Freight Broker Prospecting and Sales Tips | Final Mile #27

Freight 360

January 23, 2024

Nate Cross & Ben Kowalski answer your freight brokering questions and discuss:

  • When to start prospecting
  • How to sell in the spot market
  • Requirements for a sprinter van company
  • Prospecting freight forwarders
  • Factoring company requirements

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Show Transcript

See full episode transcriptTranscript is autogenerated by AI

Speaker 1: 0:19

Alrighty, welcome back for another edition of the final mile, where we answer all of your questions about Frey Brokering, whether it's from YouTube, comments, our website, through email. We're doing it all for you guys. Please take a moment and check out the description box to check out our sponsors and recommended products. And if you'd like to learn more about Frey 360, go to our website We've got a whole searchable library. And check out the Frey Broker Basics course to learn everything you need to know to start and succeed as a Frey Broker.

Speaker 1: 0:51

We'll get right into our questions, ben. Our first one is this this first couple came from YouTube I'm going to open a brokerage. Should I find Frey before I start the business? So I've actually I've been asked this before by a lot of people like they're like, oh, I'm gonna get my authority. It takes nearly a month to get everything all done. So, like, form the LLC, fill out your application, get your process agents done. So in this period they're wondering like, should I go out there and start soliciting business? And we'll kind of take a look at this from a couple different angles.

Speaker 1: 1:28

So first I want to start by saying that there are the FMCSA gives you the legal authority to broker freight when they license you. So does that mean you're not allowed to make connections and start to meet people? Absolutely not. You can definitely do that. What you cannot do is represent yourself as an authorized, licensed freight brokerage when you don't have that authority granted yet. There's always a chance that you might get denied. It's pretty rare, but there is a 10 day protest period in which somebody can say oh, you know, this person shouldn't get their authority granted for X, y and Z reasons, whatever the case might be.

Speaker 1: 2:10

You definitely can't start doing the actual brokerage work, like moving freight or representing yourself as a licensed brokerage, until then. But you can, by all means. You can go out there and start, like definitely start to generate leads, like compile your list of your shippers you want to call. So I got our episode I think it's 77, prospecting with a Purpose and various blogs, because there are a lot to do to prepare yourself for day one, and I would recommend that. What do you think Ben? What do you think they? What's a good starting point while they're waiting that three weeks to a month? What can they get in place?

Speaker 2: 2:47

For sure leads in your CRM, like, because, even if you've got it, everything done, we always say, like, before you even start prospecting, you should have about 200 leads. So if you've got a month to you know, 45 days, right, I would probably get try to get in 400 leads of maybe four different topics, like, pick four commodities that you have some interest in, either as a hobby or a previous なんです, profession, doesn't matter, right? Pick four of those categories. I would pull 400 leads, 100 leads of each, and I would enter them all into my CRM. Here's the other thing, right, I think this has overlooked a lot, even by myself, right, I'll give you a personal experience.

Speaker 2: 3:30

I was building out HubSpot last year, right, and again been using CRMs my entire adult life, since I was like 20 years old, right, so a long time. But what I didn't take into account is like how long it just takes to get familiar with the software, just getting things in there, seeing the functionality where things are. It took me a few weeks to really get used to HubSpot, the functionality where things were going and putting leads in there, and some of them didn't go in, right, and some of them were duplicates that I needed to clean out and some went in the wrong place, that I didn't understand that I needed to move here and I needed to clarify differently. So, like I think you could use that time absolutely to build out not just your leads but getting them into your CRM, because a lot of this practice is going to be very useful as you move forward. Right, and then to your point. If you get all of that done and say you still got a week or two, I would absolutely pick up the phone and start calling and again, I wouldn't represent myself as a free broker. I would approach it the exact same way I do every other call hey, reaching out. I don't know if it would be a fit to work together, but I at least want to introduce myself.

Speaker 2: 4:37

I had a couple of questions. If you got a second, again not looking to move any of your freight or do any business right now, but I did want to reach out because I'm either local or whatever the reason was you called them in the first place? Maybe your previous career was in construction and you're going at construction materials, right. Whatever that is, because again you'll find you'll get some familiarity with the gatekeepers and we talk about this a lot. But like prospecting really is like riding a bike.

Speaker 2: 5:04

If you've never made a sales call just like if you've never ridden a bike, you're going to fall and skin your knees. You're not going to skin your knees on a prospecting call, but you're going to make mistakes, you're going to say dumb shit, you're going to get embarrassed, you're going to want to hang up the phone. It happens to everybody, myself included right? So your first 100 or 200 leads that you're going to call anyway, treat them like practice. So just getting the repetitions in is really going to be the most valuable thing for you. Have your reasonable expectations. Do not expect to get customers, business and money in this timeframe. Use it for what it's worth, which is the practice, the repetitions and just getting used to the systems you'll be living in.

Speaker 1: 5:42

Yeah, and I'll add a couple of administrative things that you can get in place, think about. So I'll go through like products and then like the marketing side. So products think about load boards. You're going to need TMS. Check out the. If you go to our website and go to the as the about yeah, go to about, and then there's affiliates. We have a bunch of recommended products in there. So, like load board DAT you're going to want access to. You can get 10% off your first year If you use a link that we have on there.

Speaker 1: 6:13

Tms, rose Rocket and the Send TMS are two great ones that we think are really good for new brokers. You could start doing your demos, decide which TMS you want to go with, get it all set up. Book services great place if you want to go after. Like produce great place to go check out and start getting in to learn about the different commodities and compile all your list. Highway we recommended for carrier vetting. You can always let them know if you go over there and let them know that we sent you guys that way.

Speaker 1: 6:46

But there's things you can get in place product wise. Now marketing side I'm not talking about like going out and building a fancy website, but clean up your social media. Make sure you've got a clean LinkedIn profile and a company page for your freight brokerage on LinkedIn, and this stuff should all look professional. You're better off to have nothing than to have it look like garbage. So you can get a lot of that stuff in place too, along with what we mentioned before generate leads, start making those calls and all that good stuff. But great question, I will say try not to have that waiting period be what's holding you up from getting out there and doing this job. If you know you want to start a brokerage, apply right away. Get your stuff going immediately so you're not then waiting on FMCSA. Next question how can I use? So? This is this question came from. We were talking about how spot rate this was in the episode with Ken Adam.

Speaker 1: 7:47

How spot rates have been Lower than contract rates for almost two years now. The question was how can I use the lower spot rates as a selling point to get new customers? So what I would say is it's a Absolute good discussion point to have. If that customer has freight that's going to be appropriate for the spot market. Now what kind of freight is that? Last minute freight that they don't have a lot of lead time on, or Maybe an overage of projected load volume that wasn't already contracted?

Speaker 1: 8:21

If a customer has contracted business they it could be contracted out as much as a year in advance. So the spot markets no good to them, except for those opportunities that fall outside of what's been bid out. It could be stuff that was unexpected they don't have a lot of lead time on, or it could be that a carrier that has a contract rate Bailed out on them and now it's going to fall to the spot market. So I would definitely use that as a discussion point and educate them that, based on the specific lane that's what you want to look at that a contract rates might be more advantageous for them, less predictable while in advance, but you can tend to get a truck for cheaper. That's a nationwide Reporting stat right now. Well, what's your take?

Speaker 2: 9:11

I Agree with what you're saying and the premise that, like right, like you're not, the loads you're going to get access to are the ones that they usually don't have a carrier for. It's not as likely They'll pull a load from you know a dedicated carrier to give to you, right, it Agreed that right now. Again, I've this is anecdotal, just from the people I've talked to. This is not mean, this is, you know, unanimous across the country among shippers, right, but a lot of shippers I've talked to this year are Dipping into the spot market to reduce some of their contract exposure, meaning every month. They're like well, hey, if we have just, for example, you know, 50 loads a week, that's you know 200 loads a month that are contracted, say 150 more contracted they're like, well, you know, the spot market is so cheaper than contract. Maybe we just lean on our dedicated carriers for like 80% of that next month and then maybe the next month that's 70%, and there they are aware that it's cheaper in the spot than the contract and if the service level is there, they're willing to work with somebody new or an existing broker to do this. So this is absolutely happening where shippers are willing to do the opposite of what they normally do because, again, there's more risk in the spot market than in the contract. But since there is a savings there, you can position yourself and my conversations where I do this sound just something like this Like hey, nate, I was reaching out and you know, I wanted to just ask you because a couple of my other customers that I know Are in your line of business.

Speaker 2: 10:44

They both ship widgets A lot of their lanes. They've been this year. They've been moving some more of their contract freight over to spot, because I don't know if you've looked at this recently, but you know Memphis to Buffalo right now is 230 a mile contract. I can get you that's, you know, in the spot market for $2.10 a mile. And again, I'm not suggesting, I'm not trying to take business away or food out of anyone's mouth. I just want to let you know that some of my other customers in your area have found some benefit to accessing the spot market more last year and going into this year. If that's something you guys are open to, I'd love to be able to take a look at a couple of your outbound lanes and see if Any that might be a fit where you might be able to save, you know, a few hundred bucks a month, if that's something you're interested in, right?

Speaker 1: 11:26

Yeah, the the only caveat to that and I've got you pointed it out A small percentage, right, we're not saying we're gonna move 100%, because if you, if you were to take, say, 50% of your contract business away from those contract of carriers overnight, you're gonna piss a lot of them off and you're relying on them for capacity, right? The other thing is a Lot of work goes into a bid and setting up contracted lanes when and that's done before it's awarded there is no preparation for spot work. It just it happens when it happens. So it takes more time to get a spot load Booked, then just tender it out to a content to carrier.

Speaker 1: 12:03

So now that you're putting more work in your customers Plate, potentially, if you move a lot of it to the spot because you're you're not, you know You're going back and forth trying to figure out rate. Make sure that you know this is all good, oh, you know, whereas everything was already set beforehand with the country to carrier. So a small percentage yeah, I think you make a great point there and I. The takeaway is it's not we're gonna move all that you start with, we're gonna take a slice of the pie for cost savings reasons. I think the juice is worth a squeeze there for sure.

Speaker 2: 12:33

Right and this is again we were talking about this on the TIA that we taught today. Like you need trust to be able to have that conversation, like it's really difficult to get somebody to do this if they have no trust. So, like you're opening call, it's really hard to get that done. But if you've talked to somebody three or four times and you've got a little familiarity with each other and some trust, like now you can execute something like this where and again to your point You're not trying to get all of it, half of it or even a significant portion of it. You're trying to get like a load or two moved right to just get the wheels moving, to get the Relationship moving and get some momentum and then move from there. Right, yep you don't put a cheaper, cheaper game anyway.

Speaker 2: 13:12

Like that is not the way you want to position yourself into the relationship regardless. So you want to make it like I always put like a caveat or a qualifier, like, hey, I can do this here. I don't know that I can do it with all the lanes we work on, but I do think I can help you out with this Specific one. Right, because we talked about this another episode like you get typecast, just like an actor that only does comedies. Everyone always wants to see him and that's the only movie roles he gets. If this shipper Identifies you as the cheap broker that saves them money when you really need the money to move a shipment that needs moved, they don't want to give it to you because they're so used to you being the cheap person. But that's what they identify you as and that's what you want to avoid.

Speaker 1: 15:04

Good stuff, all right. Next question Do Sprinter van companies need to have an MC slash DOT number? The short answer is yes, but there are some caveats potentially here, and my quick answer of yes is because I've done a lot of work in that capacity and Ven these carriers out just like anybody.

Speaker 2: 15:26

They not start there? When do they not? Okay, when do they not?

Speaker 1: 15:30

The FMC SA. So this might sound robotic, but I'm going to read verbatim Okay, so in general, companies that do the following are required to have an interstate operating authority in addition to a DOT number Transporting commodities owned by others or ranging for their transportation, which covers brokers and carriers. So if I'm transporting it, I've got to have a authority, and if I'm arranging it on the broker. Now keep in mind they said you, they are interstate crossing state lines. Right, if you just work in Texas, you would just have a Texas DOT number. You don't need to have a Texas or a US DOT or MC number. Those are fairly rare. But if you're a small courier service in Texas, maybe you just have a Texas DOT number. Okay, you will see those. Now here's the other part. Who does not need an authority? Let's see Carriers not required to have an operating authority include private carriers, so that's carriers that transport their own cargo.

Speaker 1: 16:42

For higher, carriers that exclusively haul exempt commodities cargo that is not federally regulated. Carriers that operate exclusively within a federally-deserted commercial zone that is exempt from interstate authority rules. Commercial zone is, for example, a geographic territory that includes multiple states bordering a major metropolitan city, such as the Virginia, maryland, washington DC area and that same thing kind of applies if you're just an interstate carrier. But you're going to find the majority of the time if you're hiring a sprint van they're usually crossing state lines and they're going to have an MC number. So did you know that? I did not. Here's what I'll tell you. I learned when I was doing my fact checking here. I knew about the interstate, I knew about that, I knew about that.

Speaker 1: 17:32

I knew about that. Yeah, I did not know that there was federally-deserted commercial zones, that kind of act the same as interstate, like that DC area. I think the reason is DC is so small.

Speaker 2: 17:45

It's not a state, but it operates. It's just kind of like one.

Speaker 1: 17:48

But yeah, it's going to be that same kind of concept. They're going to be like hey, we'll make this big area and we'll call that, like you know, intrastate style.

Speaker 2: 17:57

What was the other one you said, if they move their own cargo.

Speaker 1: 18:00

Yeah, so if they own, if they own move their own stuff. Like let's say, I own a company and I'm hauling my like I'm hauling my own product from one facility across town to another.

Speaker 2: 18:14

Don't you still need a motor car, you don't need an MC and that you don't need a federal MC number.

Speaker 1: 18:20

You'll see a lot of those carriers that they just have a state DOT number and now, like there's other things too. So like for a state DOT number, and it's going to vary by state, but they're going to look at the weight of the vehicle. So like, for example, you might have a towing company that all they don't do is like they tow cars right Around a certain city. They don't need to have a USMC or a federal FMCSA MC number. They're going to likely have, like in my case, a New York state DOT authority issue too, cause they're just operating within their state. But if I own, like the, if I it's my own cargo, let's say I own a lumber mill in Montana and I have my own trucks that move. Well, here's a better one. If I own a landscaping company and I'm driving my own equipment around right, does my F 350 with a like, does my hotshot, essentially need to be licensed by the FMCSA? No, does not.

Speaker 2: 19:27

Well, what question, though that wasn't specific to the equipment type. What you just read, though.

Speaker 1: 19:33

So they just asked does a Sprinter van company need to have an MC or DOT number? Well, what you?

Speaker 2: 19:38

found. My question was like I've lots of shippers I've worked with and you've worked with have their own trucks. Everyone I've ever seen still has an MC number right and the FMCSA. I'm guessing the reason they do is cause they need to get back calls. They can pick up stuff.

Speaker 1: 19:51

Oh yeah, they're going to haul something else of stuff.

Speaker 2: 19:52

Oh yeah, right. So I mean that's the majority of why they do have them, but oh, yeah, oh yeah, for sure, 100%.

Speaker 1: 19:59

And if they're crossing state lines, right, if they're crossing state lines and hauling someone else of stuff, definitely need to have it All right Next up. How can I prospect freight forwarders? We have talked about this a little bit. I mean, you're going to prosper like any other company. You're going to generate your leads. You're going to find the companies that are. You know you want to make.

Speaker 1: 20:22

Freight forwarders are a great fit for a freight broker to work with. In the event that they're really, really good at the import export business and they don't want to worry about the domestic side. They would say, hey, broker, you deal with all these carriers that are out there. So if I need something to go from you know here to the port or from the port to here or from here to the airport, you handle that. I'm really good at everything else. I'm good at air, I'm good at ocean, I'm good at customs clearance. That's my specialty. I don't want to deal with the domestic ground transportation part of it. So that's when they're good fit. Now I will say there are some, there are some forwarders that won't work with brokers because they will only want to work. They want to do the brokerage style work themselves. They're going to go out there and use their forwarding license in contract asset based companies directly for their ground transportation needs. Now let's say you find a forwarder that's a great company Like, for example we've had people on in the past talking about forwarding.

Speaker 1: 21:33

They tend to operate in like independent branches that don't all invoice the same, don't all tend to loads the same. They might have a branch manager, almost like an agency. So you kind of have to prospect them individually. So if you remember, we had Des Clark on and he, like AIT, is a big freight forwarding company and he got a chance to meet the owner of it. So the company like AIT, they're a great example. They have a corporate identity but each one of their branches is essentially its own customer. They're run independently by a branch manager.

Speaker 2: 22:11

Tender to load independently.

Speaker 1: 22:12

If I'm working with the Atlanta branch, right that whoever my relationship is at that branch doesn't necessarily get me in the door with someone at the Salt Lake City branch. They might be able to introduce me, but they can't tender loads in most cases on behalf of another branch. They're going to operate their own little operation or business under their roof. So what I think is a great way is get in it, find out the corporate requirements, get in the door, find all the locations and prospect them all individually. That's my advice on it and I've seen that work very, very successfully in the past.

Speaker 2: 22:47

So I would say understand what and how they do business so that you can provide value that aligns with what they need. What a freight forwarder does, as Nate pointed out, is they typically negotiate and arrange the overseas portion. They can and sometimes do the domestic portion, the US truck piece right. What is really common for freight forward is say I've got a shipment like the one I work with a lot. They do a lot of business in Turkey, so it's really common for them to send me like four or five requests for a shipment, for a shipment out of different places, because they're quoting the overseas piece right and they might say hey, ben, like they do lots of competitive shotguns for tournaments, they're like I got a truckload coming in, what is it from Norfolk to Vegas, what is it from New Orleans to Vegas and maybe what is it from you know?

Speaker 1: 23:38

Like Newark right, like your different ports. Newark, yes, different ports.

Speaker 2: 23:43

Because what they do is exactly, they look at the rates to each and they go, okay, it might be 3,500 to ship from Turkey to Norfolk, might be 4,200 to ship to Charlotte and it might be five grand to ship to New Jersey. So then they ask me to quote each one of those ports to their customer, say in Las Vegas, and then they add both of those together and then go back to the customer and go there's different times for each port and different transit times from each port, different costs, and then they provide options right. So what they need a lot of are a lot of quotes. They need very fast, responsive brokers to work with and brokers that they trust enough will uphold that rate and get them a truck, because they're quoting these before they book the overseas piece. So you're quoting these oftentimes 45 days before you're moving it. So that's their number.

Speaker 2: 24:31

One pain point is when they work with newer brokers. They give them rates that aren't good 45 days from now and that doesn't help them. So you want to understand their needs and how they do business so that you can help provide resources to where their needs are right. So just understanding what is important to them and how they need that. Their other big issue is within DRAGE and just congestion. At different times They'll need to shift things from ports. So those are the other major pain points to ask questions around.

Speaker 1: 24:59

Yep, great point. Last question do factory companies have requirements to use them as a new freight broker? Some do and some don't. That's the short answer the ones that have requirements. It could be requirements such as we will only factor loads for companies that have a minimum revenue per month of 50 grand or something. It could be a revenue requirement because they want to make sure they have enough business. It could be that they have a requirement to be exclusive on every single load that you do. You run has to go through them, where some you can pick and choose, but there's I mean there's absolutely a factor.

Speaker 1: 25:44

Companies out there that don't have those requirements, like you, can be brand new, have no business and they'll set you up. Think about it, someone, everyone's got to start somewhere. So you're gonna have companies that are a better fit when you're new, probably don't offer you the best. You know fees on it, but they'll get you an opportunity to start up, whereas you earn the right to get better service, more competitive rates and fees If you hit the benchmark of hey, we, we're doing this much business, etc. So to work with new brokers.

Speaker 2: 26:18

No to that. I know that work with newer brokers Hall pay and Data axle which is, I now believe, denim are two that work and focus on working with newer brokers. So those are the two that we denim. Yeah, I think I think data axle, which remember the one we used to promote a lot years ago, is now that that axels the.

Speaker 1: 26:39

That's the old reference USA.

Speaker 2: 26:41

Yeah, no, what is that? What was the first factor in company we used to promote member a long time ago?

Speaker 1: 26:49

I don't remember.

Speaker 2: 26:53

First affiliate I.

Speaker 1: 26:58

Remember all pay, but yeah, no, anyway, but yeah, no, you're, you're right on those. So, yeah, check them out. There's what I'd say with any factor in company is and check out our other content on this. Make sure you understand their requirements, but also make sure you understand recourse versus non-recourse and make sure you want, which means, if the customer doesn't pay it, are you due for that money or they covering it, which will affect your rates and your fees. And the other thing is Are they going to pay you, are they going to pay the truck? They offer both. What are the costs associated and all that? But what's that?

Speaker 2: 27:43

Axel, not that, axle is just Axel.

Speaker 1: 27:46

Yeah, yeah for sure, yeah, yeah, that was our boy Travis yeah, I think yeah. Travis Hodges, travis Hodges, yeah, that's right. And then they they became denim, that's right, that's right, well, cool, yeah. So if you ever check out our factoring episodes, we we did have Travis on to talk about it and it was under axle at the time.

Speaker 2: 28:11

Good memory been it was like three years ago. Denim itself was never previously. Another factoring company was founded in 1919 under the name axle payments. However, due to the growth and expansion beyond just payments, they rebranded to denim in 22. There you go.

Speaker 1: 28:25

Good deal. Check them out. Well cool. We appreciate everybody. Listen and continue to send us all of your questions and we'll see you guys on the next freight 360 or Final mile. Then final thoughts.

Speaker 2: 28:40

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

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