A Driver’s Take on Brokers, Rate Transparency, & More (with CDL Shorty, Avante Jackson) | Episode 317

SPEAKER_02: 0:19

Welcome back. It's another episode of the Freight 360 podcast. We got a good one today. We're joined by a fellow YouTube personality coming from the carrier side of the industry. We'll get to Avante Jackson, aka C DL Shorty in just a minute here. But if you're brand new, make sure to check out all of our other content either on YouTube or on Frey360.net, including the Frey Broker Basics course. That's a uh educational bit we put together in conjunction with DAT for you know, for anybody who's starting a brokerage from scratch, or if you're looking for some training material for your team when you're bringing on some new team members, uh make sure to share, like, subscribe, leave us comments and questions. We answer your questions on our Tuesday edition of the final mile. Um, Ben, how's things in Florida?

SPEAKER_01: 1:10

Man, love this time here. It's starting to get cool. Weather's turning. It's like our uh cooler summer. I was telling someone yesterday, I'm like, yeah, we've got two seasons down here, like really hot, miserable summer, and then 10 months of like very nice summer. So there you go. Well, you'll be down here soon, right? Aren't you coming down next week?

SPEAKER_02: 1:26

We're heading down this weekend for we'll be there next week just to kind of hang out. No uh, no Disney World, thankfully. So I can actually relax. So um, but all right, without further ado, CDL Shorty. It it is Avante Jackson, but he goes by CDL Shorty. Welcome to the show, man. How are you?

SPEAKER_00: 1:44

I'm good. I'm good. Thank you guys for having me. I truly appreciate it.

SPEAKER_02: 1:48

So I want I want to ask you, you you had reached out to us a couple weeks back, um, wanting to come on the show. We, you know, a lot of times Ben and I talk brokerage. I I haven't worked on the carrier side in over a decade, so my ability to speak uh from a carrier's perspective is not uh current. Um and Ben, you you more recently have worked on the carry on the asset side, but more so in brokerage lately. Um But Avante, I'm I'm curious. What what made you decide to reach out to us and say, hey, I wanna I want to come on and kind of give my perspective?

SPEAKER_00: 2:24

Uh well, first of all, thank you for asking me. Um what made me want to come on, well, what made me reach out to you guys in the first place was first of all, I like what you guys have going on. I love the show. I'm a fan of the show. Um, you guys definitely go in depth, you know, of the broker side. Um and I just feel like, you know, I'm an advocate for the drivers, I'm an advocate for the carriers. And I feel like everybody's blaming everybody. You know, you got the brokers blaming the carriers and the carriers blaming the brokers. But if we can sort of bridge this gap by having these type of conversations and collaborations, then I feel like we as an industry in totality will uh will um definitely get better.

SPEAKER_02: 3:07

Yeah, I remember one of the first episodes I ever did on this podcast was in late 2019. And we were kind of me and the guy I was doing it with at the time, we were talking about like predictions for 2020. And clearly, like none of us saw COVID coming, so like we were way off either way. But one of the things that I I said that I I hoped would happen um was that the animosity between brokers and carriers would would go away. Like it, like you just said, there's you know, it's kind of like this uh this is it, the Spider-Man meme where like everyone's like pointing at each other, like brokers are pointing, right? Brokers are pointing at carriers and carriers are pointing at brokers, and you get dispatchers in there, and um, it gets all messy. So yeah, that's um that's good. I'm we're glad to have you on. We have a lot of stuff we can talk about today. We're gonna we're gonna hit on some things like rate transparency, double brokering, um, you know, the use of freight guards and and reporting on one another. Um so I I do Ben, unless you have anything you want to kick off with, I was gonna ask a couple questions. So um you're for those we got to talk with you last week. So we we we we understand like your background and kind of what your role is right now. You you do um, you know, you're a you're a carrier advocate, you do uh CDL training, is that correct? Yes for new drivers. Um so in the current state of things, right, where we've got uh what feels like a record length of rates being extremely suppressed, um, which nobody wants. Brokers don't want it either. I know we had a lot of comments, um, I think it was like in the last week on our YouTube, someone was like, Oh yeah, great. You guys uh you you finally are gonna have to start paying, you know, higher rates instead of those bottom of the barrel, you know, drivers that you guys are booking. And the reality is like we don't want rates to be low. Like we're a margin, we our earnings are margin-based too, right? So like if rates are normalized and brought back up to a standard level, like everybody is everybody does better, right? Um, so I'm curious in the in the current state of things, like suppressed rates, there's a whole all kinds of fraud now. What is it, what is it like in the perspective of the carrier side of the equation where um you know we're we're dealing with all this all this crap that's out there right now, and and it's hard to even make money. So what what's it like from the driver's perspective or the a carrier's perspective um overall in general? I guess it's a broad question, but just kind of curious for you to paint the picture for us.

SPEAKER_00: 5:43

Yeah, well, you know, I used to be one of those guys, one of those carriers um that, you know, be like, man, you know, the the brokers are taking all the money, you know, suppressed rates, all of that. But I really had to sit back and do some research and some homework and things of that nature and kind of change my mindset because what we see and what we have going on right now in the current climate and market uh economy is, you know, we have to just be honest with ourselves as drivers and as brokers or people in the industry. The economy has has taken a downturn. Um, shippers aren't making that much commodities right now. Uh, and with that being said, that's where your suppressed rates come from. You know, um I used to be the one that'd be like, oh man, no, the brokers are keeping the money, the shippers aren't paying. But then you have to really sit back and look at the economy. No, the shippers aren't paying because they're not making much anymore. Americans are not buying much uh stuff anymore, many commodities are being shipped out anymore. So uh from that standpoint, I had to change my mind, number one. And then number two, you know, you see the influx of truckers that have come into the industry from 2020 to now, you know. Um, you have to change your mindset as a carrier and as a driver to say, hey, my trucker buddy, my trucker friend, that is my competition. You know, um, yeah, we can do things, you know, we can be buddy buddy and things of that nature, but at the end of the day, this is a business. Um, so you have to, you know, kind of weed out that perspective and look at things from a different mindset, a different perspective. I gotcha. I gotcha.

SPEAKER_02: 7:25

Um, so uh one of the things that I'm I'm curious on, or I guess I want to point out, is there's very likely a difference in, and correct me if I'm wrong here, but there's there's very likely a difference in the amount of like data and where we get our information from on the brokerage side versus your typical small carrier. Um, you know, I'm thinking back to when you're talking about suppressed rates, so and the the the concept of quote unquote like the brokers keeping all the money, right? So as brokers, and Ben, you and I have seen this for years and years now, right? Like we see rate data change on a daily level, we see it weekly, seasonally, and then obviously in the big market cycles. And, you know, a lot of brokers, we don't sit behind the wheel, right? We sit behind a keyboard and a computer. So we have access to see the news articles and the rate data and the analysis on all that stuff, and what's you know, the different factors that are impacting it. And like you, like you mentioned, um the demand to ship, right? Um, that's one side of the equation that that comes into pricing is how many, how many truckloads to just generalize it, how many truckloads of freight need to be moved. And then the other side is the is the supply, and that's how many um available trucks are there at any given point in time. And we saw supply massively increase the post-COVID shutdown, and we've seen um the demand to ship cut back when you know domestic manufacturing and shipping has just kind of the the spigot got turned off. So I'm curious if you think my analysis is accurate that the average trucker probably doesn't spend as much time getting their information on what's causing rates to do what they're doing, um if they're spending as much time in the same sources as brokers are. Because my my guess would be that if I'm just a if I'm an owner and operator and it's just me and my truck, where am I getting my information? It's probably social media, maybe a news article and just you know, water cooler talk at a truck stop. Whereas um brokers spend a lot of time on a computer, you know, reading news articles, seeing rate data, etc. Do you think there's any accuracy to that, or do you think um carriers are are getting their information from you know I guess the the carriers that are are claiming brokers are just stealing all of our money, are they getting their information from somewhere else? I mean, what what do you think the disconnect is there?

SPEAKER_00: 9:59

Well, for me, like I get my like if you go up and you ask the average trucker, that's why I consider myself the trucker's voice, the trucker's advocate, because I'm trying to educate my community. So for me, I I look at things like jury. I get on Marine Time, I see what containers are coming over, uh, the price of the containers and things of that nature from big big box corporations. Um, so I do things like that. Um if you ask the average trucker carrier what not what tender low rejection is, where do they get that from? You know, where where do you see your data from? They don't know. You know, a lot of them they don't know.

SPEAKER_02: 10:35

And a lot of it is a lot of brokers don't as well, to be to be fair. No, but you're making a good point, yeah.

SPEAKER_00: 10:42

Uh a lot of it is water cooler uh talk at a truck stop. You know, everything I I said this to a lot of people that kind of get mad at some things that I say online. A lot of things that I say, a lot of my rhetoric that I speak uh from my YouTube channel and whatnot are just things that other truckers are saying at truck stops or just conversations that are being had at truck stops. But I I've really learned throughout these uh last couple years that you know what? Some truckers, not all, some truckers are a little bit ignorant, as well as some brokers. So my whole thing is let me dive deep into the conversation. Let me start doing my due diligence by going on these websites, printing out this data. I got stacks and stacks of paper, and I go out to the truck stops and I hand them out to any trucker that wants it because the narrative is all carriers are dumb, all truckers are dumb, and I hated that, and I just wanted to educate my people.

SPEAKER_01: 11:42

And I I want to ask a question about that. So do you think, from like a driver's point of view, right, and talking to carriers, do you think that it is a level playing field of competition amongst just the carrier side, right? Do you think everybody's operating, and I'll say specifically, under hour of service guidelines, do you think everybody that is competing for freight, right, on the carrier side is all driving the standard hour of services that should be mandated through, like the ELDs, for example? Like, what is the opinion of drivers on whether or not everyone's following the rules or not? Because I've heard so many different things where legitimate carriers are like, look, it's the law. Everybody's driving under the hour of service laws. And then Nate and I are interviewing and working with folks like Danielle, we've had on the show and researching and finding like massive disparities where carriers are violating ELDs, driving 20 hours a day. I mean, the Hope Trans accident was a really big example of that. A one guy on a team load for the USPS that had driven like 20-some hours two days in a row fell asleep. So does that does from the carrier side and just like the conversations at truck stop, do they believe it's a level playing field where the guy's doing it the right way, right? And you train CDL drivers, right? Do you think you're also competing against folks that just are doing whatever they want as long as they can get away with it?

SPEAKER_00: 13:52

Oh, of course. Of course. There are there is not a level playing field. I mean, you can we can all see right now with the the whole conversation and the talk about non-domicile and domicile CDLs, which I'm I have a um I have a love-hate relationship with that conversation. But yeah, but even with the people that are non-domicile, you still have mega carriers out here that are running double e-logs. You know, I have I have a few friends that, you know, work for these mega carriers, and they'll sit there and they'll tell me, and not just tell me, they'll show me whenever they're in town and I get to see them, I'll come to the truck and they'll show me to where they can just make a phone call and say, hey, I'm at hours, and they'll switch it over to like a ghost person or a dummy person. Um that way that they can, you know, run more hours. But I think the real conversation is, you know, because the ELDs was implemented in 2016 under the Obama administration, but did the ELDs really help with help truckers, or did it hurt truckers? I think that's the real conversation.

SPEAKER_01: 14:54

I think the status they hurt the whole industry, including safety training on it.

SPEAKER_02: 14:59

And it didn't absolutely to increase safety, and it uh there's really not a lot of um you know hard evidence that can say that that actually happened. So I remember when when I worked when I worked for a trucking company, like it was paper logs, right? And like people, you know, you draw that line and you up up, right? You do that whole thing, and like it, it you dude, guys would drive around with two sets of logs. Like it was that it was that simple. But it I mean, if you can fake it that easily with paper logs, and then you just advance technology and you have ELDs, you can hack an ELD. Like it, and there's no, you know, it's they're self um self-certified, right? There's not like a government or third party mandated organization that has to certify these providers. And we see like it's like every week there's another article of a of an ELD provider that's being um scrapped because they're they're being used for fraud or whatnot. So yeah, and I think Ben, you brought up a good point. Like it's within the driving community, and we see this with brokers too, right? Um, we become our own like worst enemy, right? We we got our there's bad actors in both both buckets there. It's the same thing with dispatchers, right? There's a lot, there's like been bad rhetoric around independent dispatchers where the good ones can really add good value to small carriers and to brokers. Um, but you got the bad ones that get all the spotlight.

SPEAKER_00: 16:19

So yeah, see, my my thing, I would just like to add to that a little bit. My thing is there's on the carrier side, there's no uniformity amongst the whole industry on the carrier side. Like we're heavy regulated when it comes to safety, but you still have guys out there that are legally able to run paper logs because DLT said this you can have they used to have these things called glider kits, right? Yeah, where I can go buy a truck without the motor. But now, and even when ELDs was implemented, you could go and buy a 2021 truck. But if that motor is 2006 or below, I can still run paper. With me. 99, yes, 99, and I think two 2003, I'm sorry, 2003 and below, and 99. Uh, it first was 99, and then I think they upped it to 03. But then as someone like, let's say me, for instance, if I'm run doing an example, if I'm on e-logs and then my my friend is on paper, then of course he can make more money and run run longer than I can. So that's not, you know, when we talk about uniformity and fairness, you know, that's that's not fair.

SPEAKER_02: 17:31

Yeah. Well, agreed.

SPEAKER_01: 17:33

The the thing that I the thing that I found super fascinating is like I was unaware of how bad this was. Like, we kind of knew, like you had said and Nate said, like, we'd hear from folks, hey, like these logs are getting manipulated talking to carriers. And again, like I honestly probably have more friends and colleagues on like the carrier side and driver side that I still talk to that I've worked with since the beginning of my career, that I'll call every now and then, tell me what's going on. And like they're saying like it was more and more prevalent. But when we got into this with like Justin and Danielle and had Gordon on the show and like really looked at how prevalent it was, just how often it was happening, a lot of things to me started to click. Because the other thing I had seen in the past couple of years that I've never seen since I've been in the industry is I would have brokers telling me they're arguing with shippers over transit times, saying, like their drivers, hey, I can book this load for the rate the customer wants, but they're gonna do 900 miles a day or 850. And I'm like, like, where are they driving from? And my first question, I'm like, are they like driving, you know, through like the Dakotas where there's like literally no traffic, no cities? Like, I'm like, okay, maybe if you're driving through the desert, you could probably get that kind of mileage once in a while. I'm like, but to do that every load in areas like Atlanta, where there's cities, where there's traffic. I'm like, that's like mathematically and physically impossible to keep doing if you're driving 11 hours a day. And like they're arguing and they're going, look, hey, showing me the carriers, showing me the emails. And I'm like, like, that can't be true. And then it started happening so much that I'm like, something doesn't add up. Like that doesn't add up. And the rates also made no sense where shippers were sending back lanes to us that I would review. And this is a major food shipper. I was telling Dean this last week. I did a bid for them like a couple months ago. We're talking like 3,000 lanes, very well-known company. And I quoted all of this freight like below DAT average on the lanes we were like a fit for. So like none of our pricing was even remotely high, if not below where the market should be. And this is like reefer perishable freight. The feedback to us is we were just like 25 to 35% too high on every lane. And I went back and looked at it and I'm like, even if you looked at historic and predictive rates, I'm like, I'm still almost like the lowest range that should happen for this. And they're telling me every single one of these are like 30% too high. I'm like, who is submitting rates? Because like Nate and I talked to carriers, like, what does the break even cost to run a trucking company? And I'm like, these are lanes at like$1.25 a mile across the board. And I'm like, how is this major company shipping all this freight for rates that absolutely make no sense? Right. And then you hear from the people we talked to going, oh yeah, like I got guys that'll run it for that, but it's got to go 900 miles a day. And then the last piece that kind of fell into place was like how prevalent ELD manipulation was. And you're like, okay, wait a minute. Now this is starting to make sense. Other carriers are driving way longer than they should and undercutting the legitimate carriers because then all the bankruptcies were coming from the legitimate carriers. All the ones that had good maintenance, good training programs, or doing things the correct way are getting pushed out of business because they can't operate at that low cost. And then we're seeing all of these folks and the drivers and like running without insurance, deferred maintenance, trucks that shouldn't be on the road, not training their drivers more than like two weeks before they put them on the road. And then they're manipulating the logs. And you're like, okay, well, like this is not a level playing field at all. And this is really what is causing rates to stay that low because otherwise, in the 40 years our industry existed, they never stay that low for longer than 12 months because enough companies go out of business that freight stops moving and shippers have to pay more, right? Everyone always kind of looks at the brokers in the middle, but at the end of the day, there's just companies that need to pay to move stuff and a vehicle that is able and willing to move it for that rate. If nobody moves it, eventually they will pay more money. But if someone else goes and moves it for that cheap rate, the shipper has no reason to ever pay more money. And like I know everyone looks at the intermediaries as like taking profit out of the middle, but at the end of the day, like we don't really control the market. We just help them find trucks willing to do the work for what they're wanting to pay for. And trucks just kept booking loads. And I'm just like watching this going, like, this makes no sense to me how trucks keep booking loads at this volume on what shouldn't be profitable, right?

SPEAKER_00: 22:02

Now, I'm I'm glad that you said that because this is why I wanted to have this conversation and bring more awareness to the forefront between brokers and carriers. Because with that point that you pointed out, we need to have a conversation of predatory brokers out there. You know, like, come on, man, like we talk about the ELD and the safety, but how many times will you have a, and this is where I want to separate the good freight brokers from the bad freight brokers? Because how many times would you have a freight broker to say, oh, wait a minute, mathematically, you're not gonna be able to do that load in the right time if you're on the ELD. They don't care about it being on the ELD or not. They just care, can you get that load from point A to point B in a timely manner? They don't even really care about safety. And I'm saying them as far as the shipper, the broker, and the carrier, you know, because if you can't do that safely in a good timely manner on the ELD, you're you're not gonna be able to do it safely at all. It's gonna be unsafe. So then you're putting hard putting people at way, uh harm's way. You're not getting the carrier's not getting rest and things of that nature. So, you know, when are we gonna have the conversation of predatory brokers, you know? And then also, it's not your job as a broker to know, you know, what my um operating cost is. But also, how about from on a good freight broker standpoint, how about if a carrier is saying, oh man, I can take this low for a dollar a mile or 95 cents a mile. Now, what I say might not make sense, but let's try to make it make sense. If you if you get a carrier that says that, it wouldn't that be somewhat of a predatory broker? Because I'm saying, oh wow, I get this carrier, this, I get this dumbass carrier to do this for cheap. And this carrier, like that right there would make the low uh um the um the the rate suppressed as well, too, because you know good and well you're not making money at 95 cents a mile at a dollar a mile, you know? And there's a lot of predatory.

SPEAKER_01: 24:00

Yes, sir. Okay, so here's like I'll let's go through a scenario, right? So let's say Nate's a broker, I'm a broker, right? And a customer both gives us a load and says, Hey, we ran this yesterday, this load for a dollar mile. Let's just use your example, right? And they go, Hey, can you move this for a dollar mile? And Nate and I go, Well, that's probably too low. We'll see if there's any carriers. Both Nate and I put a post on a load board and reach out to our carriers and go, hey, we got a load moved from this customer. It doesn't have to go today, but they're looking to be at a dollar mile. And then literally 35 carriers email both Nate and I and go, I'll take that load for a dollar mile. How one, Nate and I can't tell anything other than does the carrier have insurance? What is their safety rating, and are they willing to take it? And then we can verify the VIN, but like we can't see logs. We can't see whether or not that carrier wants to take that load because, hey, they just need to reposition their truck to go get a load from their customer and they're gonna make some money instead of driving there dead or empty. And they're like, hey, man, like this load works for me. I gotta get to Memphis. So like I'll take the buck a mile, it fits in my schedule, and I'll take that one today. And then you hear that from like 30 carriers from Nate and our point of view, as a broker, the customer's saying they paid this yesterday. We can see it in their RFP. A bunch of carriers are saying they're willing to do it. I mean, are Nate and I supposed to go back to the customer and go, like, well, we have 30 people that all said they could. The math doesn't seem to work, but they're willing and able to do the work. And the customer's going, Well, yeah, here's the load. How, if you were in our position, would you discern from literally dozens of carriers saying they're willing to run that rate for what should be less than profitable?

SPEAKER_00: 25:35

Well, that goes back to what I was saying when I was saying, like, if my trucker buddy, you know, me and my trucker buddy were not friends in business, you know, that's literally my competition. Number one, he might have different bills than I have, but at the same token, we're both cutting each other's throat. That's number one. So, you know, it has to be a way to where we as carriers can soften that blow. Um, it doesn't always have to be cutthroat. And then number two, if you have 30 carriers, and correct me if I'm wrong, if you have 30 carriers that are that are saying this and saying, yeah, I take it, I take it. You know, how many do you vet on highway that you look at their CSA scores like, ooh, this is not a good carrier.

SPEAKER_02: 26:15

100%. All of them. Well, 100%. Again, I'll I'll add in here, and I'm gonna oversimplify this. Like you said, there's good brokers and there's bad brokers, right? Bad brokers likely are not using sophisticated software and vetting procedures that the good brokers are using. And again, I'm way overgeneralizing this, but uh just for the sake of conversation. But I would like Ben and myself having been doing this for a while, and a lot of the larger reputable brokerages out there, um, 100% of them are running every single carrier through a system like Highway or My Carrier Portal or CarrierSure RMIS, whatever the case might be, because they're integrated directly into the TMS to the point where the broker is not physically able to send a rate confirmation to a driver without them going through those processes. And there's there's rules set in place. Again, those are the good brokers, right? You might have someone that just got their authority last week, isn't using any of these tools. And yeah, there's nothing from stopping them. There's nothing stopping them from just being like, oh yeah, I'll book you and I'll email you a confirmation, and they don't do any research on them or anything whatsoever. So there's nothing legally stopping them. But in general, the brokerages that sustain and last for a long time are using tools and technology. Um, and it's not just to find out safety scores, it's it's also to protect them from cargo theft and double brokering and other forms of fraud. But yeah, out of those, to answer your question, out of those 30, 100% of them are going to be run through a vetting platform if the broker is acting, you know, is in that bucket of good broker versus bad broker.

SPEAKER_01: 27:51

Yeah, and I would say this too. I want to layer on one thing and your other point, though, real quick. The other point we're talking about rates, right? The thing that I think is also harder to do in the industry is that from like a trucking company's point of view, like I've run trucking companies and worked on the carrier side, is that like you're not always going to be profitable above your average break-even for every load, right? Just like take a tanker load, for example, right? They are literally driving empty to their pickup. So they're not getting paid at all, right? From point A to B to just get loaded. And then they're making most of their money on the backhaul, right? And the same thing is true in reefer, right? Like a reefer driver, say they're running watermelons during watermelon season out of Florida. They might make$4 a mile going from Florida to whatever Tennessee, but then they might take drive freight for a buck a mile to get back into Florida to get four bucks a mile coming back out, right? Yeah. Or drive empty because all the money's in the front hall. So like there's not an equal relationship in loads saying that like front haul and backhaul rates are typically different because when there's demand for trucks and produce is just an easy example, and rates get inflated. So the carriers, like that's why you'll see the rate outbound of Florida during produce season go to three bucks a mile and the inbound rate go to 90 cents a mile, because the carriers know they're getting paid coming out and they got to get in and get as much as they can, even if they can cover the fuel, because they're still profitable, but you're not gonna see the profitability on a lane-by-lane basis. You're gonna see it on front hall versus like backhaul.

SPEAKER_02: 29:21

And to add to that, put it in the broker's perspective: if we have an annual contract with a shipper directly and we guarantee a set rate for 12 months, there are going to be times of the year where we're having average profitability. There's gonna be times of the year where we're losing a good amount of money, and there might be times of the year where you might have you might have a load like the pink cheetah or the TQL example, right? Where if you look at one specific, if your sample size is one load, right, which is I think a terrible sample size, it's it might show 40% margin. But what are the other what if you were to take a thousand loads and analyze them, what does it look like? And I think that's where um I kind of just want to get into rate transparency, if you guys don't mind, unless you have anything else you want to talk about on that part.

SPEAKER_00: 31:00

But I think the my my last my last point on that, not to cut you off, my last point on that would be would it be somewhat of the carrier's decision, the 30 carriers that called you guys, would it be somewhat on their decision to call the factoring company and check the broker's credit?

SPEAKER_02: 31:18

So that's actually before we do transparency, I do want to hit on this part, right? I want to talk about how carriers are vetting brokers out. Um, gotcha. So could I mean so you're saying your question was should the carrier be asking their factoring company about the credit worthiness of the broker? Is that what you're saying?

SPEAKER_00: 31:39

Yeah, yeah. The credit worthiness of the broker in that example that you guys just said you posted uh a low for example, posted a low for a dollar a mile and you had 30 carriers, you know, because to me that's like all carriers are jumping on one thing, you know, and saying, Oh, we can take it, we can take it. But also they're not checking the credit worthiness of a broker as well.

SPEAKER_01: 32:01

It happens in two ways usually. From the carrier's point of view, they're going to see the credit score of the broker on DAT before they reach out. So at least they can see the Ansonia report numbers on DAT or truck stop. Hey, this broker has credit and what their average day is to pay. The second step is if they go to get that load, when they get onboarded with the broker, that carrier's factoring company, that carrier is going to go into RTS, for example, into their website, put in the broker's MC, and RTS is going to say, approved or not approved to work with this broker. So they can see it and then they'll verify it with their factoring company's website before they get onboarded with the broker. Then they're going to get the agreement with the broker to now move forward to do business. But the third step is the one that I think is what causes the most issues in fraud, which is RTS will verify that that broker has credit. But what carriers can also do to prevent fraud for themselves, right? Like just literally protecting themselves from being involved in any type of fraud is just looking up the phone number for that brokerage, calling the main number and saying, hey, I got a rate con. I want to verify the load number and then I'm working with you guys. Because if you call that main number, they are going to tell you, hey, that person on that rate con, yes, works here. And two, that is one of our load numbers. That one small step would probably prevent 90% of the fraud on the carrier side, where they think they're working with a legitimate broker like TQL or even CH Robinson, but it's really somebody in Azerbaijan that just created a fake rate con and a fake email, told the carrier, the legitimate carrier, hey, you're working with TQL and it's a completely different load number. That guy doesn't really work there. Then they run the load and find out 45 days later that they're not getting paid. So like that one phone call of like call it a third step of credit or verification is like the one thing that every if I was a driver or a carrier or a dispatcher, like I would make that phone call on almost every single load and just really quickly going, hey, just want to make sure this rate con is legitimate, that you guys sent this load over. We're just starting to work with your brokerage. We don't really have a relationship with. Because in every fraud that I've been involved in after the fact, where a carrier client calls us and goes, hey, this happened to us, or a broker, as soon as I make that phone call, I find out immediately, like, that guy doesn't work there. That rate con wasn't legitimate. And now it's too late. Now you got to work through all of these headaches to try to figure out what happened. But that is like the biggest preventative measure every driver and dispatcher, because if I'm driving a truck, the last thing I want to do is go work for three days and then not get paid, and then have to wait three months to call an attorney to go get half of my money. Like that one phone call is going to make sure at the very least I know I'm working with the company I think I'm working with.

SPEAKER_00: 34:51

Yes, sir. How do you guys pick? I have a question. How do you guys pick a carrier that you would think that oh, I'm not gonna get freight, I'm not gonna get uh uh cargo theft on with dealing with this carrier right here.

SPEAKER_02: 35:04

You're talking about like in general, what are our vetting steps?

SPEAKER_00: 35:06

Yeah.

SPEAKER_02: 35:08

So I'll I'll give you personally what we use at my company. I'll try to generalize it without being too wordy and lengthy here, but um, we have a set of rules in our carrier vetting platform. We use highway. So we've got a set of rules that we use, a lot of the basic stuff. Do they have an authority? Um, do they have insurance? Um you know, we you can set the age, like so we'd have we have a benchmark, do they have a year of authority? And not to say we won't use someone if they're under a year, but it's just it'll it'll flag if they're they're new. And then we have CSA scores that are set, and we're looking at out of the five reportable CSA categories, we look at um each of them and how they benchmark against the national average, and we set a threshold. In our case, it's if they um if they are oh if they are over the national threshold in three or more of the five categories, it's gonna flag them and it it'll they'll fail our basic rules. Again, if we want to, we can do more analysis and override that. But that we look at that. Then we look at um, do they have reports against them for cargo theft or stolen identity or double brokering or holding a load hostage, right? And that those are basically like community notes that people, whether it's from um picture like a freight guard, right? But those are internal to your to your vetting platform, whether it's highway or carrier sure or whatever. Um and then we we look at a bunch of other subjective stuff. Like, does this um does this carrier have a VIM number um on a tractor that was inspected recently but is not listed on their scheduled autos policy, which leads us to believe they potentially are running uninsured. A portion of their fleet might be uninsured, which is a prime example of how some carriers might be trying to cut corners and save on money is to hey, I'll insure you know, some of my trucks, but not all of my trucks, right? Um so those are an example of some of the things we use on the front end. And then what we do is depending on the load and the situation on the customer, we're we're probably gonna have some sort of tracking requirement. Um, it could be an ELD connection to highway or to trucker tools. If they're ELD exempt, it could be, hey, we're gonna use a tracking tool and require or request pictures at the um, you know, the the dispatching location or at the pickup to ensure that the right carrier at the right, you know, with the right truck and is in the right place at the right time. And this is all done for two reasons, right? One, it's to protect us that we aren't hiring a bad actor or carrier. And number two, it's to protect the carrier to make sure that we, the person that we think we're booking and are paying is the person that is actually gonna haul the load in that we're going to pay and not somebody else. Um that's what we do. It's a pretty lengthy thing. It is for the most part, a lot of brokerages have this process um automated now, right? Where carriers that don't meet basic criteria aren't going to get through. Whereas you'll have, you know, maybe a um someone uh a new broker, or we'll put them in the bucket of bad broker that's not following these processes, and they might just book anybody and not do any vetting because to them they're just like, oh, the rate looks good, let's book them, right? And they because they don't know. They don't know what they don't know. They haven't been burned yet, they haven't um had a load stolen yet, or you know, had a bad experience um to force them to make that decision to have those processes. But in a nutshell, it's a pretty thorough process. A lot of it is automated, but we do we look at a lot of stuff and a lot of data points. Okay, let me ask you this. Does pay that's my company?

SPEAKER_00: 38:53

Okay, got you. Does pay uh get involved? Like um, like would you not saying you personally, I'm just giving an example, would you as a broker like uh lowball a driver? And then because that's what a lot of things are being said amongst our us carriers at truck stops and stuff like that. A lot of carriers say, well, if the broker paid more, you know, they would you ever heard that old saying you get what you pay for? And a lot of carriers say if the broker pays more.

SPEAKER_02: 39:21

Right. So here this brings up a really good point. So when we look at the bucket of good brokers versus bad brokers, right? Good brokers are all about carrier relationships. And right, my first priority, if I have a load for my customer, I'm not gonna post it to a load board and book a carrier that I've never talked to. My my primary goal is let me find a carrier that I've partnered with in the past that I have a good relationship with that I know and I I like and I trust, and I'm gonna reach out to them and um, you know, I and I'm gonna go that route first, right? I know them, I have a good relationship and history with them, and a fair rate is going to give me peace of mind, right? Yes. Whereas bad broker, and again, bad might not be the the right terminology there, but the not as the not as optimal brokers, um, they're transactional, right? They don't they don't value long-term partnerships with carriers, and they're gonna just go find the cheapest one, right? Now, in in the in the case that I gave you with all those um vetting criteria that I went for, that I talked about earlier, if I've met all of those, all of that criteria, and this, you know, these let's say I've got two carriers and they both look ideal, but one's a hundred bucks cheaper because they don't have to deadhead as far. Well, that's the one I'm gonna book. Most likely, I don't have any reason to pay somebody extra money for them to deadhead. Because I the reality is they're probably not the best. Well, they're not the best truck available for my load, and I'm not the best load available potentially for them for their truck. They they might be able to find a load that they don't have to deadhead as far for. So um price obviously comes into it. It really does. And that's just the reality of the business is if I because again, I'm also competing against other brokers to secure that shipment from the shipper. So if I come in at$100 higher to the shipper, well, then I don't get the load and that driver doesn't get the load, and then we both lose. Correct. So that's just one example. Hey, if I if I have the load contracted and I'm gonna get it either way, and two carriers are identical, but one just happens to be offering to take it for a little bit less for whatever reason, maybe they don't have as high of a truck note, or they don't have to head as far, or their insurance is a little bit cheaper, well then they have the advantage there. And that's just the reality of of economics and business. Um, but yeah, I would take the the less expensive or the cheaper truck in that example.

SPEAKER_00: 41:51

Well, a lot of a lot of the contract freight, you know, that you guys have aren't on the log board as well. Yeah, you know.

SPEAKER_02: 41:58

Oh yeah, for sure.

SPEAKER_01: 42:00

Yep. Yeah, and and there are shippers that have moved completely away from contract freight just to book loads in the spot market because they know they're cheaper right now. And again, it it always goes back to I think from here's the thing I think that this really originates from is that like when you're I think the points of view and information are different for a broker than a driver and a dispatcher. And here's what I mean. So say like we post up a load, any load, right? And you get 30, 40 trucks that all look have the same safety rating, the same insurance, right, the same maintenance, the same crashing, the same everything we can see the FMCSA actually provides. From our point of view, like they're all equivalent, right? So then we are looking at what are the carriers asking to do this work for. And when all of them are coming in at like just your example, a dollar a mile, and then one guy's like, well, I can't run for a dollar a mile. I need two dollars a mile. And he's absolutely correct. And I agree that he does need that, but there's no way I can get my customer to pay more money to just give one of them more because their truck is either more expensive or their insurance or whatever that reason is, especially when there's 25 other equivalent trucking companies that are saying, I'll take this for this number. So it's not that the broker is like lowballing the people they book, it's that they're generally sometimes just being honest with the dispatcher, like, these are all the offers I have. Like, I'll use your truck, but like I can't pay more just because your company needs more than all of the other ones that are asking for it, right? Which goes back to the level playing field. The whole reason one needs more money is because they're doing things legitimately, and probably the other ones are just lying and defrauding the FMCSA, whether it's safety, hours of service, or insurance, which is a whole other conversation. But like from our point of view, like no one's trying to lowball anybody. Like, we just want the best fit truck for that load with the money the shipper has budgeted for it, right?

SPEAKER_02: 45:13

Yeah, we don't set the market. I think there's a there's a misconception from some carriers that they they think brokers are setting the rates and lowballing people when the reality is we don't. It it is supply and demand. And when there is an oversupply, you hear it blows my mind when you hear on the news like there's a driver shortage, and it's like a driver shortage, like there is literally an oversupply of of capacity right now. Um, and again, that's a generalization because every lane and or market is gonna have differences there. But when you have an oversupply given the current demand to ship, rates go down. It's because if I'm a driver and I I can either I can either park my truck and make zero dollars or I can compete against all the other trucks in my area for the available loads, and we're gonna we're gonna undercut each other so some of us get loaded, right? And that's just the real it's the same thing. The the same thing goes on on the the broker side and shippers do have that too, right? When in the heyday of COVID, when rates were through the roof because everyone was shipping stuff and there's not, there's a there was an undersupply of capacity, um rates went through the roof, right? That that is supply and demand, and nobody is setting that outside of the market itself and just pure supply-demand economics.

SPEAKER_00: 46:26

Yeah, I've always said, and I've basically been one of the only drivers out there that have said this, but you know, we need it it comes a point to where we need to stop blaming us as carriers, we need to stop blaming brokers, and we need to start looking at shippers as well, because shippers are the are the ultimate ones that do pay out the money.

SPEAKER_02: 46:47

Um I mean I would challenge you on that too. Um, oh yeah, that's cool.

SPEAKER_00: 46:54

I was just gonna say, you know, with that being said, brokers do bid on the lanes. I think we had talked last week about you know why does TQ why is TQL so popular? Because they bid low on lanes and they kind of squeeze out the profit margin for the carrier. Am I am I wrong or well?

SPEAKER_02: 47:10

I'll tell you, the the larger the the brokerage, like a TQL or um CH Robinson, for example, right? They have a very well-oiled machine when it comes to a procurement department, meaning everything on how they can find the best available truck that's out there. Okay. So they have the amount of data they have, the people that are working in specialty roles, because their goal is I want to find the best truck at the best price who has the least deadhead and has the highest probability of getting this load delivered successfully, right? And if you have 4,000 brokers in your company and 30 years of historical uh proprietary data, you have an advantage to be able to meet that goal versus someone that just set up shop yesterday who's relying solely on you know load board data. That's the argument that I would make there. And then on the shipper side, again, if you take the broker out of the equation, it's you you get the same result here. The demand to ship is the shipper's freight outgoing, and the supply to haul that freight is the amount of capacity of motor carriers, right? So if I'm a shipper and I have, let's say I have 10 loads going out this week and there's 15 trucks available, well, they're those 15 trucks are gonna be undercutting each other to secure their chance at hauling my 10 loads. If I have 10 loads available and there's only five trucks available, well, those five trucks know, based on that load to truck ratio, that they're gonna be able to get a premium because the shipper is gonna have to book all of them and they have to then prioritize well, which one, what shipments do I want to get sent out and which ones am I gonna have to roll to next week? So that supply-demand thing, I would argue, still maintains. And I think the the the way that rates um, I don't want I hate to use the phrase go up because it sounds negative to the consumer who has to ultimately pay for, but it's to normalize them because they are suppressed and they're they're below where they should be right now. And it's great for the shipper who's saving money on costs, and it's great for the consumer who's not having to pay inflated transportation prices, but it's bad for the the brokers and carriers and the dis everybody that that puts the pieces together that get that stuff shipped, it's bad for everyone in our environment because we're operating at at compressed margins. And until um either supply of capacity comes down or demand of shipping goes up, or they meet in the middle in that supply-demand curve, uh, I I I don't that that basically that's what it's going to take, either one or the other, or both. And most likely it's gonna be both over a you know an extended period of time. Yes, sir.

unknown: 49:59

Yes, sir.

SPEAKER_02: 50:00

That's my take on that. Ben, I don't know if you have anything to add in. And my dog keeps coming in out of my office. That's why I keep standing up here.

SPEAKER_01: 50:06

Is it like at the end of the day, even if you eliminated all the brokers and it was just the shippers and the carriers, would literally be in the same position, right? Because shippers are in the business of selling whatever they manufacture, right? Whether it's basketballs, kayaks, cars, washing machines, it doesn't matter. They're in the business of making money selling that thing. Shipping is just an expense they have to pay that they don't want to, but they need to to get their product to their customers, right? So their incentive is to pay the least amount. And on the carrier side, their incentive is to get paid the most amount. So the open market is supposed to determine the right number of each as there's more or less goods, more or less carriers, right? But in the example that has happened was like rates went up so high, right? And the government got so freaked out that they relaxed all of the restrictions on drivers and CDLs and said, we need a whole bunch more of them. And then the narrative of we need more drivers, because they fixed a short-term problem by creating a longer-term problem, meaning like, yeah, they fixed the fact that things were getting really expensive because we shipped too many things really quickly and unexpectedly. And then they increased the number of drivers just by lowering the standards and the enforcements and the regulations. And there's just a mass influx that kept getting bigger. And then it just kept rates down. Well, from the government's point of view, all they're talking to all these companies and all these lobbyists that are like, this is great. These are the lowest shipping costs we've seen for this long ever. Keep it up, right? And then we're in this industry that everyone relies on, that no one pays attention to, going like, something really wrong is happening here. What is happening here? And then they just keep that narrative of like, oh, we're a driver shortage. We just got to keep letting in more drivers and keep giving more CDLs. And it's like, well, the people that have been in the industry for 30 years are going out of business. The guys that have been driving trucks for 30 years can't pay their bills. Like, this has never happened in 40-some years. Like, something is happening. And then when you really kind of look under the hood, it's like, well, you were talking about verifying carriers. Everybody relies on the FMCSA's information or some version of what they're regulating, like the ELDs, and they did that terribly. They are dealing with safety terribly. One in four, one in five trucks on the road isn't even at the maintenance standards of the FMCSA. They aren't inspecting the drivers and carriers to make sure the bad ones are even keeping their maintenance up to be safe on the road, let alone verifying CDLs to make sure people have gone through training with programs like yours to know what they're doing to drive these vehicles. And they just, pun intended, just didn't have their hands on the wheel now for like six, seven years toward this problem has gotten so bad that I think carriers are frustrated, brokers are, shippers are happy because they got cheap rates. And then everybody just wants to point fingers at each other because, like, this is who we talk to the most, right? We talk to carriers, you guys talk to brokers, and we're both just like, what the hell is going on? Because even from our point of view, like we're trying to bid loads to be able to get good carriers we've known sometimes for like decades. Like Nate or I have known for like 10 years, like, this is a good company. This lane should work for this, but the shipper is paying a dollar ten a mile. Like, how in the hell is that economically possible? Like the math just doesn't math. And then you see it everywhere, and you're like, something is very wrong here that doesn't make any sense until you really look under the hood and see, like, oh, it's not a level playing field. And a lot of these carriers that are undercutting the legitimate carriers are just able to do whatever they want because nobody was paying attention. And now we're starting to see these things come up because in the news, people are getting killed. And now all of a sudden they're like, okay, like this is worth us paying attention to because now the public is being involved in this. When everybody was saving money, no one in the government or in the economy seemed to give a shit about our industry. But now that they're starting to see some of the bad things that happen when you just literally let anybody do whatever they want, they're at least starting to address it, which hopefully gets better over time. But to me, this has been the underlying issue the entire time.

SPEAKER_02: 54:05

So I want to I agree with that. I do. So I I wanna I know we we've kind of rambled on here, and I want I want to get to rate transparency before we uh go too too long here. So Avante, I'll I will give you the floor here to give me your um give me your best argument as to why rate transparency rate transparency should exist. So as a as a broker, help me understand why we should be opening our books to carriers. Um, because my company has a has a trucking company, uh a sister company as well. So on the trucking side, we don't we're not advocating for transparency, but a lot of carriers are. So CF CFR 371.3C specifically, but give me give me your take on it. Why do why do you think that um carriers should uh or brokers should be required to to do ex um display, or I guess what is it, to disclose their their shippers rates to the carriers?

SPEAKER_00: 55:08

Yeah, uh well, number one, um it it says, you know, F 49 CFR uh 371.3c is a regulation that is on the books. It's been on the books, you know, for a long time, number of years. Um, you know, we talked about it last week, how one of your guests was on um months prior, and you know, have written down the whole situation of why it's on the books, you know. Um but with it in regards with it being on the books, um you know, some some brokers, mostly most brokers have it in the carrier agreement, the carrier package that you know we would waive we would have to waive our right to that if we agreed to do business together, all your your loads and whatnot. Um, and you know, if we don't, then you know, at least several paths right there, we don't do business together. Or if we do, you know, and then um if we ask for it after, you know, you guys blackball us per se and then put unjust freight guards and things of that nature. The pri the perfect and prime example, um for me, uh the example of all examples, uh the granddaddy of them all is the Pink Cheetah one. Um, you know, where the famous, old famous TQL, you know, had went above and beyond and took above and beyond of what they were supposed to do. Um and now they're putting up a huge fight, you know. Um even the uh even the judge that that ruled in favor of TQL didn't rule in favor of TQL because they were happy for TQL. You know, it was certain wording that the judge said, Oh, I don't like that wording right there. Um, and I just think it just becomes the overall playing over a good playing field, a fairness per se. Um, and it builds trust, it builds a relationship. You know, we are heavy regulated on the carrier side, you know, every little thing that we do gets scrutinized. But as far as the brokers, uh per se, you know, it's not scrutinized. You know, I've I've gone on record to say I want higher surety bonds, you know, for you guys or whatnot, stuff like that, because we all know about MAP21. You know, MAP21 is basically it did nothing for the industry. It was a slap on the wrist. It did nothing for brokering or double brokering, uh, per se. Um, so you know, with that, it just period did, but it in actuality it didn't play out to do anything.

SPEAKER_02: 57:40

Yeah, the intent behind it seemed like it was supposed to be good.

SPEAKER_00: 57:43

And then, you know, then you have some brokers. I always say the bad brokers, you have the some bad brokers out there that literally will take advantage of a carrier per se, like uh FTL, like uh uh full truckload. You know, there's a broker, there's a few brokers out there. I've talked to one of them that um, you know, full truckload. If a if I get if in your contract you say full truckload and it's exclusive to four or five pallets, and then I get there and you added three more pallets because you got a full truckload, but you don't want to pay me for the extra weight for that commodity, that's not fair. But if you open up the books, I can see oh, they the shipper paid you how much for these three pilots for these extra three pallets, blah, blah, blah. So, you know, I'm just I'm just all about fairness. I'm all about, you know, building relationships.

SPEAKER_02: 58:37

And I think that uh broker transparency will help do that across the So the example you gave of the weight difference, I agree with you that if a broker contracts a motor carrier at a certain weight or pallet count or length, and then the carrier gets loaded for something in addition to that or above that, yeah, the broker should be paying more. I don't I don't here's my take on uh broker transfer.

SPEAKER_00: 59:05

That happened too, by the way, that's a real example of the FTF.

SPEAKER_02: 59:09

Yeah, I've I've seen that. I mean, there there's there's freight that's loaded or that's um booked in uh you know, hundredweight, right? Like potatoes and onions, it's per 50-pound bag or per hundred pounds loaded. Um and that solves the problem of the hey, we don't know how much it's gonna weigh until it gets loaded issue. But you're right, if it's like, hey, the the customer says this is a uh 30-foot shipment and um I book you for 30 feet of your trailer, and then you're gonna partial you know a second load on there and end up we load 40 feet, and now you it screwed up your other one. Yeah, that's that's on the broker. Um, I think if the broker hires a carrier for their full truck dedicated um and it's more pallets than it was supposed to be, um that doesn't bother me, but if the weight is different, it does, because then you're talking about fuel costs. So if they tell you it's gonna be 40,000 pounds, we want your dedicated truck and um it's 40,000 pounds and it still is the whole truck, but it's more pallets, I don't see a difference there. But if it's if you're adding weight and cost to the carrier, then absolutely. So here's like your your car that you're driving now, did you buy it at a dealership? Yes. Okay. Um, do you feel that we as consumers should be able to force the dealerships to tell us how much they bought that car for before they sell it to us?

SPEAKER_00: 1:00:40

I I've I've heard this argument before based off of uh everything else. Uh so I get what you're you're saying, but you know, for the sake of argument, I will say uh we don't do it, but I will say yes, we should.

SPEAKER_02: 1:00:52

We should. Okay. Then I we just have a difference of opinions then.

SPEAKER_00: 1:00:55

Yes, sir.

SPEAKER_02: 1:00:56

Our our our economy operates based off of supply and demand and and um people are people will whenever someone says, well, what's this worth, it's whatever someone's willing to pay for it at any given point in time. That is kind of the the general argument. I think when you when you look at um mandating people opening their books across the board, that that is a different philosophy of what our country's economics of how our country's economics are set up in a question in a free market.

SPEAKER_01: 1:01:30

The question I would ask too, Wanted is if if carriers want to see what costs go into a load, right? It's not just the revenue on the load, it's the cost that it takes to get that load. You would agree, right? It's a business. Like the load just didn't come out of somewhere. That brokerage had to pay someone a sale a salary to make phone calls, pay for technology to verify carriers, be able to train that person, keep the lights on in that business. So like the revenue that got paid for that load doesn't account for the costs. In the same way, from the carrier's point of view, right? The revenue you got paid for your load doesn't account for do you have maintenance? Are you paying legitimate salaries to your drivers? Do you have the right insurance? Did you maintain the reefer correctly? Have you been doing regular maintenance on your vehicle right? So, in the same sense that it's like, I get that from the carrier's point of view, they want to see the dollar that came in on that load, but it doesn't take into account any of the expenses to get the load. And then from the carrier's point of view, it's like, well, okay, I would also love to be able to see the carriers I'm working with. I'd like to see your maintenance books. I'd like to be able to see how long you've trained your drivers, what kind of CDL program they went through, how individually they've been for safety just with your company. And I'd like to be able to see how much you've borrowed as a trucking company to be able to run your business. Because a business is not just the revenue, it's the revenue minus the expenses. So when we talk about a load, those are just the revenue numbers. That doesn't take into account all the money that gets invested to actually get the load. And I'll give you like the last point of view on this because this is the thing I think is really different from the carrier side or the broker side. And I've worked with large trucking companies, and you know, they'll say, I want to do more work. With shippers directly. And I'm like, well, you should. Like, that is a good strategy and objective. Then they go, Well, how do I do that? I'm like, well, hiring salespeople is expensive. You're going to need CRMs, phone lines. And oh, by the way, like, even really good sales companies have to hire about 10 salespeople to find one that works out. So nine of the people you're going to hire and train for six months are going to bring in no money, are absolutely going to end up getting fired in six to eight months, but you're going to still have to pay for real estate, a computer, someone to find them, hire them, pay their insurance, train them, all for you to get one sales guy. And then they're like, well, how long is it going to take for I for me to get more business for my trucking company? I'm like, probably eight to 12 months. And you're going to have to pay 10 people for six months, of which one will be working with you a year later and you'll probably get one account. And they go, Well, that math sucks. I can't afford to do that. And I'm not going to invest that amount of money to maybe get some business in the future. That's the gamble that brokerages spend to get the freight in the beginning that trucking companies can do, but usually do not do because of the risk, right? There's very different risk in sales on the trucking side versus the brokerage side. And all that goes into like, okay, well, how much does it cost to actually get the load in the first place? This is why brokerages tend to end up getting more shipper business and then having to find lots of carriers, where most carriers don't do it directly because like you've got to invest a lot of money or a lot of time to actually make thousands of phone calls to different shippers to follow up, to convince them to give you loads, to negotiate the rates, to make sure you get all that business and then line up all your trucks, right? So that's why you see most of the salespeople and all the risk it takes to hire, train them, to find the ones that actually work out for your business, all that's an expense. There's a reason why lots of trucking companies don't just choose to do this because you would have to invest tens of thousands of dollars per month for the better part of a year to get a couple accounts. Maybe. And maybe you don't even get any couple accounts after you spent$80,000,$90,000 that year, right? So like that's the other piece of like what are the expenses in the business to do because business development or sales in any business is like one of the most expensive things. It takes a ton of time, a lot of rejection, and it's really hard to find people that can do that job well for a long period of time. That's why even when you look at any company, like all of their money is spent in hiring, training, and firing salespeople that really don't work out to find one or two people that are really good.

SPEAKER_02: 1:05:40

I'll add in here too. The when you when you look at a um a carrier's perspective, you know, your the the pay on a load is that's your revenue. That's what that's what your starting money is to work with to then pay for all of your other expenses and and hope turn a profit, right? In brokerage, that profit, that is not actually what we take home. That is our revenue. Some companies even just call it their revenue. When in reality, the revenue is what the customer is paying, but it's your gr it's your brokerage revenue or it's your it's the low gross profit. That's your starting point before you start to pay for all your other expenses. So um the the I did I looked this up this week. The average net profit percentage, uh, meaning after all expenses paid, bottom of the income statement, the amount of profit that comes out of every dollar that goes through that company for a brokerage and a motor carrier are almost identical at about 5%. Meaning that for every dollar that uh again, you're gonna have more profitable and you're gonna have some that just can't manage their expenses or can't get the revenues up. But um on average, every dollar that a that comes through a broker's door, five cents will be left as company earnings at the end of the day. That's that's your profit, right? And so I know the whole like 15% or 44% on the pink cheetah um example, that's the gross profit. That's essentially the starting revenue to start paying expenses on, like insurance and training and you know, IT and all the other things that Ben mentioned. And for every dollar that a trucking company gets paid, again, this is a gross simplification, five cents is what's actually made on that. So after paying for fuel and insurance and maintenance, et cetera. So five about five percent, they're they're pretty even. So um if a brokerage goes out of business, um, they did a bad job at bringing their revenue in or they're spending too much money somewhere. If a brokerage is way above that 5%, well, they had they either did a really good job at bringing keeping the revenues high and their expenses low or a mix of both. And the same thing goes for a carrier. Carriers that go out of business likely aren't bringing in enough money to cover their expenses because they either either overpaid for a truck or um they they contracted with a shipper for rates that that they didn't understand weren't going to be profitable for them, or they could be getting screwed by a broker. I mean, they there, those are all possibilities, but expenses are the are what we can control for as both brokers and carriers. Um, and I think there is there is a lot of frivolous spending that was kind of hidden four years ago, right? Five years ago when rates were three, four bucks a mile on average, that people went, they either overpaid for stuff, they bought crap they didn't need, they hired people that really didn't need to be hired. Um, and then as the market shifted back, just based off supply demand, they didn't adjust, right? And if you, you know, the the average broker is probably the average broker today, um like the the average individual working in brokerage today probably wasn't in the industry 10 years ago, right? So this a lot of people, this is all they know is is COVID and up to now, right? So they hadn't seen market shifts in you know the early 2010s and in 27 and 2018 and in 19. Um and then, you know, obviously what we've seen now, but this stuff happens um over like over time, right? Like the the trucking company that my the the that's sister company to my brokerage, right? Um, five years ago, we had 35 trucks running down the road. Today we have seven, right? We've we identified that it is not um to operate what the way we are operating wasn't as profitable. So we downsized and scaled back to the business that made sense for us for the company to stay profitable. And that's just a business decision. Um, and the you know, the people that were driving with us that aren't with us anymore are either owner operators doing their own thing and or they're maybe they're you know with a different fleet or whatnot. But we we knew that based on what what the market was doing and what we had the ability to change, we shifted our our expenses and our operation to maintain a profitable business. Same thing with any brokerage, right? Any brokerage today has had to find ways to we have increased costs on technology for vetting to prevent from fraud and theft and things of that nature. And we have to find ways to save money. And that becomes, you know, leveraging some technology to replace workforce, uh, having to, you know, lean more in on sales, et cetera. Um, it's it's business at the end of the day. And I kind of went down a tangent there, but um the the sample size of one load at 40 something percent, I think is is it's just not a sample, it's not a sample size, it's literally one load. And I gave the example earlier of a contracted lane um that might have annual pricing, or maybe it maybe I'll give you a more realistic example. Let's say we're on a mini bid for a 30-day bid right now, and I've agreed to pricing. We all know what happens on Friday, Fallout Friday, right? A carrier is gonna fall off more likely on a Friday than they will on a Tuesday or Monday. Um so I might have, let's say I have$2,000 that the customer is paying me, and I contracted a uh a trucking company for let's say$18.75, right? That carrier falls off because they find a they found a higher paying load, and now the next available carrier is$2,500. And I have to, I committed to my customer and I'm not gonna lose that business. So I lose$500 on that shipment. That stuff is very, very normal and regular. If I pulled up my my company's board right now, I'd be willing to bet that 8 to 10% of all of our loads that are booked right now are are at a loss. And that's just completely a business at scale. So the same business of picking one out of the bucket and you open it up and it's 40%. There's I bet there's some on our board that are at 40%. Um but the average is probably closer to like 12. 12 to 15.

SPEAKER_00: 1:11:55

Yeah, yeah. Yeah, that that happens to us, you know, when we we don't get paid our tone news, our detention times, you know, things like that, dealing with other uh brokers or whatnot. You know, that's the same thing. That's a bad road right there. That's dirty. But then, but then when you talk about, you know, you know, like uh TQL, you know, they hit for a one-time thing. But you gotta think that's that's once every what hour or so, how many lows they move. They find, you know, uh they hit a nice, we say quote unquote lick. They hit a nice lick, you know, for like uh once every hour. So, you know, and then go back to which what uh Mr. Benjamin was saying earlier. Um I've always proposed, me and and some of my other trucker friends have proposed, what do you guys think about truckers need to take a business course before they become an owner operator? Because or independent owners.

SPEAKER_01: 1:12:51

We wrote one. It's available for free through DAT's website. Yeah, they have DAT university. We wrote a freight broker course, and we literally wrote a course um exactly for this for owner operators and for drivers to be able to calculate their loads run, their expenses per mile, their revenue per mile, their profitability. So like you can access that right now through DAT for free. It took Nate and I like eight months to write that course out.

SPEAKER_00: 1:13:16

I love that. I love that. I love that because there's a lot of truckers or there's a lot of carriers out there that don't know proper business. Like back to Mr. Nate's point earlier when he was like in COVID, there was a lot of frivolous spending going on. You know, if we would have if we as carriers would have saved that money, invested it in sales or whatnot, found logistics coordinators at these shippers, went and built relationships with them, bought trailers. We all know a lot of shippers like trailer pools or whatnot. We could have, we we could go out and get our own carry, I mean our own um shippers or whatnot, our own lanes and stuff like that. But the average trucker, and this is where I speak up and I'm fair, the average trucker out there is lazy. Here, I I would say this.

SPEAKER_01: 1:14:04

I would take a different point of view on this. And here's here's where and why. Like, um, Steven, who's our producer, they're heavily involved in the asset side, family has for decades, right? And the interesting thing is that like we looked into some of the trucking associations. I can't remember what it which one it was, but they're like hundreds of carriers at the meeting Steven was at. And he was telling us like 90% of them all have a brokerage authority and just don't do anything with it. Because there's nothing preventing a trucking company owner from also being a broker. But what happens is is, and I've worked with a lot of them where they've reached out and said, hey, I want to get this brokerage off the ground, right? And it's the same conversation I said earlier. I'm like, okay, here's the amount of money you're gonna have to invest in order to get this off the ground. Or you're gonna have to find someone that does everything you do all day, and you are just gonna have to hammer the phones for the next four to six months until you can get some customers in. And it's probably gonna be a year before that brokerage is even close to breaking even. So you can either allocate, you know, a hundred to two hundred grand to get this brokerage off the ground quickly, or you can spend a year and a half, find someone else that can take everything off your plate, and you got to hammer the phones every day until you can build this out. And what all of them decide is like, well, no, like I would rather be on the trucking side, there's less risk. There is less risk, right? Like there's different risk profiles to brokerage versus carriers, and there's nothing ever preventing carriers from also being a broker. It's that when they come to that point of having to make that decision of either investing a significant amount of time and effort or a significant amount of money into hiring other people to do it, they go, it makes more sense for me to just buy a couple more trucks and keep building this business. So there's tons of dormant MCs owned by trucking companies, like literally thousands of them that just don't ever operate because like this is what goes into that business that is very different than the trucking business. And I don't think it's miseducation. It's just that like they're very different businesses. How they make money, the risk profile, how and when you lose money, they're just not the same. They're both involved in moving things, but they're just very different risk profiles as businesses.

SPEAKER_00: 1:16:11

Yeah, I was gonna ask, what's the risk? Because the risk to me just sounds like, oh, I gotta spend time and a little bit of money. I mean, 100 to 200, you know, back in the COVID days was nothing, but I just gotta spend time building relationships versus jumping in a truck and driving a truck when somebody could cut me off and I'm more at risk of having an accident and losing my life. I'm just talking about truckers because how many you guys go to broker carrier summits and things like that. How many, how many carriers you guys see at the broker carrier summits? How many carriers do you guys see at these conferences and things like that? You know, and I'm trying my best to get carriers to come out to these broker carrier summits and whatnot. But the like I said, the average carrier, oh no, I'm gonna go home and spend time with the kids, I'm gonna go home and spend time with the wife, or I'm gonna get on this road and and run this load, or I'm gonna go take a trip to Barbados or something like that. When we as carriers don't invest back into ourselves. This is me talking to the carrier.

SPEAKER_01: 1:17:12

Yeah, all pretty true. I mean, and also everybody's I mean, people are different, and it's not just a matter of like intellect. Some people just have different priorities and preferences. Like, I remember asking my dad this. My dad worked in construction his whole life. I was in business school at the time, working in construction in the summer, and I'm like, Dad, why in the hell are you not running this business instead of running the cruise on the job sites? My dad used to tell me, he's like, I don't want that stress. I don't want to worry about my job when I'm not at my job. I want to show up, do a job that I enjoy, make a good living, and go home and be with my family. He's like, the guy who owns the business, Rick, he's working 18 hours a day, sometimes seven days a week for months, trying to make sure we have enough business to keep us busy. He's like, I don't want his life, I want my life. That's my preference, right? And it's not always about like intelligence. It's just like, what choices do you want to make and how much risk or things do you want to spend your time on, right? We all have a limited amount of hours in the day, and some people just choose to do things differently based on what's important to them. And that also changes over time. Somebody that might take a lot of risk in their 20s doesn't want to in their 30s, or vice versa, like that's what's unique about you know all the different people in the economy.

SPEAKER_02: 1:18:20

I will say this too, and then I want to wrap up on a uh of a glimmering positive note. Um Okay. Any so I'll say this first though, that any if you're a carrier out there and um you're disgruntled and upset and think brokers are stealing your money, um there is nothing stopping you from going right back to that FMCSA website and paying$300 and getting your brokerage authority. You can you can you can hop onto the thief side if you'd like to, if that's what you think is happening. Um but here here's I want to end on a on a positive here. So uh we talked through a lot, right? And I think back to my my example of 2019 when I talked about the animosity between brokers and carriers, and I wish we basically to sum it up like why can't we all just get along? Um, Avante, what what speaking to the audience, you know, brokers and carriers, what would you say or advise um to put us a step in the right direction of of having a harmonious relationship? Because the reality is we need each other. Brokers need carriers. We we brokers cannot service their customers without the carriers that are doing the the hard work of driving long hours and being away from their family and um small carriers that don't have a sales team and direct customer relationships heavily rely on on brokers to to keep them loaded and rolling. So, what would you say to folks out there to um to take us a step in the right direction?

SPEAKER_00: 1:19:53

Yes, sir. My thing that I could that I want to see happen in the future is I want to see brokers and carriers come together. But the only way we're gonna be able to do that is if we take it upon ourselves to put ourselves in each other's shoes. You know, the the uh carrier, stop pointing the finger, you know, get you a good relationship with the broker and start putting yourself in their shoes and not only seeing things from their standpoint of view, but also educating yourself as well. And from the broker's standpoint, stop pointing your finger at the carrier, put yourself in their shoes, look at their perspective, look at their risk, you know. Um, because like you said, without each other, we don't exist and and we need to come together and have a very good kumbaya moment, moments, you know, in the future, because you guys need us just as much as we need you. And I think it's time for both parties to stop pointing the blame at each other and let's work together and find a common ground.

SPEAKER_02: 1:20:58

Agreed. I always tell people like I talked about transactional transactional brokers earlier. Um, if you're a broker, I would highly encourage you to take the extra time when you're talking to a carrier and find out what their fleet looks like, where do they prefer to drive? What you know what does it take for you to help find them a load to get them back home so they can get to their kids' soccer game and um you know just work together and mutually go get more business, right? And and everybody helps everybody out.

SPEAKER_00: 1:21:27

So I got another one. How about the freight broker jump in the truck and take a ride with the trucker one day? A whole day and and sleep at a truck stop and take a shower at a truck stop and eat at a truck stop.

SPEAKER_02: 1:21:41

Exactly. And there's a reason, Avante, that I work on the brokerage side now and no longer on the carrier side. I did not I did not enjoy sitting in a truck. Um I worked on a dock for a number of for I worked in the office, I worked on the dock, and I did ride-alongs too. Um, I've done customer business. I've done I've I've done a lot of the stuff on the carrier side, and there is a reason that I uh enjoy the brokerage side more. It's a preference. I don't I like I like to be uh behind a computer and not in the truck or on the dock. So but yes, I agreed. I I think that's that's a huge thing. If you are a um even if like if you're a broker and you do it, go visit your customer. There's gonna be trucks there, right? Talk to talk to some of the the drivers that are there and get their perspective. Um I had I had one and I I won't tell the whole story and waste time here, but um there's a lot of frustration about like, you know, drive drivers are like what you know, they're showing up late and to the wrong place and all this stuff. And then the customer's docking money, and the cut the drivers get pissed off that they're getting docked money. And then we go to the location and the customer has the most confusing facility in the world. And all we have to do is take some pictures and make a little like thing to to text out to the driver, hey, here's what you're gonna see. Make sure I know it says this, but you want to turn left down this um this driveway and their facility to get to the correct location to check in, right? So, yeah, I mean, I highly encourage all that stuff. Put yourself in everybody else's shoes and and get a just get a different perspective and a paradigm shift. So um, CDL Shorty, Avante Jackson, we appreciate having you on. Where can folks find you and your content online?

SPEAKER_00: 1:23:19

Uh thank you. Thank you once again, both of you guys, uh, Mr. Nate and Mr. Benjamin for having me on. Um, people can find me on Instagram at AVJ8. You can find me on YouTube at CDL Shorty. Um, yeah, things of that nature. Um and then one last thing I want to leave you with, guys, is uh I know a lot of people are talking about non-domicile and domicile CDLs and crashes and things of that nature. But I want you guys to really look into and educate yourselves on um underride crashes. Underride crashes are starting to become a thing that nobody's talking about. You know, an underride crash is when a car goes up underneath a tractor trailer and dies. And it's been a lot of American-cause underride crashes versus non-domicile and domicile CDLs, um, which NHTSA, OIDA, and everybody else has helped covering it up. Did you guys know that uh only 14 states out of 51 only recognize underride crashes? So that is a statistic right there that's climbing up in the ranks that nobody's talking about. Um so when we talk about, you know, we talk about safety and things of that nature, that's one thing that we need to talk about because Wombash got sued, the trailer manufacturers, they got sued over it. Um NISA's helping cover it up. Um uh uh um state troopers, you know, on their accident report. They don't even have a um they don't even have a thing to say this is an underwrite crash. So in order to actually find out if a crash is an underride crash or not, you have to really go into the NISA database because they don't have it marked as underwrite crashes and that's where interesting.

SPEAKER_02: 1:25:04

All right. Well, we appreciate it. Thanks for joining us. And uh Ben, any final thoughts?

SPEAKER_01: 1:25:10

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

SPEAKER_02: 1:25:14

And until next time, go Bills.