Fixing the Broker Deals
Freight brokers have felt the scorn of the trucking industry since deregulation
I’m amazed at the lack of respect they get, and frankly bewildered how carriers can bad-mouth brokers while counting on them to be a quasi-sales force.
At some carriers, all they do is third-party business. Dispatchers hang around load boards scooping the skids they need to make the irregular-route jigsaw puzzle ﬁt together. They’re not using brokered loads to ﬁll the last six feet of a trailer. This is their main source of revenue!
Freight brokers are customers. This doesn’t mean you have “broker customers” and “real customers”. Customers are customers. There are good ones and there are dirtbags. So manage them that way.
If you’re looking to grow the freight broker segment of your business, you might want to consider the following:
There are two types of freight broker: transactional and sustainable. Clearly, I favor one type over the other.
Transactional brokers are feverish shoppers. You know the drill. Their “deal of the day” freight is the business equivalent of a one-night stand — the only long-term thing about the relationship is the risk to your health, since all you’re really doing is destroying the rates in the core lanes you run.
On the other side of the spectrum are the sustainable brokers. Yes, they do exist. I used to own one of them. They act like business partners and have no problem paying a premium for the value your ﬂeet provides. Hauling their customers’ shipments week in and week out is good for your bottom line. Hauling them quarterly is not.
Determining a freight broker’s modus operandi is a good place to start managing this segment of your business.
Dispatch Wheel Deal
How frustrated would you feel if every time you took your shirt to the dry cleaner you were charged a different price? One week it’s three bucks; the next it’s 10.
If this is how your dry cleaner handles pricing, then he or she is probably a former trucking dispatcher.
Consider what happens when dispatchers have too much control over pricing. Every time brokers call for a price, they get a different number than the day before. It’s impossible for carriers to attract sustainable brokers when pricing systems are designed to attract transactional brokers.
Giving a deal to a customer is ﬁne, provided the commitment is stronger than, “Sure, the load is yours — until I get a cheaper rate.” You’re better off taking pricing decisions out of your dispatchers’ hands. Tariffs and pricing have to be controlled by a ﬂeet’s C-suite executives.
Speaking of Pricing
I’m not so naïve to think you can run a trucking dispatch board with a rate sheet. But you have to start somewhere to protect your margin and attract the right type of brokers.
To get the ball rolling, pick out your best broker customers, using whatever criteria happens to be import- ant to you. Pay them a visit, but instead of talking “deals of the day”, try ﬂoating these trial balloons:
- Rebates for increased monthly/yearly volumes
- Discounts for early payment of freight bills
- Discounts for committed, regular business
- Customer-speciﬁc rates
- Technology to create closed-loop administrative handshakes
- Opportunities to act as wholesale agents for backhaul headaches
Treat your best brokers like your best customers, because they are. Service them.
Incentivize them. Eventually your dispatchers will see brokers as long-term business partners instead of hustlers.
Taking a Percentage
This sounds like a broken record, but the asset-based C-suite needs to have a good relationship with its non-asset counterparts.
Freight brokers want compelling, cost-efﬁcient solutions that help them sustain their customer base. Truckers make money when the freight broker’s customer becomes their customer. So relax. It’s OK when a middleman takes a percentage.
Speaking of good business, is there anything to be done about the freight your biggest customer is ramming down your throat? Maybe you should ask your favorite broker if they can move it on someone else’s truck. Brokers are great at pimping freight.
Maybe you should try it. It’s called diversiﬁcation. It’s a common growth strategy.
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