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Introduction

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

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Who Are Some of the Major Players?

In addition to Freight Brokers, this industry is made up of:

  • Manufacturers,
  • Shippers with freight of all kinds,
  • Growers,
  • Distributors,
  • Wholesalers and so on.

Just about anything and everything under the sun can be – is – and will be moved by motor carriers.

A Freight Broker’s customers can be large, medium or small-sized companies. Some customers need to move many loads everyday – others may need to move just a few loads from time to time.

Motor carriers can be one-person owner operators or fleets of a small, medium or large number of tractors and trailers.

Some carriers go directly to shippers for loads; many others rely upon Freight Brokers. Some use both.

Why Are Good Freight Brokers in Demand?

Is there a realistic opportunity for new Brokers? Yes. Most people understand that if a person opens a car repair shop or some other type of retail or service outlet, they are going to get customers. Why would you expect anything different by opening a brokerage?

Is it too competitive to enter this industry? Any good business opportunity attracts competition. Believe in yourself. Do it and don’t be intimidated by others.

What are the “real” costs to enter this industry? Your time and effort are the real costs. It takes a relatively small amount of cash but a lot of effort to get this business off the ground.

This is why new brokers need to get properly prepared.

Here’s why Freight Brokers are valuable …

Freight Brokers save shippers, especially, and carriers as well – time, money and energy.

Shipping departments are busy enough coordinating inventory for outbound freight with their other departments. They don’t have a lot of time to deal with a lot of carriers.

They would have to make a lot of phone calls, try to negotiate a good rate, discuss accessorial charges, prequalify the carriers, monitor the load, starting with the pick-up and so on and so forth.

It’s just easier for a shipping manager to turn all this over to a freight broker.

What Are Some of the Challenges?

Challenges to entering this industry are not insurmountable and can be categorized in two ways:

  1. External challenges
  2. Personal challenges

External challenges

  • Competition,
  • More and better established Brokers,
  • Unwillness of others to share information,
  • Negative perception by some truckers.

Personal challenges

  • Lack of contacts,
  • Lack of one or several essential skills,
  • Not relying on others who CAN help,
  • Not knowing WHEN to rely on others,
  • Lack of confidence,
  • Lack of experience or training,
  • Lack of proper financing.

What Is the Future Outlook for Brokers?

Sometimes, the way trucking goes, so goes freight brokering.

Without a doubt, trucking will not stop, barring any super major catastrophe.

Freight WILL BE moved.

Now, about brokers working as intermediaries – they help facilitate a good percentage of this freight movement, as mentioned above.

Get prepared now and take your position in all this.

For sure, driverless trucks are at least two decades away – and even then, people normally want to work with human beings in the trucking (and other) industries.

On another note, new brokers don’t necessarily need to build a base of 100-200 customers. Sometimes just 3-5 good-paying shippers can keep a small brokerage very, very busy.

Our population and economy are growing every day. Every year, the U.S. population grows equal to the size of Houston, Texas. People need stuff – the demand is increasing.

Some impending obstacles for truckers that impact freight brokers may be:

  • Scarcity of truck drivers,
  • Hours of service(HOS)guidelines,
  • Safety Fitness Determination (SFD) confusion,
  • Rising carrier operating costs,
  • Legislative over-reach,
  • The notion that shippers, brokers and other third parties may be sued for trying to “second guess” what the FMCSA’s goals and intentions are,
  • Poor infrastructure, etc.

Slowly, the awareness of our broken infrastructure is surfacing. The current administration is all on board to be doing what it can to alleviate this long-neglected problem.

For sure, the trucking industry needs a greater effort by regulators to lessen the burden of over-regulation. Will regulators do it? Can they do it? The bigger companies can absorb much of this; the smaller trucker struggles without receiving a lot of consideration. Yet, it’s the smaller trucking firms that are the backbone of our trucking industry.

What Is the FMCSA?

The FMCSA is the Federal Motor Carrier Safety Administration and was formed in the year 2000 under the Department of Transportation (DOT).

The FMCSA administers the Safety Measurement System (SMS) which inspects and regulates motor carriers with the ultimate goal to predict and reduce highway accidents.

We’ll discuss SMS in more detail further along.

The FMCSA also receives applications from prospective Freight Brokers through the Unified Registration System (URS) where applicants also pay the required fee to become freight brokers.

The FMCSA does not endorse or recommend any type of freight broker training.

There is much, much more to be said about this agency further along in this program.

Industry Terminology

>>> 3PLs <<<

These are usually larger logistics companies that help customers move cargo worldwide.

They possess knowledge of various modes of moving cargo such as ocean, air, rail and trucks. Usually costs, time in transit and potential supply chain interruptions are upper most in their minds.

Thus, 3PLs are always seeking greater “visibility” up the supply chain in an ever-changing work place.

>>> Supply Chain <<<

The supply chain is comprised of all the parties – the network – who initiate, have involvement or complete the production and delivery of freight and commodities to the final retail outlets and/or their customers.

The processes also include implementing technology and disbursing or receiving funds along the way.

>>> Logistics <<<

Logistics is a company’s purchase, movement and storage of freight through various channels by using various means. Channels may be land, air and sea. Means may be using trucks, trains, airplanes or boats.

Logistics involves a great deal of planning and monitoring as small changes or disruptions may create greater costs, delays and rerouting.

>>> Freight Forwarders <<<

Freight Forwarders have their broker authority to arrange for the transportation of freight as well as the authority to take possession and storage of that freight.

They often consolidate smaller loads while in storage and move them when it is efficient to do so.

By taking possession of the freight, Freight Forwarders assume liability for the cargo and issue their own bills of lading. Normally, a shipper will issue bills of lading.

>>> Freight (Broker) Agent <<<

A Freight Agent or Broker Agent works under the authority of a Freight Broker. As such, the Agent does not need to obtain his or her broker authority.

The main functions of an Agent are to find new customers who have cargo to ship and then find carriers to move that cargo – and, finally, to monitor the entire process of pick-up through delivery.

These agent procedures are normally called business development and load management.

Agents normally do not have to do the “back room” office work such as invoicing customers, taking collections and paying carriers, etc.

>>> Capacity <<<

Capacity refers to the number of loads that are available for each available truck for a given location – city, state, lane or region.

For example: 3:1 (more loads than trucks) or even .5 to 1 (more trucks than loads).

Lanes or regions with a lot of capacity mean there are more trucks available than loads. This is good for brokers seeking trucks. For carriers, it’s not so good.

Some load boards have Hot Maps with colored areas of various intensity indicating where there is a need for particular types of trailers.

No matter how many loads you have available, if you can’t find a truck, you ain’t gonna’ make any money.

>>> Lanes <<<

Lanes are the particular routes that lead from the point of pick-up to the destination.

Some loads and trucks run the same lanes all the time – maybe every day or every week or every month.

Both truckers and brokers should make the effort to learn which lanes are paying off. That is – which lanes give the best rates and margins? – which lanes are less hassle? – which lanes have better capacity? – etc.  

>>> To “Cover” a Load or Truck <<<

To cover a load or truck means that you have found a truck for your load or the carrier you are calling on has found a load already.