During the McLeod Software Users’ Conference in Birmingham, AL, this week, three logistics representatives took the time to hold a discussion with both brokers and carriers interested in creating brokerages within their operations.
They all had one simple piece of advice: Let it go. As in, don’t mix your asset-based trucking operation with the sales-based brokerage operation.
“I’m always amazed when people throw out brokerages as a negative term,” said Jason Beardall, vice president of England Logistics, part of the C.R. England operation. “I don’t think we’d be here as an industry without brokerage.”
Joining Beardall on the panel was Kacy Robinson, terminal manager for J.H. Rose Logistics and Adam Wakefield, vice president of operations for AFN. Each of the three approach brokerage operations differently, but all believe that a successful brokerage operation needs to work independently of the asset-based trucking operations.
“If you depend on your asset sales guys to sell brokerage, it won’t grow,” Beardall said, pointing out that the sales side of the equation is quite different. At England, some of the brokerage freight is shipped via C.R. England’s fleet, but Beardall said the England fleet has to compete for the freight just as any other carrier does.
At J.H. Rose, Robinson said that almost none of the brokered freight is sent via its trucking operation, and AFN is a non-asset provider hauling high-value goods.
The point that each man, and several in the audience, tried to make, is that a brokerage operation can’t be profitable if it is designed to simply handle overflow freight. It needs to be its own operation. And according to each, it can be quite profitable.
For carriers looking to get into the brokerage business, or who may be looking to expand their current operation, the men had a few words of advice.
First, make sure you have contracts that specifically indicate you are brokering the freight. Beardall suggested communicating to the shipper which freight has been brokered and which freight is one your own assets so the shipper knows where its freight is and where it is going.
Second, follow through with contracts. If you commit to hauling a load, haul the load, Wakefield said, even if it is at a loss. That builds confidence.
Third, make sure the carriers hauling your brokered freight are paid promptly, even if you haven’t been paid by the shipper yet. Beardall said England pays its carriers in 17 days but receives payment from the shipper in about 34. At AFN, payment to carriers is oftentimes within 10 days.
Wakefield recommended standing behind your commitment from an insurance perspective and use tracking devices if necessary. Also be sure the insurance on the load will cover the load should something go wrong. Brokers become responsible for the uninsured portions above a carrier’s liability.
And finally, each of the men spoke of the real key to making a brokerage work: customers. Treat everybody as a customer – both shippers and carriers – to build relationships.
“It’s much healthier and allowed us to become partners with carriers instead of a broker to carriers,” Wakefield said.
While some in the industry may look at brokers as the red-headed stepchild, after spending even an hour listening to these men, it’s clear that brokerages can, and do, play an important role in moving freight across this country. Just ask all those carriers that use brokers on a regular basis. They can’t all be wrong.