Tuesday, April 3, 2007

Why Does a Shipper use a Broker?

correction: In yesterday’s posting I recommended the book, Customers for Life. The author is Carl Sewell and Paul B. Brown, not Carl Lewis, he’s a runner not a writer, oops)


Chantell Miller, one of my super sharp freight broker students asked:

Q. What is the rationale behind a shipper using brokers and brokerage firms, rather than working directly with carriers? Wouldn’t it cost them less to work directly with carriers versus using brokers? I believe that understanding this concept will help me understand my approach when working with shippers.

A. Consider both shippers and carriers’ viewpoints.

Shippers come in two sizes: large and small.

A large shipper, has a list of asset based providers for their shipping needs and a few brokers as back ups. They have traffic departments whose entire job is to get the freight to the right place, at the right time and at the best price. If their main providers can’t handle a load they turn to the broker.

The large shippers will call brokers as back ups and that is exactly how you get in the door. This is your opportunity to shine. You are probably their 4th call. Rate has become less significant; getting the load handled is paramount. Speak confidently, don’t make it about price and don’t belittle their regular vendors they trust with most loads. Your job at first is to get in the door with the shipper and be a back up. Once they give you a chance: Stay on top of your work, track everything and communicate everything.

A small shipper needs the broker agent to BE their traffic department since they aren’t large enough to hire employees for the job. You will find trucks at fair rates and manage the shipments. You become an extension of their office.

Every day, all day carriers miss loads. You want the shipper to call you when they need to be saved. They have to get that truckload off the dock and to their customer. They will pay more and be thankful when you get the job done.

The other player in the mix is the carrier. 95% of all trucks you see on the road are owner operators. They need freight brokers to get them a fair rate and a good load to get back home. They can't afford to have a sale force s in every geographic region. Carriers quickly identify the good brokers. The word gets around in the trucker’s world.

To be counted as a good broker: Pay the carrier on time and ask him or her to holler at you next time they are coming to Dallas or where ever you’re based. Then try to find a good load for them. You will have more carriers than you need.
Don't forget you will always be dealing with carriers and shippers.

I see myself as a consultant to both the carriers and shippers. It really depends on the situation. I have shippers that do over 50 million a year in sales and will only use a broker because they know we bring value. While our rates may be a little more, we keep cost down because they can depend on us to
handle transportation. They make widgets and we handle and manage transportation.

Moving on,

Jeff

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