Do Motor Carriers Need Freight Brokers? | Final Mile #43

Speaker 1: 0:19

Welcome back for another Q&A session. It's the final mile. We take your questions excuse me, whether it's from YouTube comments, through our website or just via email. We're here to answer any questions that you guys have. We've got four today. We'll be getting to all these, but first please take a moment. Check out all of the sponsors in our description box. We've got levity, blue book services, dat, quick scope, and we hope to be adding more trusted partners as the year goes on. So check them out, help support the channel and our friends over at those companies, and check out freight three 60.net for all of our other content, including our freight broker basics course, for a full, deep dive into how to launch and grow a successful freight brokerage. All right, let's get into it. Ben, first question this came from. Most of these came from our either Facebook group or YouTube comments.

Speaker 1: 1:19

I paraphrased this one to keep it kind of short, but basically, my customer wants me to grant power of attorney so they can sign customs paperwork. Can I do this? Was that you that sent the response, ben? Or maybe it would have been. It was me, okay, so do you have more? I think the context there was a specific customs form and they said, I'm pretty sure that's only for, you know, only for carriers, et cetera.

Speaker 1: 1:44

Here's my take on anything international. The FMCSA does a really good job at defining the roles and licensing for various transportation providers. The three main are brokers, carriers and freight forwarders. They're going to break that up depending on the type for household goods or non-household goods, um. But as freight brokers, right, we are not the responsible party for, um, producing or completing customs documentation. We're not customs uh brokers, we're not, um, we're not freight forwarders. So I worked at a carrier for a number of years a little over a decade ago and we did some international shipping. But keep in mind, the transfer of custody of the customs paperwork did come through us and to our driver and it followed the shipments, but it was not on us to complete that paperwork. Right, that all came from the shipper. So, and especially as a 3PL, as a freight broker, we're not the ones hauling it. Right, our job is to facilitate the movement of goods between a shipper and a motor carrier. Right, we're not a licensed carrier, we're not a shipper per se and we're not a licensed freight forwarder or customs broker.

Speaker 1: 3:11

So I would caution anybody from, as a broker, overstepping their licensed role in preparing documentation for an international shipment right. If you want to give guidance or advice based off a previous experience, by all means you know, do so. But I like, even with like anyone who's like hey, you know, you know, do we have any? How can we handle this, this ocean shipment going over to yada yada country? And I always personally default to finding a good freight forwarder and building a relationship with them the same way that you would treat a motor carrier in your carrier network. Right, they're the experts in hauling the goods and freight forwarders are the experts in arranging transportation for international shipments.

Speaker 1: 3:57

And power of attorney I mean that just scares me to think that a shipper wants you to sign power of attorney, almost like you're a motor carrier in getting paper prepared. So never treat yourself like a motor carrier when you're a licensed freight broker, and I definitely wouldn't give power of attorney to a shipper when it comes to signing documentation on someone else's behalf. Did you have any other insight on the question that came in? There Is that no, really.

Speaker 1: 4:23

I'm like, don't do that.

Speaker 2: 4:25

I mean to be honest. It's like I always look at the licenses and like what? How they govern? Right, like a forwarder's license or an NVOCC right, they're licensed to move cargo from country to country. Right, like that's part of their setup. That's their license right, country to country. Right, like that's part of their setup. That's their license right. And our license allows us to tender and transfer possession of not transfer possession of freight, but to transfer the contract to move freight domestically. Right, anytime. I've shipped and I used to work with DHL Canada they were a big customer of mine a long time ago Like anytime something's moving over the customs docks, even choosing the customs broker wasn't up to the freight broker.

Speaker 2: 5:11

The customs broker is chosen by the shipper and then the carrier submits the docks to the customs broker to go across the border to Canada back and forth or into Mexico. So we really just handed the paperwork off to make sure, if somebody needed it, that we got it from one person to the next, but we weren't responsible for it at all. Our license doesn't really have anything to do with bringing things internationally at any point, and I researched that form. I think it was like 7512. I might even be able to like, see it pretty quick, but even in the explanations of it, right, like, when it references transportation, it's referencing like forwarders or carriers, right, which makes sense. They have yeah, they have the license to do that, not a freight broker, right?

Speaker 2: 6:00

So to me it's probably more that the shipper just was hoping that the brokerage could provide that service, meaning like let me just give everything to you and you just make sure it gets done, kind of thing, was my read. Even the comment said that is like I think this is what they're asking. I'm like, I think that's what they are too, and what I would do is, like, literally like, and it also depended on where it was coming and going, and I asked them to send an email so we could get more information, instead of having that all done on the comments. Because if it was going to Canada, right, like I would reach out to whoever the customs broker they've been using is. If it's going, you know, to Mexico, I would have done the same. If it's going through a port to another port, like then I would want to know who their forwarder is, because you can't arrange that anyway, like you're not able to and it's not under your license.

Speaker 1: 6:50

Yeah, like. So obviously the USMCA, which replaced the North American free trade agreement. I think it was NAFTA, right? So USMCA replaced NAFTA a handful of years ago. That does make transport between US, Canada and Mexico a lot easier, but it doesn't mean you skip the customs process. There's still customs paperwork involved there. It just makes it a little bit easier to get stuff moving freely with less restrictions. But yeah, I mean we're not responsible to prepare customs paperwork. Freight forwarders take legal possession of shipments just like motor carriers do. We don't do that as freight brokers. So definitely shy away from being treated anything close to a motor carrier or freight forwarder and when in doubt, use a good, trusted legal transportation legal professional to help you kind of clear the muddy waters on anything you're unsure about.

Speaker 2: 7:45

So we're not attorneys by any means.

Speaker 1: 7:47

But you know, definitely have a trusted one.

Speaker 2: 7:49

Correct. And the other thing I learned, like when, when I first started working with the shipping lines as a direct customer right, so I'm on the phone with them all day, talking with them. I worked with lots of people in different departments and what I learned was because this would come up right, like I would have a customer and they'd be like, hey, can you handle international? You're literally bringing the, you know, the delivery for my containers for Maersk, for example. Or like, hey, can you help me with this? Right. And when I first went down to figure out what we could and couldn't do, right, like with the way it was explained back to me from our person who literally lived on that side of things, the international side, he's like, listen, like the license does not allow you to. Your license is a freight broker, right, the ones that we all have and we all talk about on the show. Right, it does also not even allow you to make money on that portion of the transit, which meant, cause I asked this I go, well, can't I call a rep that I know at Maersk to arrange and negotiate this? Them give me the bill. And I just throw a margin on it because I did some of the legwork to put it all together.

Speaker 2: 8:54

Just the same way we would do a truck, and again, the way it was explained to me is like we aren't authorized to make money on it because we aren't licensed to do it, so you can't profit from it.

Speaker 2: 9:06

I've seen companies try to skirt that by calling it like a consulting fee and to try to get away with it. But it literally doesn't fall under your license and we aren't able to make money on that for that very reason we're not licensed to do it. So even when I did it to your point, what I would end up doing is like literally just connecting them directly, and it's most often easiest with a freight forwarder, because then the freight forwarder handles the international piece and they give you the business for the domestic piece. So maybe they bring the container from wherever Turkey or wherever into the US. Then you pick it up at the port and you're able to make your margin on the trucking piece and it's beneficial to the freight forwarder, which means it's more likely for them to give you some of their other business. Like I always try to look for relationships that benefit both parties, because then it's a win-win situation.

Speaker 1: 9:54

Here's another example too.

Speaker 1: 9:56

So yeah, we can make money on the domestic part.

Speaker 1: 9:58

I've had situations where like, hey, I want this to go from Buffalo to the port of Jacksonville and then to some country in South America. Right, I just I just made that up. So if you find a forwarder that can help arrange all of the transportation and your hope is just make money on the domestic part, well that forwarder most likely is just going to want to work directly with that kind of customer to arrange all of it, unless it's just they're either going to work with just you know port to the other country and you're not involved at all in that and you don't make any money on that because you're not licensed to be involved in that, or they're going to say you know, we can just work with this customer ourself directly and if we add our margin on, then you add your margin on the domestic part. The price becomes so high to the customer that someone else likely a forwarder will directly be able to beat you in a competitive price there and just be the single point of contact. So it's tough.

Speaker 2: 11:00

But that's why, if it works both ways, it helps.

Speaker 2: 11:02

Like again, like one of my forwarders, I do this with right and basically he's just dope with me. He's like this is about what I think I can charge and still be fair market. And then he's like this is what my margin would be. I'm like, okay, well, like, if I keep bringing it to you, can you work your margin down just a little so I can get a little bit of this, because there's not enough room for me to keep spending the time talking to get you the information right. Like I've got to be able to make enough to want to keep doing it. And if you work together, that's what's always played out for me is like, hey, they'll be able to reduce it in some where they can, so I can get a little more. And vice versa, like I'll try to, you know, whittle down a margin and sometimes do them for free to be able to help them. And it's a give and take, right, it's not trying to make the same thing on every single load or not moving it right, like it's a give and take Precisely.

Speaker 1: 11:48

All right. Our next question this one's funny how do I handle carriers that say the industry doesn't need freight brokers? Well, my short answer is don't get in a pissing match with a carrier who's probably not going to work with you anyway. I'm not sure where the conversation would have happened, but I mean, there's a lot of people that try to connect on social media. You see Facebook groups, linkedin we see it in our group a lot and you get carriers that hop in. They're like freight brokers are stealing our money, they're evil, blah, blah, blah. I just wouldn't engage in it. I wouldn't right.

Speaker 1: 12:21

If you have a motor carrier who truly believes that freight brokers don't serve a purpose in this industry, they probably don't have a full grasp on the scope of where everybody falls in line, right? Do freight brokers play a role in 100% of the industry? No, there's a lot of really large asset-based carriers that run a really good operation. They've got a good reach, a lot of expertise, and they don't really have a need for freight brokers, or a very minimal need, for that matter. But we've gone through the stats before and I might botch these, but it was something along the lines of 98% of motor carriers have less than 20 trucks and 92% of them have seven or less. So the vast majority of the licensed motor carriers are small companies and they don't necessarily have the ability or the expertise to go out and spend a lot of time getting business, aka getting direct shippers, and maybe they might get one or two, but for every single place that they drive are they going to have a direct shipper.

Speaker 1: 13:21

It'd be great, but it's just not the reality of how it works. So freight brokers we come in to help find the most efficient way for drivers to keep hauling loads with as little empty miles as possible, keeping them loaded, etc. So we do serve a purpose in a big, big percentage of motor carriers that are out there. But the bigger ones, yeah, we don't really serve a lot of purpose there because they've got their own internal sales department and sales functions. Purpose there because they've got their own internal sales department and sales functions. But if someone's going to try to, you know, go toe to toe with you about our role in the industry, it's not really worth wasting, wasting the precious oxygen trying to have. You're not going to convince somebody that doesn't want to be convinced. So I just wouldn't bother, you know.

Speaker 2: 14:07

No, and it's. It's an uphill battle with no ability to help the other person understand. If people aren't open to listening or understanding. Like to be honest, as soon as I kind of feel that, I just kind of move on because it's not worth the effort to try to argue or explain how you can work together. To me, if it's a carrier you really want to use for whatever reason, and they don't want to work with any freight broker, like to your point, maybe they just have enough dedicated business that they don't work with any brokers and that is what it is right.

Speaker 2: 14:42

But I don't think there's too many instances where, like, you'll come across a truck or a carrier that would really work for your lane where they don't want to hear you out, a truck or a carrier that would really work for your lane where they don't want to hear you out. But if that does occur, like a rule of thumb is use questions, not statements. Like you're not going to understand why they feel the way they do unless you ask them questions. Trying to convince them why they're wrong definitely won't work. But ask them like, hey, what has happened? Do you have you had bad experiences with a broker? Is there something specifically you're worried about when, with us working together, is there some issue that you think you know you might not be aware of, like what is it that makes you feel that way? Try to understand where they're coming from first, and usually literally just trying to understand and caring enough to ask will help make the conflict dissipate or go away and help you work through it.

Speaker 1: 15:32

I would imagine in this instance it could have been broker as a load as looking for a carrier, and maybe they started just cold outreach into carriers based off location and they might have called a carrier. That's like we don't use brokers, we have our own customers, we don't need you guys, or something like that. So who knows, all right. Next one, speaking of sales what percentage of cold calls lead to you actually talking to a shipping manager? We don't have a. There's not going to be a right or wrong answer here, because it totally depends. If I try to call in July to prospect Christmas trees, uh, probably 0%, right, um? If I try to call um, um, you go back to 2021, the peak of like everything. You probably more than half of your phone calls you're probably talking to somebody, but I mean. So I'm going to try to go off of like stats that I've actually gone through recently, like in the last six months, where it's the current softer market and it was less than 10% of the phone calls where we actually were getting through to the right person or someone that would even get us to the right person. Right, there's a lot of. You know you get, you get a voicemail, you get a receptionist who doesn't want like that's your gatekeeper, right? They don't want to give you, they don't want to transfer to that person, they'll. They'll say they'll take a message and if you just ask for their extension, they won't want to transfer you to that person. They'll say they'll take a message and if you just ask for their extension, they won't give it to you.

Speaker 1: 17:06

It just really depends. When shippers have a need for us, they're going to take our calls a lot more often, and we saw that in late 2020 into 21 and early 22. But when they don't whether that be just the freight market or how capacity looks or the seasonality of their commodity if they don't need us, you're not going to be able to have as many phone calls as easily. You have to get a little bit more creative with how you're trying to route your way into that person's sphere of influence, whether that's through getting routed through a sales rep or an accounting rep to their phone line or phone line, or I'm getting an email introduction from somebody that knows them and wants to give you a referral. It's a lot harder.

Speaker 1: 17:47

So stats I mean I would say right now you're, you're probably. I'm going to ballpark and say you're probably like, at a good day, 10% you're going to get through. So if you make a hundred calls you might talk to 10, but I think that's high. Even what have you been seeing lately? And I know again, if we were to go back three years, it was way different. But how would you say things are looking currently?

Speaker 2: 18:10

I think it depends on what question we're really asking. So, if the question and the intent is shipping manager and what they mean by that is decision maker to onboard you, right? And what they mean by that is decision maker to onboard you, right? I'm not usually trying to speak to that person first because, for one, they're the most busy and also, like, the person who typically decides when people are being onboarded or aren't is not the person that is dealing with the day-to-day shipping operations. What do I mean by that? Like your traffic manager? Yeah, correct, that is dealing with the day-to-day shipping operations. What do I mean by that? Right?

Speaker 1: 18:42

Like your traffic manager.

Speaker 2: 18:44

Yeah, correct, and a mid-sized company, not like huge ones, like a mid-cap, you know, not very small but big enough that they've got a department because they have a manager, clearly. So it's not just him, he's overseeing other people, right? There's usually three or four, maybe even five people that are actually tendering the loads, and they're the ones also that are experiencing the problems that we actually help with, right? So there's a much different value to the person that is actually either booking the truck or getting yelled at when the truck doesn't show up and has to deal with the problem of booking twice as many loads tomorrow. That person's day-to-day life and what they need help with at work is usually different than their managers. Their manager might not care, and it depends on their personality. The manager might be like look, we're not onboarding anybody, you got to go figure this out. You figure out how to do this.

Speaker 2: 19:36

In that case, I'm not trying to speak to the decision maker first. I want to speak to the boots on the ground, if you will the traffic managers, the ones dealing with the trucks, talking to carriers, talking to other brokers. That's who you'll be doing business with anyway. So before I'm trying to reach them, I am probably trying to connect with somebody lower, if you will, in the company hierarchy to understand is there a need right now? If there isn't a need, why am I trying to speak to their boss to get onboarded when the person who I help the most doesn't have an immediate need? To your point three years ago, they all have immediate needs. So maybe you're going to go try to directly the decision maker to get onboarded to help them, but you have to first find a need before you can close a sale. You don't try to sell something to somebody in any context if they don't need it. So before you try to get to the decision maker to get a yes, you first have to talk to the people that you're going to help that actually need your help. Those usually aren't the same person. So, like I can probably get a shipping manager on fairly quickly. The problem is my conversation is going to be pretty poor because I don't know anything about what their employees are experiencing and I don't want to talk to them yet anyway until I've learned that, and I think that could be one of the reasons why maybe this person seems frustrated, or they want to know how many calls they should be making Because, to your point, like the approach is just different.

Speaker 2: 20:57

Like I want to talk to a few people over there, learn about them, before I'm ever trying to get to the decision maker, and if I do that then I can reach them pretty quickly. Because if Sally tells me what she's doing, even if she tells me she doesn't need help and tells me Paul's the guy I need to speak to, like I can call Paul probably a week later I was talking to Sally, said everything was going well. I just want to see how things are going on your end, again, trying to find a need first, they'll pick the phone up, because I name dropped Sally. Or I sent an email to Paul and said, hey, sally, can you connect me? Or I sent an email and said, hey, I was talking to Sally, would like to connect with you. Like I can get them on the phone. But that doesn't mean I'm going to find a need and they're the least likely person to care about the need I solve anyway.

Speaker 1: 21:42

The last thing I'll add, there too, is, when it comes down, not every company is the same, but if you talk about these mid-cap and definitely your large cap companies, where the onboarding or procurement department is different than the person who's tendering loads, if the person who tenders loads has a good rapport with you, they trust you and they want to work with you, it's going to mean a lot when they go to their boss or department head and they're like hey, we've got a need here. Like you just outlined, you can identify that need and I would really like, for whoever logistics you as the broker, we'd love to give them a shot and get them on board. Right, that's a lot, a lot better of a way to expedite that process of getting you set up than you know trying to do it yourself.

Speaker 2: 22:17

For sure. And to just add to that, like what it looks like when I do, it is like so I've talked to one or two people. They say everything seems to be fine, but hey, if they need something they'll let me know. They tell me that the decision maker is this other person when the time comes. So now I kind of understand the situation. Well, now what I'm going to do is I'm going to keep following up and build real good rapport with the person I would be working with if the time comes.

Speaker 2: 22:41

Because when that situation does arise, let's say they get jammed up and I happen to talk to them and 10 o'clock and we're like, yeah, I am just dying trying to find a truck, can I talk to you later If I go? Well, hey, I got a truck literally, maybe I have one that I just talked to that would work. Like, hey, I can literally send a truck and now would that work for you? If that urgency is there on their side and I can absolutely help quickly, usually that person is the one that asks the shipping manager to make an exception to get me approved. You, like, need the situation for the ammunition to get the decision maker to do what you need them to anyway. So, again, their job is to help support the people below them, and if you got the people below them that have told you there's a need, they're my advocate to get me on board at any rate.

Speaker 1: 23:41

I need their word to their boss. Hey, how do we get around this requirement of X, y and Z that you know a lot of companies like we're not onboarding brokers unless fill in the blank you know they're X, y or Z certified, or this, that, the other thing, and it's like well, hey, we've had this relationship for a long time. We understand you've got a new policy here, you know, go to bat for us and we figure out a way to get it done, so they'll be an advocate for you All, right? Last question as a newbie, what can I do to get started in the hot shot business? Very niche, specific. Well, I shouldn't say niche, because we do like we do.

Speaker 1: 24:23

I recommend you try to find yourself a niche, but anything that's that's out of the ordinary, right, like a lot of hotshot stuff. They've got some really unique equipment types and they definitely have limitations on their weight, unlike the actual class of truck, right? Because a class eight truck are the typical tractor trowers that we deal with, where you might deal with a class one, two, three et cetera. And these are these are based on the weight, the gross weight, the vehicle um is rated for. So when it comes to like some hotshots too, right If you're dealing with something that's real wonky and requires, like, a permit or escort or whatever the case might be. Um, you know it can be really tricky.

Speaker 1: 25:04

I'd recommend for anybody that's new stick to like your three basics of your van reef or flatbed If you want to get in anything specialized, like expedited hotshot, which a lot of the hotshot industry is. You see a lot of auto hauling and hotshot which can get real tricky as far as which carriers actually hauling in who are they representing. I've heard a lot of auto hauling and hot shot which can get real tricky as far as which carriers actually hauling in who are they representing. I've heard a lot of horror stories around that. But yeah, I wouldn't totally recommend it. But hey, how do you get involved in any kind of niche? Well, you've got to learn it somehow and you've got to really focus on it. So if you want to let's say your niche is going to be produce right, start learning a lot about produce, learn about the challenges and the struggles that they have, the needs that they have, the different equipment types, different commodities, all that stuff, and then just continue to go from there. What would you add in there, ben?

Speaker 2: 25:53

Yeah, there's a lot of different risks that you outlined for moving hotshot. It's also, as Stephen pointed out, like it's harder to rate those carriers because there's less information on them. So it's also hard to tell how they are or what it would cost is the other thing. But I mean as a rule of thumb, if you're experienced and you want to do more, select us as a load board that you can use. Is it going to help you secure? You know, box trucks and hotshots.

Speaker 2: 26:18

Facebook groups are good ways to connect with local carriers on the carrier side of things. So select us and literally just networking, but that doesn't help you without the business. So where I would go to find the business, which I think kind of almost always comes first in some way or it's happening at the same time freight forwarders, anything that is located near an airport that operates off of that business, because you've got smaller parcels coming off a plane that need trucked. They're probably not going to be an entire truckload coming off a plane, for obvious reasons. So that's a really good area to start looking at.

Speaker 1: 27:05

A lot of your forwarders handle that business too, so the forwarder has to become your customer, and they're located around the corner from the airport.

Speaker 2: 27:10

Yeah, Right, and if you think about what does a hot shop provide that a full truck can't? It's smaller, it's faster, it doesn't carry as much but can carry smaller packages easier. Like you're not going to put, you know, half a pallet on a full truck because it's not going to navigate small areas, cities and things that needs to get there quickly. Well, think about when you need to ship something quick. Well, if I got to ship it fast, it's probably going on a plane and once it gets off the plane it's still got to get on wheels to get to wherever it's going. So if it's going to go fast, it's probably going air. It's probably not going by train, probably not going by truck.

Speaker 2: 27:42

In some cases it might with, like, a team driver, but if it's smaller, you're right. Like it's going to go hotshot. That stuff's mostly moving by air or hotshot directly from one city to the next. So look for the businesses that tend to focus on smaller packages, that care about service and things that need to get there quick. See this in auto parts. You see this in plane parts as well, where there's a lot of these things that a small piece of equipment maybe that needs to be there in hours, not in days. Right, like that's going to be your, the hot buttons you're looking for.

Speaker 1: 28:16

The like aircraft on ground or the AOG scenario is a big one. So, like you'll have some aerospace companies where and I'll just, I'll just make this up let's say, let's say Boeing has a plane, that's well, maybe Boeing's a bad example for right now.

Speaker 2: 28:36

Let's boeing has a plane that's well.

Speaker 1: 28:37

Maybe boeing's a bad example for right now. Let's say there's a, there's an airline that has a uh, a jet that needs an engine. Boeing needs another door. It's a door, but like for real, right, if an, if an aircraft needs an engine, and every day that that aircraft is not operational and it's grounded for maintenance, they're losing money because they can't transport the people or the cargo or whatever it is to wherever it's going to go. They're going to pay someone to get that engine part or that engine or whatever. That critical piece is a lot of money. It's got to get there fast. So they're going to, they're going to throw it on a plane if they can, and a lot of times you'll see like an F three 50 with a small flatbed behind it holding this thing, tarpon strapped down to wherever it's got to go, to get to this repair facility, wherever the aircraft is. So, um, yeah, there you go. Steven added in, especially if it's, uh, southwest one day. One delay torches their whole network.

Speaker 2: 29:24

Yes, very huge cost of delays, for sure. And again, whether it's a seal, a gasket or a whole engine, it's just one example, but if I'm going to go at something, I try to think about it very simply. What needs to move fast is pretty small and not big enough that you'd want to put it on a full truck, right? Yep, for sure, look for those commodities and make phone calls and ask questions.

Speaker 1: 29:46

That's it. That's it. Great questions.

Speaker 2: 29:53

Keep sending them our way and we'll keep answering them. Any final thoughts, Ben? Whether you believe you can or believe you can't, you're right.

Speaker 1: 29:58

And until next time go Bills.