Thursday, October 13, 2016

Should a Trucker Be a Freight Broker?

Microsoft bundles products that complement each other. Similarly, a trucking company and a brokerage are complementary products easily bundled.  But the timing must be right.

Only when a trucking company has more freight than capacity should they open a brokerage. If a trucking company wants loads for their trucks they could simply use the Gold Book of brokers to get loads or go find some shippers.

The brokerage has to be set up as a separate business all together with a broker MC number. (MC-B will be at the top of the authority to indicate you’re a broker not a carrier). You will have economies of scale, however, brokers and carriers have completely different regulations and laws and liabilities. One is ops driven and the other is sales driven.

You can go to the FMCSA web site and do everything on your own or work through a company that specializes in getting a broker all set up.  Look up “property broker”.  You will pay a fee and need to take out a bond.

When you’re ready to either open a brokerage or be an agent for a broker you should get training.

Tell your shippers that you also have a brokerage.  Explain that you have an asset based transportation company and a non-asset based company to better serve them. In the old days a broker was a dirty word for carriers,  to shippers, now, it is no big deal. All the big trucking companies have brokerages - they call them 3pl’s, brokers. The legal term is property brokers.

I have been fortunate to meet drivers who attend my career school for freight brokers and agents.  I can honestly say the driver does most the work and gets the least amount of respect. I want every carrier out there considering this business to know the truth.

A brokerage is a service business where you put the carriers' and shippers' needs together.  Plan on working hard every day all day for  3-6 months before you start making real money.  It is not magic.  It is a strategic business process. The process takes pressure off the employee. The Freight broker business is not a get rich quick deal. It requires you to continue to prospect for both shippers and carriers and requires a great attitude and a sense of urgency.

Realize you will have your ups and downs. Focus on progress not perfection. Keep your fixed cost as low as possible and serve your shipper and carrier as an extension of their office. Keep doing that and you can build a real career that you can work anywhere you have Internet. Being a freight broker agent is just like being a Real Estate or Insurance agent with a different product.

If your cash flow is not working with your trucking company, then do not open a freight brokerage because it requires major cash flow. You have to pay the carrier first and on time and then bill the shipper. Turn around time on your money is at least 45 days.

If cash flow is an issue, then it makes more sense to be an agent for an established broker that has cash and the right infrastructure to help you get your business going..

Being a Freight Broker or Freight Broker agent is a great career. Our economy and the role of the broker are continually evolving. It is important to stay ahead of the curve. In this industry time is money. Again, do everything with a sense of urgency.  Have a plan. That is where the training comes in.

“The only thing worse than training your employees and they leave is not training them and they stay” ….Zig Ziglar.

Moving forward,

Jeff Roach


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