Blog by: Glen Falk VP - General Manager
Having spent nearly 25 years of my life in the transportation industry, I have had the chance to meet with literally thousands of customers. Invariably, when the topic of freight brokers comes up, I regularly hear some passionate explanation of an unpleasant experience the shipper had at some point with a freight broker.
“I used a broker one time to haul some food products and he showed up with live goats or tarantulas in the back of the trailer” or “I booked a load with a broker one time requesting a reefer unit and they showed up with a window air conditioner duct taped to the back of a hay wagon.”
Yet, when I talk further with the majority of these shippers, they acknowledge that they use brokers on a regular basis as a ‘necessary evil’ in order to service a portion of their business. This begs the obvious question then - "How do I find a good one?"
Recent figures peg the number of licensed freight brokers in the 20,000 range. It is not an easy landscape to navigate with that many industry participants. Based on my experience, here are a few recommended questions which will help in finding a good broker.
1) Are they TIA Certified?
The Transportation Intermediaries Association (TIA) is the premiere organization for third-party logistics professionals doing business in North America. The TIA Code of Ethics promotes the highest standard of ethics within the brokerage and third party logistics industry. Since 1978, TIA has made adherence to the TIA Code of Ethics a mandatory requirement for membership.
Of the 20,000 licensed brokers in North America, only about 10% are members of the TIA. RGL is a proud member of TIA.
2) How long have they been in business?
My implication is not to broad brush that any a newer freight broker is not capable of being a quality provider. However, there is absolutely no substitute for experience, and no doubt that those whom have stood the test of time over a number of years have demonstrated both a competency and commitment to the marketplace they serve.
3) Are they legally licensed to perform operations as a freight broker?
You may accuse me of being Captain Obvious on this one, but it is a timely qualification to validate. In October of this year, the bonding requirements for the 20,000 freight brokers mentioned above was increased from a $10,000 to a $75,000 bond. Those freight brokers who wanted to maintain their license were required to secure the additional coverage as a part of the Map-21 legislation.
According to the federal register of licensed brokers, there were 7,561 fewer licensed brokers on Dec. 10 than on Dec. 1st. These freight brokers have either relinquished, or had their licenses suspended for failure to meet the new bonding requirement. Those individuals who continue to broker freight without the appropriate bond limits or license will face steep penalties of up to $10,000.
As a shipper, would you want to be dragged into that ‘rat hole’ by working with an un-licensed provider…..obviously not. Trust, but verify.
4) How do they treat their underlying carriers?
The vast majority of brokers will tout the fact they work with thousands of carriers (some as high as 50,000) in the spirit of offering up capacity to move your freight. The practical application however, is that many times they will simply post your load on various load boards hoping to find the cheapest option and put more cash in their pocket. So when a carrier as a last resort, goes to the load board, he is expecting to get screwed by a broker taking advantage of his backhaul rate. As a result, the carrier’s commitment to that transactional load, in terms of both service, and attitude toward your customer is going to be less than ideal.
As an alternative, consider the professional 3PL who chooses to work with a select group of (150-250) core providers. Who invests time and resources in regular discussions with those carriers to fill the lanes that the carrier truly covets. Who helps the carrier improve his business, and who negotiates a fair rate for both parties. The focus is on long term partnerships versus single load "home runs". Familiarity develops into a relationship, which creates long term trust.
In which scenario does the carrier feel better? In which scenario will you and your customer get the best long term value and service experience?
This list is not meant to be all inclusive, nor is the issue black and white. In the end, this is a relationship business, executed by human beings, and requiring significant amounts of trust between shipper, carrier, and freight broker.
I can’t guarantee that the above list will solve all of your transportation problems, but it should significantly reduce your risk of having live goats or tarantulas on the loading dock.
“The happiness of your life depends upon the quality of your thoughts.”
― Marcus Aurelius