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Todd Dills

Transparent ‘new deal’ for independents using brokers?

| March 31, 2014

Over the past several years, James Lamb, a former DOT investigator, current head of DOTAuthority.com and self-described “volunteer president” of the small-broker advocacy group/business league AIPBA, has been outspoken on the increased broker bond (now at a $75K minimum for all registered freight brokers and forwarders). At times, his thoughts on the bond, which he opposes as a one-size-fits-all requirement, have seemed designed to drive a wedge between the Owner-Operator Independent Drivers Association, which supported the bond, and its core constituency, small-business-trucking company owners and independent owner-operators.

Saturday, however, in one of the final seminars conducted at the Mid-America Trucking Show, Lamb made a different sort of appeal, one that seeks closer ties in both business and advocacy realms between two groups that, in his view, have a mutual interest in each others’ long-term business health. In addition to the AIPBA brokers’ league, he’s now promoting a Small Business in Transportation Coalition of brokers, truckers and other entities and, more to the point, a brokerage soon to be launched that operates on the idea of rate transparency.  

"12PL," a play on the "3PL" term for third-party logistics companies, is the name of the brokerage James Lamb says he's prepared to launch to "lead by example" on broker/trucker freight-transaction transparency.

“12PL,” a play on the “3PL” term for third-party logistics companies, is the name of the brokerage James Lamb says he’s prepared to launch to “lead by example” on broker/trucker freight-transaction transparency.

His seminar began Saturday with a query following the traditional view many owner-operators take of their brokers, often regarding them as the “lesser of two evils” in the grand scheme of things. “What’s the number one worst thing other than working with a broker?” Lamb asked rhetorically. “Deadheading. You can make a little money working with a broker, or none” with no freight on the hook.

He continued on by querying the audience, largely made up of independent owner-operators, about their gripes with brokers. Among the chief complaints: lack of information. And in particular, as he noted, what the load actually pays before the broker’s cut. The problem with brokers, ultimately, as it is with the hours of service and electronic logging devices, Lamb concluded, is money, pure and simple, and he urged a “new paradigm” in transportation transactions based “only on transparency in transportation. The question is not just how much the load pays the trucker, but how much the load pays period, and how much the trucker gets and how much the broker gets.” 

Lamb is planning a launch of the “12PL” brokerage in order to “lead by example,” he said. “Watch our website. It’s a ‘new plan for independent owner-operators’ – if we’re transparent and tell you how much money we’re going to keep and how much we will pay you … ultimately, when independents see how much it is, it will probably be in the 10-15 percent range. It will catch on in the industry – I’ll be speaking a lot about it, of course.”

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As it does catch on, he hopes, more and more parties will demand to know the percentage brokers are keeping, thus making transparency the new norm and pushing rates to the truck up. “If we make it more lucrative for someone with their own authority … there will be a rush of people who want to get authority,” Lamb noted. “They’ll come to DOTAuthority.com” — how Lamb stands to benefit in one way — “and then, as more truckers want to become independent, the driver shortage [among sizable motor carriers] will get even bigger. It’s all cyclical. If we do this right now, what’s going to happen is [carrier recruiters] will have even more of a hard time recruiting. What that means is that there will be a supply and demand problem for recruiters. How will they have to compensate? They’ll have to make a better deal for their drivers. By being transparent, we’ll make it a better industry for drivers regardless of whether you’re a company driver, leased owner-operator or an owner-operator with your own authority.” 

Brokers, he noted, will “make their money on volume rather than” a high percentages of the take. 

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It’s a notion with no small amount of thought behind it, though obviously it will require time and participation in order to really gain the traction required to turn the entire industry for the better. Lamb’s not the only one talking about more transparency in freight transactions these days, however. Some automated freight brokering engines — such as the longstanding eBay-like uShip, and the Go By Truck initiative that got off the ground just this year — are certainly more transparent than the traditional negotiation-heavy broker transaction. In the case of uShip, however, many argue transparency only depresses rates, given the open competition encouraged among transporters in a down-bidding auction-style environment. 

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In both instances, the automated “broker” takes a set rate, so everything’s out in the open. uShip’s “Pro” side, too, is allowing its marketplace technology to brokers to create private networks of carriers with more automated load selection and more transparency within those networks.

In some ways, the transparency train in broker-facilitated transactions has already left the station, as I wrote in this feature from last year, part of a round-up of load board-related news featuring commentary on the future of load selection. What do you think? 

As for Lamb’s 12PL initiative, he says he’ll be releasing more details about the brokerage in the coming months. You can keep an eye on it via TwelvePL.com. 

  • g

    “MISTER” Lamb has written a Comment here that truckers are WHINERS?? MR. Lamb he calls himself..quicly placing HIS position in life High Above the low life trucker….he is to be referred to as MISTER. Like he is our BOSS/Executive/ superior…???? Go Die Lambchop…nobody needs your worthless product.

  • g

    “MISTER” Lamb has spoken. His “must have transparent product” is beyond reproach(and belief?)…he has commented here how truckers are in HIS own words here on comments ” A BUNCH OF WHINERS”??? This is part of his “business model”?? Insult the customer??? He feels comfortable ABUSING truckers as he has probably done his whole life while stealing from them…a natural slip of the tongue??? Lamb Boy seems to DESPISE truckers…..I would NEVER trust a WORD this ANUS has to say about ANYTHING……what a total JERK.

  • g

    Scoundrel…..too funny……I bet he IS!!!

  • g

    Lots of “brokers” in there STEALING on That load!! brokers are Scam Artists, Thieves, Corrupt Pigs. Lots of B.S. talk of “freemarket”…”Businessmen”…..the unsuspecting trucker is always conned and stolen from…it is a RACKET……..Crooks is all they ever have been….why would it ever change?? Never trust a WORD these Thieves are saying..it is always a half truth or an Outright Lie.

  • g

    Yep…and we all KNOW its the TRUTH too!

  • g

    Backhaul is back to the poorhouse. The load has been passed thru 4 brokers and whats left of the rate is all yours!

  • g

    Lamb says he will post his “cut” in the transparent transaction….his cut after the has been passed to him after 3 other “brokers” to Their cut?

  • g

    Sure Lamb will post the Gross Amount Lamb gets maybe $1,000 however does he specify the load ORIGINALLY was $3,000 from the shipper and has been SAVAGED by 3 other “businessmen”??? There will be PLENTY of hands still STEALING from this Pie…..they will find a way……the driver will always be Chumped by crooked “busineemen”. lol

  • g

    “transpartent” how funny……yep we will see the FAKE number…..see look that is the real amount……..sure it is……….hahahahahahah all LIES!!

  • Falcon

    I don’ t see any mention of brokers being more transparent about the fuel surcharge. The only time I see it on my rate sheets are on military loads

  • Tom AndSheila Hurd

    I have direct shippers who are cheaper than brokers, I simply know what I am willing to haul for and what I am not willing to haul for, meet my rate and your load will be on my trailer, I have had many times that a broker refused my rate and then would call me back and give in to me, I really don’t care if they make a grand or loose their shirt, and I don’t haul cheap for anyone.

  • Sherry

    There is already transparency … according to regulations, once you complete a load, the broker has to give you a copy of their shipping agreement, if requested. If you take a load and then feel as if the broker under paid for your service … ask for a copy of the shipping agreement …If you then feel that the broker under paid don’t haul for that broker again. I use direct shippers and brokers … I have good relationships with some great brokers … but I also have a list of brokers that I refuse to do business with. My flatbed generally runs for $3 per mile on a legal load.

  • http://www.powerhousetrans.com PowerHouse Scott

    Truckers are greedy:

    New truck cost: $144,000
    Insurance per year: $18,000
    New Trailer: $30,000 – $60,000
    Fuel Cost: $4.00 per gallon
    Labor cost to drive the truck: 20% – 30%
    Maint cost: $5000.00 – $10,000 per year
    Base Plates: $1500 – $2500 per year
    Heavy Use Tax: $550.00
    UCR Tax: $250 – $1000 per year (small carrier like us)
    Fuel Taxes: $1000.00 per year per unit

    So excuse us for being tired of carrying the weight of cost, so the rest of the nation can be happy and not have to pay for our services. We expect to be compensated for our work. A workman is worthy of his hire. As far as the brokers, we have excellent brokers that pay us fair to great rates. They at least wise pay, shippers on the other hand sometimes like to take 90 days to pay. We all want our piece of the pie, just make sure that we all have enough to eat and we will get along nicely. If you think about it the brokers and truckers should be working together to get better rates from the shippers for more of their pie. Trust me I used to be the shipper and know exactly how much I would mark up the freight to my customer. So in the end it is the shipper most times that is lying to both the broker and the carrier by saying they only want to pay what they paid in 1982. We just tell them no thanks and move on, two days later the shipper or broker are calling for our trucks and now will pay whatever we want to get the load moved. Patience is the key to winning. Keep on trucking the PowerHouse Mercenary way, here today gone tomorrow.

  • USMC 69-75

    Now that make sense for a change!

  • USMC 69-75

    Sherry,

    I do like wise. I have brokers still call me, that know I’m dependable and have good equipment. They pay my rate and know it or they call somebody else. I’m not saying all brokers are bad, but you have to know what your doing, or the load ends up costing you money!

  • http://www.powerhousetrans.com PowerHouse Scott

    I have a brokerage firm as well, so don’t tell me about the truckers being greedy. We only take a 10% cut. Our independents do not have a problem because we represent them not the shippers. Our job is to find them the best paying freight possible for the best independents. If you want good service then you must be willing to pay for it. So you whining brokers and truckers that don’t understand that just pack your bags and leave the industry. We all started in ignorance and learned the hard way. I had a broker agent think he was going to rape the truckers and get away with it. I took him out back Special Ops style and gave him some boxing gloves and let him know what it was like to get beat up and make nothing for doing so. So if you are a broker that beats up the trucker who is doing the Lion’s share of the work, shame on you. If you are a trucker who does not appreciate the honest, fair and good brokers that wait 45 – 90 days on their money, when they pay you in 48 hours, shame on you.

    In about 5-10 years there will only be about 20- 50 players in the broker market anyways. Little guys are getting gobbled up by the bigger companies. This is why we chose to be the truckers broker instead of the shippers broker. We don’t worry about cutting the loads (drugs) anymore then agreed on between the brokerage firm and the trucker. The shipper can always mark up his price on the freight like I used to do when I was the shipper.

  • USMC 69-75

    Ron,

    I’ll try to keep this short! I had a customer that got almost 10 Gs in my pocket in almost a month.
    (Agreed on weekly settlements) I would unload his freight in the front door, go to the back door
    and reload for his customers. Got paid from the shipper on the inbound, and he was supposed to
    pay on the outbound. Well after numerous calls and the check is in the mail B/S. I took my last
    load to his plant, planing on DH home. (It paid very well and I could afford to do that, just
    wanted to meet the thief face to face.) Well hi shipping/receiving clerk and I were good friends,
    and while I was getting my paperwork signed, he informed me on the hush hush, that he had a
    load going through my hometown in SC. Told him I wasn’t going to haul any more of the thief’s
    freight…..he then mention it was going to a job sight past my hometown, with a grin on his face.
    My lights came on, and told him I’d take it. Got loaded up and pulled around the front of the
    building, went into the receptions and ask to speak to the woman in charge of accounts payable. The receptions said she was in a meeting. So I asked for the man / owner. He was also in the meeting. I told her in a polite way that he needed to come out to the lobby NOW! She left, and in a few minutes returned with the boss. He wanted to know what the problem was? So I told him, I needed to get paid, after I introduced myself. He told me that the “check is suppose to be in the mail.” Wrong answer, I asked him, very polity, if he saw that big black truck outside his front door, he replied yes! Do you see that loaded flatbed, hooked to that truck, YES! Well that load is suppose to be at the job sight tomorrow morning, but it is going to be delayed, collecting storage in my warehouse, unless I get a check here today for what is owed my company, along with the pay for this load. He told me I couldn’t do that, I informed him as long as that load is on my
    trailer, I’m responsible for it, and where it goes. Did he want to call his customer and inform them
    that because of his irresponsibility, their load would be late? He left, came back with a check for
    the exact amount. I went to his bank, (fortunately right down the street) cashed it and was sitting
    at the job sight in the morning, a happy little camper! I do what I have to do, but I do get paid!
    If you noticed….I DID NOT start this with “you ain’t going to believe this” true story!

  • James P. Lamb

    Look, if you don’t like brokers, then don’t work with brokers. But many of you do work with brokers… and you do because you want to avoid deadheading. That makes financial sense. The point here is that you can’t categorize all brokers into one category. There are small, big and megabroker sizes… there are good, bad and evil. Same applies to most other industries. Look at the moving industry for example. Same deal. We have created a new model that we expect good, small brokers will follow to distinguish themselves from the bad guys and the big guys who seek to score 22.5% on each load. If the good small brokers know what is good for them, then they have already joined the AIPBA and are using that brand to show they are honest and ethical. If you are a small broker and you haven’t joined AIPBA, it’s time. Those small brokers who don’t embrace the transparency model are going to have to deal with the perception that they must have something to hide since so many other brokers are being transparent. Those who do, will be adopting the partnership-team mentality. The attempts by some posters on the trucking side to scapegoat a group of honest small business men and women into a one size fits all category are misguided and not realistic. Those truckers who put the negativity aside and keep an open mind stand to benefit from the new deal we are creating. They will also be adopting the partnership-team mentality. Those of you who want to continue to whine and be negative, go ahead… but do it someplace else. Someone once said: lead, follow or get the hell out of the way. Change is coming, folks. Like it or not.

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  • Mind Games

    I bet you would change your little tune if you knew how much they were really keeping.
    Don’t give us your shuck and jive head game we have seen it go on for far too long in this industry! If it ain’t you its the brown nosers! Save the drama we ain’t hearing ya bull.

  • Coffeeclue

    Do you always look at someone else’s plate? They can double the price for all I care, as long as I get what I need. It takes a lot of talent to be a sales rep and I have the highest respect for them. Usually the broker asks me what I need for the load, I tell them and then we agree or don’t agree. What the broker earns really doesn’t concern me. If I thought I could do a better job, I would be a broker myself.

  • aaron menice

    Mr. Lamb’s idea is a one size fits all idea! He doesn’t understand that there are many different kinds of brokers in many different kinds of trucking rolls. Not all brokers will have high volume to “make up” the revenue or may be in high risk situations. This more seems like a desperate ploy to recover from the failure of not stopping the new bond from going through.

  • Zachary Gillespie

    It all comes down to trusting who you work with , yes the broker can make good money. I as a Broker pay close to $30,000 in insurance a year. Have my office, workers comp., computers , phones etc…. This is NOT an easy job! There are scoundrels out there! Most people can tell what type of person they are dealing with 1 conversation. If it doesn’t feel right, don’t do it. Don’t discount what brokers do to create relationships with the shipper, receiver and truck lines. I want long term relationships and have many of them. People trust me and my company. That is the only way to have a successful and long term business. What is being said with this article is saying that Wal-Mart , car dealers or any other distributor should let anyone know what the product cost to produce. But what about what it cost to ship it, market it store it, take the risk that it doesn’t sell. What is the true cost of brokering a load? That’s not the question, you want to see what we as brokers are getting paid! I have ran my own campanies and understand what the cost of doing business is. MOST People don’t! They see a bottom line. They see the check amount and not the cost behind it. BAD IDEA ALL TOGETHER!

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  • Andrew Piera

    Sounds like Obama’s socialist policy’s have crept their way into the trucking industry.

    It’s none of the trucker’s business what I charge my customer to haul a load AND if I don’t like the price that they give me OR I don’t like they way they talk to me on the phone, I don’t have to tender them my load.

    Good luck 12PL…maybe your on hold music can be the theme from the kid’s show Barney…”I love you, you love me, were just a happy family”…

  • Atex In Texas

    Coffeeclue is right on. If someone wants to go the “transparency” route, that’s up to them. But truckers really need to focus on what their costs plus profit are. Some portray all this as if brokers are “always” ripping off their trucks. Did you stop to think that Shippers are under the gun as well. They have cost constraints just like truckers and they don’t often give out boo-koo dinero that enables the broker to grab a bundle and give the trucker squat. Truckers – know your total costs, know what profit you want to add on and divide it by your estimated miles driven. THIS will tell you per mile whether you are getting what you need.

  • Atex In Texas

    I hear this too often. Yet, can I believe it? Not really. Most of my clients who train to become freight brokers are truckers or own small trucking companies. I feel that 99.9% of them will go on to their new venture as honest freight brokers who know the trucking industry.

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