For all freight brokers out there, there is a constant internal struggle when submitting rates. Don't get me wrong. I am well aware that the price is determined by the market, (a law of supply and demand). The scenario I am referring to is one created by competition; where the broker has to submit a competitive rate to get the business, but at the same time the broker must submit a rate that will allow him or her to consistently cover loads with quality carriers. It is a tight rope walk that almost all brokers experience.
When an economic slowdown takes place, carriers and brokers begin to slash their rates in response to it, attempting to hold on to business. But where is the line drawn? Where does the broker know to stop?
Yes, there a multiple websites that have services where a broker or carrier can view the low, high, and average rate for specific lanes, but how accurate are these services? How often are they updated? Where does their data come from?
This is when experience, commitment, determination and relationships help a broker to succeed. The experience can assist the broker in knowing what rates trucks are demanding that day and an understanding of the business cycles that take place . Commitment and determination will allow the broker to continue covering loads even when there seems no hope in finding a truck for such cheap freight. And relationships can enable the broker to possibly get the business at a slightly higher rate than some of the competition, due to their history of providing great service. Relationships can also help the broker to raise rates incrementally as trucks begin to tighten and the rates begin to climb.
There is a general feeling in the transportation industry that carriers are sometimes gouged by brokers during an economic slowdown, but the carriers don't see the many times when truck capacity is depleted and brokers lose money to cover loads and protect their customer. The pendulum constantly swings and the broker hangs on to it for dear life, trying not to be thrown.
And so goes the life of a freight broker.
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6 comments:
I'm a freight broker and a dispatcher for a large trucking company. I prefer to dispatch as I am a driver advocate. The question is not where to draw the line the question is "who". In an economic slowdown...what a sad excuse for manufactures and shipper to cut the shipping rates. They certainly don't cut the prices to the consumers of their product as a matter of fact prices go up. I say to hell with the shippers that use our economic slowdowns as an excuse for their greed. I could care less about shipper clients if we dont have drivers we have nothing. If for only one month brokers would refuse to move crap rated freight and dispatchers as well as carriers would simply refuse t also. Those shippers OMG have a choice pay more money or keep you product sitting collecting dust until your willing to pay for the work we do.
Brokers need to stand back a minute and realize that in todays world your clients are not exclusive. Do or don't move thier freight...you are not their only broker you have no exclusive contract. So go ahead Mr Broker and all your Buck Bud Carriers out there keep taking those trash loads and as it has been it shall stay.
I totally agree with what Martha says. The effort and the service should be paid what they are worth for. Cutting prices significantly just for the reason of economic slowdown may not be fair.
I ship products related to the building industry and I've got to tell you freight rates eat me alive. I try to give my customers a great rate on their products because I deal mostly with small or family owned businesses. I want them to be able to compete with big businesses but normally they can't if they purchase from someone else because if they can't buy a truckload of product their prices are double or more that of the bigger companies. I try to absorb the freight increases but because I keep a low profit margin there just isn't much room. It stinks that I can't deal directly with a truck line as a small business and get as good a rate as I can using a broker. I know the broker is making a cut so the truck line is making even less but if they quote me direct I get rates sometimes a couple hundred dollars per pallet higher than I do through the broker. To the comment about leave our freight sit unless we want to pay more...there are those of us out here trying to keep small businesses in America from going under...you know families from losing their lively hood...the more they have to pay for my products the more your house cost or your storage shed, etc. I've absorbed so many of your freight increases that I just can't take anymore and my prices are going to have to go up. Be fair. If companies that ship lots of freight can get a great rate why make those of us who ship less pay for their savings. Flat rate for everyone would work great just like a flat tax in American...we are all treated equal.
Freight brokering is one of the fast growing industry today. Due to this we can't avoid that the competition it tight too.
You know it sounds good, Brokers, don't take the freight...How about Truckers, don't haul it. Because you and I both know, when you pass on it, 10 more call behind you that want it. Some shippers will even open an account of their own on ITS or some board and post it even cheaper to undercut the Broker, so blaming the Broker is the easy, cop out on a massive problem. Let's face it, This industry has gone to hell since Carter deregulated it for "lower prices to the consumer" and the ONLY one that made out were the Corporations, not the Consumer. They kept the savings and passed along nothing, It has always been us against them. Brokers, drivers Blacks whites, Hispanics, dock workers drivers...we all have more in common than rich Corportations and rich people, but as long as we fight each other they get richer, laughing at our stupidity!!
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