2.0 Essential Tools of the Trade

*Atex Freight Broker Training, Inc. – El Paso, Texas*

Lesson 2.0 Essential Tools of the Trade

Overview – Lesson 2.0

Routing, Mileage & Mapping Resources

How many miles on each load

Practical miles vs short miles

Mapping resources

Calculating Rates

Negotiated rates, spot rates, contract rates

Base (Gross) rates, accessorial charges

Payment methods

Payments over and above base rates

Rate Negotiation

Broker rate margins

“Head haul” rates, “back haul” rates

A sense of urgency

Finding the going rates

Hot Maps

Offers to pay the truck

Dollar amount to expect on each load

100 cwt or 50 wt (usually in the produce industry)

Resources for finding “going rates”

Load Boards – using DAT, Truckstop or Both Several options

Basic and/or additional features

Continuous truck searches

Benchmarks to Evaluate Progress

Monitor load and shipper performance

Load Manager spreadsheets

Shipper and Carrier Databases

Why databases?

Using databases

Other Software Systems

Transportation Management Software (TMS)

Both DAT and Truckstop have TMS software

Accounting software

Lets’ get started! …

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Routing, Mileage & Mapping Resources

Why you need to calculate miles

Know what “dollar amount per mile” you are offering your truck driver

Dollar amount offered, number of miles:

($1,600 / 1,000 = $1.60)

Calculating practical miles vs. short miles

Practical route (probably the quickest) or the shortest route (fewer miles but poorer routes)

Mapping resources

Here is a free mapping resource and a paid resource:

Google Maps

GPS systems

Calculating Rates

Negotiated rates – spot rates or contract rates

Which one?

Base (Gross) rates and accessorial or unloading charges:

Example for the broker:

Base rate $2,300 –flat rate to the broker

Unloading fees +100 -reimbursed by shipper, sometimes

Total Rate $2,400

Example for the truck:

Base rate $2,070 –flat rate to the truck (2,300-230)

Unloading fees +100 -reimbursed by broker, yes

Total Rate $2,170

Payment methods

Examples:

Flat rate,
Rate per mile,
Piece rate,
100 cwt or 50 weight

Who Determines HOW the Rate is Paid?

Base (Gross) Rates

Flat rate

Example:

From Denver to Houston,

$1,725 flat

Rate per mile – $ 1.75 per mile –

El Paso, TX to Phoenix, AZ – 410 miles at $1.75 per mile.

Gross rate – $717.50 (410 x 1.75)

Piece rate – per box, bag, bin, etc.

Shipper is paying $4.75 per bag or box, etc. Shipper loads 900 pieces. Gross pay = $4,275

Per 100 weight (cwt) – i.e. $5.50 per 100 wt (cwt) or $3.50 per 50 wt –

Shipper will load each truck to the “legal max”

“Weigh” ticket is sent to the broker by the carrier along with the carrier’s invoice, bill of lading, etc

“Gross” weight and the “net” weight

Shipper will only pay on the “delivered” weight. Broker does the same

Confirmation will use an estimate of either 40,000 lbs. or 42,000 lbs, depending on if a pallent exchange is made

Let’s take a look at some examples.

Example for 100 cwt:

The shipper indicates he will pay $6.00 per cwt

If 40,000 lbs. are delivered, your gross rate will be: $2,400 (40,000 / 100 = 400 x 6.00)

If the truck loads and delivers more than 40,000 lbs. – let’s say 43,500 lbs., your gross rate will be: $2,610 (43,500 / 100 = 435 x 6.00)

Example for 50 wt:

The shipper indicates he will pay $4.00 per 50 wt

If 40,000 lbs. are delivered, your gross rate will be:

$3,200 (40,000 / 50 = 800 x 4.00)

If the truck loads and delivers more than 40,000 lbs. – let’s say 45,500 lbs., your gross rate will be: $3,640 (45,500 / 50 = 910 x 4.00)

The four basic methods above are the most common methods. However, there may be other payments added to the base

Payments over and above base rates

a) a fuel surcharge

b) reimbursement for unloading fees (lumper fees)

c) extra stops

d) detention pay

e) rerouting charges

f) other ??? – for example, a tarping charge

Final comment on rates:

Know what is being offered to the truck before posting a load

Rate Negotiation

Learn this skill

Win-win-win outcome

Freight broker rate margins

What kind of margins should you expect?

10-15% on average –

Can you get more?

What if you average less than 6-7%

Margins are without accessorial or reimbursed fees

“Head haul” rates and “back haul” rates

Finding another load on the return

Back hauls paying lousy rates

Time and experience

When a great head haul rate is required by the truck

Detecting a sense of urgency with either shippers or carriers

You are helping both of them

Getting your foot in the door

Seek competitive rates

Music to your ears

What are the going rates?

Rates fluctuate

Look first to load boards

See more further below …

Hot Maps – capacity – spot rates

Dynamic, visual information –

>>> https://www.dat.com/blog/reefer-report-watermelon-season-rolls-on

Look at demand, look at “tight capacity”

Rates – simply a function of supply and demand

Here’s a great article:

>>> Reefer Capacity by Dean Croake

How much are you offering to pay the truck?

General formula –

Let’s put figures to this formula:

$2,500 – Shipper pays

$ -375 – Less broker’s portion

$2,125 – Offered to the truck

$ +200 – Plus fuel surcharge

$ +150 – Plus 2 extra stops

$2,475 – Total offered to the truck

If the haul is 1,350 miles, carrier gets about $1.83 per mile. (2,475 / 1,350).

Find the number of miles on a load

Broker is getting about a 15%

Offer to the truck – accepted, rejected, negotiated

What dollar amount can you expect on each load?

Strive to make between $100-$150 to $200-$250 per load on average starting out

The length of the haul

Go out there and make things happen!

After a while, start doing some house cleaning.

If the shipper is paying by the 100 cwt or 50 wt (usually in the produce industry)

Each 25 cents equals $100 on a 100 wt load. Each 50 cents equals $200

Example – 100 cwt:

Net = $100 (40,000 / 100 = 400 x .25)

Net = $200 (40,000 / 100 = 400 x .50)

Example – 50 wt:

$200 (40,000 / 50 = 800 x .25)

Resources for finding the “going rates”

Check out these several rate resources:

>>> Rate Mate from Truckstop

>>> Rate View from DAT

>>> Where Do DAT Rates Come From?

Use rates from these resources as a starting point.

Using Truckstop, DAT or Both

Three necessary features:

Post and search,
Rate analysis and trends,
Carrier performance rating (CPR)

Other features – quick, carrier on-boarding

>>> Truckstop – post loads, truck search, plus more

>>> DAT Express – post loads, truck search, plus more

Ask about “combo” features

Some additional load board features

Radius searches – select a city, then a radius, usually 25 to 200 miles

Desired direction – sort the results according to “desired destination”

Load-to-truck ratios – for a given area

Negotiating strength –

Deadhead miles –

Posting options – multiple loads, updating or refreshing loads, roll-over loads, bids

Remember – drivers and dispatchers from all around the country are looking for YOUR loads

Training Videos – post loads, search for trucks. plus more

Final thoughts in searching for trucks

Some ideas:

Use the load boards,
Use Yahoo Local or YellowBook.com or YellowPages.com. Enter a City – search for “trucking”, etc.,
Pass out flyers,
Go to rest areas and pass out free burritos and flyers,
Write down MC numbers from truck doors,
Build your own database

What happens when your truck search comes up empty?

Searching and adding trucks to your database

LET ME REPEAT …….

……. NEVER pass up an opportunity to ask a trucker if you can get set-up with them,

“Start a conversation”…

Benchmarks to Evaluate Progress

Monitor load performance

Load margins,
Accounts receivable collection,
How many loads, and
How easy to cover loads?

Load Manager spreadsheets – Make decisions here …

How to use and why you need databases

company names,
contact names,
phone numbers,
addresses,
email addresses,
days to pay for shippers,
types of trucks needed (for shippers),
types of cargo being shipped,
type of trucks available (for carriers),
favorite lanes for carriers, and so on.

Use your databases to continuously call shippers and carriers

Databases are your gold mines

A good, inexpensive software – but time consuming to set up

Example Carrier Database

Other Software Systems

Three types of software for your freight broker business:

Database – to collect and manage information,
Operations – to manage loads and drivers,
Financial – for income and expense financial reports

Transportation Management Software (TMS)

Manage load activity and more with your TMS,

Database,
Load and dispatch management,
Document management,
May integrate with QuickBooks,
Carrier tracking,
Payroll management,
Real-time reporting,
Integrates seamlessly with load boards

>>> Ascend TMS Software – very affordable, get started for free

Both DAT and Truckstop have TMS software

>>> Truckstop

>>> DAT

Other TMS solutions – go ahead, but you might get confused …

>>> TAI – expensive

>>> EZ Loader – may be affordable if you are not new

>>> Even more –

Accounting Software

Financial statements, including …
- Profit and loss statement,
- Balance sheet,
- Cash flow statement,
- A/R and A/P aging reports,
- Plus more …
Invoicing,
Credit management,
Payroll, optional,
Printing checks,
Accounts receivable and payable management,
Budgeting,
Manage 1099 contractors, plus more,
No load management, routing or dispatching

The most popular accounting choice by far … QuickBooks by Intuit

Online or Desktop – what’s the difference?

Here’s a good article by Forbes Advisor:

>>> QuickBooks: Online or Desktop?

Subscription basis

Desktop – $549.99 / year

Why QuickBooks?

Summary:

After taking shipper order, get miles on the load,
Learn rates and figure your margin,
Learn how the shipper is paying,
Learn about accessorial charges,
Learn how to negotiate rates,
Get either Truckstop or DAT,
Learn how to monitor progress,
Get a database or TMS software,
Consider getting QuickBooks,