Why Unpredictable Freight Makes Brokers Essential | Final Mile 122

SPEAKER_01: 0:38

Welcome back. It's another edition of the final mile. We're going to answer your questions. These are coming from a mix of YouTube, Facebook, and I think I snagged one off of Reddit, if I remember correctly. Check out all the other content too, including the uh Freight Broker Basics course on our website and share us with your friends. Check out the sponsors in the description box, help to support the channel. Let's get into it, Ben. First question here. What industries have the highest success rate or have the highest demand for brokers? So far, the only industry that I've found that specifically needs brokers are liquidators. I'm not really sure what the liquidator thing is. Um is that like when a store goes out of business, right?

SPEAKER_00: 1:22

They buy usually inventory cheaper and then resell it somewhere else for faster and lower amounts of money.

SPEAKER_01: 1:32

Okay, so um I'll try to take this question and just give a generalized answer because this is good for anyone that's new and try to figure out who to target. Where brokers tend to be very valuable is when you have a short period of time to secure capacity for a shipment, meaning less time to find a truck. So predictable shipments tend to be bid out in a um an annual or quarterly or cyclical bid. And a lot of times your large truckload motor carriers will bid on the lanes that they want to load their fleet with based on where they're located and you know all kinds of things in there within their organization. Then the that's what we call the contract market. The more unpredictable freight that comes based off of one-off orders or just different various needs that can fluctuate and the volumes can change and the shipment dates are you know less predictable. We call that the spot market. And that is where primarily brokers will be heavily involved. And a lot of times you'll have um you'll have some some trucking fleets too that may be on a uh um a daily load list or something like that, where hey, here's what we have today or tomorrow or coming up this week. And that's where brokers become the the the middleman, and we've you know we connect these shippers that have these near-term needs, and I'm overly generalizing this, but we these shippers that have this near-term need, we connect them with the trucking market that has a near-term um available capacity, right? So your average trucking company, it's like over 90%, are considered small trucking companies. They've got less than 20 trucks, which means they probably don't have a an in-house sales team trying to go out there and and sell to customers and get their business. They're gonna rely on relationships with brokers um or use load boards to connect with brokers, and that tends to be where it's at. Another thing where I would where I would tell you as far as like industries, um, examples of a lot of this is gonna be in your seasonal shipping for like produce is a generalized commodity because the harvest, like the exact time of the harvest can shift year to year. So like a large trucking fleet is not going to commit their capacity six months in advance when they don't know exactly when those loads are gonna be available. What would you add to this?

SPEAKER_00: 4:05

Yeah, it's uh it's like a function of time and unpredictability to your point, right? Like if a load is moving every Tuesday all year, it makes more sense for a shipper to work with a carrier because from the carrier's point of view, they can assign a truck to it, schedule around it, and have the same driver go to the same place every Tuesday. So like it really benefits the trucking company and the shipper gets a lower rate. The trucking company's like, hey, that's great. That's three days of work every week for one driver. I can build the rest of the week around that with maybe one spot load. So, like you said, predictability and regularity. So if like on an RFP, anything less than 50 loads for a yearly RFP probably goes to a broker because like it's not regular enough. Like a trucking company has a very hard time going, like, hey, I'll move this load the first Monday of the month, then the third Tuesday, then maybe the fourth Friday of the month, because like they just can't schedule around that well. So they go to brokers. Brokers then go get those loads in, like you said, the spot market. The other way, and we talked about this in the podcast. One of the questions I always ask is like, how much lead time do you have between basically knowing you have a truckload that needs shipped and when it has to ship? So, like, did you find out about this order a week ago, two weeks ago, six months ago, or this morning? The closer it is to this morning, the closer it is you gotta work with a broker, right? So, like a good example of this are like produce brokers almost always use freight brokers. Why? Because a produce broker waits for their customers to call them sometimes the day of, and they're like, hey, my guy at Walmart just called me and said, they ran out of watermelons at this store unexpectedly. They sold through them too quick. They need two truckloads of watermelons by tomorrow because they literally don't have any watermelons to sell. That guy runs, buys a bunch of watermelons, and then he's got to get it picked up by the end of the day. He can't call a trucking company, be like, hey, can you either pick up from Nogales or can you pick up from Salinas Valley or from this place in Arizona in four hours? Like, no, like a broker's got to find whatever truck is closest to where that load is and then go get it for them, right? So the shorter the time between knowing a truckload needs shipped and it having to ship, the more likely they're gonna use a broker. And to your point, the more it changes. Because if you're a shipper that ships two truckloads every Tuesday and you've got a trucking company that does it every Tuesday, but then this week I have five loads to move, and I only found out about them yesterday. Two of them will go to the trucking company, three of them are gonna go to a broker. So volatility, like how many loads ship, is the other indicator in time.

SPEAKER_01: 6:39

I'll I'll add to that too, and this is a good question when you're prospecting, is to understand how their how their bid and their contracted lanes work. So if you've never done a bid, a lot of times what you'll get is um you're not gonna get the exact dates of the shipments, but you're gonna get like an estimated volume of shipments in that lane during that bid. So maybe let's say your bid's for a year, which is a common one. Well, I guess probably less common now. Let's say, but let's say it's for a year and it says we expect to have you know 400 instances of this of this lane. So almost two a day, basically, to a working day. Um so if a carrier wins that lane and gets awarded it, again, they don't know the exact date of the shipment, they just can understand predicted uh, you know, an estimation of it. But let's say that that shipment then gets solidified for you know Tuesday, December 9th, right? Next week. And the carrier's like, I actually am not gonna have a truck available for that, they reject that contract attender. And then depending on how the customer operates, it might have a waterfall effect where it goes to the second place person and then the third place, or it eventually goes into their spot market, which is what we were just talking about, where this is when um they don't have somebody available and it's gonna go to you know, whatever broker or potentially carrier can be the best fit for them in that short period of time. So that waterfall or tendering process, that's a good thing to ask about when you're making prospecting calls. Because you may be, you know, maybe you don't have any um, you know, contracted business with them, but you at least understand how things work. And when you when you go to call them to follow up, you can have a good question to ask, like, hey, you know, anything um get rejected that you know needs to get taken care of this week, and you know, things like that. So um, all right, next question. Tried to look for a carrier for loads through the search trucks tool on DAT, but all that I came across were with some kind or all the ones I came across had some kind of issues, either potential fraud signals, including suspicious phone lines and reuse carrier addresses, safety issues, etc. What are your experiences with searching when searching for a truck? Should it be avoided and just let carriers reach out to you for the load? Um well, it in a nutshell, we've talked about this in other content, but whoever makes the phone call is gonna have less leverage just in general, because you're that's the person that is calling wanting or needing something, right? If I'm a broker and I call a truck that's posted on dat, they know that I'm calling them because I need their truck. If a truck calls me about my load posted on DAT, I know that they're interested in this load and they need me, essentially, if you want to put it that way. So there's that part of it. But when it comes to the fraud, I treat inbound and outbound um communication equally as far as how I'm gonna protect it and prevent fraud, meaning my rules don't change for carrier vetting. My compliance and tracking requirements don't change depending on who made the phone call. Right? I'm looking at what is this load? Is it a standard load that meets my standard rules? Is it a high value load that requires additional rules? Is it a reefer load that requires additional checks on reefer breakdown? Is it a power only that I'm gonna have to look at trailer interchange? Um, but all my my fraud prevention ones are pretty much always gonna be the same across the board, right? I'm gonna be looking at identifiers that my company has determined are red flags for you know stolen uh cargo or um stolen identity or double brokering or you know, you name it on the fraud issue, but I don't differentiate. What is your what's your take on this one?

SPEAKER_00: 10:33

It was exactly what you said. Like, I mean, you probably are gonna run into I mean, to be honest, you don't necessarily know you're getting more on search trucks versus inbound calls, because my um it's a pretty good guess is that like you're probably researching these carriers before you call them.

SPEAKER_01: 10:52

That's true.

SPEAKER_00: 10:53

Where when they call you, you're talking to them, and then if you almost have a deal negotiated, then you look at them. Because like I've tested this, and like I can tell you, inbound calls, I had plenty of carriers calling and reaching out that weren't legitimate with misused phone numbers. When the market depends on the lane and which brokerage, and like I've also been I've also been able to do this from many different MCs as far as brokerages, like just with clients or ones I've worked with. So it's not like I was just seeing it from the point of view of one MC brokerage, right? Like I've probably done this with like 10 in the past year, and I'm like, I get the same amount of garbage calling in or calling out, and I'm like, I don't think there's really much difference. I think you should still make outbound calls if you can't get a load covered. Go to lane makers, that's another good way to call outbound. There's other ways to do it, but I don't think you should avoid it just because you're not getting the results you want the first couple times you tried.

SPEAKER_01: 11:53

Yeah, agreed. Um another cool thing with DAT, they have their new carri management suite. So you can set rules that are like absolute, like we'll never use the a carrier that meets X, Y, and Z. And your load won't even be visible to carriers that meet that criteria. So, like let's say you're gonna set it with authority, just as an example. Like, I don't want anyone who's got less than six months authority. They won't even see your post. So you won't get a call from them. If you're doing search trucks, um different story, but yeah, that's a good way to just filter out all the ones that are um like never gonna never gonna use them for whatever reason, set those rules. And I don't know this. I actually am supposed to do a uh supposed to have a meeting with them for Pierce Um to try and look at what kind of rules they have available because it isn't it is a newer product. Um and I'm I would imagine like any um compliance tool, they will evolve and add more and more features, the same way that like highway or MCP adds, you know, vetting criteria. All right. Our last question. I just opened my freight brokerage after being stuck under a contract, any new business owner advice. I'm not sure what that means, stuck under a contract. Any advice? I mean, Ben, you've coached way too much.

SPEAKER_00: 13:16

Non-solicit, non-compete.

SPEAKER_01: 13:18

Okay, that's kind of what I assume. So maybe they waited it out for a year or six months or two years, whatever. What's some advice you'd give to someone that's new?

SPEAKER_00: 13:25

Prospect more than you think and be consistent about it and do it every single day more than you think you should. That's the number one reason why I see people not get businesses off the ground, is they just there's not enough execution, whatever you want to say. There's not enough phone calls made. There's I mean, it's mostly that. Like putting in the hard work on the business development is like the number one indicator of whether or not you're gonna see a new business succeed or not succeed.

SPEAKER_01: 13:53

Yeah. I mean, my my biggest thing, and I see this a lot with with agents that come into our company, um, because they're essentially like running a small brokerage, it's just that they're you know blanketed under ours. Um, but if we're talking about truly building a business and not just owning your job, what I always recommend is you should become an expert at every single role and responsibility of your of your business before you start to offload that on somebody else. So we oftentimes see people that are like, I'm gonna start a brokerage, I'm just gonna hire a bunch of salespeople, right? And then like literally, you have no idea how to guide these salespeople because you don't you yourself haven't gotten good at it.

SPEAKER_00: 14:38

And I'll I'm gonna say what you said in another way of like if you are gonna start any business, you are the leader. And I think oftentimes people conflate that with like manager or owner, but a leader is very different. Like you need to be able to do the thing you expect the person you're hiring to be able to do, to be able to one, oversee it, to know how well or fast it can be done, to know where the issues are with that job, because it is very difficult to manage anybody in any area of business if you've not at least done that yourself for some period of time. So whether it's like you said, accounting, operations, track and trace, sales, like I think most new businesses fail because somebody thinks they can just hire someone that knows how to do it and they'll just give them a salary and they'll go build the business for them. Like that I've never seen that work. Like you've got to know how to do the thing that you're going into business with before you hire employee number two ever, I think.

SPEAKER_01: 15:40

Yeah, 100%. And that goes, I mean, it's not just sales, right? It's it's the accounting part, it's claims, it's disputes with carriers, it's um the operational and um sourcing capacity, and it's the fraud prevention. It's it's ever it's literally everything. Um, some of the weirdest hats that I've worn that I never thought I would wear is like being the pseudo-it guy. Like literally never thought I'd be the one having to like build out part of our website so that a process that we want to implement can function properly. Like I built out for Pierce, I built out our help desk that captures the information. So let's say, for example, someone wants to set up a new customer or wants to initiate a freight claim or wants to onboard a carrier that requires a manual review because of certain flags on a vetting system, right? I had to build out a part of our website that collects the information that we need and then connect it to a third-party tool, Zapier, that then can generate and craft up an email that gets sent to the right person in the right format that that person wants in it and make it foolproof so the user can't screw it up and the person reading the request um can decipher everything properly. And I never thought, you know, running a sales team of a hundred some people that I would have to wear that hat, but that was a procedural change that helped enhance our operations and efficiency. And we don't have an outside IT person um that was gonna do that, and we don't want to go pay five grand for a web developer when we could just figure it out ourselves. And now the great thing is now that I know how to do that, we can quickly tweak and add functionality on the fly. I did it this morning. I literally like this morning we we tweaked one of our our ticket forms for somebody that's a customized one on who it's being sent to. And we added in a um a question on one of the forms the other day as well. So, like that's that was a really weird one for me. I've got like a one of my guys that helps me out, he's primarily there, he he operates a lot as like a trainer. So he helps people learn our system and how to how to like if they're new to the company, like how to do things our way. And the dude has become a master at like troubleshooting VPN connections and how to set up email accounts and distribution lists and like all these other weird like tech things. And it wasn't part of the job description, but that's just kind of what happens when you scale things out. You have to learn and adapt and and kind of like you know, flex new muscles.

SPEAKER_00: 18:11

A hundred percent. I mean, going back even when we started Freight 360, right? Like, to be honest, like I didn't have the patience for computers, not computers, but like software, connecting it, ATIs, web hooks, web development, all that stuff, like zero interest, but someone had to do it when we put the business together, right? So you and I like either built the website, dude.

SPEAKER_01: 18:31

We built our first website in-house, right?

SPEAKER_00: 18:33

Yeah, all of it. Then we had to learn how to edit video, edit audio, how to record audio, what hardware, what software we needed, how to podcast. Then it was like, okay, well, how do you hire an IT person to help you when you're one business out of your house, right? So no one could help us, and then we just had to figure that stuff out.

SPEAKER_01: 18:53

Then, like years later, all trying to work in freight brokerage, right? Correct.

SPEAKER_00: 18:57

And then, but it's like once you learn how to do them, then you can outsource periods of it without also overpaying, too. Like you're better at managing a business because it's like once you've at least done it yourself, you go, Oh, this is probably where it's broken. I have better uses of my time doing other things, but I'll bring a contractor in to just look at that one thing because this is where I'm pretty sure it's not working. Instead of going, well, I guess I'm paying an IT company four grand a month to oversee everything, even though there's just like one small issue, right? And like to your point, it doesn't matter whether it's doing and learning accounting, whether it's IT software, web development. I think you absolutely should at least learn how to do every aspect of your business before you hire anybody.

SPEAKER_01: 19:40

I think back over the years, and that you know, depending on the time and the thing, we we've we've outsourced and ourselves done the following, right? Social media has been both, web development has been both, um, marketing has been both, um, video editing has been both. Like we've we've done it ourselves, we've outsourced it, we've done it ourselves again in some cases. So, yeah, and the same goes with opening a brokerage, like you know, the like this, you know, sales, right? For example, and not not everyone's gonna be Ken Oaks and TQL, where the guys still on the floor, you know, 30 years later.

SPEAKER_00: 20:17

But I use that example all the time, by the way.

SPEAKER_01: 20:19

Yeah, but yes, but like, you know, you become you are a number one salesperson, you know, and then eventually over time when you build up the team and you become the the leader of the organization, um, you're gonna have subordinate salespeople, and depending on which direction and business model you go with, whether it's you know, having W-2s or you have departments where there's a sales team and an ops team or a scroll to grave or pods or whatever the case might be, um, you at least can still lead in any of those models because you've done all the jobs before. And maybe you're still doing some of those jobs, depending on what it is. What I would caution you is like, um, you know, like if I'd be doing them all forever. I was gonna say, like, if if I were to try and uh go out and sell all day long myself right now, I would have zero time to support hundredsome people that um rely on me and and my team every single day, right? If the owner of the of our company, if he decided to go out and sell all day long, he wouldn't be there to do contract review and make business decisions and you know decide if we need to hire or fire somebody or whatever the case might be. So yeah, that's it it all comes with time, but you need to master all these things before you start to put other people in place. It's a good uh good discussion, though. All right, final thoughts.

SPEAKER_00: 21:40

You believe you can or believe you can't, you're right. And until next time, go bills.