08/24/09

  10:02:10 am, Categories: efficiency , Tags: value added services

Why should a shipper choose to use your brokerage company to move their freight, rather than dealing directly with carriers? Unless you add something of value to the transaction, they will not choose you. Let’s look at some of these value added services and how you can improve your customer satisfaction rating.

One reason a shipper will choose to use a broker is to avoid adding additional manpower costs to his payroll. As long as the services you are providing are less expensive than additional employees, shippers will continue to use brokers. These services include carrier certification, driver communications, handling claims, and carrier payables. If these are handled well, you will have a satisfied customer that will continue to value your partnership. There may be other services that are unique to your market niche. Be aware of the services that you are expected to provide and do them well.

A second reason to use brokers is to provide a more stable rate structure. For example, if a company uses a broker for a specific lane, his rate will remain fairly constant for that lane. But if he is using many different carriers, the rate will fluctuate drastically. When shippers are planning the cost of moving freight, this ‘rate stability’ is important to them when determining the cost of the product they are shipping. Forward forecasting relies heavily on rate stability.

A final reason that some shippers use brokers is to insulate themselves from lawsuits. If the shipper deals directly with the carriers, he is responsible for insuring all his carriers and their drivers are safe and all the carriers all have cargo and liability insurance. If he uses a broker, however, he has an insulating layer between himself and the carrier. But that means that you can also be involved in possible lawsuits. I cannot emphasize enough the importance of brokers establishing and following proper carrier certification and having cargo and liability insurance. Shippers also need to know your certification policies and insurance information.

Add value for your customers and you will be partners indefinitely. However if you just coast along and do not add much value, soon you will be without customers. If you are too busy to handle the small issues that pop up, soon you will have plenty of time.

Using TruckMaster’s Freight Brokerage Software will help you manage your business and keep track of the small things that make a world of difference to your business. Contact us today for a free demo.

Craig Sorensen
TruckMaster Solution Provider
TruckMaster Your Freight Brokerage

07/31/09

  12:08:02 pm, Categories: starting , Tags: factoring

Financially speaking, a freight brokerage can be a very rewarding business. When first started, however, it can be very challenging to keep your cash flow positive. The situation is compounded if you are forced to pay a carrier or two for loads that you have yet to be paid for. Your customers may not have paid you yet, but in order to keep your carriers happy, you need to cough up the dough now.

So you have a situation. Unless you are independently wealthy with a nicely padded bank account, you will need to come up with a source of financing that you can use in a pinch. Banks are unlikely to offer much assistance to a start up business without substantial assets.

Enter the factoring company. Factoring companies provide immediate money for your freight bills, at a price.

The relationship between you and your factor typically works as follows:

  • As you bring on new customers, you submit their information to your factor. The factor will run a credit check on them to ensure that the customer is a good risk for them.
  • As freight is delivered, you bill the customer, typically using the factor’s address as the remit-to address.
  • Copies of the invoice and freight documents are also sent to the factor. The factor, usually within a day or two, advances you the amount of the freight bill, minus their cut (typically around 2% - 6% of invoice amount).
  • When the customer pays the factor, the transaction is considered settled. Should the customer not pay in a pre-determined time frame, the amount advanced will be payable back to the factor.

Some factoring companies will only advance you 60% to 90% of the freight bill amount upon delivery, and the balance upon customer payment. Some will allow you to pick and choose the invoices you factor, others require you to factor all of your invoices. Some may offer other perks to get your business, such as quicker payment, payroll services, etc.

Due to these differences, as well as a variance between the fees charged by different factoring companies, it’s a good idea to shop around prior to choosing a factoring company.

As you can see, factoring could be a good alternative way for a start up brokerage to get fast cash until profit margins have created a buffer in the bank account. It’s much quicker and easier than talking to a bank about a line of credit, and has the added advantage of growing automatically as your receivables grow.

The trade off is that the fee you pay to the factor can cut deeply into your profits, and it can be hard to wean yourself off this without much discipline.

TruckMaster has a few factoring companies on our industry links page, if you’re looking for a place to start searching from.

Greg Dodson
TruckMaster Solution Provider
TruckMaster Your Freight Brokerage

07/10/09

  11:47:19 am, Categories: starting , Tags: starting a freight brokerage

In May, this blog talked about what needed to be done to set up a freight brokerage company, you walked through the steps, and you are a legal freight brokerage company. Now what? How does a budding freight brokerage company make money? Answer: the same way a long time existing brokerage does – they work hard at it.

The two high focus areas that need to be considered when starting are (1) a broad carrier base, and (2) a broad customer base. Sometimes these two areas fall in the "catch 22" drawer – customers will work with you if you have a broad and accessible carrier base, and carriers will only work with you if they know you can choose from a broad customer base.

Here is one way to build a carrier base. Early each morning, before the delivery day gets started, stop at all the local truck stops. Wander through the truck parking; write down the names and addresses of the various carriers stopped there and the number of trucks from each carrier; talk to the drivers if they are up and moving, find out where they are from, where they haul to, and what they haul. See if you can get a phone number and a name of the dispatcher that handles their truck. It’s always nice to have a name when you call the company.

Now that you have some carrier names, go to yellowpages.com and get the phone numbers for those you are missing. Call the dispatchers and ask them the important questions. How many times do they come to your area per week or month? Are there other areas of the country they service? Are there areas they go to where freight is hard to find? Who do they deliver for, and to, in your area? Who do they pick up for, and from, in your area? What kinds of freight do they prefer to haul? Would they be interested in giving you a chance to provide freight for them? And the question that many brokers forget, do they have freight they can’t move? And, would it be possible for you to move that freight for them?

Another way to build your carrier base is to search through your local yellow pages in the various listings for trucking, freight, and any other label the phone company might use to identify a trucking company. Don’t call these companies, go and visit them. Find out what they haul, where they go, and how you can help them be successful.

Now, how to build a customer base. Remember we asked the carriers where they were going and who they delivered to or picked up from? Armed with that information, you must locate phone numbers and start making calls asking for freight to move. You will want to talk to buyers, logistics managers, warehouse managers and anyone else in the company that looks for trucks. Don’t confine yourself to just the freight in your local area. Be sure to ask them about the trouble spots. If you want a quick "in" with shippers and receivers, find them a truck for areas they struggles with. Depending on your freight focus, look in the yellow pages of your local phone book for warehouses that fit the focus. Just like the local carriers, go and visit them. Show them you are interested in helping them move their freight.

Now you have carriers, and you have customers who are willing to work with you, this means you have freight to broker. Be sure you have TruckMaster Freight Brokerage Software to help you manage your business. The software is so intuitive it reminds you when carrier insurance certificates are about to expire. It warns you when a customer is a bit slow on paying. And it will help you keep track of where the trucks are, where the freight is and how you can get them together. Bottom line, this is how you make the money. Understand that carriers and customers will be cautious, but if you are persistent, they will give you a chance at one time or another to help them out.

Good luck on your new adventure!

Dale Clark
TruckMaster Solution Provider
TruckMaster Your Freight Brokerage

06/19/09

  02:36:14 pm, Categories: efficiency , Tags: connectivity

I was talking to a friend of mine, who runs a small freight brokerage business with satellite offices (agencies) in six locations across the US. I asked how business was going, he told me fine except he wished he had a better handle on what all of the agents were doing. "Like what?" I asked. He said that a couple of the agents only send what they have "invoiced" to the main office, nothing else. He said he knew they were missing loads, but didn’t know what, and didn’t know how to find out. I asked how all of his offices were connected, or if they were connected. He explained their operation as follows:

Each evening, just before closing, each agency is required to fax all of the loads that were loaded and the loads that were "invoiced" that day to the main office. The next morning, his billing clerk enters all of the information received the previous night into the software they are using, and creates a ‘duplicate’ original invoice that is actually mailed to the customer. Then the loads that are in transit are posted on a grease board in the main office where he can see pending invoices.

What he is afraid of is that some of his agents are taking freight and then realizing they can’t move it so they give it back or worse – just ignore it, fail to perform, and ruin his reputation with his customers. He calls this his lost revenue.

I explained that with good freight brokerage software, like that available from TruckMaster, all of his offices can be tied together in such a way that each office can only see the freight specific to that office, and at the same time he has total visibility. In other words, if one of his offices can't move a load, he can see it and offer to help. If he wants all of his agents to see all of the freight in all of the offices, or if he has agencies that want to share information, that is easily done.

With TruckMaster brokerage software and real time connectivity, each office can create its own loads, print carrier confirmations, create, print and mail its own invoices to the customers. A billing clerk in the main office doesn't have to waste time recreating loads and invoices that are already there, but would only manage the various receivables from the agents.

Agents can truly manage their own agencies while still under the umbrella of the main company. Additionally, as freight is entered by satellite offices, the master planners are able to see all of the freight, offer suggestions for efficiently handling the freight, or even move the freight as necessary. Also, corporate freight entered by the master planners can be assigned to localized agents for effective movement. It’s a case of agents helping the main company and the main company helping the agents. It’s a win-win situation.

Is connectivity right for you? If you have multiple offices or agents and you want to keep up with what they are doing on a real time basis, the answer is an emphatic yes!

Visit the TruckMaster Freight Brokerage Software website or call us at 888-891-9550 today and request a demo. See what connectivity can do to enhance and grow your business. Ask about our multi-office freight brokerage special.

Dale Clark
TruckMaster Solution Provider
TruckMaster Your Freight Brokerage

06/05/09

In addition to death and taxes, in the brokerage industry, there is another certainty, paperwork. Every day you are inundated with paperwork; customer orders, carrier contracts, carrier qualification documents, carrier confirmations, delivery documentation, carrier bills, customer invoices, claims, etc. Then all this paperwork must be filed in a manner that will make it instantly accessible at anytime in the future. This is a never ending, expensive task.

There are ways to streamline this process however. It may take a small investment in time and equipment initially, but almost all of this paperwork can be stored as electronic documents, saving you an immense amount of time and money later on.

First you need a TMS system that is not only capable of electronic document storage, but also various forms of electronic communication: fax, email, edi, web site, etc. For every electronic message that is sent and received, there is one less piece of paper that must be scanned into the electronic document storage system or filed as a hardcopy.

Work with your higher volume customers to implement EDI for receiving load tenders and sending them status updates and invoices. For your customers with less volume or who are not EDI capable, a web site solution is suggested. They can enter their load tenders and receive status updates via the web site. You can send invoices and delivery documents via email directly from your TMS system.

Carrier communications is similar. Use EDI where it is practical and require all other carriers to use email and your webpage to receive load tenders, update load status, and send you invoices and delivery documentation.

All of these documents are stored in the electronic data storage of your TMS system and can be easily accessed for viewing or printing at anytime in the future. Just remember to backup your electronic data offsite.

If your current TMS is not capable of this or you do not have a TMS system, check out TruckMaster's freight brokerage software. We do all this, plus have a complete dispatching, billing, and accounting system in one package. Start saving time and money immediately.

Craig Sorensen
TruckMaster Solution Provider
TruckMaster Your Freight Brokerage

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