Are Brokers Parasites? & More Q&A | Final Mile 91

Speaker 1: 0:19

All right, welcome back for a final mile edition. Here we're going to answer some questions and actually give a reaction to one of our YouTube haters at the end here. But if you're brand new, check out all the other content at Freight360.net. You'll also find the Freight Broker Basics course. While you're on our website, and please check out all of our sponsors to help support this channel. They're in the description box. All right, hopping right in.

Speaker 1: 0:47

First question here I've wondered is there a platform to bid on freight shipments? So this is the age old question of like hey, where do I go find these customers that need me to move their freight Right? The short answer is no. There's not like a magical, like bidding place out there. But I'll add two things here.

Speaker 1: 1:09

Number one um, I bet I could go find 10 customers today that would put me on their load list and basically send me their this you know their example or their version of this like I'm gonna get a list of 50 loads and they're going to say either here's the price or, you know, bid on these, here's our upcoming shipment. So you can get on a load list which is basically jump ball freight goes out to like a ton of people. So that's kind of an example of it. Another scenario would be as if you have a customer and all of their bidding is done through an online portal. So once you've gotten onboarded with them, they're giving you a chance to work on their freight. Their stuff is automated through a third party system online. I've seen that for a lot of customers where everything's done on their website or through a third party website but there's not like a magical load board of just customer shipments out there. You got anything to add on that one.

Speaker 2: 2:08

I don't. I would just say that, like, even in this market, like I've got brokers that I work with that are adding one guy, like two, three new customers a week and I would say every six to eight weeks, every month and a half to two months a larger one we're getting an opportunity to either bid or get on their spot board. So I mean there's opportunities no matter what market you're in. And the thing is about now the upside of the tariffs and all of this is that, like all these companies are looking at different sources to supply, meaning they're looking at lanes they don't normally run. So they're open to having other brokers quote new lanes to see if you might be able to service them better or give them whatever it is they need different from their current brokers. So I mean there's always opportunities out there if you put in the time and effort.

Speaker 1: 2:53

Next question what do I do if someone is using my MC to book load? So if you are the victim of identity theft, I still do. Yeah, this is like the worst.

Speaker 1: 3:05

It like really hard because, no matter what you do, you feel like you're hurting yourself when you do some of this stuff, but, like the, because you're gonna raise red flags, right? So, um, I think, if you're, if someone's using your mc number, I'm gonna alert all of my um, my go-to carriers, right, anybody that's on a current load of mine, any of my go-to carriers that I use on a regular basis, like, hey, someone's trying to use RMC and book loads. You know, beware, right. So, basically, like, well, I guess, if you're a brokerage, it depends if you're the brokerage or the carrier, but either way, you want to go to like your go-to people that normally are used to dealing with you and say, hey, someone's trying to spoof me right now. If you're not talking to me on the phone, don't trust that person.

Speaker 1: 3:51

Right, you could change your, change your login information on FMCSA, which will raise red flags again. Right there, you can post in a blast out in any public way, like I've seen it on highway, I've seen it on DAT, I've seen it on um, uh, uh, tia watchdog. I've seen like all different ways of um people trying to get ahead of this and the reality is like it just ends up really sucks, like it really really sucks that someone did that and they're trying to scam other people using your legitimate um credibility are we assuming this is a carrier or a broker?

Speaker 1: 4:27

yeah. So I'm trying to kind of answer it both ways. If it's a carrier, I'm gonna make sure I'm going to my my go-to brokers. Um, if it's if it's a broker, I'm gonna go to my go-to carriers. Like, don't take any loads from you, know someone who claims to be me, um. Or if you're a carrier, um, you know, don't uh, um, go to your broker like, hey, don't book any, don't book any of my trucks unless you talk to me.

Speaker 2: 4:51

Type, deal, right, um because the reason they do it is you have a clean mc, a legitimate company.

Speaker 1: 4:58

They want to impersonate you to be able to take freight from somebody, um, and then steal it, rebroker it, whatever the case might be.

Speaker 2: 5:07

So so, yeah, I've had a few carriers that have put flags on themselves, like in the past week or two. Um, that we've seen, that we've caught, and then you know, work through, work through the situation, it carries like, hey, look, but the thing is like, the thing I would say is, no matter which side you're on, you want to get as much information as you can to put into whatever flag you're going to put out, right? So it's like you want to know how are they booking loads on your MC? Did they somehow get an email created under your legitimate domain? That is very different and something you need to work on and fix. Are they creating Gmails that look like your domain before Gmail?

Speaker 2: 5:45

And you want to be very specific when you put this information out there, because I've seen these flags. They're so general, you don't really know what the crime or how it was happening, so you just kind of don't use them. The more specific you are, the better. And the same thing from, like, the brokerage side, right? Like if someone's booking loads on your MC and I've worked through that with a client a few times last year it's like you're calling, we're going to carry going. Hey, send me the Raycon, I want to see the name and number on it. I want to see exactly how they sent it to you, what it looks like and look for those specific details to put that information out there as like a public service announcement.

Speaker 2: 6:21

And the thing I want to point out too for the carriers out there because I talked to a couple of attorneys in the past month or two about this is I forget the term they use but, like carriers are deemed sophisticated, sophisticated buyers I forget what the actual legal term is meaning.

Speaker 2: 6:37

Like you know you own a business and with that becomes the responsibility of knowing who you're doing business with. And a lot of the times the carrier will be like, hey, I took this load from a broker and that broker doesn't exist, so I'm going to call the shipper and demand my money from them because the broker didn't pay me. If I'm a carrier and you know this much fraud's going on, you should be doing the same things we talked about in that full-length episode of look at the brokerage MC, call the phone number on the FMCSA, look for a name change. You want to verify who you're getting loads from and make sure that is the legitimate company and not somebody impersonating them. Right, because it's a two-way street. Both of us are in this business together carriers and brokers and both of us have responsibilities to make sure the person we think we're doing business with is the person we think we're doing business with.

Speaker 1: 7:25

Yep, absolutely Our next one. I'm about to start up and I have some questions. People are telling me it's not worth it and that I can't compete with the huge brokerages, but I really want to start. Can you give me some guidance? I want to say one thing and then I'll let you kind of run with this. One is that can't compete with huge brokerages. That's one of the great things about our industry is that, like you, don't have to doesn't matter big or small.

Speaker 1: 7:49

Like you have the same, you have the same ability as everybody else, no matter what your size is. But what are your thoughts?

Speaker 2: 7:56

and take on this one I think there are advantages and disadvantages to each One is not better than the other. Right, a big brokerage has more financial backing and more notoriety. But if you work at a big brokerage it is really hard to even get a shipper's name, basically to allow you to even prospect them, because you're competing with five or six thousand other brokers that all have a lead list of one hundred and fifty companies. That's a lot of companies that you can't call because someone else is working them. That is the biggest disadvantage in a small company. It is wide open. What do they call it? Blue Ocean the whole market. You can pick up the phone and call any shipper you want to do business with. And what do they call it Blue Ocean the whole market. You can pick up the phone and call any shipper you want to do business with.

Speaker 2: 8:36

And then the other big advantage, I think which is the more important one of a small company over a large one, is as a small brokerage I can offer two different types of service. We'll just keep it simple. If I worked at a big brokerage like TQL, I don't get paid unless I am able to charge upwards of 25% margins, because that's the way the company is structured Like. You've got to be able to sell service and you've got to be able to sell stellar service and get your customer to appreciate it to be able to succeed there. As a small company I can do both. I can sell service when they need it and get better trucks with better communication and staff it differently. If I've got a price sensitive customer that wants to give me volume, I can run that at lower margins, staff it differently because that's what the customer is asking for.

Speaker 2: 9:22

I don't need a lot of communication. I need confirmation when it gets picked up and delivered. I don't have many standards on insurance above making sure they have cargo. I don't necessarily have a preference to who's picking it up and when. Pick up the load today or tomorrow, okay. Well, hey, you're going to give me that much flexibility. I can operate on a lower margin because at the end of the day, both make sense to me as a freight brokerage. At a big company I'm at CH, I'm on the cheap end. Typically that was the old adage. If I was at TQL, I got to be on the service end and you really couldn't do both as a small company. You can offer shippers so much more than the large companies because you have flexibility in how you structure your business, how you staff it and how much effort you're going to put into it.

Speaker 1: 10:05

Yep, absolutely right. All right, now, this one I picked. I liked it. This was a react. I want to give a reaction here. Someone we did video and I forget what video was something on YouTube, and this is a comment we got.

Speaker 1: 10:20

Brokers are an unnecessary leech of the industry. They are the single most reason for bad rates in the industry. They market themselves to manufacturers and shippers as the means to cut costs, when in reality all they do is cut rates to trucks and then slowly raise rates on the shipper, but yet they never increase rates that they pay. Really just a parasite on the industry. This is just absolutely wrong on so many levels. So I'll go through like a kind of I'm going to go through a couple of pieces here and then I'll see what your take is. But I understand First of all. I understand Right. Whenever someone thinks like broker, they think, well, they're getting a cut of what I should be getting paid, right? Or they're they're skimming off of whatever. It's going to cost me more money to use them, whether it's a real estate broker or a insurance broker or a freight broker, getting the access to the vast amount of options out there in the market. They do get you what you need and at a rate that's reasonable. So that's just the reality of how it works.

Speaker 2: 11:32

Now it means the cost, because that point is really important. Just to sit on that one right Like. Here's the thing a large shipper is not going to onboard 50,000 carriers that have less than five or 10 trucks. Why? Because they don't have the staff to do it, which means none of those loads from those large companies are ever going to be available to a small company. Why? Because that big company isn't going to hire enough people to do it. So those loads are just going to go to big carriers, mega carriers, and they're never going to get to smaller carriers, and there would be no spot market, to your point, on the market that gets created 100%.

Speaker 1: 12:08

Now they market themselves as a means to cut costs. Some brokers do that and the reality is sometimes they can, because again we can source the market and find potential backhauls or lower deadhead miles, a carrier that's a better fit, which could return, you know. In turn, reduce costs Slowly, raise rates on the shipper, but don't pay the carrier more. I don't know where this data is coming from. If you look at the data of what rates we're paying, historically it fluctuates based on where the freight market is. We're looking at things like how much freight is being shipped? That's your demand. How many carriers are out there that can haul that freight? That's your supply.

Speaker 1: 12:51

When there's an imbalance one way or the other, prices will go up or down. In the peak of COVID there was not nearly enough capacity of trucks to haul freight, so we were paying premiums to get a truck. On the flip side, in a freight recession, if you want to call it that, when there's just not enough freight to fill all these trucks, the rates go down. Carriers are willing to take a load for a lesser rate because they'd rather do that than just sit there and not drive at all. So we as brokers don't control the market. I'm sure there's bad brokers. It's like there's bad carriers out there, but on the whole, here's what we're talking about.

Speaker 2: 13:30

There's bad shippers.

Speaker 1: 13:31

Yeah, exactly brokers, it's like there's bad carriers out there.

Speaker 2: 13:33

But on the whole, here's what we're talking about bad shippers. Yeah, exactly. Um, here's the thing. Right, if every carrier today just decided to not turn their wheels unless they got two dollars and fifty cents a mile, guess what? Maybe not today, maybe not tomorrow, but within a few days all of the rates would come up. The truth is, why this carrier is saying rates are falling has nothing to do with a broker. It has to do with the fact that another carrier is willing to run it for less money than what you want to run it for. So they are going to take that load.

Speaker 2: 14:06

The broker isn't saying you can't get paid this. They're saying I've got two options. Both of you have the same insurance, both of you have the same ratings, the same equipment. This guy's willing to run it for less. You want it more. You say that's a fair rate. They say this is a fair rate. At the end of the day, in free market economics, the value of a price, of what something's worth, is what somebody's willing to pay for it or provide the service for it.

Speaker 1: 14:30

So at the end of the day, if somebody is going to go perform that work for a buck 80 a mile and another guy wants 220, the price on that load ends up going to the lowest until, literally in the last couple of weeks, we set up a new insurance policy and we use an insurance broker to shop the rates and he came back to us with five you know five carriers that were willing to underwrite this policy for us, with various different uh terms and whatnot, and ultimately, like one of them came in like really competitive and we ended up going with it and it's like that's how.

Speaker 1: 15:03

that's how this works, like it's a little like, the freight market has more intricacies to it because there is a finite amount of assets to haul freight and like a physical amount of goods, whereas like insurance, like anyone can buy, buy an underwriter policy for anybody right. Whereas, like, we're literally dealing with supply and demand, like at its finest in freight brokerage. And it's not because that other carrier just wants to haul it for less, it's that they know that if they don't do it, somebody else will, because there's just a lot of capacity out there. That is just your economics 101, right there.

Speaker 2: 15:39

I'll tie this into tariffs. So 50% of our farms soybeans are being purchased by another country and that country is getting a tariff of 140% and they stop buying it. The price of soybeans does not go up. That means there's 50% of the market that is now available. With nobody to buy it, the price will plummet. Right? That's what happens. Like it doesn't make a difference what it is. Whether you sell apples or a service, if there's a finite amount of need, whether it's supply and demand, right, they're going to meet in the middle, and as one goes up or down, so does the other. Right? Like it doesn't make a difference what it is, whether it's the housing market, whether whatever it is, if somebody's willing to pay for it, that's what it ends up costing, not what somebody wants for it. I can list my house for $5 million. It doesn't mean it's worth $5 million, it's what somebody is willing to trade their cash for. That determines the value of my house. Yep, precisely.

Speaker 1: 16:38

Good comments, good feedback. Keep the hate mail and the hate comments coming. It's good, it's juicy and we'll react to it. But final thoughts, ben.

Speaker 2: 16:47

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

Speaker 1: 16:51

And until next time go Bills.