Port Strikes, New Carriers, & More Q&A | Final Mile 64
Freight 360
October 8, 2024
Nate Cross & Ben Kowalski answer your freight brokering questions and discuss:
- Working with newer carriers
- Creating BOLs for a shipper
- East Coast and Gulf Coast Ports Strike
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See full episode transcriptTranscript is autogenerated by AI
Welcome back. It's another edition of the Final Mile. We're going to answer your questions today we have. These came from a mix of YouTube and Facebook group, but first I wanted to read off a review we've gotten. But before I read that review, thanks for following us. Please check out the sponsors in the description box to help support the channel. Share with your friends. Check out all of our stuff on YouTube and our website, freight360.net, including the Freight Broker Basics course. All right, let's get to this review. This was awesome man, fabio. So he had emailed us October, early October. Here I said hey to all three of us, steve. Well, steven, nate and Ben recently started following your podcast on freight brokerage and truly appreciate the wealth of information you share about the industry. I'd love to take a moment to explain why I started following, first on Spotify and now recently on YouTube, which is by far my preferred, since I feel like you guys are really talking to me.
Speaker 1: 1:22I have a background in dispatch, customer service and chauffeur services in key markets, particularly in the NYC metro area. A coworker who transitioned into truck driving inspired me to consider the same path. My cousin, who owned a truck at the time, encouraged me to explore freight brokerage, believing my experience would make me well-suited for the role. During the pandemic, I began working for FedEx Ground and a friend introduced me to a supply chain management certification at Columbus State Community College. However, since I already had an associate of arts for transfer from that institution, I decided to pursue a bachelor's degree at Franklin University instead to build a career in this resilient industry. Bachelor's degree at Franklin University instead to build a career in this resilient industry. As I dove deeper in the supply chain, I recognized how vital freight brokerage is in connecting shippers with carriers and ensuring smooth operations. Recently, I earned my CDL, put my degree on hold to complete 40,000 miles of truck driving training, while also taking a freight brokerage training course. My ultimate goal is to start my own brokerage business and I feel confident I'm on the right path.
Speaker 1: 2:24Your podcast has been invaluable is to start my own brokerage business and I feel confident I'm on the right path. Your podcast has been invaluable, offering deep insights into freight brokerage trends, technology and regulations. I look forward to every episode because I always walk away having learned something new. Thank you for the incredible content you provide. Man. That makes me feel good. You know we, even if we just help one person we're making a difference. We've got about 5,000 or 6,000 of you that tune in on some sort of regular basis. Maybe you don't listen to every single episode, but we've got a fairly active audience and a community of nearly 100,000 in our Facebook group. We we're happy to help out those who uh, you know who we can.
Speaker 2: 3:08So there was something I wanted to ask you that I did for the first time this weekend. I didn't want to do it on the podcast, cause I know we wanted to get a bunch of stuff in having a guest on and factoring, but what I was going to ask is have you ever done a cold plunge?
Speaker 1: 3:22No, a cold plunge like if you know what they are? I've not, I've not. I don't like cold water, neither do I.
Speaker 2: 3:32That's why, like I never had, and I was, like honestly a little scared, especially being now like acclimated to very hot weather. I am not comfortable being cold at all anymore. Like 60 to me when I lived in pitt Pittsburgh, it's like five degrees is what that feels like now, just being used to the heat. But my cousin has been doing it and again, like I've been reading a ton on it and like through the years, like Tim Ferriss talks about it but it's supposed to be really good to bring down inflammation but also like fat burning. The other is it create like your body actually creates, I think, the same thing as like the way it was described as like literally like opiates kind of, like this endorphin, like high feeling. That's not like like you're on drugs, but like you just feel like much better and it lasts hours, like six, seven hours that I've read.
Speaker 2: 4:22My cousin's been doing it for a few weeks and like, to be honest, I was like scared to try it but my neighbor had one and he took it to the pool Sunday and he was like, hey, I'm going to go do this outside if you want to come try. And I was like, yeah, I'm like I've wanted to, and I think the peer pressure will help me because, to be honest, like I'm well, I'm very scared to just get into a giant bucket of ice water, and I did it. I was in there for about a little more than five minutes, like five minutes 20 seconds, and I will tell you like I have back pain from like an accident I was in, and like tennis elbow, from like lift and latch, and like I can tell you that the rest of that day I felt better, literally. Still, the next morning slept better than I have in years. I'm like it was absolutely fantastic.
Speaker 1: 5:07Are you smoking pot while you're in there, while you're at it, right? No, it's like, legitimately, just like the the effects of the cold plunge, correct?
Speaker 2: 5:15just the stuff people swear by.
Speaker 1: 5:18I got a buddy who, uh, literally just in the winter here like people will just throw like snow into a a pail and fill up with water. I can set up ice, just throw snow into it and just make it really cold and hop in there for a couple of minutes, yeah.
Speaker 2: 5:34You got to try it at least once. Dude, I'm telling you, like the first 15 to 30 seconds you really you feel like you're going to die, Like your body like almost goes into shock, it sucks the wind out of you because you feel like you're going to go into hypothermia. But as soon as you cross that little thing and I was like cause, like again, my neighbor was like kind of coaching me through he's like dude, just pick something to stare at and just try to meditate, and if you can calm yourself down, it's not that bad. Once you get over that little hump, like I don't know, Like I couldn't say enough good things, Like I'm really excited for each other.
Speaker 1: 6:02I remember doing the ice bucket challenge like 10 years ago.
Speaker 1: 6:06Yes, I do remember that that's just a quick bucket of ice water versus five minutes, but anyway, yeah, I'll try anything once, man. Let's get to our questions here. First one as a broker, why shouldn't we want to work with carriers that have a new authority? So I will challenge this question and say that you shouldn't not want to work with carriers that have a new authority, but you should have a heightened level of attention when you are dealing with a carrier that has a new authority. When you are dealing with a carrier that has a new authority. And the reason for this is blatantly, the majority of fraudulent carriers tend to be using a new authority and have been over the last few years. That's the number one reason. Number two reason is when the post-pandemic shutdown surge in shipping demand tight capacity, everyone and their brother was getting into trucking and getting a new authority, didn't necessarily know what they were doing. They made mistakes you might have had, you know, damaged shipments, delayed shipments, claims, whatever.
Speaker 2: 7:16Yeah, all kinds of issues.
Speaker 1: 7:18So it's inexperience is another reason. So it's inexperience is another reason. But some of the best carriers that are out there are someone who worked and drove for 20 years as a company driver and got his own authority one day. Right, and they're going to be new, like when I, when I've got carriers, we've got a, it'll flag them if they, if they're under 12 months authority Doesn't mean we can't use them. It just means that I got to take a look, right, what's the deal with this carrier here? So that's really it. You know fraud, you know relationship to fraud, relationship to poor service Doesn't mean don't use them. It just I would. I would personally recommend just take a deeper look, right. I mean, what's your take here? It's a two things.
Speaker 2: 7:57It's really personal preference.
Speaker 2: 7:58I think that is also a holdover from the way things used to be, like you know, years ago. A carrier under a year, to your point, like that's where most of the fraud was like when I started in the industry. So most companies had that probably fraud instances of like cargo either being held hostage, stolen, diverted, some version of, like some criminal activity. I can't remember one that was an MC that was less than a year, because the criminals realize it's harder to get freight, so like they're now fishing real legit MCs that have age because the industry had been avoiding them. So to me, like I don't even think there's a really good case for the fraud piece. I think there is the case for the inexperience. But, to your point, like I have a preference for working with newer businesses. One because, like they, they need help and like, to be honest, like I want to work with companies that need a leg up and need an opportunity, and I mean the cynical part of me is like they're usually going to give you a better rate because they don't have as many options. Now the other part of me is like I genuinely like working with newer business owners because, like this is what we do for a living and like I like helping people get out of this and to be able to stabilize. So like I try to work with more newer carriers right Than older in a lot of scenarios. But to your point, like it's just asking a lot of questions, hey, can you tell me a little bit more about, like, your driver experience? I mean, are these guys that have been driving CDL for a number of years decide to start a new business? Are these like brand new drivers to the industry? And the other thing to consider is like what are you moving? And if you're moving some lumber loads, I mean, my driver fitness and experience is nowhere near as relevant as if I'm moving something that is perishable, where, if the reefer isn't managed correctly, I have a claim or something that could be damaged because of a driver's inexperience, like glass.
Speaker 2: 9:54On the questions you're asking, I don't think anybody out there should just be drawing a line and I know lots of systems do. But, to your point, the line shouldn't be to exclude them. It should just be to look deeper and ask some more questions to understand because I can't tell you how many carriers, to your point, I've worked with through my career that like they worked for a huge company. Then they became an owner up right, like they were my some of the guys that I talked to when they were at a big company. Then they called me and said hey, I got my own MC. Can I still run some of these same lanes with you? Absolutely, you've done a great job. You communicate well, never had an issue on a load. We'd love to be able to get you approved. Then you get the waiver from the company. If you're at a big company or my case, like I, can just move that bar up, let them through and we work with those folks.
Speaker 1: 10:44Yep, yeah, absolutely. There's no black and white answer, it's preference, subjective, yeah, cool. Next question Am I allowed to create BOLs as a freight broker for my customer? Yes, some companies. I've actually heard of companies that won't let their employees do this, like brokerage companies that won't let their employees do it. I've always seen the BOL.
Speaker 1: 11:12Creating a BOL for your customer is a value add. So I've seen it a lot of times in the freight forwarding business. I've seen it with the multi-stop, where they need a BOL for every order on that shipment that's going to each location and you're like, hey, I'm going to save you the time of having to create these, I'll get them all prepared for you, I'll email them over. That way, when the driver shows up, you've got all the paperwork you need ready to roll and we're good.
Speaker 1: 11:40I would you know, bol is a legal document. Right, it is a legal document. It's the bill of lading that shows the shipment that's on board. It's going to say you know the quantity, what it is, and it's going to have a spot to sign that you know this has been picked up. And hey, this is on my truck and hey, I've just received this at the destination. So there is, I would say there is risk, for if somebody is new, that you don't want them to be creating BOLs if they're not comfortable with it yet. That's possible they might screw something up or put the wrong something on there. But yeah, I mean, did you guys? You were a big box W2 before you got into the independent thing, but did you guys ever create your own bill of ladings?
Speaker 2: 12:21I used to do it a lot for specific customers. For those instances Like hey, can you guys create the bill of lading for multi-stops or for blind shipments? Hey, like I have a load literally right now in this scenario where, like, my customer usually brings product to them and then we ship to their customers, but sometimes, when their customers need product faster, I pick up from their supplier, Then I create the bill of lading to deliver to their customer directly, so that it so that their customer you want to talk to that actually real quick.
Speaker 1: 12:50So, because I've actually had to help folks with this a couple of times in the last couple of months. Blind shipment BOLs yes. You end up having two right. You have, like one that just doesn't show. Let's say, for example, you don't want the receiver to know where the shipment picked up from, correct right, for it could be back solicitation. It could be a number of reasons. You're going to have a legitimate bol and then you're going to have a bol that's blind, that does not show the actual shipping location yes, and the driver they're both going to follow the driver, but the receiver only gets the one or will sign the one. That's blind. Correct, yes. Is that how you've done it?
Speaker 2: 13:33Yeah, and here's the instance, right, I'll just give you one of the instances where this happens. Okay, so let's say you're my customer and you buy glycerin off me, but I buy all my glycerin this time of year from call it like you know a big company like Louis Dreyfus, whatever, right. So, okay, I normally ship from me to you, so from my facility in Boca up to you know, buffalo. I literally bring my product from Louis Dreyfus into my tanks, right? Then I load it into the trucks here and ship it to you normally. Now let's say you're like Ben, I need another tanker load in like four days. Well, I don't have time, or I don't have enough in my tanks because I've got that already distributed to other customers. So what I'll do is I'll call my supplier and go, hey, I need a load, an extra load, this week. Then I call a carrier and go, hey, I need you to pick up at that facility, my supplier, like normal, but drive directly to Buffalo instead of bring it to me.
Speaker 2: 14:30Why, I don't want you to know where that product came from because, then you might just be able to call that supplier and be like hey, can I buy it from you and maybe they'll give it to you cheaper. Maybe, if you don't have the volume. It doesn't work. But that's why you want to shield where it's coming from and a blind shipment from where it's going to, so that they don't just start buying from the place you're buying from, cause that's your proprietary value as a company. You've negotiated these relationships. This is how you make money as a business. You don't want everybody you're selling your product to to be able to go directly to where you get it.
Speaker 1: 15:00So how do you create your BOLs in that situation?
Speaker 2: 15:03So exactly how you just said right, like it is, sometimes they we might even just put in the same supplier, like it would come from like Boca Raton to go to Buffalo on the BOL, so it just looks like every other one. Some customers say like, hey, we just don't want any shipper on there, we just want the receiver and the products that are in there. And we have one on our website. I was pulling it up right now, like Steven used to use this even before he worked with us.
Speaker 1: 15:29Yeah, the BOL template, yep.
Speaker 2: 15:30Yep, and again it's the stuff that's on there. A typical one is ship from ship to location details. Fill in a number, carrier name, trailer number, seal number, if applicable, a SCAC code, if applicable, freight charge terms right Like prepaid, collect, third party and then you've got the details of what's in it, like what, how many POs are in this shipment? Is it one big thing, or is it? You know 28 different pallets and what is in each of them that needs to be outlined in the bill of lading and at the bottom, like, you need the receiver to also be able to sign it along with a carrier, and they should also indicate when they checked in and when they left to determine if there was any detention.
Speaker 1: 16:14Yep, and that's why we say legal document, right. It's literally people are signing of taking position, like the driver is taking possession, right, and then the receiver is taking possession, so good stuff. Um, yeah, the blind uh. So I pulled up the blind shipping bol like a little explanation. So supplier replaces their name on the bol at the company's name.
Speaker 1: 16:40The bol is given to the consignee without the supplier's information. The bol is given to the consignee without the supplier's information. The BOL is given to the carrier and shipped to the customer. To ensure the shipment goes to the correct destination, the carrier will switch the BOLs once the shipment has been picked up and is in transit. Most carriers will request notification if the shipment is blind, so they can switch the BOLs.
Speaker 1: 17:00A shipment where both the shipper and the consignee want their information hidden is called a double blind shipment. So you'd have, uh, um, the shipper omitted on the one and the receiver omitted on the uh on another one. So yeah, interesting, it's a whole different part of the business. All right, um, but yeah, check out the bol template on our website. It's official. It's literally the version that would come from like bill of ladingorg. We just made it nice and clean and fillable for you guys? And, um, yeah, it's, it does the job for you. All right. Last question here how will the port strike impact our industry? Ben, what do you got? I know we talked a little bit about it on our our episode that dropped Friday. Um, about the news part, but you know the the port strike. How do you think that will impact freight brokerage, whether it's rates, capacity, demand, where stuff's coming in? What's your hot take so?
Speaker 2: 17:59I was talking about this yesterday with our team, like, okay, what tends to happen and what do you do about it? Right, so the thing is like think about it really simply. You got lots of stuff that normally comes in the East Coast, right, let's just take perishables Like bananas tend to be one of those commodities. Like Jason Miller posted a whole list of these on LinkedIn, you could see exactly by percentage what comes into the East Coast ports so you can be aware of what's going to be affected. So let's just take bananas, right? Okay, well, the first thing that happens is about a month ago companies were aware this could happen, so a lot of that product got diverted to the West coast. Okay, well, think about that. If this company usually books the same truck every week to pick up from, let's say, the port in New Jersey to run to New York, where you're at in Buffalo, now that product needs to be shipped there from California, so that lane is no longer available for that truck to go from New Jersey to Buffalo, now it's got to be booked at clearly a higher rate to go from California to Buffalo, so it shifts where the trucks and which volume of freight is available First where the freight's coming from moved. So then the trucks go to pick up from where that is. So it moves capacity in one way. That way right.
Speaker 2: 19:10The other thing that happens is companies try to bring in a little more product to make sure they have enough on hand. So sometimes they'll order more of it to your point or to that point I just made right To the other coast. Or maybe they'll try to bring it up through Mexico or wherever to make sure they have at least enough inventory to sell. That is shifting where the loads are, so it's shifting where the trucks are going to be. That's already creating some disruption and that creates changes in spot rates. More loads are all of a sudden coming out of California. The spot rates are going to start to go up because there's more demand for trucks than there are originally. More trucks go there.
Speaker 1: 19:46That levels out Now the thing that In Southern California has historically been a tight market regardless, just because of all the activity.
Speaker 2: 19:53And now you're going to double down on that and that was on the back of the produce season, right. So the other thing is like okay, well, what happens though? On? Like the East Coast, so like lots of companies just aren't going to be able to get inventory right Now. It depends how long it lasts. If it is two or three weeks, right. There might be periods of time where some shippers literally don't have any product to move, so like loads just literally might not be available because they don't have anything to ship. Like I have a customer that ran into this now, like where they're literally going to have to wait until whenever the strike is over to get their product. That is sitting on a boat waiting to get in the port now Right. So you have all this pent up demand, right. Like think of a dam holding back a river the more it's there and the more water keeps coming, the bigger and more pressure there is for it all to be released, right. And they're saying that, like one day is the equivalent of about five days of backlog. So for every day the port's closed, look at about five days to work through that. So if it is less than a week, probably not going to see a giant impact, but if it is like three or four weeks. That is going to be significant, also because we're going into the holiday season, which is traditionally a higher volume.
Speaker 2: 21:03People buy more things. You've got consumer goods for Christmas. You've got Christmas trees. A lot of them get imported into the East Coast. There may be shortages on those the holidays that are coming, like there are a lot of products that are going to be affected.
Speaker 2: 21:18And then what happens is is it doesn't matter, like how many trucks are there, you still only can move a certain amount of containers through a certain number of ports every day. Like, even if you had more people there, they can only bring so much through and there's a finite or limited amount of space for the containers to sit there before they get picked up. So, like there ends up being usually a very large demand in a very short period of time to get these containers out and the trucks are going to do whatever they can, but that usually pushes rates up. Like, literally, the major shippers that bring in imports have to pay more money to get their containers out faster because they're on a clock. If that container sits there more than a few days, it starts to incur demurrage of anywhere of like $180 to $200 a day and it goes up to like $300 or $350 a day. So every day that container sits in demurrage, that customer, whoever owns that freight is paying that bill.
Speaker 1: 22:14So now, all of a sudden it makes a lot more sense to pay more to move it Because someone's not working, because someone's refusing to work, correct, wow. So you could just be like an innocent buy or not innocent, but like you could be a customer, a shipper, who is literally paying fines because the dock workers are on strike.
Speaker 2: 22:33Yes, Well, they already are, because all the steamship lines started and I don't know if all of them, but at least a few, I read were putting like an extra thousand dollar surcharge on every container coming into the East Coast as of like a few weeks ago. They're already starting to price in the fact that they'll have to pay more to get them out of the port.
Speaker 1: 22:52I gotcha Interesting. And so, yeah, jason Miller, his, you mentioned bananas. This was interesting. The other ones that he mentioned, these ones, they have a high percentage of freight that goes to the East Coast. You got unglazed ceramic flags and paving worked monument, et cetera. Stone, granulate, plywood, veneered panels, salt including table something, fruit, nut or vegetable juices, wine of fresh grapes, dates, figs, pineapples, avocados, water sweetened, etc. Yeah, they're kind of like groupies in the broad categories but yeah, I mean, these are all commodities that over 70% comes to the East Coast and Gulf ports. There's a whole bunch of other ones too that are, you know, hefty, like furniture, motor vehicle parts, things like that, that there's a smaller amount that comes through there. But this is crazy.
Speaker 2: 23:54Yeah, and there's two opportunities right. The one opportunity is maybe to capitalize and to be able to help get more product out of the ports after they open, and the other is to just talk to your customers about what they're doing to plan for this or how they have rearranged their supply chain to get ahead of it. And that might mean, hey, we got more lanes coming out of areas of the country we don't normally have. What that usually means is they need more spot quotes because they don't have carrier relationships coming out of there at this time of year. So it creates opportunities for you to be able to help maybe get in the door, move a load or two.
Speaker 2: 24:27Like all of the disruption, like we solve problems. At the end of the day, that's what a freight broker does Find solutions within the supply chain to help get your customer what they need. So for our industry selfishly, like these things usually benefit our industry and they usually benefit truckers as well, because, at least for a period of time, rates get inflated because everybody still wants their goods moved as quick as they can, even if there aren't enough trucks. So that puts upward pressure on trucking rates. So it could be a good thing for the industry selfishly but for sure not a good thing for the economy, shippers and us as consumers that buy these things because we're going to pay that bill one way or another.
Speaker 1: 25:02Yeah, I mean, this is the same thing as COVID, right, there's winners and there's losers. Yes, so good stuff, good questions.
Speaker 2: 25:09Yeah, what do you got? One last question. Okay, In a typical agency like and I know there's no standard, but who pays for the load boards and the TMSs Is?
Speaker 1: 25:18there a rule of thumb.
Speaker 1: 25:22I would say probably slightly more than probably, the majority of companies will have some sort of fee or commission deduction that accounts for their expenses. Some call it, you know, like literally I worked for a company that right in the commission check would say, all right, here's 150 off for DAT, here's 20 off for truck stop, 10 offer post everywhere. And then there's other companies like God. So one of the things I did early on was I used to like call every brokerage out there to see, like what do they offer? Right, things like that. And like Global Trans had like a 400. This is like 10 years ago I had a $400 a month like technology fee, but it covers all their costs, right. I've seen companies that charge you an administrative fee every load $5. I got a buddy that works at a company that does that and that covers on average their costs.
Speaker 1: 26:21So I would say the rule of thumb is that the agent will somehow pay for it. Um, that can be through a lower commission, through a direct uh fee. Um, like we don't at Pierce, we don't charge our agents for that. We just only bring on good agents who are worth our time and us to pay for that kind of stuff. So um, yeah, but that's my answer for you. So so cool, yep, good deal man. Final thoughts.
Speaker 2: 26:51Whether you believe you can or believe you can't, you're right and until next time go bills.