Layover Fees, Transparency Debate, and More Q&A | Final Mile 73

Speaker 1: 0:19

Welcome back the final mile Q&A session here from Freight360. Please check out the description notes to see our sponsors. That'll help support the channel, and you can check out all of our other content at Freight360.net, including the Freight Broker Basics course. Please, as always, share, like, comment. Do all that good stuff and we're going to get right into it. Today these all come from YouTube comments. Our first one I'm a freight broker with a potential customer who ships to Amazon, but Amazon doesn't seem to work directly with brokers. How can I legally handle her shipments? For how can I legally handle her shipments as a broker? Should it be marked as for hire authority or can I use a carrier authority? Did you see that comment? This comment, by any chance I did. Do you understand what they're asking?

Speaker 1: 1:09

Because I was going to talk a little bit about Amazon and about using a carrier authority versus a brokerage authority, but what's your take on this?

Speaker 2: 1:15

first, so Amazon here's what I know, so one. They own their own trucks. They used to and I think still do work with some brokers. I know when I was at a large brokerage we definitely did work with Amazon, but since then they've definitely developed out both their assets and their brokerage because they actually approached us.

Speaker 2: 1:38

They came to us and they asked us to do some training for their brokerage years ago. Oh, that's right. Yes, Now here's another thing. It really does depend. So Amazon has like two different services that I'm aware of. I looked into this years ago and I don't know if this has changed, but basically it was like Amazon FBA, which is fulfillment by Amazon, meaning like you could take all of your product and it would sit in a warehouse at Amazon and as orders come in, they basically ship them out. They charge you a higher cost right per unit based on how much of their warehouse they're using and using their trucks, but getting the product to the Amazon warehouse still like.

Speaker 2: 2:18

I know people that sell product in Amazon. They literally will drive and deliver units in the trunk of their car, sometimes to Amazon facilities. If you're doing volume, you very well may be able to do that, because it really depends on your customer's relationship with Amazon. Most of them, and what they used to be, is that like that customer could decide do they want Amazon to pick their product up at their house or at their local place of business, or do they want Amazon to come and pick it up? That's usually the piece that the customer used to have a decision based on right, Like hey, I'm selling 100 toothbrushes a day. I've got a thousand boxes in my garage. How do I get them to Amazon? Usually that used to be the vendor's decision. Now, what happens after that goes into the Amazon network? One of the things that changed with Amazon was they also outsourced all their local delivery about seven or eight years ago.

Speaker 1: 3:12

I was going to say that's probably where the question stems from then.

Speaker 2: 3:15

Now the way those work. Those are all independently owned trucking companies but they're all less than 10,000 pounds, so they're like different in how they operate over what you think of in full truckload, but I believe they're all the same, because I looked at doing one of these when I left TQL with one of the guys that worked. I was like, well, let's look into this. The way those work is independent business owners start a company and then your only customer is Amazon. But what I didn't like about that was like Amazon dictates everything. They dictate the rate, what you're paid, the volume, how quickly you have to deliver it. You work within their system.

Speaker 2: 3:51

So it's like a plug and play business, kind of like a franchise. You own the company but they dictate all of your revenue, all of the work. You do where you need to take things, what terms, and then you get that set rate. You do where you need to take things, what terms, and then you get that set rate. So I don't know. I think he's asking like. His customer is probably saying like, hey, amazon picks these up, call Amazon and work with them. That customer may or may not be using like Amazon FBA and may or may not be moving enough volume into Amazon's network to begin with for you to do business with them as a freight broker.

Speaker 1: 4:25

So here's how I took it and I'll just. If I'm wrong, oh well, we'll at least explain it. I have a feeling that they talked this person talked to a shipper and the shipper's like well, it's customer routed and Amazon is the customer. So they contact Amazon and Amazon's like we're only onboarding brokers or we're not onboarding brokers, we're only onboarding carriers. And if that's the case and you are also a carrier, by all means you can go that route, but don't try to onboard as a carrier and then broker the freight out. That's the fine line I want to make sure we address there. Your explanation was pretty interesting. I didn't understand all the inner workings of how Amazon does that stuff, but if the shipper you talk to is a vendor or a supplier for Amazon distribution centers and Amazon's controlling that freight spend which they very likely are, because usually the bigger fish is going to control it right, they're set rates. You've got to go by their rules, yeah.

Speaker 2: 5:28

See, I had two things. So, like I know one of my closest friends has, he works in like new product development. He has like a couple products. One of them is it's a picture frame that you put in collectible cards into. So you know they come in like the plastics once they're certified. Well, people want to show them off and there's no way to do that once they're in there. So he has basically developed a picture frame where that thing sits inside and it's just a normal picture. So he basically has a lot of these in his garage and, based on what sells that week or over two weeks, literally goes and takes more to the Amazon Fulfillment Center. They take it and then he pays a certain rate for Amazon to handle everything from there. But technically he could pay someone else to deliver his products to Amazon and I'm sure there are companies that do this at scale, that probably do that. It would really depend on the volume they're shipping into. The Amazon network is one of the questions I would ask.

Speaker 1: 6:23

Yeah, and the comment that this question came from was in regards to a video about legal double brokering for freight brokers. It was a video. We answered something about co-brokering and double brokering and all that. So, anyway, our next question. This is in regards to freight guards that we talked about recently. So this listener said how about when a broker tells you that you have a 3 pm delivery? You get there on time and they tell you, sorry, you don't have an appointment for today. Now the broker wants you to sit there for two or three days and only give a $150 layover fee. Can they freight guard you if you return the load? So I'll answer the question.

Speaker 1: 7:08

Anybody can leave a negative review on whatever site they want for just about any reason, and a lot of the times those sites allow for responses. Like Google, someone leaves a bad review, like we get them all the time. Someone's like we had one the other day and it was like this customer or this brokerage didn't pay us, you know, or shorted us X amount of money, Right, the review's up there, it's one star. We dig into it. We find out the carrier's screwed up, they didn't, you know, follow their terms and whatnot, and we address it and you know we move on.

Speaker 2: 7:45

I have a question about that. Yes, I was just going to ask you. I've never seen a rebuttal on a freight guard, do they allow that? And I was going to ask you what you were about to say.

Speaker 1: 7:56

I don't know, I don't use carrier 411. Highway, you can have community notes in there. Google you can respond to um, I don't know. On freight guard, I know that they're. They're like permanent now, though they don't go away, yeah, but I guess, to answer the question, my guess is um, yeah, they can freight guard you, but um, the real the again, it's only people leave negative reviews more than they leave a positive review, because they're more inclined to do so. They're, they're pissed off and they want to let the world know how angry they are.

Speaker 1: 8:31

The reality here is, if this is all true and there's no other facts in here, the broker is in the wrong for sure, or it could be. The shipper was in the wrong and then the broker's wrongdoing was leaving the freight guard, if you like. We I had one of these happen over Thanksgiving where and it's still going on right now where a piece of equipment, like an oversized thing, was supposed to pick up Wednesday before Thanksgiving and deliver this week, and the shipper had the dimensions wrong. So the RGN shows up and it's not like they're going to. They're going to, basically, escorts and all kinds of other stuff that wasn't planned for. Now this is all going to work out because the customer? It's an auction site for construction equipment Richie Bros, we've all heard of them. Right, they're going to do the right thing and compensate everybody. You know, because they screwed up. The carrier is fine with waiting. They take the reset and they're going to get extra money for layover etc. They already had a really good rate at $9 a mile because it was a holiday and it's heavy haul permits, all this stuff. They're going to get even more money now to compensate them for their time. The broker will still make their margin. The buyer of the equipment will still get their, whatever the equipment was.

Speaker 1: 9:59

But when you see either a shipper screw up on an appointment time or a broker screw up on an appointment time or a broker screw up on an appointment time and the carriers there left holding the bag, by all means, like the carrier is not in the wrong for either saying like I need to be compensated for my time or I'm sorry, I can't. You know, I can't haul this for you anymore. Just give me a truck order not used. That's, that's how I would say. Or if it's a, if it's a delivery, if they already picked it up and the delivery is screwed up, um, hey, I, I gotta go drop this at a warehouse somewhere. I can't, you know. Yeah, you, you know I I'm not available, for you know, waiting three more days.

Speaker 1: 10:34

So and this is where these like situations in these stories like this is where the animosity between carriers and brokers like has just gotten. I feel like it's like worse and worse since, like the last five years, is because, um, you know, you think if you're the, you're the one that feels like you got screwed over, like you're going to point the finger and blame the broker, cause that's who you got the load from, when in reality, it could have been the shipper who's then screwing the broker over as well. Um, what do you think?

Speaker 2: 11:01

If I'm a carrier, I'm going to say listen, I have a customer load I got to pick up. I can't lay over that long. I need you to transload this either to a warehouse or to another carrier. Book another truck, send them in, I'll meet them at the cross dock, get it transloaded into someone else. I can't lose a customer because there was an error at the receiver. Right Is the first thing I would try to do. Right. The thing that I would say is more important is trying to prevent these in the first place. So, like again, I know that everybody's trying to move fast and get a lot done, but if I'm a carrier, what I am doing with every new broker I work with is asking them what the accessorial policy is when I'm negotiating the rate for the load. What is the detention, what is the expected free time, what is the per hour, what is the layover fee and at what time is it considered a layover versus detention? If I'm there at nine in the morning and I got to unload tomorrow morning, that is certainly a different situation than if I get there at 4.30 morning and I got to unload tomorrow morning. That is certainly a different situation than if I get there at 4.30, they close at five and they're going to unload me at eight in the morning. You want to know at what time period it goes from detention to layover, or if they pay you detention and layover. If you get there at nine and you can't unload it tomorrow, are you going to pay me detention all day and then layover for the night? How do you handle these scenarios? Right, every broker should be able to tell you that at the time they're negotiating the rate. So if you find out, hey, I was going to run this load for two grand, but they want four hours free and then $50 in detention, okay, great, my rate's $2,200 because my detention policy is two hours free and $75 an hour. If you do that upfront, you avoid so many of these miscommunication and discrepancies and ask them hey, before you send me the Raycon, put that in there or put it in the email with the Raycon what your access to real policy is. So I know what to expect if I run into this. Hey, if I'm there before the appointment and they tell me, right, like I've got to wait, like that clock starts, then not when they tell me the appointment was Like, if you're telling me my appointment is at three, I get to the shipper and they say oh no, sorry, your appointment's at five. My contract is with the broker. I want to be very clear that if I arrive for the contract and rate confirmation you sent me by the time I'm expected to, that's when my clock starts, not if the shipper tells me oh I'm sorry, your appointment's three hours later. That clock should start then and I should be able to start charging you. And again, I know it's not like I'm trying to push this on the carrier, but I think it's just good to be clear.

Speaker 2: 13:36

You and I were talking about this. We have a customer that just did this to us. I called this customer was working on rates for 45 days before we started work with them. They avoided every phone call and every email that I tried to ask them for their access to real policy, what this was going to be. They just started sending us loads and I went this scares me because they're intentionally not telling us something.

Speaker 2: 13:58

First time I got the attention oh, we don't pay detention. Like, okay, well, like, let us know before. And then the response was we'll just charge more. Like okay, well, you just had to submit rates for the next 60 days. So, basically, you just got a discount for lying to me for 60 days. Well, I got to eat detention, because 60% of your shippers hold a truck for four to five hours, which would be fine if we knew that. So now we got to pay the carrier out of pocket.

Speaker 2: 14:25

Also, to all these questions that brokers don't do this, that's absolutely what we did. We are not stiffing the drivers because our customer lied to us about detention. We're paying them two hours free and then a rate after that. Right, and to me, like it is difficult sometimes, and that's why I use the example of. I've literally tried to do it in this situation and I ended up still jammed up in the middle, but we are still making it right and doing what we should for the carriers and the short run while we fix it in the long run and I think carriers can do more of this if dispatchers are better trained and they're getting more clarity on what the expectations are at the time of negotiating the rate. Don't try to negotiate this when you're already loaded and you're on your way there, because one you might not get the answer and you might not get an answer that you're okay with and you've already agreed to that rate. At that point, agreed.

Speaker 1: 15:18

Yeah. So if you have a customer that does not pay detention and they're telling you, just factored into your pricing, that's their, that's their right to operate that way and you could do so accordingly. So if you know, hey, roughly one out of every 10 loads is going to result in me paying detention out. Well, inflate your rates to the shipper and then you're going to have to manage that internally. You create like a little slush fund where you know, set aside some of your profits and expect to use those profits internally to pay detention as deemed necessary or appropriate to your carriers. That's why some larger brokerages have an in-house like um detention policy and there's different takes on this. Like, for example, let's say you have a detention policy and it's like, yeah, we're going to pay, uh, 50 bucks an hour or, let's say, a hundred dollars an hour after two hours, um, and then your carrier finds out that the customer is actually paying $150 an hour and now you're pocketing money that should go to the carrier. Like there's an argument to be made that well, you're kind of like taking some of that carrier's money at that point, but on the flip side, for the carriers or for the shippers that don't pay detention, and it's all part of the rate. There's an argument to be made that, hey, as a brokerage, if I'm going to make my own policy, that's the policy that my carriers agree to. You know you can kind of see it both ways. So all right, enough on that, I'll move on to the next one. So this next one was regards to our broker transparency discussion.

Speaker 1: 16:52

Back on episode 272, I think, of the podcast, someone commented this is a terrible analogy, comparing apples to oranges. In any other industry that involves a broker, every party that is involved knows exactly who's getting paid. What and how much is fair right from the jump. Look at real estate. Both buyer and seller agents know the exact percentage and even have industry standards they use of how much they're going to make from the jump. As well as the broker, nothing is hidden and fair wages are paid. Brokers really should have a set percentage price and if they want more money and they should negotiate with the shippers better. That's the way it was. You're right, that is the way that it was Continuing on. There wasn't all these pop-up brokerages that they have now Used to have a good broker you built a relationship with and they would go find you great loads. Both carriers and brokers did right by each other this. This person is correct in their historical discussion here and if you listen to our podcast that talks 273 from last week that talks about the evolution of brokerage, transparency was created exactly for to protect the broker when deregulation happened and it became outdated in our opinion because once the broker started to fund the transaction and make it a two-transaction system meaning we charge the customer, we pay the carrier two separate transactions there's no need for transparency.

Speaker 1: 18:21

Now to address the concern here about real estate real estate is a one transaction system, the same way that brokerage used to be before the Motor Carrier Act of 1980. Two years ago I sold a house. Well, actually, my wife and I sold two houses and we bought the house we currently live in and both of those transactions when we sold the house, we sold the house directly to the buyers of that house the buyer of that house. Their money came directly to us, minus the commission that went to the agents right, or the agent if it was the same one. In those situations. That is the way that brokerage used to be right the shipper would pay the carrier directly and the commission would be paid to the freight broker off that sale price right. We don't operate that way anymore. Real estate still does and I can't imagine real estate changing to a way that a real estate agent is going to fund all these transactions. Could you imagine that, like you, just you get your real estate license and now you got to get a factoring company to help factor.

Speaker 2: 19:30

You know six, five hundred thousand six hundred thousand dollars.

Speaker 1: 19:33

Yeah it's just we don't operate that way. It's just not the reality. We are more like a car dealership, right? Someone sells their car to the dealership. The dealership resells that car to the new buyer.

Speaker 2: 19:47

Here's some other examples.

Speaker 1: 19:49

Like the new buyer and the old, the seller like don't ever meet each other and the dealership takes possession. It's like more of like a freight forwarder, but either way it's his or her. Debate here is apples to oranges, Ours is apples to apples, in my opinion.

Speaker 2: 20:07

Here's the list. I pulled this up because I was curious. Here are the other types of brokers or intermediaries that operate without fully disclosing their cross structures or margins Commodity brokers, produce brokers, seafood and meat brokers, import-export agents, global trade intermediaries, which are agents or trading companies that buy things overseas, do not disclose what they paid for things. What they do is they give somebody a landed cost or delivered price to their customers. Delivered price to their customers.

Speaker 2: 20:39

Specialty goods brokers, coffee, cocoa, specialty oils, art dealers and intermediaries. Commercial insurance brokers, surplus lines brokers those that are placing coverage in specialized, non-admitted markets frequently maintain, without providing costs, Clients just see the quoted price. Here's another one Talent agents, entertainment managers they do not tell who is paying for somebody to come and speak or give a concert, what they're paying for the actual talent to come and do those things. Recruitment agencies, staffing firms neither of which will tell you what they pay the person coming to do the work. They just give you the cost for somebody to show up and perform that work for you. And also mergers and acquisitions, hedge funds and asset managers are all just a few other brokers that operate very similar to the way freight brokers do and do not disclose their costs.

Speaker 1: 21:39

What they might do is have an agreed upon commission with the like. For example, a talent agent might or let me use the. I'm trying to think here, like, someone might have an agreed upon, like, hey, I'm going to charge you a commission of X to do this, but yeah, the whoever's buying the service doesn't know and there's no rule, there's no CFR in place that requires the transparency of those. Could you imagine? It would be insane.

Speaker 2: 22:08

And I know like they call them speaking bureaus do the same thing. Like you go to these things as a company Say you're just like a large company, for example, you're Microsoft and you want somebody to come speak at your quarterly event to all your managers. You go to a speaker's bureau and you say somebody to come speak at your quarterly event to all your managers. You go to a speakers bureau and you say, hey, this is the topic we'd like you to cover. Who do you have in your bureau? That would be a fit. That company goes oh, we've got four or five speakers that could speak on that. Here's our rate. They do not say, hey, this is what we pay these people per hour to come and speak for you. This is what we charge you to choose from this variety of services. The purchaser or consumer Microsoft in that case gets a better variety. They have a known price to negotiate. What is the benefit to the people on the other end, the people that actually do the speaking.

Speaker 2: 22:55

They get more gigs because they have a larger reach and they don't have to sell and do all the administrative things. How much money that company makes in the middle is not disclosed to either side.

Speaker 1: 23:06

Yeah, exactly, all right, good discussion on that one. Let us let us know your thoughts in the comments. We'll keep this the transparency thing is going to probably be a topic for you know until we get into January and see what happens and then beyond that, all right, our final one, real quick here. Someone asked we talked about loadouts and power only. Someone said can you explain power only with loadouts? Thanks, yeah, so really quickly.

Speaker 1: 23:33

A loadout is and a power only loadout is when a power only truck meaning it's just the truck only. Loadout is when a power only truck meaning it's just the truck, the tractor, right, no trailer behind it, the tractor alone is going to move a trailer from point A to point B. The loadout part of it is when that driver is allowed to use that trailer to load someone else's cargo and deliver it along the way. So, for example, let's say I'm in New York, you're in Florida. Let's say there's a company that wants to move an empty trailer Maybe it's brand new, right? Brand new trailer. Needs to go from Buffalo to Boca, where you are. Power only driver can pick. If the loadout is allowed. Power only person can pick up the trailer in Buffalo, right, maybe they drive it to Pittsburgh, pick up a load, deliver it to Jacksonville, florida, and then they eventually deliver the empty trailer to Boca, where you are. That would be an example of a power only loadout, meaning the power only part is all I need is my tractor. The loadout is I can use the equipment I'm hauling to then actually deliver someone else's freight along the way. It's going to require trailer interchange insurance. It's going to require details of the loadout requirements, meaning how many days do I have to get it there? Is there any restrictions on what I can and cannot haul and that equipment? So like if someone's moving a, a reefer or a tanker or something they might say you can't. You can haul whatever you want, except these commodities, because the risk of it could be damage, contamination, you name it. But that's a loadout. Check out the.

Speaker 1: 25:20

I think we did an entire episode on loadouts. I'd recommend just go to our website for a 360 dot net. Look up loadout or trailer pools or anything like that. You'll probably find that recent episode that we did Anything else on that one. No, pretty straightforward.

Speaker 1: 25:35

A lot of times you'll see like it's common with trailer manufacturers. So we saw this a lot in the peak of COVID, when there's a lot of orders for new trucks and trailers and you know these trailers are being manufactured and they might say hey, you know, come haul it, you can use it for 10 days, just get it to where it's got to go. It's got to be there in 10 days though. So this driver, kind of like, gets double right. They're going to probably get a little bit less than market rate on the actual trailer move, but they get a free trailer for 10 days. They can haul whatever they want with that trailer for 10 days, as long as I get it delivered to where it's got to go. So they kind of make, you know, two streams of income on the same transaction. So, good question, keep them coming our way and we'll we'll keep answering them. We got anything exciting or fun coming up. We got some guests on. We're getting towards the end of the year.

Speaker 2: 26:33

Yeah, I reached out to get Ken on the show. I'm going to send a follow up email. Steven, if you want to reach out to him, I'm sure you'd probably interact with him more on X and whatnot.

Speaker 1: 26:42

We were trying to go through DAT's communications guy Speaking Bureau.

Speaker 2: 26:47

Yeah.

Speaker 1: 26:48

Yeah, there you go.

Speaker 2: 26:49

Probably exactly the same thing. We were talking about Yep.

Speaker 1: 26:52

All right, Well, good stuff Ben. Final thoughts.

Speaker 2: 26:55

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

Speaker 1: 27:00

And until next time go Bills.