Highway robbery: Ask the tough questions during negotiations to root out the crooks

| March 07, 2018

Previously in this series: 

Highway robbery: Combating dishonest brokers

Even with more broker-checking services available, some dishonest freight middlemen continue to deceive or steal from owner-operators. Things are in play for a technical change ...

There’s plenty truckers can do to avoid getting involved with the crooks among brokerages.

“Ask more questions,” says independent owner-operator Chad Boblett, also founder of the active Rate Per Mile Masters Facebook group for rates/business discussion. “I see that being such a problem, mainly for relatively new carriers.” Such questions flow freely from any carrier that’s been burned a few times.

Consider any response from a broker that raises a red flag an invitation to double-check the broker’s credit information, whether using the metrics provided by load boards or independent sources. You’ll know a broker’s on the ropes when days-to-pay measures creep higher over time, says Boblett.

With rates such as they are in today’s post-electronic logging device mandate market, “a lot of brokers are hurting right now,” he says, because their pre-negotiated contracts with shippers are below today’s spot market rates. They’re going to “continue to hurt through April” and beyond as stricter enforcement of the mandate is set to come into play. From a rate-negotiation standpoint, he adds, “we might be able to squash them like a roach on the floor” then.

“Thirty-five days [to pay] seems to be an average” in load boards’ metrics for brokers, Boblett says. “If days to pay shows up with a 4 in front of it, ask yourself, ‘How big of a broker is this?’” He’s seen some larger brokers hit or stay a long time at higher numbers, but if the middleman is a household name, they’re unlikely to go out of business. Not so a small broker, and business failure is exactly what you don’t want when dealing with a small operation.

Going after payment by making claims on a broker’s bond or surety trust in a failure event is unlikely to result in full payment. If claims exceed the amount a failing broker was bonded for, claims oft-as-not get prorated in a well-delayed settlement.

Danny Schnautz, operations manager for Pasadena, Texas-based Clark Freight Lines, says the 150-truck carrier going after a broker’s bond after a nonpayment event might happen “a few times per year.” For most truckers, filing on the bond is likely to give the broker the nudge he needs to follow through on the payment.

More common are disputes over accessorials, significant sticking points in carrier negotiations with brokers. “The accessorials are what people get burned on” most, Boblett says. “They’re not going to pay out on the bond for accessorials,” most likely, “but it does get some people’s attention when you put in a claim.”

Brokerages large and small are notorious for giving appointment times at what they may know are first-come first-served facilities where undue detention may be more likely — just to avoid addressing detention rates in writing or in conversation, many carriers believe. “We’ve had appointments not really be appointments,” Schnautz says.

In 2018, says Boblett, with the ELD mandate in play, “it is now 100 percent OK to bring up detention before you get off the phone” with any broker. “You’ve got to start bringing it up.”

Related

100 dollar bill

‘100 percent OK’ to bring up detention before you get off the phone

'Don't leave money on the table,' redux -- that sentiment could increasingly include examinations of revenue and income per hour in your business' accounting and ...

If the broker’s reluctant to agree to your detention terms, particularly if conforming to the industry standard of two free hours after which detention applies, you’re probably going to have considerable detention at one or another of the facilities on either end, Boblett believes. If the shipper and receiver are good about minimizing detention or paying for it, “the broker should have no problem agreeing to your detention time pay” terms.

Consider, too, going above the commonly offered $50 an hour after the first two. “If the third hour is $50” paid, Boblett says, “that’s just $16.66 an hour for the first three hours. It’s not worth it. If a broker tells me, ‘It usually takes three, four hours, but we pay detention!’, I don’t want any part of that.”

It’s hard to budge any broker off the industry standard of two hours free, Boblett adds. Consider it a red flag when a broker offers you a variation on it. “The broker will tell you, ‘We don’t pay until after three hours’ or ‘If there’s a problem, let’s talk about it when it happens.’ ” Once one problem like that surfaces, Boblett says, “you’re probably going to run into other issues.”

Related

E-logs and detention, redux | An 800-pound gorilla in need of a few good lumpers

E-logs and detention, redux | An 800-pound gorilla in need of a few good lumpers

Will ELDs point the way out of the detention 'quagmire'? If they do, it won't happen all at once, no doubt. Could be a wild ...

Schnautz sees some measure of improvement in honest dealing in trucking, as with other fields such as car repair and insurance. But like many truckers, he views the “lack of accountability” with which too many brokers continue operating as troubling. “No leverage over brokers is the deal.”

Some brokers who don’t pay will plead that the “shipper won’t pay” and that “I’m trying to get your money,” though Schnautz and company “seldom believe that.”

Until “we know that the broker will keep their word and conform to industry standards,” Schnautz suggests, strive to know exactly who you’re dealing with. And keep asking those questions. “We are good at that.”

Next in this series:

Highway robbery: More warning signs in negotiations with brokers

In addition to the "red flags" that ought to give any owner-operator pause during broker negotiations, one would do well to consider the following warning ...

AD

There is one comment

Your email address will not be published. Required fields are marked *