Managing Million-Dollar Freight Risks | Ep 47

Brian: 00:00:00

In this episode of logistics and Leadership, we're going to cover everything you need to know about moving high value freight.

On today's episode, we're going to talk a little bit about high value freight, how to handle it, how to talk to your carriers, carrier selection, how do you talk to your customers about it?

All things high value freight, including some commodities that might sneak under the radar and people might not know that they are high value when moving them in 40,000 pound increments. Have you ever dealt with this before? What's your experience with high value freight?

Justin: 00:00:39

Yeah, I actually have a decent amount of experience through various commodities and different shippers in my career. It's early on it was something that I did not incorporate into my sales process.

But understanding load values and expectations and the entire onboarding process is extremely important on the front end because last thing you want to do, and this has happened before, I know a few people where they've been burned because they had no idea. You know, a good friend of mine had a million dollars worth of scientific calculators on a truck and he had no idea it got held up.

Brian: 00:01:13

TI83. Oh yeah, brings me back right there.

Justin: 00:01:17

He used to cheat on those things like crazy.

Brian: 00:01:19

Yeah. Jesus. I never got to like 10th grade math. But is that like the graphing calculator? Okay.

Justin: 00:01:24

My mom was not happy about buying that one.

Brian: 00:01:26

Yeah, I never got out of algebra too.

So with theft, obviously high value, the scammers, they can turn around and sell that trailer, sell that load of calculators for what, a couple hundred grand on a million dollar load, that sort of thing.

Justin: 00:01:41

Yeah, yeah. I mean that's always in play.

Brian: 00:01:43

Yeah.

Justin: 00:01:43

And I definitely think we need to spend some time on that. But I think to start is the insurance, right.

And making sure you had the right insurance and your carriers had the right insurance in place prior to picking those up.

And again, those are conversations that are had with the prospect and the client before you ever get anything over the road or you're picking up high value cargo real quick. Like, you know, we've been in logistics for a while.

Brian: 00:02:07

Yeah.

Justin: 00:02:08

What are some commodities that are high value? And we're talking about value. Like what are we looking at here? Are we talking about millions? What are we looking at?

Brian: 00:02:16

Yeah. So I think there's a lot of them that go under the radar. Right.

And a lot of those are cheese, animal proteins, powder proteins, any type of dairy product that's out there. You have to check the value of that on what it actually costs.

When a, you know, a KROGER a Costco or Walmart or the end user is buying this product from the shipper.

A lot of those kind of, you know, they're a little sneaky and they do fly under the radar and you have to have your antenna up to know that, okay, that I'm shipping a load of powder proteins. This probably retails at $100 a jug. How many jugs can I fit inside of a 53 foot trailer? Your load value is probably going to be anywhere 150, 200.

I mean that just opens up a whole can of worms. Especially with carrier sel insurance like you mentioned.

I do want to reference, we have a podcast, we actually have a three part podcast that we did a couple months ago and we'll put those episodes in the show notes, but it's with a transportation attorney, Rob Hasman, where we dig into the details and we go into what to look for in a carrier and that sort of thing. But you know, that's, you know, high value cargo, it can be very lucrative. The margins are a lot higher.

At the same time, there's a lot more risk involved as well.

Let's talk about some of the advantages or if you were speaking to a prospect that does have high value cargo, what are some things that you'd want to talk about or address?

Justin: 00:03:39

Yeah, and this is more so advice if shippers don't have this in place already.

But God forbid they just let anybody and everyone into their network, carrier network to run their high value cargo because that's where you're exposing yourself to a lot of risk.

But when I'm having those conversations, I know going into those calls and I'm pursuing them for a reason, it's because we know we can bring value to the conversation and their overall network. But if we're calling a copper company, we know that it's likely going to be over $100,000 per load in value.

So how can we present ourselves as to say, like listen, we know what we're doing. We have processes in place to screen, manage, monitor onboard reliable partners who meet our expectations, who meet your requirements.

They move high value cargo and there's a number of things there. What do they carry in insurance? Are they carrying the standard 100k in cargo or, or do they have 200?

Brian: 00:04:35

Are you talking about a carrier? Yes, the carrier that we contract out.

Justin: 00:04:38

Correct.

So we'll go and contract carriers who meet the requirements as opposed to they're an owner op, they have one truck and trailer, they carry 100k in cargo through progressive and they have no capital. So we're not going to go contract a carrier like that. Instead we're going to screen and source capacity. If we don't have it in place already.

With carriers who meet those insurance requirements, they have the resources, the assets, the capital in case there is, let's say, a claim, nothing stolen. But in this situation it could be stolen. But let's say they get in a wreck or an accident, making sure that we're covered.

We're managing that risk for our client, for ourselves and for our carriers from an insurance perspective.

Brian: 00:05:21

And so for those people that don't know, $100,000 in cargo coverage is usually the status quo or the norm. For every carrier out there, you can get anywhere from 150 grand to 250 grand. Hell, I've seen some carriers have 2 to 5 million. Correct.

And obviously that costs more in insurance premiums. Just like if you bought a Lamborghini versus the Toyota Corolla that I drive today. So that's going to.

The insurance for that Lamborghini is going to be a lot more expensive or the insurance premiums is going to be a lot more expensive than for a standard car. What are some other things that you know, when you look at the high value insurance side of it, you know, carrier selection, number of power units.

Are there certain things that come into mind with carrier selection that others wouldn't think of?

Justin: 00:06:12

Yeah, I mean anything high value is going to be white glove. We're going to be on top of it.

Brian: 00:06:16

Yeah.

Justin: 00:06:16

We are very selective in who we're putting under that shipment. We are going to be closely monitoring that from dispatch to pickup to, you know, delivery.

And if you think about it, if you're moving a truckload of hay, how much is that hay going to sell for? How much is it worth?

Brian: 00:06:31

$7,000.

Justin: 00:06:32

$7,000. So if you have a 200 mile transit.

Brian: 00:06:35

Yeah.

Justin: 00:06:36

That's going to eat into the bottom line for the profitability of that load of hay.

Brian: 00:06:40

Yep.

Justin: 00:06:41

Compared to 250,000 in copper.

Brian: 00:06:44

Yeah.

Justin: 00:06:44

They are likely going to pay a little bit more of a premium to make sure that that load gets picked up and delivered on time in full. No claims, no damage, anything like that.

So your margins typically should be higher because there's a different level of attention required for a high value shipment compared to a truckload of hay.

Brian: 00:07:05

I also think like you mentioned this earlier, but like carrier selection. Right. So we talk about it all the time. It's all supply and demand. And if you want to go out there and you Want to get a carrier who has 250 in cargo.

They have 10 power units, they have this equipment, that equipment. A 53 foot step deck lowboy with tarps. Well, that's like a unicorn. Right.

You're probably going to pay a lot more for the unicorn carrier as opposed to every single other carrier that has 100,000 cargo. They have two trucks, the equipment's kind of, you know, so. So.

Justin: 00:07:33

And they know that.

Brian: 00:07:34

No, for sure.

And that's where I think we have to inform our shippers as brokers to say, hey, listen, here's the reason for the cost and here's why it's going to be a lot higher is because we have to go out and find that unicorn who might be deadheading.

Deadhead miles are kind of like empty miles in our industry, but they might be deadheading 350 miles just to pick up our load because they meet all the specifications.

Justin: 00:07:56

Yep, you're exactly right.

And this is a few years ago, but we had a project up in New Jersey and it was like a $80 million like energy cell that they were constructing up in New York.

We were deadheading specialized carriers who met the expectations, they had the insurance requirements, they knew what they're doing from Chicago to New Jersey to do a 20 load project that they were constructing up in New York.

Yeah, Our client completely understood because they were willing to pay a higher cost even with that deadhead to make sure that this was ran to perfection.

Brian: 00:08:31

Sure. Probably because the value of the load was 250. Right. And they had more room from a sales perspective on their side.

If the product that they're moving is 250, they're probably selling it for 300. 350 to their customer. Now they got some more room to work with as opposed to a, you know, you referenced it with a $7,000 load of hay, right? Yep.

Justin: 00:08:50

And that's a project if you're running higher volume volume shipments that are high value. I encourage shippers and brokers to be very thorough and transparent about your process.

Brian: 00:09:01

Yeah, I was just going to go into that, but you know, let's say.

Justin: 00:09:05

I'm a shipper, I'm onboarding carriers or vetting carriers. I'm evaluating new partners every six months or whatever.

My first question is wanting to gain an understanding around their care vetting and monitoring process.

Brian: 00:09:20

If you're a shipper, you have to.

Justin: 00:09:21

Yes, because if I'm just brokering out of my basement and I'm posting up shipments out of your city where you're Shipping out of, to load boards.

There are scammers out there, there are double brokers out there that know, let's just say Cincinnati, Ohio or some smaller city that there's copper moving out of that location going to southern Florida. And it's just, they know, man, they're.

Brian: 00:09:46

Not, they're not dumb. I think one of the, like I'm going to, I'll share an experience that I had recently and it's with a meat wholesaler out of Illinois.

And one thing that they do, they are extremely thorough from a shipper perspective. They come in, they make sure we have to send over the driver, cell phone number, tractor and trailer before they get loaded.

They go in, they take a picture of the driver, they take a picture of the license, they take a picture of the truck and the trailer. They do like six different steps to make sure that it's the right carrier picking up that load.

And I think anybody that moves high value shipments out there, I think they have to do more of a carrier vetting at the shipper or do a shipper verification to go in and say, okay, ABC trucking is picking up this load. And that's who assigned, that's who was assigned to it. Now, ABC trucking, that matches up, driver's name is Phil.

Here's his phone number, here's his tractor trailer. Okay, everything matches up. You get the green light.

Where I think some shippers, they might be a little bit less strict and they say, oh yeah, sounds great, load up. Your CDL is right here. Okay, perfect, check. And they're doing nothing else. Right.

So I do think that there's some responsibility on the shipper side of it where they have to put those processes in place.

So anybody that's listening to this, and hopefully we can get into the ears of some of those shippers out there where they can do this or they can change some of their processes to protect them so they don't have any of that theft or that fraud out there.

Justin: 00:11:27

Yeah, and that's a lot of what we do too. Not just with our clients, but you know, potential clients or shipping partners that we work with through our clients.

Brian: 00:11:34

Right.

Justin: 00:11:34

You try to collaborate with them and say, hey, like, here's what we recommend. I know this is a high theft market. Is there any chance we could work with you and collaborate with you to screen these drivers when they check in?

Brian: 00:11:45

Right.

Justin: 00:11:46

We've had shippers that say, like, we don't have time for that. It's like, okay, well, you're exposing yourself to risk.

We'll do everything in our power to make sure we're utilizing our internal networks that we trust. But at the end of the day, things are going to happen.

I mean, these scammers continue to evolve and they'll find other avenues to get in and steal products. So we always want to educate our partners and work with them. Hell, we've gotten to work closely with Uber Freight over the past 12 months.

I think one thing that attracted them was our process. And we are very transparent. We went in, we showed them everything that we do.

Brian: 00:12:20

Yeah.

Justin: 00:12:21

And we partner with Highway. They've been a phenomenal partner for us. They're more on the compliance side and care screen side, but we show them everything. These are our tools.

This is how we do it. This is our entire process.

Brian: 00:12:30

Yeah.

Justin: 00:12:30

And I'm pretty sure, you know, they've implemented some of those with their shipping partners as well because there's mutual clients there.

Brian: 00:12:36

If you are a broker and you're interested in moving high value freight, it will increase your value of the service that you provide. It'll also give you that experience to leverage that to future prospects, future customers and being that service provider that they're looking for.

The nature of the beast is products, regardless of inflation or not, products are going to continue to get more expensive the older that we get.

So as far as getting a good insurance policy that covers that, making sure you're doing your due diligence there, as well as selecting the right carriers on a day to day basis. On this week's episode, we talked about a lot of the tactics about moving high value freight. Tune in next week.

We're going to look at it from a shipper's perspective and how to select the right broker when making that decision.