Guidelines for choosing a broker
Chances are every owner-operator has used the services of a freight broker at least once. Many operators turn to them rarely, while some use them nearly all the time.
Doug Field, a Napa, Calif.-based independent, says he uses a broker for both ends of nearly every trip he makes. It works for him because he’s found a brokerage he likes and that gets him decent-paying loads, usually between California and the Pacific Northwest.
“The last year and a half, I’ve pretty much stuck with one broker, Rose City Transport of Portland, Ore.,” he says. “It’s pretty steady. I usually have a load the same day I want it.”
Field found the broker through other owner-operators who had worked with the company. He relied on word of mouth instead of doing a more rigorous review. “I talked with guys who’ve worked for them, knew their money was good and wouldn’t have to worry about getting paid,” he says. “I’m usually paid within two weeks.”
You may not be as fortunate as Field in finding a broker who meets your business needs, so consider following a more detailed process in checking out a broker for the first time. As Don Thornton, senior vice president of freight business services at TransCore, notes, “Seventy-five percent of loads that a carrier takes today are with a broker they’ve never worked with before.”
Your most important consideration is getting paid. While there are no guarantees, a particular broker’s credit rating and average number of days to payment will help determine if you want to do business with him or her. The Gold Book of Transportation Brokers lists brokers that pay in 30 days or less, along with a Dun & Bradstreet credit score. The directory covers more than 1,000 brokers that have been in business at least three years. “It’s all about cash flow now,” says Jeff Roach, owner of Brooke Transportation Training. “You want to make sure you get paid on time.”
John Allen, vice president of RMA Transportation, says he wouldn’t necessarily dismiss a broker with less than three years’ experience. “They may have a compelling story,” he says, such as experience in trucking or at another brokerage before going out on their own. If that broker supplies you with good references, you may want to negotiate more favorable payment terms such as payment upon delivery until you develop a track record.
Ask for a broker’s references, both financial and business. Call other carriers who have done business with the broker and the broker’s bank to see if it will vouch for the broker. If the broker won’t supply you with this information, you may want to pass.
Another key item is the broker’s bond level. The required minimum is $10,000, though some trucking organizations have called for a higher amount, noting that the current minimum is skimpy in the case of a default. “It’s an indicator that the broker thinks it’s important the carrier knows they’re going to pay and that they’re a reliable service,” Thornton says. “It’s a statement that they’ve raised the bar. And some shippers require higher bond levels.”
Beyond the numbers, your search for a broker may also depend on your rapport with an individual. If the broker answers all your questions and gives you pertinent information, that person may be worth beginning a relationship with. “Is he completely up-front about every single aspect of a transaction?” Allen asks. “I’ve heard some brokers don’t always give out all the information for fear of releasing proprietary information in the marketplace. To me, for a transaction to be as good as it can be, everyone should be on the same page.”
John Thomas, owner of Atex Freight Broker Training, says another good sign is a broker who takes an interest in you as a person and a potential business partner. “It’s good to run across a freight broker who’s interested in you and what you’re looking for,” he says. “I think an owner-operator would want a freight broker to ask them questions and find out what they want.”
Tips to Qualify Brokers
Here are points to consider in evaluating a broker, according to the Transportation Intermediaries Association, a trade group composed of about 1,200 brokers in North America.
• Check their credit using a neutral credit rating service like TransCredit.
• Check if the broker is a member of TIA and get his or her dated membership certificate or call TIA at (703) 299-5700.
• Ensure that the broker that hires you is the one that was hired by the shipper.
• Get everything in writing.
• Document everything.