Navigating Non-Competes | The Final Mile #30

Freight 360

February 13, 2024

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

  • Getting consistent loads
  • Non-competes
  • USPS loads
  • Freight broker training
  • Carriers with old trucks

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Show Transcript

See full episode transcriptTranscript is autogenerated by AI

Speaker 1: 0:19

Welcome back everybody for another episode of the final mile where we answer all of your questions. Continue to send them our way through YouTube comments, through our email, our website, freight 360 net, and make sure, while you're over there, check out the freight broker basics course a course, full-length, self-paced, top by Ben and myself everything how to start your brokerage and succeed. And please take a moment, check out the sponsors in the description box. All right, our first question comes from a carrier who asks, as a carrier, how can I find consistent loads? So I chose this one because I want to. I want to answer it and give freight brokers a perspective here, um, that maybe they don't always. You know, a lot of times brokers think you know, customer, customer, customer, right, the shipper is the most important thing to me, and that's not the case. Reliable carriers are extremely valuable to you, especially Reliable carriers that can do repeat business for you, because If it's very low touch, you know light lift. All you got to do is just verify each week that, hey, you still got Joe or Sally available for this pickup and this delivery. Um, make your job a whole lot easier than trying to go out there and, and you know, slung a truck the old, the old fashion way, um. So the advice that I would give is the same way that we tell freight brokers to build really good, meaningful relationships with shippers Carriers you should be doing the same thing. If you're an owner operator, right, your goal should be Not to just take loads off the board every single time you're driving your truck. It should be maybe you've got um A consistent lane that you're running for a direct shipper, um, or maybe you've got consistent lanes that you're running for a good quality freight brokerage that you've got a good relationship with Um. Brokers are great for carriers and the fact that they're a massive they cast a massive net for available shipments for you that aren't always going to be just available ly posted On load board. So my basic advice would be Build some good relationships with brokers. I see it in our facebook group and I see a lot of people doing that, and I love it when they're like hey, I've got 53 foot drive-ins available in this city consistently. Any Um brokers interested send me a message. What's your take on it?

Speaker 2: 2:41

For sure. I mean, there's just there's two tasks that take up most of your time as a freight broker Calling shippers and talking to carriers right? The more you can reduce either one, the more time you have to do the other one, right? Hey, if I want more business Every time I can get a carrier to pick up a load on a consistent basis, once a day, once a week, once every other week, I don't care what it is. Whatever that repeat is that's one less book, that's one less truck. I got a vet call negotiate with him book for the first part. So selfish motivation. For sure. Every broker should be looking for opportunities to get more work for the same structure using. Not only does it provide better service, but it provides less risk, less work for both of you, and it's a win-win for everyone when you can find them. So for sure, that's there, right. The thing I would add is Definitely want to do exactly what you outlined. Do you want to ask brokers? Hey, do you have any consistent freight, is there anything on a weekly basis? Right. But also, if I'm on the trucking company side, like I'm going to call lots of shippers directly, right. And I am going to lead in with something very simple. The shippers I would call First would be the places I go to the most often, right? So if I'm a Pittsburgh carrier and I tend to see myself in Chicago on Wednesdays and I'm typically wherever on Thursdays, whatever these places are, you tend to see yourself most often. Those are the places you pick shippers to call because they fit your network the most, and your phone call to them is very simply Just telling them the truth. I am in your area on a regular basis every week. I work for these other customers. I think we could find some opportunities to work together. If you have them. I'm here regularly and I think I can offer you a fair rate. If you've got some consistent work, if you do that 10 to 15 times a day in a month to two months, you will have some more consistent loads. You will have better relationships and now you're playing both hands. You got some money that you can come from from relationships from brokers, which is great. Spot loads are going to be the most profitable anyway, but they're also the most risky. So when they're there, everybody's happy. When they're gone, everybody starves. So you want some of it, but you also need to eat from the other side of the restaurant, if you will, which is Going and getting like fundamental loads that you can also rely on that are likely to stay at the same rate. They're not as great as your huge rips. You get a spot market but you can rely on them to make sure you know you're not going to starve when the spot loads aren't there, because they will not stay there forever for sure.

Speaker 1: 5:13

Good discussion. Love to see carriers looking, looking through that lens of trying to have a long-term relationship with, with a freight brokerage. Right, it's good stuff, all right. Next question Um, this one came in through email. I kind of summarized it because it was lengthy, but we're going to have a good discussion on it. He had asked us what are your thoughts and perspectives on non-competes and non-solicitation agreements. So we've done like full-length discussions on this and here's my take. First of all, depending on the state that you're in, the non-compete portion of it may or may not be something that is typically upheld and additionally, if a non-compete is so vague and broad, it's going to be really hard to convince a judge to enforce it, meaning if it doesn't have a time restriction and a geographical radius on it or if those are too loose, I've seen them very, very easily challenged and tossed out. For example, if a freight broker says hey, mr or Mrs Employee, if you decide to leave here, you cannot go work for any of our competitors in the entire country for three years. That's a very long time and that's a very, very broad scope. On the geographical radius, the ones that are very ironclad, assuming you're in a jurisdiction where non-competes are a commonality. You might see something like you can't go work for a competitor within 50 miles for six months or for 12 months. That is reasonable. If somebody's moving their family across the country or a two different state, they naturally are going to leave their job if it's not remote and it doesn't restrict them from going to continue to work in the industry and provide for their family. Custition, on the other hand, refers to soliciting customers or employees or contractors of that business. That would be something like and this could be alongside, or just it could be along with a non-compete, or there might be no non-compete but just a non-solicit saying sure, you can go work wherever you want, you just can't take your customers with you and don't try to poach our employees either, and they'll put a timeline on there for a year or something like that. My take on them is I don't personally find non-competes to be beneficial for the overall growth within our industry. I think that there's a lot of smart people and if they're stuck in one organization, they're limited on how they're going to grow professionally and from their different perspectives that they'll gain at different organizations and in different roles. I've seen something that'll basically tell you if you're a freight broker. You can't go work at a carrier. You can't go work for a distributor. You can't work at a dispatching company. I've seen where. You can't go work for an insurance company that ensures the transportation company. I think those are silly. But again, whoever has the deepest pockets can fight that stuff the most. Non-solicits here's my take on that. It's an ethics thing in my opinion. If you came to my company and I paid you for three months to train you on everything and helped you get some accounts or assigned you some accounts, don't go steal them on your way out. I think that there's an ethical issue there. If you have a non-solicitation, violating it is, in my opinion, would be wrong. If you're not held to a non-solicitation agreement and you put the work in to get those customers, you're in a really awesome position because then you can write your own destiny. That's my take on non-competes. Non-solicits they're going to be case by case. They very rarely get in front of a judge. They're usually settled outside of a courtroom. I've probably seen 150. Cease and assists or beyond that cases where someone's being told you're violating this stop and the very, very slim minority of them actually make it to a point where they're battling back and forth, typically young kid out of college who leaves Freightbrookern after 12 months, gets a letter from a lawyer and is afraid and says I can't, I'm not going to work in the sinistry. So they serve their purpose in that aspect. What's your take on it, ben? I kind of hopped around there, but I'm curious what are your thoughts? Are they useful? Should they exist?

Speaker 2: 10:00

Mine are similar. I mean, I think non-competes hinder industries. I don't think I think it puts too much leverage on the companies, but there are absolutely cases where, like I can see the other side from the business owners. There's a famous one that Warren Buffett talks about in his biography. It's a furniture company he buys, it's somewhere in like Wisconsin or somewhere up in that area, right, and in his biography he talks about he buys this company and the woman who sells it to him I think I mean she's much older, Like I want to say, in her 70s or 80s, right, and she builds this massive furniture company that he buys, right, and he doesn't put it on, compete in, and this woman literally turns around and again I want to say she's like in her late 70s builds another one, competes with him and he has to buy the second one, right. So, like, I think that are definitely examples where, like, they're warranted. If I'm buying your business, I don't want you to create the same business three weeks later that I'm going to compete with you for or that I got to buy. But from the employee standpoint, like, I think they're more just the heavy handed ability for large companies to protect their own interests, Like some of these companies train thousands of people a year and I guess from their point of view they don't want to just train their competition. If they don't hack it in their company, they're just going to go out and compete with them. So I think there's like some point that makes them somewhat like reasonable. But how they're used is absolutely not that To your point. They're mostly used to just throw weight around and to keep people out of an industry and to me that's not ethical. Like if I have a passion for this industry, just because I work for your company should not prevent me from working in that industry for more than a year. 12 months is what I've seen. They typically kind of hold up to. And I looked up the states at least now they're California for sure, Oklahoma, North Dakota and Montana. That's why you won't see lots of these large freight workers just have offices in California. For that very reason.

Speaker 1: 12:04

Yeah, there's a thing called a right to work state and it's not just exclusive to non-competes Non-competes right. It has to do with, like, the ability to organize and unionize and all that stuff. But there's verbiage in there that basically I don't want to try to quote it like a lawyer. Well, I want to read this. I'll read this for you.

Speaker 2: 12:26

There's a at the bottom. It's like it's important to note that, even in these states where non-compete agreements are or aren't enforceable, courts will typically scrutinize them to ensure they're reasonable in terms of duration, time, how long they are, geographic scope that you said, for what region of the country do they sit on and the legitimate business interests they seek to protect. Right, like I gave you an example, where there are, like, legitimate business interests, most of them are just a company's ability to just throw their weight around.

Speaker 1: 12:57

Dude. Let me give you an example. So I was part of I'll just say I was part of like a TQL I remember like mega case. I think it was in maybe late 22. And what it came down to? So like originally TQLs and they had hired outside. So representation for this big case, but everyone that's ever worked.

Speaker 2: 13:20

There has gotten a letter from Chris Brown. Yeah, so the so the way out.

Speaker 1: 13:24

But the attorneys. Their argument was that like, yeah, you know, tql believes that their training is proprietary. Yeah, and then you know, through discussion it was very clearly argued against that that nothing that they're doing is proprietary or different than what other successful training programs are. It's sales coaching. It's coaching an organization and rapport building. But what it really came down to in this, like you said, to protect their interest, what they really cared about is we don't want to train, you get the have, you get this business, just to then see you out the door and steal this business and other employees from underneath us. So the regardless. If you sign a non-compete with a company like TQL, you sign a non-compete, but at the end of the day, when push comes to shove and lawyer fees can get expensive, they're going to focus on, in my opinion, they're going to focus on what is their biggest interest, and it's not you, it's the revenue and the carriers.

Speaker 2: 14:26

Yeah, carriers, they'll fight both of us. They'll fight the care relationships too right for those. The instances that always bugged me with these larger companies and I've been involved in a few right were like wanting to work for the customer, right yeah. And again, I guess there's an argument that can be made that if you from TQ you can direct.

Speaker 1: 14:44

The freight goes then.

Speaker 2: 14:45

Right, their point of view was hey, we taught you how to cover loads for them. They want to hire you from us. Like clearly that's our business, so that's against our best interests. Like I can understand that at least there's an argument to be made there. But in most of these scenarios, like that's not exact, that's not in any way how it was going to play out or how the company trying to hire that broker wanted to proceed. Right, that's like one extreme example they used to justify all of these things and to me, most of them don't hold much water. Yeah, Again. I'm not an attorney, or To say the last thing I'm going to say is.

Speaker 1: 15:17

We're not attorneys and I recommend to use one. I've reviewed myself from being a part of a non-compete, non-solicit. I have been in a company where we've had employees or agents that were involved in that process and, like I said, I was part of that big suit with TQL. So I've seen these and better than enough. My recommendation is, if you're going to get into freight brokerage and you're young and you're out of college, know what you're signing and if you don't know what it is you're signing, have somebody take a look at it. That's a legal professional because-.

Speaker 2: 15:53

And here's the reality, I think there's almost predatory.

Speaker 1: 15:57

There's a case to be made arguably made that there's like predatory practices by some of these companies that just kind of slide it in there and don't really explain to these kids what they're signing. So do your due diligence.

Speaker 2: 16:07

But how much leverage does most of those kids have? If they want the job, they don't, they want to take it. It's usually you got to sign it to move forward, right. But we're pointing out there's usually other employment opportunities that don't involve the non-compete, where you can have the non-solicit, still do things ethically, get into the industry and not have to deal with a headache. Should you not want to keep working for that company, right, like it's two-way street?

Speaker 1: 16:30

for sure. All right, that's enough on non-compete, non-solicit. Next question how do I get set up to move USPS loans? That's the United States Postal Service. I'm not going to answer this by telling you exactly how to go through and onboard as a broker or carrier, because there's a lot of restrictions and they're very specific. But I will tell you that everyone that I have seen ever as a freight broker move USPS loans. They didn't do it directly in most cases. What they did was they would find out who. What USPS will often do is they'll take all of their business, which is a lot of business, and they'll chop it up in contracts to some large companies and then what you can do is co-broker with those customers to get little, bite-sized pieces, kind of the same way that Crowley handles a lot of the military freight, that big contract. So you can co-broker with them. That's my aspect on it. I will tell you that year-round USPS loans, different than their peak season towards the end of the year, it's a pretty cool. We talked about Project Freight in the last podcast. It's a pretty cool project-style environment to be in. If you're getting involved in that one-month peak season towards the end of the year, you have any history with USPS or any work with anyone who has.

Speaker 2: 17:52

Yeah, I know the one agency I work under, business to Business Logistics, did a lot of business with them, I think last year, I don't know if they still are, but yeah, I was involved in kind of the setup process and things. But for the most part I can't recall off the top of my head who it was and how they reached out and the semantics of which department was which.

Speaker 1: 18:12

To be honest, yeah, the stuff that I saw the peak season. We had a guy at my last company who their group did a lot of it. It was really cool because it was all In essence it was roundtrip, no empty miles. So, like you would line these drivers up and for three or four weeks I'll just make up two locations They'd go from, let's say, baltimore to Richmond and then they would unload in Richmond and then they'd load up with stuff going back up towards Baltimore. You just keep going back and forth, back and forth. So it's great, great money for the drivers, great money for the brokers, very efficiently run. So it's good for the, for the shipper to USPS. It's just a lot of work, it's a lot of planning, it's a lot of touch, a lot of track and trace to make sure people are aware they're supposed to be on time. So a good question Next this came from our Facebook group what is the best way to get certified as a freight broker? Should I look into an online course or community college? So I want to the word certified. You get licensed through the FMCSA. All right, they are the one. Well, you're, it's, you're given your authority and there is no requirement to have any sort of training Like if you get a driver's license, you got to take a depending on the like New York state. You got to take a five hour course. You got to have your learner's permit for six months and have driven 50 hours of supervised driving and then take a road test and pass and you're given your life driver's license.

Speaker 2: 19:42

You want to be a freight broker? You take a five hour course.

Speaker 1: 19:44

Yeah, you take a five hour course that teaches you your driver's license. Yeah, man, new York dude, it's like the worst state to live in. So basically what would happen is, in high school they offer this five hour course you take like you, basically like you go two nights during the week for two and a half hours each and they cover like all the way.

Speaker 2: 20:00

I took it in TA but mine was like to reduce my insurance. It wasn't like a requirement. That's a different kind of course.

Speaker 1: 20:07

This is a like a pre-licensing course I have seen I've gone through. I used to have a lead foot and got a couple speed and tickets too many and I had to take a course to drop points on my license for my insurance purposes. But you take five hours of pre-licensing that teaches you like all the rules of the road and traffic basics and things like that. And then we had to have six months of having your permit, 50 hours of documented supervised driving. So, like drivers, that would cover a lot of that and usually your parents would sign off on the rest of it. And then you take a physical driver's test and you get your license. Freight brokerage pay 300 bucks, fill out an application online and within a month, boom, you get an MC number. So as far as certified, you don't get certified. Now how do you get the experience you need? So there's options the community college course route. I didn't know that existed until like five years ago. I think it's kind of a scam. Like you have, you're being taught by. First of all, you're paying college rates. Even community college is gonna cost more than like for our course, for example. Right, and it's being taught by people who don't do the job Right. Maybe they did in the past, or maybe they're just a supply chain professor. Here's a good point, though.

Speaker 2: 21:29

Right Like I think all of that's true. The other side of that, right, is what Chris Jolly reached out to us for doing, an episode on next week. Right, there are a lot of people out there that freight broker whatever that means or are freight brokers that offer courses that also don't know what the hell they're doing and say that if you take that, you'll learn how to do it. Right, I think there's like both sides to that argument. Right Like I wouldn't go down that revenue either. Like it's super expensive. A college credit at a community college has gotta be six 700 bucks.

Speaker 1: 22:02

Five 600 bucks. I've seen community college brokerage courses for like over two grand because it has a three credit hours, 2500 bucks 22, 50. Yeah, but I'll tell you this like an online course, like so, if someone comes to us and like wants to get coached, we usually tell them like you gotta learn this stuff, that's in our course and then we can work with you on a twice a month, something like. You have a mentor to walk you through that process of getting started and deal with the challenges that you have as they pop up. I think that's a great way to do it. Another option, too, is go work for somebody, learn from them, right, I mean that's. It's a lot easier to go out and buy a course and pay somebody to train you and coach you, but that, in conjunction with working under a company, is like probably your best, best case scenario, even if you like, hey, for a summer, right, or in your free time, I wanna come learn from you and mentor you and help you out for free, right, so I can learn, because that'll least give you an idea like do you even like the industry? Are you going to be okay with cold calling and dealing with upset customers and drivers? So, yeah, you don't need a college class, you don't even need a course for that matter. I think ours is great. Obviously, we taught it, we put the curriculum together and there was a lot of demand for it through a lot of the customers at DAT. But yeah, same thing, like TIA, we coach their new brokers and very structured curriculum. But even that, I think what we add to it is we're not just, you know, speaking doctrine or like lecturing. We tell stories, we ask questions, we get very involved with the students going through it and we try to help others learn from each other within the class. So I think there's a lot of different ways to learn this stuff, but if you're just in a bubble on your own, you're kind of doing yourself a disservice. You've got to. I mean, a coach is great, working for someone's great, being in a group setting is great. Those are all great options.

Speaker 2: 24:10

Anything else on that. I mean I'm a huge advocate of college and like education and reading, I mean I still do that with most of my free time. Now I will say the one thing that I learned a lot transitioning between the two, between college and practical, and I had a professor that told me this. I remember here's just reminding you guys Professor Kennedy, and he was an investment banker that then taught finance, and I was like I want to stay for my MBA, I want to keep working, I want to stay at school as long as possible, basically so that I can make more money and learn more when I get there, right, and he told me he's like full stop, and everything you've learned from me and everything you're going to learn in school is a world of difference from what you're going to have to do and learn how to do from a practical standpoint. And I didn't really believe it. I kind of I trusted him. He was, like you know, one of those kind of relationships, but still, as soon as I got into the workforce, like I have heard that quote or that sit, that line, and I can see him saying it to this day, because to me they're very different things and I looked it up, by the way, like community college courses for something like this. I just threw it into like Bard and it was like here's a few examples I don't even know where this community college is, but 3795 for certified sub in professional and freight broker agent training. But it includes additional supply chain management content. So there's a bonus for four grand. You to your point, you could go and work for a freight brokerage and they'll pay you to work for them for a month or two. Don't sign a non compete. Sign a non solicit. Go make some money and learn from people doing it far cheaper than paying to go to school to learn how to do the job right.

Speaker 1: 25:50

Absolutely All right. Our last question is there an age requirement for equipment for owner operators to haul for certain brokers? So, like you know, does the truck have to be a certain year? It depends on the company. I've seen brokers that say you know it's got to be like. I've seen some that it's got to be less than 10 years old. The FMC SA doesn't set a rule on that.

Speaker 2: 26:16

They mean there's equipment matters to the type and what you're doing with it. Sure, very much so.

Speaker 1: 26:21

Absolutely. But you got to think about, like, the use of it. Like if you've got a truck no, let's say you've got a trailer that was very lightly used and it's 15 years old, oftentimes in better shape than one that's half as old but was ran to the ground and poorly maintained. Yeah, so like that's why you know if you're looking at an internal, maybe you're trying to set your internal SOPs as a brokerage and you say you know we don't want to work, we don't want to use equipment that's over a certain age. Maybe you can have an exception of that based on the number of miles on it or the safety percentile like the CSA scores for that carrier. Overall, if they don't have a lot of violations for vehicle maintenance and driver fitness and hours of service violations, they're running a pretty tight ship and they're. I've never looked at it, ever. I hadn't until like highway, we use highway now and highway tells you by the number, like you're making mom. So until I look at it now, because it does.

Speaker 2: 27:22

You're right. Like I look at it now because I can see it, but I mean just prior to using highway, I always just look at the out of service percentage because to me, I don't care how old or new something is, I care how reliable it is, and how reliable it is is usually reflected in their out of service reports. So it's like, hey, if you keep getting dinged for out of service, you're not maintaining it. Well. Okay, if it's a 2020 or a 2010,. Right, got low out of service percentage, then you're maintaining it well, and that's all I'm concerned with. Can you get my customers free from here to there without breaking down? And to Stephen's point, maintain the reefer temperature. If it's a reefer, it's a van. Just get it there, right.

Speaker 1: 28:03

Yeah, oh yeah, he had it on. He requires 2018. Reefers are newer to make sure temps can be down on it. Yeah, I mean, there's technology that that's a big thing too. Also, think about like 99 or older. They don't have to. They can use paper logs. Still, they don't need ELDs. So if if you're worried about double brokerage and you want ELD the ability to have an ELD download from a carrier they're exempt from that if they're a 19, if they're, if they're older than a 2000 model year. So, but good questions, keep sending them our way. We love to answer them. We appreciate all you guys do, as we have crossed the million download mark earlier, or actually last month. So thank you guys all for that. Looking forward to what the rest of the years got, ben, I need final thoughts whether you believe you can or believe you can't, you're right. And until next time go bells.

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