From Shipper to Shelf: A Brokerage Overview | Ep 17
On today's episode on Leadership & Logistics, Supply Chain Leaders Brian Hastings and Justin Maines explore the fundamentals of freight brokerage, tailored for both newcomers and seasoned brokers. We discuss the challenges of convincing shippers to choose your services over existing partners, simplifying brokerage by comparing it to subcontracting in home construction and explaining the process from shipment coordination to delivery. They also highlight the importance of communication, managing unexpected issues, and the benefits of outsourcing transportation management to brokers. Whether new to the industry or experienced, this episode provides crucial insights on over-servicing clients and maintaining ethical standards.
The Logistics & Leadership Podcast, powered by Veritas Logistics, redefines logistics and personal growth. Hosted by industry veterans and supply chain leaders Brian Hastings and Justin Maines, it shares their journey from humble beginnings to a $50 million company. Discover invaluable lessons in logistics, mental toughness, and embracing the entrepreneurial spirit. The show delves into personal and professional development, routine, and the power of betting on oneself. From inspiring stories to practical insights, this podcast is a must for aspiring entrepreneurs, logistics professionals, and anyone seeking to push limits and achieve success.
Timestamps:
(00:38) - Understanding the Role of a Broker
(01:58) - Challenges in Freight Brokerage
(03:30) - Why Shippers Need Brokers
(05:19) - Managing Shipments and Carrier Networks
(08:33) - Key Takeaways and Best Practices
Connect with us!
▶️ Website | LinkedIn | Brian’s LinkedIn | Justin’s LinkedIn
▶️ Get our newsletter for more logistics insights
▶️ Send us your questions!! ask@go-veritas.com
Watch the pod on: YouTube
Transcript
Whether you're a new broker, you've been around for decades.
Speaker A:Regardless of the timeline, I'm sure you're going to agree with me that the most difficult part of this entire process is convincing shippers why they should be using you and your services compared to the partners that they already have in place.
Speaker A:When you HEAR the phrase 101, if you're like me, you're thinking of an entry level course in college or whatever it may be.
Speaker A:Well, that's what we're going to discuss today.
Speaker A:Broker 101, an intro to Freight brokerage.
Speaker A:What comes to mind when I mentioned freight brokerage?
Speaker A:How do you describe it?
Speaker B:Yeah, I think when you think about it, you think about it this way.
Speaker B:If you go to, if you're trying to build a house, you go to the builder.
Speaker B:Well, that builder is not going to do all the drywall and the painting and the carpet and hardwood floors.
Speaker B:Right.
Speaker B:They're going to outsource that work to people who specialize in that.
Speaker B:Right.
Speaker B:So, you know, when you think about it, or you know, talk about like the broker one on one side of it, that's what we do.
Speaker B:You know, in a nutshell, we're taking shipments from a shipment manufacturer.
Speaker B:We're earning their trust to coordinate those shipments from a shipper manufacturer, and then we're outsourcing that work to a preferred vendor or a preferred carrier partner, AKA a trucking company.
Speaker B:They're going to, you know, complete the job.
Speaker B:They're going to complete the work for us.
Speaker B:And our job is, you know, just like any other business out there, is to make a margin in between.
Speaker A:So if I'm the project manager of a house, I'm subcontracting all the duties out responsibilities to the plumber, carpenter, you know, you name it.
Speaker A:You're the project manager for a shipper then, correct?
Speaker B:Yeah.
Speaker A:And let's say the truck breaks down that you contracted with.
Speaker A:Now it's your role to get that resolved, similar to how a project manager would get a foundation issue resolved.
Speaker B:Yep.
Speaker A:They're outsourcing to you.
Speaker A:You manage it, get it from point A to point B.
Speaker A:Is that accurate?
Speaker B:That is.
Speaker B:Yeah, you're absolutely right.
Speaker B:And I think there are challenging convers that need to be had.
Speaker B:Just like you said, if you let that, you know, home buyer down or if you let that, that shipper manufacturer down, you have to deliver some of that bad information.
Speaker B:So let me ask you this.
Speaker B:So you're talking about if I'm, you know, the Campbell Soup Corporation.
Speaker A:Right.
Speaker B:And I got, you know, chicken Noodle soup.
Speaker B:Where do I get those ingredients or you know, how do I make sure that all that stuff is taken care of and shipped on a truck to, you know, the end retailer, to a grocery store or a Walmart, Costco, Target, that sort of thing?
Speaker B:Yeah.
Speaker A:So if I'm making, you know, if I'm manufacturing and producing soup, there's a lot of things that go into that finished can of soup in order for it to end up on the shelf.
Speaker A:You have the wrapper, the labeling, the ink that goes on those labels, the aluminum can, the ingredients inside, the broth, the noodles, the soggy grizzly pieces of chicken.
Speaker A:But at the end of the day, those products are coming into the manufacturer via inbound shipment.
Speaker A:They are producing that finished good, which is the can of soup.
Speaker A:Now the next step is getting that can of soup onto the shelf for the consumer to purchase.
Speaker B:Yeah.
Speaker A:So whether you're handling inbound, outbound, it doesn't really matter.
Speaker A:There's a lot of moving pieces there.
Speaker A:But as a broker, the only way you're going to earn business is if you are reaching out to these manufacturers or these shippers and convincing them why they should give you an opportunity to move their product from point A to point B.
Speaker A:And that team seems to be the biggest challenge for most brokers.
Speaker B:Yeah.
Speaker B:Well, let me ask you this.
Speaker B:So if I'm a shipper manufacturer, right.
Speaker B:Like why do I need a broker?
Speaker B:Why don't I just go directly to John Smith trucking down the street that I know is local, our kids play sports together or something like that?
Speaker B:Like why don't you just go directly to a carrier?
Speaker A:Some do.
Speaker A:And it's important for shippers to diversify their, their partner pool, whether it's asset based LTL providers, full truckload brokerage, you know, if you're, they're doing international and shipping things overseas, you're working with a freight forwarder.
Speaker A:There's a lot of components there, but you want a healthy mix between providers.
Speaker A:But if you think of it, our country has a shortage in truck drivers.
Speaker B:Sure.
Speaker A:And there's a lot of volatility in the market right now with, you know, post Covid error, where companies we just.
Speaker B:Mentioned on a couple podcasts ago that you know about the life of a driver, right?
Speaker A:Absolutely.
Speaker A:So it creates some volatility in the market.
Speaker A:And ideally, I'm sure shippers would want to have a fleet of 100 trucks to run all their shipments at bottom of the barrel cost.
Speaker B:They want, they want control, Right.
Speaker B:Or they want some sort of control.
Speaker A:Yeah.
Speaker A:But that's not reality.
Speaker A:But also you're having to have someone or a team manage those people.
Speaker B:Sure.
Speaker A:Okay.
Speaker A:So instead of hiring additional headcount because now you have to go find talent that actually has experience to know how to run a fleet, you can outsource that to a broker who already specialized in that, who already has relationships, who already has the workflows and processes in place to manage your transportation and supply chain.
Speaker B:Yeah.
Speaker A:So instead of adding a bunch of people and hiring like crazy to build out a team to manage your transportation, depending on your needs, obviously.
Speaker A:Sure, yeah, you can outsource all that.
Speaker A:Outsource the headaches, outsource the relationships, the carrier payments, the contracts, all those things and take that off your plate so you can focus on what's priority.
Speaker A:So I'm the shipper.
Speaker A:I am now outsourcing my transportation to a few broker partners who are going to handle my day to day.
Speaker A:What's the next step?
Speaker A:What happens then?
Speaker B:Yeah, so as soon as you get a shipment from a shipper, a manufacturer, the next step is to make sure all the details are correct.
Speaker B:Making sure that you can actually haul this shipment.
Speaker B:Making sure that the transit times, you know, usually in our industry it's 550 miles per day for a driver who's over the road, understanding that those transit times are accurate and then you know, scheduling, scheduling it.
Speaker B:So if it's going into a first come, first serve shipper or if you need an appointment or whatever that looks like now, the next job is to go back to your carrier network and find a driver to haul that shipment from.
Speaker B:We'll call it Dallas to Atlanta.
Speaker B:Right.
Speaker B:We want to be that, that one stop shop so that we can get that shipment from the customer and over service it the best way possible.
Speaker B:After that, if you don't have, you know, for smaller brokerages out there, if you don't have a carrier network from Dallas to Atlanta, we'll call it for a dry van, then you'll need to post.
Speaker B:Right post to a load board so DAT you can post truck stop there, there's a handful of them out there.
Speaker B:Therefore, you know, drivers will call in.
Speaker B:We kind of see it as like a, I don't know, like a craigslist of you know, freight shipments.
Speaker B:Right.
Speaker A:That's scary.
Speaker B:Yeah.
Speaker A:But probably accurate.
Speaker B:Yeah.
Speaker B:Does anybody still use Craigslist?
Speaker B:I don't know.
Speaker B:I sold a couple couches on there at one point but.
Speaker B:But yeah, so like if they're, if they're posting up shipments on DAT or the load board, then you know, these drivers that have available equipment or you know, available trucks in, in the Dallas area, they will call in to your brokerage or your company line and they'll negotiate a price.
Speaker B:Right.
Speaker B:And where do you get this price and how do you know what to pay carriers?
Speaker B:There are different technology services out there.
Speaker B:You know, most companies or most brokerages have a service to provide them with rate tools.
Speaker B:So you know what to bill a customer and what to pay a carrier.
Speaker B:Right.
Speaker B:And what kind of margin to try to make in between.
Speaker B:At that point you need to vet out the carrier company, making sure that they have authority, they have the right type of insurance, they're qualified.
Speaker B:We'll go over a lot of those carrier selection tools in a later episode.
Speaker B:It's extremely important in today's market.
Speaker B:But you know, making sure that this carrier is qualified to haul that shipment and then negotiating a price and you know, sending them a contract or we call it in our industry a rate confirmation, then giving them the pickup information.
Speaker B:They go to the pickup, they use this information to pick up the load, they take it from Dallas to Atlanta.
Speaker B:And then you're communicating with that client along the way.
Speaker B:Right.
Speaker B:Client needs to know when the driver's en route, when it's picked up, when they're over the road, when it's delivered.
Speaker B:Those are all communication touch points that need to go back to that shipper to over service them and over communicate on the load.
Speaker A:Sounds really easy.
Speaker B:Yeah, I feel like, wait, that's it, that's it, that's it.
Speaker B:So yeah, there's a lot of moving pieces.
Speaker B:Right.
Speaker B:And it's interesting, right.
Speaker B:We've been in the industry for 10 plus years and like in breaking it down on a transactional level, I think can be a little bit challenging.
Speaker B:Right.
Speaker B:We think of it, you know, it's kind of like second nature to us.
Speaker B:Right.
Speaker B:But I think when you're just starting out and having to understand all of that process, I think it's extremely important to, for the communication side that we always mention and you know, making sure that, you know, you're doing right by your customer as well as the carrier.
Speaker A:So if you're listening, whether you're a new broker, you've been around for decades, regardless of the timeline, I'm sure you're going to agree with me that the most difficult part of this entire process is convincing shippers why they should be using you and your services compared to the partners that they already have in place.
Speaker B:Yeah, Interesting stat I heard the other day was 60% of brokers out there have no industry experience.
Speaker B:30% have industry experience or they have.
Speaker B:Maybe they're a spin off of a larger brokerage or have time in the industry.
Speaker B:You know, what does that mean?
Speaker B:Right.
Speaker B:So I look at it a couple different ways.
Speaker B:As a broker, if you're part of that 60% and you're new and you've never been around before, educate yourself on what to do over, service your clients and do the right thing from a moral and ethical perspective.
Speaker B:Now, if you're part of that 30% and you have experience, well, it's not.
Speaker B:Yeah, a lot of times we do feel like it's an uphill battle.
Speaker B:Right.
Speaker B:Or it's a challenge.
Speaker B:But there's a huge market out there where, you know, you can, you have to have consistency and effort and stamina to last in this industry.
Speaker B:We've gone over a lot today breaking down broker 101.
Speaker B:At the end of the day, do the right thing.
Speaker B:Make sure that we're oversurfacing clients and make our industry better as a whole.
Speaker C:Whoever's in charge of setting carriers up, when they get the insurance cert, call that agent, make sure that that is a company that exists.
Speaker C:If you call John Doe Insurance Agency and they say, we've never heard of, you know, whomever is this.
Speaker C:Yeah, that's a good red flag.
Speaker B:Yeah.
Speaker C:Now that's all stuff on the front end.
Speaker C:There's still going to be things that can slip through the cracks.
