Problems New Brokerages Face

Carriers are one of the most important parts of your business as a freight brokerage. Without carriers to supply trucks and trailers, there would be nobody to take the loads. Brokerages are essentially the middle man in the marketplace. Customers go to brokerages in order to get freight moved, and the brokers turn around to find trucks to take them. Being a middle man is always a lot of hard work because you have to keep track of the trucks while also reporting back to your customer. Since you are the middleman in this market, it is important to you and your customer that you choose a trustworthy carrier to take the loads. This can lead to problems with companies that that are not very reliable or trustworthy.

A major problem for brokerages is finding good carriers. While a lot of companies are straightforward and want to get the job done, there are companies that will try to take advantage of the fact that brokerages do not necessarily always have the means of knowing when carriers are telling them the truth. This is especially hard when you are a new brokerage that has entered the industry. As a new brokerage, you are probably not as familiar with a lot of different trucking companies, and that could lead to having to take risks. New brokerages need to make enough money to stay in business, so they might have to count on carriers that they have not worked with and do not know very well. Unless you have worked at another brokerage or have done a lot of research into the different companies, it can be hard to determine if a carrier can be trusted to fulfill their obligations without problems.

Trucking companies can see that a new brokerage has entered the market, and they could try to take advantage of the fact that they do not have a lot of information and are relatively inexperienced compared to brokerages that have been established for a good amount of time. This could cause them to try to deceive brokerages in different ways.

The first way is to lie about the location and estimated time of arrivals for their trucks. I have experienced a few examples of this. The brokers will ask if the truck is empty and if they are able to make it to the pickup by their appointment time. Companies can take advantage of the fact that the new brokerages might not have a means of automatic tracking, and will have to rely on calling for information about the status of the driver. Dispatchers can tell the brokerage that the trucks are empty when they really are not, which may cause them to be late to the pickup. It is not a good sign when a load starts out with problems like this.

They can also lie about the same thing during the transit to the delivery for the load. If the brokerage has to rely on the word of these carriers, that gives companies the temptation of lying. This is bad for the brokerage since there is really no way for them to confirm it.

One way the brokerages can protect themselves against this is to invest in an automatic tracking system when they first enter the market. This is important because now the brokerages have the chance to be wary of some carriers if they decide to decline the automatic tracking. They can also be aware of late pickups and deliveries if they have the means to know exactly where the trucks are at all times.

Another way brokerages can protect themselves from untrustworthy carriers is to hire brokers who have experience in the industry. They bring knowledge of which carriers can be trusted, and that can go a long way to mitigate problems in the early life of a brokerage business. The experienced workers can also share their knowledge of the industry with employees that might just be entering the industry. Experienced workers are a big asset to a new or growing business.

Some carrier businesses can also do something even more risky to brokerages. This problem is called double-brokering freight. Double-brokering freight is when a carrier takes a contract with a brokerage for a load, and then turns around and tries to find an even cheaper company to take the freight for them. Brokerages do not like this because they do not know about the other company taking the load, and they have no means to reliably track them without the carrier that double-brokered the load. This is also a huge problem because they have to find a cheaper company to take the load in order to make a profit, and a lot of these cheaper companies have very poor track records in the industry. The cheaper companies typically have to take double-brokered freight because brokerages do not usually want to risk having their load messed up by them.

Luckily, there are measures brokerages can take to help prevent these types of problems. One countermeasure is to check a company’s MC number. These numbers are unique to each company and they are registered in a database that is accessible to brokerages and their customers. These databases include information about the size of the company, how long they have been in business, and things called Freight Guards. Freight Guards are pretty much do what their name says: they report problems that the carriers have had in the past and make them available to brokerages. These reports are generated by other brokers that have used them. These reports can include things like double-brokering, missed deliveries, and demanding more money from brokers after they have picked up the load. These examples are nightmares for brokerages because not only are they failing their customers, it makes the brokerages look like they use untrustworthy carriers.

Another simple way to protect the business is to call other brokerages that have had experience with the carriers. Brokers are usually more than happy to share their experiences with the carriers in question and this can go a long way to help a new brokerage to avoid poor carriers.

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