The Impacts of a FreightGuard + More Q&A | Final Mile 66

Freight 360

October 22, 2024

Nate Cross & Stephen Ruhe answer your freight brokering questions and discuss:

  • Non-recourse vs recourse factoring
  • How freight guards impact a carrier
  • What to do when a driver breaks down
  • What constitutes a TONU

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Show Transcript

See full episode transcriptTranscript is autogenerated by AI

Speaker 1: 0:19

All right, final mile, take two. We just started recording and realized it wasn't recording. Welcome back to the final mile. We got four questions for you. Please check out all of our other content at Freight360.net, including the Freight Broker Basics course, and check out the sponsors in the description to support this channel.

Speaker 1: 0:37

First question up this is me and Steven today how does recourse versus non-recourse factoring work? This was a follow-on question from our recent episode with Hall Pay. Non-recourse factoring if you have a factoring company that's funding your invoices and you're truly non-recourse, that means that if the customer doesn't pay the invoice, you are not on the hook for that money, whereas recourse, you are not on the hook for that money. Whereas recourse if the customer doesn't pay, you would be on the hook to pay that money back that you were forwarded. Now there's some gray area in there.

Speaker 1: 1:14

So if a company advertises themselves as non-recourse, they might say, yeah, we're non-recourse, unless, let's say, the customer doesn't pay within 90 days or 60 days. So just make sure you understand the fine print on on what you're signing up for. So yeah, it's, either you're you're on the hook for the money if it's not paid or you're not. And typically if the factoring company is the one that is vetting your customer for a credit line, which is very common. That's why they would be non-recourse. It's hey, we're the ones that approve this credit line, we approve to fund this invoice, and it's going to be non-recourse. If it's recourse, they might be more lenient on credit lines, they might have lesser fees. Yeah, so anything I missed on that one, steven.

Speaker 2: 2:03

No, I think you pretty much nailed it. You know, and just like anything you do in this industry, whether it's, you know, booking loads or insurance or whatever just always make sure you're reading the fine print before you sign any contracts absolutely good stuff, all right.

Speaker 1: 2:17

Next question this is about freight guard. So is a carrier? Is a carrier able to book loads and continue to work after having a Freight Guard report for not having the right coverage for a damaged load? The commodity damage was excluded from the policy. So in this instance this was from our Facebook group, I believe. So it sounds like what happened is a carrier hauled a load. It was damaged, like what happened is a carrier, uh, hauled a load, it was damaged and then they come to find out that their insurance didn't cover that commodity. So maybe it was like frozen seafood or berries or electronics. Basically, whatever it was being hauled wasn't covered by the policy.

Speaker 1: 2:57

And now the broker has left a freight guard report on carrier 411 against this carrier. So they're saying can I still book loads and continue to work? So the short answer here is, yeah, freight guard doesn't stop you from it's like it doesn't shut down your authority to haul freight. But it's not a good look that you hauled freight that you had. You know that wasn't insured by your insurance company. And now this could be. There's probably more to this story. Right, it could be that the broker didn't, specifically, they weren't clear about what the commodity was in detail and verify that there was no exclusion on it, et cetera. But the freight guard is more of like a social review, if you will. Steven, what's your take here? I know you were saying earlier that you had a and you were dealing with something with uh, freight guard earlier or recently yeah.

Speaker 2: 3:49

so, first of all, the freight guard report that you're you're laying out here. Um, there's, there's two faults here. One the broker didn't do their due diligence to check the insurance and make sure the exclusions weren't there Right, and then the carrier, either through omission or incompetence, didn't also do their due diligence. So there's an issue there. And that freight guard report is, you know, that's a pretty standard freight guard report or like TIA watchdog or whatever you know reporting systems. All those are, like you said, they're just a review, like a Google review of your business. It's just through an industry specific platform. But the caveat onto this conversation, carrier 411, me personally, I am not a fan of that platform. Their brokers have used freight guards as a weapon against carriers and there's a lot. I mean, sometimes these freight guard reports are worse than a Reddit forum and there's little to no value and it's just so saturated with BS that we have just ultimately went away.

Speaker 1: 4:59

I don't even use that.

Speaker 2: 5:01

Yeah, we went to. No, I mean I'm not going to pay for something. I don't even use it. Yeah, we went to know, I mean I'm not going to pay for something. Especially the other issue with carrier 411 is they have little tools for the carriers to refute freight guard reports and so many people in the industry use it that it hinders a carrier's even good carrier's ability to do business. That's not something I'm going to support.

Speaker 1: 5:24

So yeah, yeah, I agree, people have weaponized it for sure. The same, I mean. One of the things that's nice about Google is you can respond to a Google review and address whatever the like we we do it every single time. A carrier leaves a one-star rating because they were pissed off at one of our brokers, freight yard's. They're like they're permanent now, aren't they like? You can't even can't get rid of them.

Speaker 2: 5:49

so the permanent. They can't go away and the carriers have very it's very hard for them to respond to the freight guard reports. Um, and yeah, it's just. And and the other issue is there's so many better products on the market to vet carriers that it's silly to just keep. Yeah, agreed.

Speaker 1: 6:12

All right. Next question what should I do when I have a driver that breaks down in the middle of a shipment? So there's a lot that depends here. So we'll say, let's say you've got a multi, you know a long haul transport, right, so it's not a local move. So you're going across the country and you know halfway move. So you're going across the country and halfway or whatever partial way down the road the truck breaks down.

Speaker 1: 6:34

So there's a couple of things that you would look at here. Ideally the truck can get fixed quickly and continue to operate. That's one option. If it's a long, if they have to go to the shop for multiple days and they can't finish the delivery, ideally they would have another truck in their fleet. They could come and pick that trailer up and deliver it. But let's say you're dealing with an owner operator, just one truck. They don't have anyone else in their company or the company doesn't have another available truck. What do you do here? Truck, what do you do here? You'd have to find another carrier and transload that I mean. So one option would be you have it cross docked so you'd have the trailer taken to a warehouse type facility where that freight could be taken off of that trailer and then you'd send a new carrier into that same facility to then get reloaded with that freight and deliver it. Alternative option would be to have a power. Only other carrier come and, with a trailer interchange agreement and insurance, would haul the first carrier's trailer to delivery.

Speaker 1: 7:42

It's kind of messy because now you've repositioned the original carrier's truck or, I'm sorry, their equipment, their trailer, and you're dealing with insurance policy and agreement that you've got to put in place. So these are messy situations. Big takeaway talk to your customer and say, hey, here's what happened. If it's not time sensitive and they can deal with a slight delay, you probably just want to keep the same carrier on there until they can get it delivered. If it's very time sensitive, well, you're probably going to deal with a transload or a trailer interchange, where you're having a power only come pick it up and haul someone else's trailer.

Speaker 1: 8:20

They get messy. The reality is this stuff does happen. But this is one of the reasons why you really want to vet the maintenance history and the safety ratings of these carriers and the age of their equipment, stuff like that. What do they have faults for on their roadside inspections? Is it stuff that's easily preventable, like brakes and tires and lights the basic preventative maintenance stuff that you should be checking in and out on a regular basis. If they're getting dinked for that a lot, well, they're more prone to breakdowns because they're not taking care of their trucks. You ever dealt with one of those mid-transit breakdowns?

Speaker 2: 8:58

Oh yeah, yeah, I get those not as often as it used to be, which is shocking with how low the market is. You would think I would have to deal with it more, but yeah, it happens. Low the market is, you would think I would have to deal with it more, but yeah, it happens. Um, and it again. It's it's always case dependent. I've had to do trailer interchanges and make sure that the the carriers had the correct policies. If not, you know we had to go to the insurance company to get a one-time policy for the movement. Um, and then I've had it where you know, just let the guy sit and get it fixed.

Speaker 1: 9:32

Yeah because the thing about this, too, is like if the guy breaks down, he might say like I'm not letting somebody else haul my trailer, right, you know what I mean? That's a real possibility, in which case you're going to have to get it cross-stocked somewhere in that area for the freight and whatever.

Speaker 2: 9:50

But usually the tactic I'll take is well, here's how much the product costs, here's what the claim is going to cost at X, Y and Z, if you're not there on time or if something spoils or whatever it's like. So which road do you want to go down? And then, when you start throwing out claims and stuff like that, they usually get a little more.

Speaker 1: 10:19

Yeah, that's a good point, Because, let's say, because let's say we'll just make up numbers here let's say the load is, uh, was supposed to pay two grand and now, because of the breakdown, you've added, you know, a thousand dollars to hire another carrier, um $200 for a cross stock or whatever. Um, now there's only 800 bucks left to pay this guy. And you know he's thinking, like you know, I want to get paid, like you know what I mean. So that's, yeah, it's a good point. So, uh, it happens, stuff happens, though. Good question, all right, our last one is going on Tonews.

Speaker 1: 10:55

If a shipper cancels a load on me two hours before pickup, does that deserve a tonew? There's not a simple yes or no answer here. We've talked about tonus in the past, so I'll give you a few scenarios here. Let's say it's two hours before pickup and you don't have a truck yet Obviously that's not a tonu, because they're not going to pay a tonu for a truck that was never booked. Let's say it was canceled two hours before pickup, um, but the truck that you're supposed to be sending in there hasn't been dispatched yet, which is probably unlikely if it's two hours, um, but usually the rule of thumb is like if the truck hasn't been dispatched to go pick it up yet and it's canceled, probably not going to pay a tonu. Like if, if they book it for tomorrow and it cancels today and they're still not even empty with their last load, no, that's not a tonneau, you go find another load. It's unfortunate, it is what it is.

Speaker 1: 11:52

But a lot of customers will have their truck order not used policy set where they say, hey, if we cancel same day we're paying a tonneau, if we cancel within eight hours we'll pay a tonneau, if it's outside of that timeframe we're not paying a tonu. Now that doesn't mean that just because your customer doesn't approve a tonu doesn't mean that you should unethically give a carrier a truck order not used payment. So like, let's say, in this case, customer cancels it two hours before they deny the tonu, you had a driver that was already on their way to pick it up. If it's me, I'm still paying that driver for their time because I wasted their time and I think they deserve that truck or not use, Even if my customer wants to be you know an a-hole and deny it to me when they're the one that canceled it. So what is your take on the tonu Do you have a tonu policy that you guys kind of go by, or is?

Speaker 2: 12:43

it my case, yeah, and actually I was going to say you know that this final mile episode seems to be very about contracts, because what I was going to mention is you know if, if you're questioning whether you should ask your customer for a tonal within 10 out two hours, um, my question to you is like what did it say in the contract?

Speaker 2: 13:05

Was it listed in the contract? Because whenever I set up customers or bring in new customers, we'll talk about lanes and rates and stuff like that. But somewhere in that conversation, before I move, the first load is ask the serials what's your detention pay, what's your layover, what's you know if this happens, if this happens and if that person I'm talking to just has no idea, I already have a document on my desktop that says well, here's what I do. Let me know if this aligns with you, if we need to tweak something here or there based on what you've seen in your operations, because I'm going to have a list of accessories. Tonu is going to be on there. Typically it's a 24-hour window If the truck's dispatched. If not, then it's based on when they're dispatched, within the 24 hours and going towards picking up the load.

Speaker 1: 13:50

Yeah, it's a pretty good rule of thumb. The specific question of two hours, I'm going to say, in more cases than not, it's going to, it's going to pay a tonu, obviously, the the difference being like if it was a last minute load that the customer awarded you and you haven't booked the truck yet, and then they cancel it 10 minutes later, like no, like it's not going to be a tonu. But yeah, if it's a predictable load, pre-scheduled, um, yeah, if it's, if the truck's already rolling, I'm paying a tonu. Uh, if it's the day before and they're still on their last load, that's not really um grounds for a truck or not use payment. But good stuff, good questions. Keep sending them our way. We pull them from the YouTube comments, from you know you guys emailing us or fill out the form on our website and our Facebook group, which there is a link in the episode. Show notes for that as well. Steven, thanks for thanks for link in the episode. Show notes for that as well. Steven, thanks for filling in for Ben this week.

Speaker 2: 14:51

Any final thoughts on your end? No, hopefully the Bengals pull out a win against the Deshaun Watson and the Brownies this weekend, but that's about all I got.

Speaker 1: 14:59

There you go. Well, I guess, is that going to be because this will drop Tuesday? Will that have been the weekend this coming week? Oh yeah, that would be.

Speaker 2: 15:07

It will already have happened. Yeah, so you guys will know I get it.

Speaker 1: 15:12

I think you're going to get the win. We'll see, and until next time, go Bills.

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