Should Companies Use Outside Brokerages?

One big question that some companies have asked is if the use of a freight brokerage is necessary for them to get their loads to the delivery. The main function for a brokerage is to take a load and find somebody to take it for them. It is possible for the customer to contact a transportation company directly and get a contract with them to move the freight.

Another thing that some companies do is create another division inside their company that has their own trucks and drivers. This can get very expensive due to the initial capital needed to embark on this type of division. Is it worth it though?

Besides the initial cost to enter the transportation market, there are a few other things that could hold a company back. They would need to find drivers to take their loads, they would need people experienced working the other side of the freight industry, and there would need to be a lot of communication.

There are a few upsides. For example, if you have your own trucks, you can most likely save money per load since you do not need to pay extra for a brokerage to find a truck for you. If you have a load that needs to be somewhere in a short amount of time, you have a better chance to get it there on time if you have one of your trucks do it since they do not have other loads they need to do.

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What You NEED to Know to be a Successful Broker

There are tons of things that you need to know in order to be a successful broker. It will take a lot of time to explain everything you need to know, but I already have a good start for beginners on my blog. There are a decent amount of posts on my website, so finding the right posts may take some time. I will help you out by showing you which posts I think are the most important for becoming familiar with brokers.

Becoming a Broker- I would start off with this post to get a good intro on what it takes to be a broker. The job is stressful, so make sure you are prepared for it.

5 Things You Need to Have to be a Successful Broker- This post is about what characteristics that you need to have to thrive in the world of freight brokerage. Even if you do not have all of the things listed in the post, do not fret! You can practice and improve your skills by getting involved and learning.

Interview with an Executive- This is exactly what the title says. It is an interview that I had with one of the executives at a firm that I worked at. It has some great answers that will teach you a bit about the industry and how to get ahead!

CEO of a Freight Brokerage- This post is almost the same as the previous post, except it is with the founder of that company. He talked about what he had to do in order to create a successful business in a highly competitive industry.

Transportation Management Systems- Understanding what the transportation management system (TMS) does and how it is used is a big key in freight brokerages. This type of program is widely used and is very beneficial if you know how to use it right. Also check out a review of one of the TMS I did a review for. free HitCounter

What if Automation Took Over Freight?

Since the beginning of freight brokerages, they have relied on some sort of technology to help them make calls, keep track of information, or to even power their building. As time has progressed, there have been a lot of advancements in technology that has really improved efficiency in the industry. What used to take a team to do, such as keep track of information in an orderly fashion and have it readily available to the brokers that need it, the advancements in technology has made it so computers have the information and it can be accessed by who needs it.

What would happen if everything in the industry was fully automated? A company could order a self-driving truck to pick up a load in a trailer that was loaded by machines, and then could drive itself to the delivery point. There would be no need for drivers or loading/unloading workers because everything is done by machines.

There would still need to be people in the process though. I do not think that there would be complete automation in all of the processes for freight. There would have to be people to make sure that the correct load is taken, that the machines are in working order, and as emergency stand-by just in case there is a malfunction or a breakdown that could halt the processes.

Full automation of freight would be bad news for freight brokerages since they are the ones that find loads and then trucks, track the trucks, and deal with any problems that may arise. If the automation was efficient enough, there could come a time where companies could skip the middle-man and use technology at a lower cost than brokerages would charge. free HitCounter

Looking Forward

In my last blog post, I mentioned some problems that trucking companies are having in finding truck drivers to work for them. There were a few causes of this, such as a stronger economy boosting the amount of products that need to be moved, a shortage in drivers available to be hired, and the laws that restricted hours of operations and drivers under the age of 21 from being able to deliver loads over state lines. Since these are causing problems for trucking companies, it is also causing smaller margins on loads for brokerages since drivers are in high demand and have a low supply. Since there are not as many drivers, the prices per load have increased due to the demand of needing to move products.

While this is a problem now for the industry, there are a few things that could happen in the future that can solve these problems.

First, there is a bill that has been written and submitted to the government to get rid of the law for prohibiting drivers under the age of 21 from delivering loads across state lines. This could be huge for the industry because a lot of graduating high school students are looking for jobs, and since they cannot get one with interstate trucking companies, construction jobs are much more appealing.

The second solution is still a long time away, but with the advancements in the self-driving semi trucks, they could be available and running in the next decade or two. This would certainly solve the shortage of drivers since there would be less of a need for them. It would also reduce costs for trucking companies, and would allow brokerages to increase their margins with the amount of new trucks entering the marketplace.

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Shortage of Drivers and Its Effect on the Economy

Over the past decade, truck driver availability declined due to a few reasons. The first reason is due to a stronger economy. With the economy bouncing back from the recession in 2007, there has been a larger need for companies to ship their goods from one place to another. This boost in the economy and increased trading has made a lot more jobs and opportunities for truck drivers and their companies. The problem is that they cannot find enough people to employ to meet the demand.

Another problem that adds to the unavailability of drivers is that a law was passed that limited drivers to a certain number of hours they can operate their trucks before having to stop and rest. While it is good that drivers will be able to rest and be refreshed for their transits, they have a harder time meeting their delivery requirements since their hours can prevent them from picking up or delivering a load on time. This also creates more of a demand for driving teams, which consist on more than one driver so they can take turns driving and not have to worry about their hours of operation. These teams cost more money, but there would be a demand for them with the hours of operation laws. The problem with this is that companies do not have enough drivers to have teams or trade out trailers to complete a delivery.

Companies have tried to increase the number of their employees by advertising. Since there is a high demand for drivers, companies have taken to offer signing bonuses or higher base salaries in order to fill the void.

This has been a problem for companies since there was another new law that was passed that prohibited any truck driver under the age of 21 to cross state lines while they are delivering a load. This takes a huge chunk of potential drivers out of the market because of the availability of workers coming straight out of high school. free HitCounter

Reefer Vs Dry Trucks

In the Freight brokerage business, one of the most basic things you can do is to know the difference between the terms reefer and dry. These apply to the type of trailers that you have to order to make sure the type of cargo you are transporting makes it to the receiver in good condition. Vans are the term for the trailer that are attached to the back of the truck. Trucks can attach different trailers to their trucks and it is used if a different driver is hired to swap or pick up a pre-loaded trailer. So if you needed a temperature controlled van that will keep the merchandise at a certain temperature, then the term you would use when you are looking for a truck is a reefer van. Reefers have many uses. They are used for frozen items that need to stay frozen throughout the transit, such as ice cream. It is also used when the merchandise needs to be above freezing, but below a certain temperature. An example of this would be sour cream, because it could go bad if freezes or gets above a certain temperature. Reefers can also be ordered for normal merchandise that does not need any specific temperature, but this is usually for emergencies when you need a dry van but cannot find one. They are not usually used for normal freight because reefers are more expensive than dry vans. You can use reefers for freight that does not need temperature control, but you cannot use dry vans for items that need to be temperature controlled.

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Fourkites Review

The freight brokerage industry has evolved. It is now much more reliant on technology than it has been in the past. One example of that is the electronic tracking programs for drivers. This allows brokerages and carriers to be able to see the current location of a specific driver.

The industry used to be heavily reliant on truck drivers checking in with their current location, especially before cell phones became popular and widespread. It evolved when cell phones became commonplace and all you needed to do was call the driver or the dispatch in order to get a location. It is now evolving once more with smartphones becoming more popular and affordable.

Fourkites is an application that can be downloaded on a driver's cell phone that has real-time tracking. This allows for less check-calls from brokerages and carriers to find out where the drivers are. Real-time tracking has helped increase safety on the roads since drivers do not have to answer calls as often as they used to. It allows drivers to focus on the road without having to worry about keeping their phone close to them while they expect a call.

There are some disadvantages to an automatic tracking system, however. One problem I have encountered is that when a driver goes through a dead zone, the application cannot send an accurate current location, and it keeps sending the last known location. Since drivers take roads that have poor cellular service, this can be problematic.

Another disadvantage is that you do not know if the driver is the one that has the application on it. Sometimes drivers have other driver's applications on their phones. This causes confusion because brokers think they have a location on the driver even though they are in a different place.

All in all, as advances in technology increase, these problems can be fixed and electronic tracking will be a much more common mean of tracking drivers. free HitCounter

Large Freight Brokerages

Companies that produce products are always going to need to have their products moved from one place to another. This has been the case ever since the semi truck has been invented. The freight brokerage market continues to grow due to products always needing to be moved and the advancements in technology.

What happens when a freight brokerage gets too large?

It is not necessarily bad when brokerages get big, but there can be problems that arise due to the size of the company. When they get big, there is a higher chance that the processes they use to book, track, and close the accounts get to be complicated. There are processes that are used where each stage of the shipment is passed along to another group of people. This works well when a company has a solid internal communication network. If problems arise, everybody can communicate and get it sorted out. If there is a poor internal communication network, not everybody know what is happening with each load and problems can become even bigger problems.

Larger freight brokerages also lose some of the personal touch they have when they get big. Instead of one or two people communicating with the carriers and their drivers, this can turn into a different person communicating with them every time. As I said before, if there is not a good internal communication network set in place, this can cause problems if a person tracking the load does not know what is going on.

System outages also occasionally occur. It is harder for a large company to be able to function if they do not have their tracking and booking programs working. With a smaller firm, it is easier to be able to keep track of who needs help than a large company. free HitCounter

Transportation Management Systems

Transportation Management Systems (TMS for short) are one example of how technology is revolutionizing the freight brokerage industry. Before these types of programs were commonplace in many of the brokerage companies, employees and managers had to keep track of their information themselves. A CEO of a brokerage firm that I had the pleasure of speaking with told me that before these systems were invented, he had to keep track of all of the loads on postcards. He used a bulletin board to pin the cards so everybody that was working had access to the cards they needed.

www.freightquote.com has a great post about TMS systems. In their article, they list some of the advantages and disadvantages that an electronic management system has. This kind of technology allows all employees to access information about all of the loads that they are working on. This saves time, effort, and increases productivity. It also allows them to be able to find information on potential loads and how much they can quote.

The TMS system that I am familiar with has a lot of extra features that allow for advanced planning. The system takes all of the users information for trucking lanes and can give an average price for that specific lane. It also provides estimated times of arrival for the trucks based on the current location and the destination without having to find it on from an external source, such as google maps.

TMS has become essential in the modern workplace for brokerages. It allows for easy access to information, increases efficiency, and allows for a higher volume of loads. free HitCounter

Prediction: Self-Driving Trucks are the Future of Freight

The title says it all. This is a fairly conservative prediction since there have already been massive strides taken in favor of self-driving vehicles. Self-driving cars have been an idea for a long time, but now that idea has spread to shipping freight. Right now, there are not any self-driving trucks that can make the delivery without a human driver, but the technology is getting closer and closer to making it a reality. Arizona has been a testing ground for using self-driving trucks that can only operate on the highways (money.cnn.com). Local roads in cities that have a lot of traffic can cause problems for the trucks, so a human driver is needed to drive through them. They are also needed to get into the receiver and back into the docks to get unloaded.

Uber has expanded their business into self-driving trucks, and is making great progress. Since almost all semis use the highway to get their freight to the delivery, self-driving trucks that can do the long stretches on the highways are getting more and more attention from both trucking companies and freight brokerages. Once companies like Uber can ensure the safety of other drivers and the cargo, they will get much more support from different states.

Freight brokerages and trucking companies will have to implement a system where the load paperwork can be done without having a driver present. This is not a problem yet since there is still a need for drivers to be in the trucks, but if they ever become fully operational without a human, then tracking systems and other checks will have to adapt to the new market. free HitCounter

Tariffs on Steel and Aluminum

The United States of America has implemented import tariffs on steel and aluminum. This tariff was part of a "trade war" that ended up not only hurting brokerage businesses, but trucking companies as well. With less and less loads being ordered from other countries like Canada or China, it is affecting how much market volume there are for trucks. It has done damage to many companies, especially the trucking companies that do intercontinental runs and firms that do business out of the western part of the country. Canada is a huge exporter of steel into the United States and with the tariffs, this has caused a reduction in shipments that Canadian based trucking companies can do (coloadx.com). This unreasonable tariff has lowered a lot of cargo coming to the western part of the country from overseas, which reduces the number of loads taken to other parts of the country. This causes not enough trucks to be available in places where they need things shipped within the United States.

With less trucks being available throughout the country due to a squeezed market, trucking companies are demanding more and more money because they have a lot of available trucks. This hurts the margins that brokerages need to operate and expand since they are not seeing as much revenue as before. With the influx of available trucks and not many loads, the market has seen a lot of fluctuation and a lot of companies are hurting because of it since it is basically a guessing game of when the freight market will be hot or when it will get cold. free HitCounter

CEO of a Freight Brokerage

In my last post, I had the opportunity to sit with and ask a high-ranking executive of a freight brokerage some questions about what he did. This post is going to be about the CEO of that company. He took me to lunch one day and told me a lot about what his experience was with his own company.

As we ate, he mentioned that he started brokering freight out of his own house. He started small and dedicated himself to his business. He told me time and time again that his work ethic was the main reason for his success. He did not go to school for business, but learned everything about the industry from books and experience.

As his company began to take on more and more customers, he was reluctant to hire new employees. He took on the extra work by himself, until a friend of his convinced him to take on more help. It started with a couple of employees, and continued to grow as he became more successful.

His vision was to become a brokerage that excelled in premium service. He wanted to be the company that customers would go to when they had problems or needed something to happen fast. This ideal was the main reason why he landed a lot of accounts from big companies.

What started as a small business, it grew as he hired his daughters to be a big part of the company and its operations. From there, it continually grew into the brokerage it is today. It is not the biggest firm, but it is continually growing.

Hard work was the cornerstone for his success, and he makes sure everyone knows that they can succeed if they "work their tail off at everything they do". free HitCounter

Interview with an Executive

I am extremely lucky to have a friend that is an executive in the freight brokering business. He has been in the industry for over 10 years and has experience in almost all facets of the business. I had the opportunity to have multiple sit-downs with him as we talked about about everything from current markets, past experiences, and tips for being successful in this business.

What does your position require you to do?

There are a lot of responsibilities he has as an executive. He is in charge of his own team and makes sure everything is running efficiently. His main job is to predict future markets so he can position his team in a way that makes them even more successful. This entails looking at the news, looking at market projections, and reporting his findings to the CEO of the company. 

What is the most important part of the job?

Efficiency. In order to grow the company, they must be able to handle a large workload. He achieved this by doing many things. Reevaluating processes that occur throughout the company and implementing programs or different ways of doing things can really make the company more efficient. 

How do you get ahead in this industry?

I was told that the most important things you can do is to work hard and make connections. The more connections you forge across the industry, more opportunities will become available to you. The more contacts you have, the more desirable you are to companies across the board.

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5 Things You Need to Have to be a Successful Broker

If you strive to become a freight broker, or you are curious about what it takes to be one, there are a lot of characteristics you need to have to be able to survive in the business. Here are some of the top characteristics you need to have in order to be successful:

1. Be able to Work Under Pressure- This job has a lot of responsibilities. There are deadlines you must meet in order to complete the job. You must be able to find trucking companies that will take the loads, and you must be able to book them by the time they are supposed to pick up the product.
2. You Must Have Thick Skin- Like I said before, this is a highly stressful job. The people around you are counting on you to complete your job, and your coworkers may get upset if you do not book the loads. The trucking companies can become easily upset if you under quote or lie to them, so you will have to deal with all kinds of emotions in this line of work
3. Be a Good Multi-tasker- Between booking loads and getting information about drivers, you will have many things going on at once. Dealing with dispatchers, drivers, and problems that arise, you must be able to have the mental capacity to handle all the things that are happening.
4. Must Have Good Communication- A broker's lifeblood is email and phone calls. You have to know what to say to different people in different situations in order to be successful. Emailing coworkers and carriers to get information about what is happening with loads is a big part of the job.
5. Be a People-person- While brokering freight, you are going to have to interact with a wide variety of people. The more they like you, the better deals you may be able to make. If you can create a working relationship with carriers, the more likely they will give you a good deal or some of their more reliable drivers.

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Becoming a Broker

If you want to become a freight broker, there are some things that you should probably do first. The first thing I would suggest is to check out some reading material on what it takes to be a broker. Learning the process and the vocabulary is one of the most important things to do if you want your customers and carriers to respect you.

You should also ask yourself if you are able to withstand the stress of the job. There have been many instances where I have witnessed a freight broker very stressed out due to many variables. Some of those variable include having strict time restraints due to a load that is scheduled to pick up at a certain time. If a broker cannot find a carrier to take the load, the customer will be upset, especially if they need the products or materials to be delivered that day. It is also stressful when the brokers cannot find a reliable carrier, so they have to go with a less known or a less reputable carrier. Doing this causes stress due to the risks of having a carrier you know might not do the delivery right or on time. It reflects badly on the broker if the load is not completed on time.

The third thing I would suggest is to just get some experience. Personally, I have been able to observe brokers that explained how and why they are doing something. Listening and asking questions really helped me learn how to broker freight faster than trying to teach myself. Training programs will be very beneficial if you plan to become a freight broker. free HitCounter

About Me

Hello reader! My name is Brian Cava. I am a college student studying business, and for the first couple of years, I did not have any idea what company I wanted to work in. I did not even have a specific industry that I was interested in. Thankfully, one of my good friends from my hometown introduced me to what he did for a living. I have spent a lot of time exploring and understanding that industry and have taken a big interest in it. That industry is freight brokerage. I am making a blog about a freight brokerage because that is something that I have had experience with in the past and I would like to be able to allow you to see some of the things that I do. Freight brokerages are confusing to some people, and if you have questions, hopefully my blog posts and pages can answer some questions you may have! I have been lucky enough to have worked with two growing companies that are in the freight brokering industry. While working in the industry, I have had a lot of opportunities to speak with professionals of brokering freight and I have learned a lot from what they had to say. With this blog, I am hoping to pass some of the knowledge I was given to you. It is a large industry, and it is also a growing one as well. If you have questions, please visit my Contact Me page, or you can email me at Cavafreight@gmail.com free HitCounter

Freight Brokerage Companies

I have selected a freight brokerage because it is a type of business that I am familiar with and have some experience in. The point of a freight brokerage is to find customers who need their products or materials shipped to another warehouse. You would talk with them about a price, and you would go out and try to find a trucking company that would take the products where they need to go.

Some of the things needed in freight brokering are:

• Sales teams
• Tracking teams
• Accounting teams
• Management

The point to this is to obviously make money for putting in the work of moving these loads. Your goal in this type of business is to pay trucking companies less money than you receive from your customer in order to make a profit. 

Your customer will give you pickup and delivery addresses along with times that they need to be loaded and unloaded. Your responsibility as a freight broker and management company is to ensure that these loads are on time and are completed with no problems. Of course, in this industry, problems occur a lot more than these kinds of companies would like.

There will be a lot of communication needed since brokers are the middle-men between the customers and the drivers. Keeping up with the drivers allows you to be able to answer any questions your customer might have throughout the process.

This industry requires a lot of work and communication between people outside of the company as well as internally, but it can be very successful if it is managed right!

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