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.

Do you think that brokerages are necessary? Comment your opinion below! free HitCounter

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