brokerage, we're you know, a little weary about working with you, you could tell them, like, hey, you're like, I, you know, I'll do ELD tracking, I'll give you pictures at pickup showing you the truck and everything. Um, you just it's again like the last question. It's about having a conversation and building that trust and just maybe taking an extra step or having one more discussion to verify um how you're gonna be doing business. I'm curious because you've you've been on both sides. Um, what would your take be on this? Would you would you break the addresses up or would you just, you know, clarify in a conversation how you're gonna do business?

Honestly, I think it's probably less work to separate the addresses than to have that many conversations because the way all the systems are set up, they're meant to catch fraud. They're not meant to prevent anyone from doing business with a carrier that has a broker that is associated with it. The problem is none of the automated systems do that well. So basically, every brokerage has at least some warning that says there's a broker at this address where there's a carrier, and most brokers are just honestly like too lazy to do the work to have the phone call. They'll just go to the next option for the carrier side, right? So it's honestly like I just think the effort is in just being able to split the addresses up quick legitimately.

In some cases, like you can't. Um, and I get that. So, like, I there's a customer, an old customer of mine. I've probably told stories about the potato farm before, but like they were they're a customer, a ship uh carrier, and a broker. Like they literally were all three. So like they grew potatoes. I'll I'll kind of like generalize what they did, but like so they ship potatoes, so they they would ideally load their own trucks, but if they didn't have their own truck, they would sometimes brokerage, you know, hire an external truck either through their through their brokerage or directly. Um, and then their brokerage, since they started getting into brokerage, would have other customers that they would work with and load their own trucks and sometimes third-party trucks. I mean, it was kind of, but they were all in the same location. So um that's more of an exception to the rule. But yeah, you're probably right. It probably is better just to split them up because like our in my company's case, like our flag yourself.

I know.

Yeah, like they're not we're like on paper, they're in the same location, like in Tennessee, but like our trucks are based out of Florida, that's where our terminal is. And our brokerage office is based in Tennessee. Um, and then our brokers are all over the country. And when we have we have we do have some of our brokerage employees down in the trucking terminal, so it's like it gets messy, but yeah, on paper, we are we are kind of like shooting ourselves in the foot. It's funny, like our our own trucking company has to be overridden in our brokerage for us to load them.

So and also like this is a big issue with large brokers working with Landstar. Like some large brokers just black flag every Landstar because they genuinely can't verify are they booking a Landstar truck or are they giving the load to another broker in a co-brokerage agreement? And then you don't have visibility into whether those things occur. And there's a lot of great agents at Landstar. There are also some that aren't. It's a very big agency. So, like, again, I just know for a fact that some brokers and brokerages are just like, you guys can't book Landstar trucks, which again, like, I have good friends and colleagues that are Landstar agents that like absolutely people should be using. But I've also been in scenarios where I thought a load was being run on a Landstar truck and I saw my load on the load board 10 minutes later when you're like, okay, well, clearly that wasn't true. So, like, there's more work, and when there's more work, it it just takes longer to get more business. And I'm like, if you could do things to make it easier for yourself, do that in the front end. It's not that you can't solve it, it's just it's probably easier to solve the address thing up front than to have to resolve this every time you're booking a truck with another brokerage.

Yep, exactly. All right, last question you added, and I'll let you take this one.

My biggest concern about starting a brokerage is the fraud thing. I understand checking your P's and Q's and crossing your T's will help, but uh what if it does? And when it does happen, you lose cargo. How do you bounce back? Because I assume everyone's experienced this from small to big brokerages. What's the worst thing that can happen or the minimal? Well, the worst thing is this happens with a very large customer that owes you a lot of money and they stiff you for the cargo value and unrelated invoices. Meaning, like that company and that customer owes you a hundred grand for freight you ran last month, a hundred thousand dollar load gets stolen today, and they just refuse to pay you all the money they owe you from before. Now you're into the legal scenario. Now you've got to go down the rabbit hole. And we just did an excellent episode with attorneys that you could literally reach out to if you're in a situation like this. Um, the minimal thing that happens is it's the first load you run with the customer. And if the carrier steals it, like that customer's out the money and the brokerage really isn't liable. Unless there is specific agreement in place between the brokerage and the shipper that outlines additional liability. If there's just no agreement in place between the shipper and the brokerage, honestly, the shipper's just out that money. And if the carrier doesn't show up and doesn't repay it or the claim doesn't get paid by the carrier, the broker just isn't really responsible, right? Which is also why it's harder to get shippers to onboard you as a broker than as a motor carrier.

Yep. Yeah. It's a tough one, man. I um I talk to people so with having an agent model at Pierce, we get a lot of people that reach out to us that want to, you know, become an agent or whatnot. And I'll oftentimes talk to people that like they got out of the business, you know, X amount of years ago and they're looking to get back in. And I'm like, it's a different game now than what it was, you know, five, six years ago. Um, but yeah, that's a uh that's a go and where'd that question come from anyway?

I was on YouTube. I came in like last night or this morning I saw it. Nice.

Good stuff, good questions. Keep setting them our way, and we'll continue to answer them. Final thoughts, Ben.

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