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introduction to freight brokering

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Freight brokers search for shippers who need to transport their cargo from point A to point B. The broker then searches for a truck to move the cargo. The freight broker, then, puts the two together and acts as a middle-man, collecting a commission for his or her matching-making skills.

There are a multitude of details and procedures that freight brokers follow. These procedures and details involve a great deal of coordination with both the shipper and the carrier.

Here are 7 tips that will help you manage and coordinate your freight broker duties.


    • Understand the needs and desires of both shippers and motor carriers.

      One of the biggest items of importance for shippers is “cost”. Big companies employ entire logistics departments to find the most cost-effective route and method to move their cargo. Some large shippers use their own trucks; some use freight brokers; and some allow their customer to arrange for the transportation. Smaller shippers rely more upon freight brokers to move their cargo. But both large and small shippers have “cost” at the top, or close to the top, of their priorities.

      Carriers also place a priority on “cost”. The current situation with high fuel costs and other high operating expenses have taken a toll on the availability of trucks. This availability, commonly known as “capacity”, has been dwindling for several years. While shipper rates have increased, it’s unlikely that rates have kept pace with a trucker’s ongoing costs. The bottom line is, the truck needs to cover not only the actual costs but he or she needs to generate a profit on top of the costs.


    • Understand that the freight broker needs to negotiate a win-win-win situation whereby everyone achieves their goals – shipper, carrier and freight broker.

      Negotiating skills come easy for some people; others hate the idea of “haggling” with opposing parties. A good negotiator will understand that there is, at times, a “give-and-take”. Knowing when to “hold em” and when to “fold em” can result in huge profits over time. The best way to exercise this “hold em and fold em” tactic will come from a broker monitoring his or her profit margin along with other important items such as volume of loads and days-in-collection on the receivables from shippers.


    • Pay attention to sound business fundamentals.

      There are many successful freight brokers. Some have been around for quite awhile; others are just getting a good start. Of these successful brokers, each and every one, most likely, has relied upon sound business fundamentals. In fact, that’s probably the very reason for their success. It takes more than just “brokering” to be successful. It takes a person to “purpose” to pay attention to marketing, cash management, planning and creating an operating blueprint.

      Each of these four topics has had volumes written about them. Without attention to these, a freight broker is most likely doomed to failure – regardless of his or her brokering knowledge.


    • On finding shippers, find a strategy that works and then stick with it – but keep experimenting as well.

      One of the biggest fears for beginning freight brokers is how and where to find shippers. It’s not as difficult to find shippers as one might think. However, it is difficult to find good paying shippers who also have loads that are relatively easy to cover.

      One of the most effective (but not easy) methods is to search the internet using unique keywords. There are plenty of various shipper directories available; but then you’ve got thousands of other brokers calling the same shippers as you are. Unique keyword searches will likely uncover shippers who aren’t being called by every freight broker in the country.


    • When a shipper wants a quote or your rates, find out more about what you can expect.

      Some shippers will require quotes before they accept your set up package. Some of their requests will involve 10, 15, 20 or more loads. Others will want a quote on just a specific load.

      Sometimes the shipper is using you to gather information on how to price his load. Other times the shipper will throw your quote into a large pool of other quotes – and there it stays with the shipper having no intention of actually giving you the load.

      Here’s what to do: Ask the shipper how often a particular load or loads are available. Are they daily, weekly, monthly? Make sure you understand if the shipper needs a dry van, reefer, flatbed or whatever. Refer to various pricing sources that provide the “going rates” for various lanes. If the shipper responds after you have given a quote that the quote is too high, tell the shipper that you’d like to try to cover the load for what he or she wants to pay. And ask for the order.


    • Get set up with as many carriers as you can regardless of whether or not you have a load for them.

      There may be many, many incoming phone calls in response to some loads you have posted on the internet. Many of these calls will be “dead end” calls as the carrier is looking for either a higher rate or whatever.

      However, while talking to the carrier, get him or her talking about what THEY are looking for in regards to what lanes they like, how many and what kinds of trucks they have, etc. If you “hit it off” with them, ask them if you can get set up with them. Most likely they’ll say Yes. Then you have one more carrier in your database.


    • Be prepared for things to go awry at times.

      In addition to “dotting your I’s and crossing your T’s”, be not only mentally prepared for problems – have some specific plans in place.

      For example, let’s say you think you have a load covered. The carrier has said, “Yes, I want the load”. And you’ve sent out your set-up package, you’ve received the broker-carrier agreement back. Next you prepare and fax out the carrier confirmation. However, it doesn’t come back and your phone calls go unanswered. So what do you do? You first consider yourself “dropped”.

      However, you will probably be getting phone calls after you think you have a load covered. So what do you tell them? You tell them that you “think” you already have the load covered but you ask them to leave their name and call back number just in case something falls through.
      This, sometimes, is a lifesaver when things do fall through.

These 7 tips don’t even scratch the surface when it comes to all the details and procedures that freight brokers face. They are, however, some of the more important items facing new and experienced brokers.

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