The freight business is booming as consumers spend all of the money they saved by staying home on things they believe will make home life more interesting.
The last time rates were this high was in 2018, and airlines responded by expanding their fleets rather than building rates and margins. By the time these new trucks actually hit the streets in 2019, the economy had slowed and the capacity pendulum swung in favor of customers.
If you need an example of why truck cycles do not match business cycles, check out the capacity picture in 2018 and 2019.
I feel that carriers are thinking differently this time.
For the past six months our phones have been ringing at freight forwarders buying freight brokers or seeking advice on starting one.
Being a middleman is nothing new to large fleets. In fact, most of the major Canadian airlines have thriving cargo brokerage businesses behind the brands. They understand the value a third-party non-asset solution can bring to their business.
There’s no reason smaller and medium-sized truckers can’t get the same rewards. This is why almost every fleet should try to add a broker component to their product mix.
Grow your existing customers
How many times have you said « no » to a long-term customer because you didn’t want to go through the hassle of adding iron and finding drivers? It hurts even more to know you are opening the door to your competitors.
With a brokered solution, you can say « yes » to the load instead of « let me think about it and get back to you ».
Increase your business value
When you become a carrier-broker hybrid, your business increases in value.
Fleet owners do not like to hear it, but freight brokers trade against higher multiples of the normalized EBIDTA (earnings before interest, depreciation, taxes and amortization) compared to similarly sized freight forwarders.
Freight brokers are generally more profitable in relation to their sales, and business buyers also see the process as less risky and more agile than freight forwarders. They add valuable stickum to the customer relationship and make it difficult for a competitor to bring you to your knees.
Up until this point, we recently had a situation where a medium sized broker with a small fleet came up to us to sell the entire business. To maximize the selling price, our advice was to sell the trucks first. The broker division became more valuable as an independent company than as a hybrid.
In this case, the first step in selling the trucking property put more money into the owners’ jeans, even though the deal was significantly smaller.
Hide your trucks
One strategy that many truckers use is to hide their trucks behind their freight brokerage department.
Instead of selling their trucking services directly to potential customers, they sell their third-party solution. This allows their trucks to carry the shipments that are best suited to their geographic footprint, hours of operation and backhaul availability.
Nothing better for an LTL freight forwarder than sweeping the client’s dock, picking the cargo that works best, and brokering the rest. What doesn’t work well for your fleet is likely to be appreciated by another trucker!
At MSM we were one of the first hybrids. If we didn’t have a guaranteed backhaul waiting for us at the other end, we would leave our truck parked by the fence and let someone handle it.
Saving empty miles is another bonus for an in house freight broker.
Industry outsiders often ask me the difference between a freight broker, a freight forwarder, and a 3PL. In simple terms there are none. They are all middlemen who offer non-asset transportation services. Some work as transactional skid chasers for cross-border cargo, while others specialize in unique vertical or geographic niches. Other carriers have evolved their third-party operations into 4PLs, which offer complex, high-level supply chain solutions.
At MSM, we opened a global freight forwarding department during the Great Recession. Suddenly we were serving countries I had never heard of with names I couldn’t pronounce. But our long-term loyal truck customers were enthusiastic and the new company grew like weeds.
Starting or buying a new business is a daunting task. But this industry veteran can assure you that the difficulty of being a middleman pales in comparison to being a trucker.
Can a freight broker own trucks?
The answer is yes, freight companies often adopt a broker license as a secondary source of income. Freight brokers can also act as transport companies as long as they do not carry double-brokered freight. There are no restrictions on freight brokers who own trucks, just on how they can be used.
How do I become an with no experience freight broker?
How to Become an Unexperienced Freight Broker [Free Guide]
- Learn some industry experience.
- List potential freight broker partners.
- Build a professional LinkedIn Page.
- Reach out to potential partners.
- Choose your company name and register your company.
- Create a business plan.
- Look for good porters.
- Get a USDOT number and your brokerage authority.
Why do freight brokers fail?
Mistake 1 – Lack of Knowledge and Planning (Expertise) – It sounds simple, but the main reason people fail is because they lack the business knowledge of a freight broker and they don’t take the time to learn this business. Many fail because of poor planning and a lack of knowledge.
What is a truck brokerage company?
A freight broker is someone who helps shippers with cargo ready for carriage by finding carriers who are qualified to move the cargo. … Freight brokers can run their own business or work for a freight brokerage company. You are responsible for organizing the transport and tracking of a cargo carried by a carrier.
What is the difference between freight broker and freight forwarder?
Freight brokers connect shippers and forwarders and monitor freight traffic. … Forwarders clarify the transport of goods from one country to another and forward shipments to each location in accordance with the statutory provisions. Freight forwarders usually ship freight under their own waybills.
What is a logistics freight broker?
In simple terms, a freight broker is a link between companies with shipping requirements and carriers. A shipper has their wants and needs, and a driver or transport company has their needs and agenda. This includes everything from pre-planned routes to the types of deliveries each truck can make.
What does a freight broker license cost?
1. License costs. Freight broker licenses are issued at the federal level and administered by the Federal Motor Carrier Safety Association. They require a one-time non-refundable fee of $ 300. If, like many brokers, you want to register as both a haulage company and a freight broker, you will have to pay this fee twice.
How long does it take to become a freight broker?
How long does the training to become a freight broker take? The freight broker training school lasts around 30 to 45 days. You can also take courses at your own pace if necessary.
How do I become a home freight broker?
What do you need to become a freight broker?
- Gain industry experience and study. …
- Choose a company name and register your company. …
- Develop a business plan. …
- Find the right porters. …
- Apply for a USDOT number and get your broker authority. …
- Get a Freight Broker Bond. …
- Take out any freight insurance and general liability.
How do truck brokers work?
Although many shippers have contracts with hauliers to move their goods, a significant portion of trucking in North America is handled by freight brokers. A freight broker is an intermediary between a shipper who has goods to move and a freight forwarder who has the ability to move that cargo.
Is It Difficult To Be A Freight Broker?
It is even more important to be organized to ensure that the stress does not affect your judgment when dealing with key situations in the job. Brokerage will always be a stressful affair, but you can relieve some of the stress through sound organizational practices.
What is the best freight broker school?
A List Of The Top Freight Agent Broker Training Schools For …
- ShippersCarriersCom LLC.
- Freight Movers School, LLC.
- Load training.
- BROOKE Transportation Training Solutions, LLC.
How do freight brokers get customers?
How do freight brokers find shippers? Here are 7 proven ways
- Always ask for recommendations. Your best leads likely come from your best customers. …
- Heartfelt calling. …
- Check the credit statements for references and give them a call. …
- Find « similar » companies. …
- Check out your competitors and their customers. …
- Check your « orphan accounts » …
- Direct mail.