Starting Out as a Freight Broker & Ethical Co-Brokering | Final Mile 51

Nate Cross & Ben Kowalski answer your freight brokering questions and discuss:

• TMS for New Freight Brokers
• Verifying Carrier Identity
• Co-Broker Contracts
• Starting a Brokerage While Driving a Truck

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Transcript

Speaker 1: 0:19

Welcome back. It's another episode of the final mile from Freight 360. We're going to answer all of your questions. I'm pretty sure every single one of these came through YouTube this week, so we appreciate the engagement on YouTube videos, whether it's a podcast or short or a shorter educational video. We do our best to answer as many questions as we can. So our first one oh, and please support us by checking out the sponsors in the description box. That would be Quickscope, levity, blue Book Services and DAT, and you can also check out the Freight Broker Basics course on our website if you wanted to learn how to get started in this industry and build your company.

Speaker 1: 1:00

Our first question is it worth it to buy a TMS when I am just starting out as a freight broker? So you can actually get one. Yes, you need to have a TMS. You can get free versions of a TMS, like a very basic free version of TMSs from at least Rose, rocket and Ascend TMS, and I don't know if there's any others that offer a free one but very, very basic functionality. But it'll let you get the feel of how their system operates before you pay to upgrade for their full version.

Speaker 1: 1:36

And if things don't pan out for you in brokerage. You didn't spend a bunch of money up front. Now you don't need to be going to buy like a quarter million dollar version of McCloud or something like that or pay a million dollars to have someone develop one personalized for you. But you should really should have a TMS, because this is the single, you know, the main platform you're going to operate out of every single day, which should eventually become like your go-to standalone. Everything's integrated into it dispatching and freight software. What is your take on that, ben? I mean because you've worked at companies that have just started up. What did that look like for you? Could you imagine not having a TMS? What was the take on when to get a TMS? What did you guys do?

Speaker 2: 2:22

I'd say here. The line is like, once you've got customers that you've talked to and are starting to give you some lanes, to quote, you should set up a TMS Prior to that. Like I think it's more of a distraction than is a benefit. So if you're just starting, I always suggest start calling, set up your CRM first, because you're going to spend your first month calling prospects and organizing them. So to me, the first tools you need three a phone line, your email and a CRM. That's where you'll live the first month or two, but right around the second month, if you've got prospects going, hey, can you help me with this load. That's when I set up the TMS and I've done it with both Rose Rocket and Ascend, the free versions, like I mean I can get one up and running in under an hour and you can't move a load without it because you need to be able to send a rate coin to a carrier, Right, so, like typically, like that's kind of the timeline. But for somebody that doesn't have the familiarity with a TMS, right, like I think, somewhere around your first month, set up a send or the free version of Rose Rocket and just spend an hour or two a week just doing dummy loads See what it's like to add a carrier to the system. Spend some time to see what it's like to build a load. Make sure you can send rate cons right.

Speaker 2: 3:36

The thing I do first is I set myself up as both Like I create a dummy customer that is myself. I create a dummy carrier with myself as the dispatcher, and then I like did this yesterday, I built a bunch of loads with. You know, freight 360 is the customer that emails me, or you. I set myself up I mean, I have a motor carrier email. So, like I set myself up as a motor carrier and I just start running loads to myself to see how it works. I send the tracking to my phone and I just make sure one that it functions. And, second of all, like I want to see what my carrier sees and that's a step that I don't think most people think of is I'm like I want to know what the rate con looks like when they get it and what I'm asking them to do, because sometimes they have questions, right? So I think that's really important to do when you're setting this up and for somebody new to the industry, like it's going to take you more than a handful of hours to get familiar with a new piece of software. Again, I've been using different TMSs for 10 years now. I am still going and redoing training with Ty, which we're doing now, and we're setting up Like there's a lot to it, like setting up the accounting piece, like it's not too hard for me to send the load out and get that piece set up.

Speaker 2: 4:47

But there are other things you're going to need to do. What happens once the load's delivered? Where do your PODs get uploaded? Did it integrate into your accounting system? How are you going to actually send the invoice? Where are you going to pay your carrier? Figure out how to upload these documents back into it so they're saved like, and most of them have really good tutorials now at this point. So like expect to have to watch the video more than once. You're going to go to try it. You're going to get stuck, you're going to have to go back and that's usually just like familiarity with individual softwares. They just have buttons in the different places. They're different icons, like it's. I spent an hour trying to figure out how to add a carrier to who tie, like last week. It's just like a little green button right next to where the carrier is. But like I couldn't tell that it was a button Cause, like I just didn't know, that's what you don't know.

Speaker 1: 5:36

They did it Right.

Speaker 2: 5:37

Once you see it, you're like oh yeah, that's quick. So like again, same thing with CRM. Right, like I. New client came on last week and we're starting by showing them how to use HubSpot as a CRM. It takes about two weeks to get used to it, to get used to how to do it fast, to know where your notes go, where the buttons are located, what takes you to the next screen, what gets you to the last screen. Those are things that I think we drastically underestimate the time it takes to get set up and to get familiar with it. So if you think it's going to take you an hour ballpark, it'll take you six and it'll probably take you six over two weeks doing it again. That's the one thing I've seen in practice All right.

Speaker 1: 6:15

Next question how can you confirm that a motor carrier actually has assets or trucks? This was more like a fraud prevention question. So if I'm a broker and I'm talking to a carrier, or allegedly a carrier and I want to know, do they actually have trucks or is there a risk of double brokerage in this situation? So well, inspection history is a great way to be able to figure that out, if they've actually been inspected. Now there's a lot of tools out here that will make this easy for you.

Speaker 1: 6:46

So, like Highway, it's a trusted service that we recommend. They're a recommended service. I use it personally at Pierce for carrier vetting, for carrier sourcing and for onboarding, and we can actually see on a map here's where they've been inspected in the last two years. And we can actually see on a map here's where they've been inspected in the last two years. In addition to that, we can see if they've connected their ELD little red flashing dots of every one of their assets where they currently are live. So that's one way.

Speaker 1: 7:18

Another way, if you're in the specific transaction of the load scenario, I want to know hey, I want to make sure this is the actual truck that's showing up. Quickscope right, one of our recommended products and sponsors. We had them on the show earlier this year. Literally, the driver will have to take a picture in the Quickscope software or on their website on their phone, within two miles of the pickup that you've to, in order for the pickup number or information to be released. That is a like foolproof one. And um, we've caught some. Even at Pierce we've caught some uh and screw ups carriers trying to get away with it not knowing that it was going to reject them by using a service like quick scope.

Speaker 1: 8:01

So, there's a lot of services out there, but what it comes down to is you're you're verifying in two ways. The preload verification is have they been inspected, you know, is there some data out there that tells me that they have trucks? And number two is how do I verify it post awarding of the load to that carrier and that could be picture at pickup using a service like quick scope. It could be you know your customer verifying that the right truck and MC shows up, et cetera. What do you? Is there anything else that you do that you would add in here?

Speaker 2: 8:34

Yeah, the old school one, which is, if I've looked and I verified, at least inspection a few of those things I am going to be like hey, what's that truck number, trailer number? Hey, also, can you verify the MC on the side of the truck and the make and model and the color? They're going to go, huh, be like, yeah, my shippers had some issues over there, so we always send over the color, the make and model so that they can verify that when they go and pick up. That question alone and just saying that usually prevents people trying to defraud you because they'll just go to an easier target. And the second thing is, no matter what the dispatcher tells me, my first check call to that driver before they pick up.

Speaker 2: 9:17

And this is really important how you ask this. Do not say, hey, that truck, jimmy, you got MC blah, blah, blah, truck number 123 and trailer 456, right, because they're just going to say yes. What I do is you call the driver and you say, hey, jimmy, can you verify the MC on the side of your truck? Don't give it to them. See what they give you back. Did it match what the dispatcher said? Hey, what is the color, make and model of your truck? Did that match what the dispatcher told me? Those two questions asked that way catch a lot of this too, and that's another thing I do, in addition to using the tools that you outlined.

Speaker 1: 9:58

Yep. So obviously fraud, double brokerage is a big risk. It's also the leased on owner operators that claim to be leased on but they're not actually representing the company that they're supposedly leased on to, because their MC on their truck is their own, not the leased on company, so which then you get into insurance issues, et cetera. Well, correct.

Speaker 2: 10:25

And if you have highway like, you can see the insured VINs, so, like I'll sometimes ask that driver like, hey, what's the VIN? When you get a second, can you read me the VIN on your truck and I look to see if it is the listed VIN on their insurance. If it isn't, then I'm asking them hey, can I have that leased on contract? Because you are not showing on this company's insurance and that is part of what we're due to vet a carrier. You need to make sure they have the insurance you think they do.

Speaker 1: 10:53

Yeah, if a carrier's insurance policy is written where it's scheduled autos, that literally means that only the VIN numbers on the scheduled autos list of that Accord 25 form. It's usually on the second page. Those are the only ones that are insured. But if they have a different policy that covers any truck, it's better. But still, the lease contract is important to make sure that you get a copy of. If there's any question, all right. Next question here this is a follow up. We talked about reefer LTL previously, but the listener said if I use one of those brokerages to help move a frozen LTL, is that considered co-brokering or double brokering? Do I have to tell my customer that I'd be using another broker? How would this work with liability and claims-wise? So yeah, if you're going to be in a co-brokerage agreement, whether it's an LTL company or intermodal, whatever it is, a co-brokerage agreement needs to be in place. It's a legal contract that establishes who's responsible for what and in the event of liability and claims, a lot of that is spelled out in the co-broker's contract typically, and usually if I'm broker A and I'm giving my load to, let's say, the company we talked about, what's expedite off if I give my load to them and they book it on a truck. If I give my load to them and they book it on a truck, they're typically going to be responsible for facilitating claims. Right, I just become a customer of theirs in that situation.

Speaker 1: 12:29

Co-brokerage agreements I personally am a fan of the transparency with your customer about it. Like for the example of LTL right, we can say something along the lines of hey, we have a partnership with so-and-so for our LTL pricing. We're able to get you a competitive raise that you wouldn't be able to get on your own right. Boom, I'm transparent about it. So that's my take on co-brokerage. Because, again here, you're not double brokering, you're not illegally doing anything here, and if you're going to co-broker, there should be a value-add reason for it. Otherwise it just appears to be a more expensive way to do business. Any other thoughts on that one? No, covered it Sweet. Well, hey, I'll let you go through the last question here that you added. I'll read it.

Speaker 2: 13:21

So I'm currently a truck driver and want to start a brokerage doing step deck, flatbed loads, since that's what I'm familiar with. But I'm trying to see if it's possible for me to start cold calling and finding prospects while on the road. And is it okay to ask the places I pick up to help them with loads, letting them know that I'm a broker, or will that cause issues between the brokerage and my carrier if the shipper tells the broker about me asking for their business? First question. Second also let's just say I'm on the road and someone does give me a load on the spot, will a laptop and cell phone be enough for me to do paperwork, get the load posted and do everything else needed? Right, is that doable? So first question right, can you?

Speaker 1: 14:08

He also said by the way, go Eagles.

Speaker 2: 14:12

So first question right, is you know, if you're a driver and you have a brokerage, can you go to the places you pick up and solicit business? No, so your agreement.

Speaker 1: 14:24

It's usually written in the carrier contract that you're not able to do that, and almost every agreement yeah, with every brokerage is going to have a no back solicit clause.

Speaker 2: 14:32

Again, very good reason, Right. Like they're introducing you to their customer, they don't want you to steal the business away from them, Right? That is a huge no, no, Right. And if a broker finds out about it, they won't use you at all. And if the shipper doesn't give you freight, you just lost that broker as a trucking company and again very, very frowned upon in the industry. But what I would say is if your brokerage's customer is the shipper, you can absolutely solicit business from the receivers you deliver to. If those are not customers of your brokerage you deliver to. If those are not customers of your brokerage, right. And I think that's one Second question right is can you broker freight while you're driving a truck? Your customer sends you a load. What's your take on that? Nate, If you got a laptop and a cell phone and you're driving, how would that?

Speaker 1: 15:23

play out. I cannot see someone that's getting brand new into brokerage succeeding by doing business that way, because there is a lot of focus and research and calling that you'll need to do to successfully grow your customer base. Now let's say, for example, you have customers already and you want to be able to drive while also brokering. We've got guys in our company that do that. They're like they're a sub agent for one of our agencies. They still drive truck and their stuff's pretty simple. So they'll handle a load here and there, but it's like a second, it's like a little side hustle.

Speaker 1: 16:04

For them it's not a full fledged brokerage. Um, and then like when it's like a little side hustle, for them it's not a full-fledged brokerage. And then when issues pop up and you've got to search through email and you've got to do this and that, are you going to pull your truck over or are you going to have bad response times? I've seen the husband-wife combo where whoever's not driving is handling the operational side of the brokering. I think you're going to be good at what you focus on, and if you're trying to focus on two things rather than just one, I don't think you're going to be an expert at either one of them. That's just my honest take on it.

Speaker 2: 16:40

Agreed. I think for this person, what I would try to do is to have some kind of hybrid if that's really what you want to do, meaning like work with a brokerage or with, maybe an agency that provides like coverage capacity, so where, if you do solicit customers and you can call when you're not driving right and you get some of them, if you've got a team that can support you, meaning like your customer gives you that load and you can email to them and they'll cover it for you and you just handle the communication to the shipper. Like I think that could work. I think it'd be very difficult to do all of those things yourself. You also still got to invoice. You've got to build a customer no-transcript, then maybe decide to stop driving the truck and just go full-time brokerage as opposed to Yep and Steven added in our chat here check your employment terms to make sure it's nothing, nothing in your contract.

Speaker 1: 18:03

If you're an employee that prevents you from running a business like that, so yeah. Like, if you're an employee that prevents you from running a business like that, so yeah. If you're a company driver getting paid by the mile, or, let's say, you're a local driver who's getting paid by the hour, they probably don't want you to be focusing on building your own business while you're getting paid from them. Potentially. So good thing to note there. I've seen people succeed at it. Usually, if you're going to go both the asset and the brokerage side, you're not really driving as much Like we've. I've had small trucking companies that have opened agencies rather than starting their own brokerage from scratch, and the only time they ever succeed is if there is a single person dedicated to the brokerage side of it, meaning that they're not. They're not just dispatching their trucks, they're not just driving All like literally what they're doing is just brokering, focusing on that. That's their main job. So but you know, hey, I encourage anybody to try and expand what they're doing and try to branch out to something new. I love what you said about where you're delivering to, you're not back soliciting, you're looking at potentially new business and you have face time with them on a regular basis. So great way to.

Speaker 1: 19:22

And even if you're not going to start a brokerage yet, you could still. You could talk to the shippers and the receivers and just get to understand, like, what it's like in their perspective and what kind of challenges they're dealing with. And then, if you decide to go the brokerage route now you've got all that information and knowledge and understanding that you otherwise wouldn't have had. So Good stuff, great questions, stephen said, and write everything down so you can recall it. There you go. All right, that's all I got. Hope everyone is enjoying their July, ben. Any final thoughts?

Speaker 2: 19:55

Whether you believe you can or believe you can't you're right, and until next time, go Bills.