Freight Bids, Ethical Practices, & Detention Policies | Final Mile 55

Stephen Ruhe & Ben Kowalski answer your freight brokering questions and discuss:

• Submitting RFPs
• Customers Falsely Committing Freight
• Detention Approval

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Transcript

Speaker 1: 0:19

Hey, welcome back to Freight360. This is the final mile episode where we answer all of your questions that you submit to us, whether it's through YouTube, facebook group, email us directly or submit them through our website. We've got three today and two of these came in yesterday, actually late in the day yesterday. They were really good questions. In fact, they are long enough that I can't even give you the summary, so we're just going to jump right into it. Let's look at number one here. I'll read the first one.

Speaker 1: 0:53

So what is the proper way to submit a request for pricing to shippers? For example, a shipper gave me 37 lanes to quote with 200 trucks per month. Should I find trucking companies with the capacity to cover the lanes first, which is my current approach? So that's what he's doing now. Is he's reaching out to trucking companies to find the capacity to cover them before he bids them, or get pricing through DAT or Truckstop, then find the trucking companies with capacity. Love the show. Appreciate the feedback. Steven, what are your thoughts? Do you find the trucks, get trucks in hand and then take their rates to quote a bid, or do you use a rating tool and then hope you can get trucks to run it for that rate after?

Speaker 2: 1:41

Yeah, so it's. It's situation dependent, right? So, um, one of the things we're lacking in the context is how much time do you have, like is this bid? Do you have a week? Do you have two weeks? Do you have a month? Yep, um, so, with that in mind, I try to do both.

Speaker 2: 2:00

So I want to reach out to my carriers that I'm already working with and try to figure out if any of them are interested in these lanes, what their rates would be, and I would kind of build off of that. But then I'm also going to go to rating tools like DAT rate view and get an idea of what that market is, because the other thing is these carriers that you're getting rates from may not work with you when the lanes start moving, or they may have an issue, or they may I mean the market that we're in they could go out of business. There's a lot of factors to rely on a company, especially if it's significantly lower than what the market is showing. So I think you have to balance with both approaches. The other thing that's not mentioned in here is he's asking for a way to submit a request for pricing.

Speaker 2: 2:47

You need to understand what format do they want that in? Do they want a per mile rate? Do they want an all in rate? Do they have a fuel table, a fuel surcharge, or do they not? And is that fuel surcharge table pretty standard or is it some crazy fuel surcharge that now you have to go and look at the rates and make sure that what you're submitting isn't going to be a significant upcharge because you didn't understand the fuel table, or it's going to be a significant discount. You're going to be losing money. Those are the things that I would look at.

Speaker 1: 3:21

For sure. Right, and here's the thing I would point out Right, like, I want to talk about, like this in first principles right, like, just very simply, you have a bid. It's 50 lanes, 200 trucks right To them is like as close to zero as you're going to get without being zero, like the likelihood is that that shipper is not giving all of that business to one broker or carrier anyway. Right? So you already know you are going to spend a lot of time and effort to get to work, to get carrier rates, and you know you're not going to be awarded at least some portion of this, if not most of it. Right, it's a pretty standard bid outcome. You're bidding 50 lanes, you're lucky to get a few at first, especially if it's a new customer, it's a customer you've been working with, maybe a little bit more, but you're never getting all of it. Right, they just don't put all their eggs in one basket. So to me, I agree with what you said and it's exactly what I would do. It's like I'm going to do both.

Speaker 1: 4:23

The tool that I've been using recently is I'm using the multi-lane ratecast feature in DAT, and why I like that so much is it breaks it out in both, which means it gives me the line haul rate and it gives me the fuel as a number. So it breaks them off in each. But it will also give me months into the future like the expected. Now no one knows what's going to happen in the future, but at least it gives me a general idea of what I should expect. So if this bid is one month, then like I'm just going to use basically rate view as my tool. But if it's for, like like I've done, a few that are like six months recently, between now and the end of the year, like I am looking at two things like what is the high rate expected over the next six months and where's it at now? I put those literally in a column in my spreadsheet because it's going to give me that spreadsheet. I put all the lanes in. It gives me every month what the expected line hole rate is and the fuel. So basically I take what is today's spot rate, I factor that in against all the lanes that's one column and then I look for the highest one over the next six months and I put that next to it. That's my range. This is what I can reasonably expect to pay between now and the end of the year. And then the second step I do is exactly what you said.

Speaker 1: 5:35

If I have carriers in my network that have run this lane, I'm going to email them the lanes that I think would be a fit and go hey, do you have any interest in running these lanes for me over the next few months? And I always make sure I put in the volume expected because that's going to make them more likely to respond. If you got four loads a week versus just saying, hey, does this lane work for you. A carrier is far more likely to respond if you've got more volume than just the lane, so I always include that. And then again I'll usually get some responses from these carriers. And then I'll probably make a few phone calls just to talk to some of these carriers and be like hey, can you expect to run this for six months? What are your other customers look like over the next two quarters? Or if you're only going to be able to run this lane for the next 45 days, then your trucks are in another area of the country. That helps, but it doesn't even help you with the whole bid anyway, even if you have the trucks to your point. So there's really a happy medium between using a tool and probably talking to some carriers.

Speaker 1: 6:35

If you're new and you have no carriers, then I for sure would just use a rating tool and I'd probably throw an 11% or 12% margin on whatever the average rate is today. It's kind of a rule of thumb If you want to be awarded it, you're probably going to need to be closer to like 8% or 9% above spot, and even then you might not win it right? Because remember, when you have no trust with a shipper and you're just going through a bid, all you are is a number. So if you can't at least be as close to their lowest on one lane, like you're probably not going to be awarded any of them. And again, to think about goals in a bid, my goal is not to get all of the freight If it's a new prospect, my goal is to get like one lane maybe two is my expectation.

Speaker 1: 7:15

So like I really spend most of my time focusing on one or two lanes where I think I already have carriers that need that lane as like a backhaul.

Speaker 1: 7:24

And then I asked them I go look, would you really like to work with a shipper?

Speaker 1: 7:27

And if they say yes, like we need that backhaul. What I say the next like okay, well, work with me, I'll ratchet my margin down to like nothing. Like I'll throw 45 bucks on these loads If you give me the best rate you can so that we can both together win this lane for you. I don't need to make any money on it. I just got to cover my expense like 45 or 50 bucks a load, especially if it's not a huge dollar amount and like I then do what's best for the carrier, the broker and the customer by trying to get one or two lanes as close as I can to that market rate, because I know the carrier needs it and they're willing to run it a little less in market because they want that load. Now I've got one or two real big winners, I think, and the whole bit of 40, the rest I'm going to kind of throw average rates on with. You know, an average margin of probably nine to 11% for a new bit is probably what I would do.

Speaker 2: 8:17

Yeah, and a couple of things I just want to point out from what you said is you know, around the six year mark in this industry, the amount of RFPs that I've done and I've gotten zero business that were three, 400 lanes plus outweighs the amount of business that I've gotten. I've done a lot of RFPs, so it's a lot of work. You just kind of got to get through it and understand and you learn a little bit. And what I want to tie that into is so, like my TMS system provides a kind of a rate view. Look, based off my historical rates yes, not outside rates.

Speaker 2: 8:54

So I know if any of the lanes match kind of what we're already doing, then I can look at okay, this is what our carriers are willing to do. So I'm a little bit more informed than I can call those carriers and offer that to them. And then the other thing was, if you don't have carriers I know the old dad had it, I'm pretty sure they still have it, but there's a feature in there called Lane Makers that I use all the time and if you're looking at bids, if you go to Lane Makers, it'll show you who is searching or posting trucks in these lanes and it'll rank them based on volume of posted trucks and searches, and those are the people you should be calling first, because they're obviously looking for that lane. Yeah.

Speaker 1: 9:38

I've used Lane Makers a lot recently. It's been really effective. It's a great tool because it shows they might not post their trucks but they were searching that lane, which means there's a pretty high likelihood it's a good fit for them. So it's a really good place. If you have no carriers, to Stephen's point, use lane makers to make some of those phone calls on a few of those lanes. And again, don't pick all of them. Pick a handful, maybe a half dozen, maybe a dozen If there's 50, maybe a half dozen, maybe a dozen If there's 50, probably five to six is good. If there's 100 lanes, maybe I might pick 10. If there's 500 lanes, I might pick 20. Again, it's all proportionate to the size of the bid, all right.

Speaker 1: 10:16

Next question I've had multiple customers this month tell me my rate has been approved for a spot shipment Great. But then a few hours later I get an email saying the load has been covered. When I called the customer to figure out what happened, they said our rate was really similar to another broker they use. So they approved both rates and whoever got the truck first got the shipment. Good old jump ball. Any suggestions on how to handle these types of shippers? I suggested a truck and hand rate to the ops team, but they don't like that because obviously they don't want to go hustling to find trucks for loads we don't have.

Speaker 1: 10:50

And also, carriers get really upset if you book them on a load and you don't actually have a load, right? So fundamentally, what I want to outline and I want you to answer this first is like there's like almost unwritten I would say ethics or rules in the industry that if a shipper gives you an actual tender meaning the document and says you got this load, the unwritten rule is that like they are giving that to nobody else but you, there's only one tender. If you have it, you're working on it, right. Because, to the same point, like it also isn't fair to the carriers when you go to book them and then the customer goes oh sorry, I just used the other guy because they did it quicker, right? So like this happens a lot but is certainly, I don't think, ethical on behalf of the shippers, but that doesn't mean it doesn't happen. So what do you do in these scenarios? How do you handle this?

Speaker 2: 11:39

Yeah, so one of the first things I want to point out is this isn't the kind of account that I would be looking for, because they're obviously favoring price and you I have gravitated more towards contracted freight and the customers that I had that were doing this, and you should be doing this every year.

Speaker 2: 12:02

I have you know, quote-unquote fired them because they eat up way too much of my time to provide a valuable service and then turn around and take it away. Now some approaches to answer your question is if you can secure a rate and you have time to secure a truck, there is some possibility that you can give them a rate, stand by the rate and get them a truck. You may have to provide a higher rate to secure that service, but if you don't have a truck in hand unless they're asking for that specifically you don't need to tell them that you don't have a truck. Here's my rate. You just need to tell them here's my rate because you're just trying to have business and that'll save you time on the back end. Um, if they're going to other brokers with similar rates, you need to figure out why they're going to those brokers over you. What are they doing differently? Is it actually the truck is getting in there first, or are they doing something different that they favor over what you're providing them as a service?

Speaker 1: 14:16

Yes, I think all of that's great advice, right? So the other thing, too, is like this is a difficult conversation and you need to have these. And this is the harder conversation to have as a freight broker is we also have to hold our customers accountable. We are not just like whipping posts to run around and to work for free so they can do whatever they want and, to be honest, like they're all people too. So there's the whole range of ethical to unethical, just like in any other profession, that work at shippers, right. So the thing is like for sure, I would call this shipper and I've had this conversation many times, right, and you've got to call and be like, hey, look, and I'm going to tie this back into the episode we just did last week Like I would use looping for understanding to have this conversation.

Speaker 2: 14:59

I'd be like hey Mary, let me ask you like the load we were working on.

Speaker 1: 15:03

I got it covered. We had a truck booked and my whole team jumped on this to get you guys booked and then you had canceled the load. What actually happened there? And she's going to answer with, let's just say, this exact same thing, right? Hey, I approved a few rates to different brokers and I just went with whoever got me the truck first. I'm going to repeat back to her.

Speaker 1: 15:23

Okay, so if I understand you correctly, like you award tenders to multiple transportation providers at the same time and then it's just the first one to get their truck there is the one that is awarded it. Did I get that right? And then and the reason I even said it with that curiosity is because I am giving them that impression that, like, that is not standard and that is very curious that they're awarding freight to many companies to see who wins. It's one thing to send a bid out to a bunch of companies and then to pick the cheapest one that gets you the rate the quickest, but it is not acceptable practices to award freight to multiple companies and then just take the guy who gets you the truck first, right? So once you ask that, she's going to respond. And if she says it's usually one of two things yeah, like this is just what we do. The next question I would ask is like how long have you been doing that? Like, do you do that with all your freight or is that just like your spot loads? Was this a special situation? And then I'm trying to understand again, moving from practical to emotional, like what's really going on here, because my guess is she's just worried and also she's probably been burned by brokers that said they'd send a truck and didn't, so she's probably just CYA covering her butt to make sure she has a truck to pick up, right? So then, if I can get her to actually tell me why she's doing this, not just that she is now I can understand her.

Speaker 1: 16:46

Okay. So if I understand you, mary, like you're just making sure you actually have a truck to pick up, and some of the other brokers you've worked with, like have said they'll book it and then didn't follow through. Did I hear you correctly? She's going to say yes. Well, guess what? Now I just turned that problem into an opportunity because guess what I learned about our other brokers? They are more than happy to commit to loads and not send a truck and not communicate and to leave her stranded.

Speaker 1: 17:16

Well, mary, if these other brokers are doing that to you, like I mean to be honest, like if I tell you I'm going to commit to a load, I will get you a truck. If I can't get you a truck for whatever reason, like I will be up front and tell you immediately I'm not going to wait till the you know, the 12 o'clock hour to tell you we don't have a truck. Like we don't operate that way. And also like, if we're going to work on things like I can't have my team running around to scramble to get you a truck and at the end of the day also that carrier is committed to the load, and now I got to cancel on this truck and they could have been dispatched already. So now I got to pay a truck order, not using that scenario. Like I can't work that way either. And now that she understands me, hopefully we can work towards the solution of.

Speaker 1: 17:54

Well, mary, like, if you have these situations, let me know. If it's a hot load, I will put everyone on my team on it immediately. I'll communicate you directly as we're getting it when it's booked and when the ETA is. Would that help the situation you're in? Yeah, it would help a lot, okay, well, I'm glad we understand each other now. So, like in the future, like we're quoting things, at the very least I know, if you send me the tender, like we're the only company working on it, right, yeah, I think I can do that, right.

Speaker 1: 18:19

Or maybe she goes the other way. It's like this is the way I do it, like I don't trust anybody. I need the cheapest truck and everybody says they can get it and then doesn't. Well, the reality is it's more like what you said originally. That's not the kind of customer you want to work with. They don't value service, they only value price. They don't care whose time they waste. Their only motivation is to get what they need, and we all need to get what we need, but not at the expense of other people, habitually over and over.

Speaker 1: 18:45

And if I find out that's the way they operate and they have no intention of changing, no matter how much they understand, that affects me and the other people in the industry. And the truck and the driver right, then like this is not a customer, and I know it's easier said than done because everybody's trying to fight to get any customers and sometimes you got to be really competitive to win the first few loads before you get trust. But you can't operate in a scenario where you're running around doing work for a company that is not standing behind their word. That's what that is. They send you the tender, that's their word. It's your load, and your load only, unless you call them and tell them otherwise. Right, and to me, we all need to be holding our shippers accountable in these scenarios because, like hey, they get scared, they need help, they're going to do things outside of what we would consider best business practices. They'll keep doing it unless you hold them accountable to it. They're not going to change unless you have that conversation with them, right.

Speaker 2: 19:38

Right, and just the one thing I wanted to add in there is you know, if this is one of the customers that you just you need to get through while you get other customers, you can then take that conversation back to your ops team who has an issue with the truck-in-hand method. You can be like look, this is what the customer wants, let's just provide that while we work our way into something else that's a little more profitable or a little more of our tool set and that's how you can navigate that. So if they're not willing to waver on how they're working, then you can at least take that information back to your team. Be like this is how they want it done. We just need to do truck in hand until we can figure out another process with them.

Speaker 1: 20:21

Agreed, you want to read the last one?

Speaker 2: 20:26

Yeah, yeah. So the last question why does the carrier need to wait for customer approval for detention Contract is with the broker, not the shipper or receiver. Broker should have its own policy so we carriers don't have to wait one week for customer approval. This is stealing money from drivers.

Speaker 1: 20:48

Okay, what are your thoughts? Why does the carrier need to wait for customer approval for detention? The contract is with the broker, not the shipper or the receiver. A broker should have a term policy. I gave this an answer and I think this was on YouTube, but what's your answer to this one?

Speaker 2: 21:03

So my first thought is yes, the question is correct. A broker should have a policy on detention and it should be dictated by the customer. It's not a profit center. However, where I think a lot of these issues come from is the brokerage probably has a policy, but the carrier didn't fulfill the requirements to then get detention. Fulfill the requirements to then get detention Not that they didn't get it, but now you have to wait on approval because you didn't hit the check marks.

Speaker 2: 21:33

So, for example, one of the most common issues that I run into is the first two hours are free. I work in the reefer world. First two hours are free. Anything after that is detention. But you need to let me know, because I'm not just going to let you sit there and rack up detention. Neither is my customer. We need to find a way to work through it, and if you don't let me know, I can't solve the problem before it gets out of control.

Speaker 2: 22:01

So if you fail to make that call to notify me as detention starts, a lot of these policies state we're not going to honor detention until that call is made. Some of them I've seen. Detention until that call is made. Some of them I've seen. Or now we have to go back and I have to talk to the shipper or the receiver, wherever you were at. I have to talk to my customer and you have to prove to me without a doubt that that detention is accurate. That's why you're waiting on approval. It's not because it's, it's the customer's policy, but you failed to hit those check marks. So now I have to do extra work to get you that detention. That could have been solved way beforehand.

Speaker 1: 22:36

Agreed Right, like it is not just one thing Right. The first is like the driver has to do whatever they need to to make sure they get that attention Right, which is usually notify the shipper or notify the broker. Like, hey, I checked in, I've been here for an hour and a half, no one's come. I've literally done this. Right now I'm literally sending messages about this, right. And the first thing is like the driver needs to understand that like they've got to reach out to the broker first so the broker can talk to the shipper and try to get them worked in or try to resolve it. Right Is the first thing. The second is need to make sure the driver has had the shipper write in their check-in and check-out times right To make sure they qualify, which is the other thing that needs to happen. But also the other thing that makes this a little bit variable and some brokerages just have the same detention policy across every load. They move right. I would say that's the least common, and the reason it's the least common is because a lot of shippers and receivers have different detention policies. So the thing that I said in response to this is it's good practice from the carrier's point of view, when you're booking a load, to ask the broker hey, what's your detention policy with this customer at these facilities? And then, whatever they say, be like, hey, can you just shoot that over in an email or throw it in the rate con, just so that I have it right, you can get this info long before the problem even happens, because it might not happen. But at least you now have them, that brokerage, telling you like, hey, you get two hours free here and there. Here's your rate after that. Now, there's no confusion. And also, the broker is likely to tell you what we just said. Like these are the things you need to do in order for me to get the detention approved. Right, because, again, accessorials, right, need to be approved by the shipper. Like it's not our money, we don't make money on this. We take what happened, convey it to the customer, for them to give us the money to give it to the carrier, right.

Speaker 1: 24:21

So, again, like some brokerages can just do this, but most don't, because things don't always go the way they're supposed to. Like I've had detention requests and you go and look and like nobody signed the check-in and check-out times or the driver just did it later and it's like the shipper's like well, I can't approve this. Like I don't know when this guy checked in and it's not even like the shipper. Sometimes it's the accounting department that has this policy right. So then you've got brokers that have paid detention and then get reimbursed and we find out, oh, when we got the bill of lading, like they just forgot to sign this. Now we're paying this right. Or we've had scenarios where, like, the driver didn't check in, was just parked there and thought that somebody saw them and never actually checked it and that's why they were late. So, like, reaching out to the broker first is really your best thing and making sure you just ask them, like what's the policy, and then making sure you do the things they outline to qualify for it.

Speaker 2: 25:11

But it really shouldn't be a point of contention yeah, no, I agree, and like one of so, one of the things I just wanted to highlight, especially with the stuff that I've done, um, in the reefer, in the first come, first serve, with, like kill plants for chicken or beef or whatever. A lot of their policies are four hours from the time of arrival, because they're usually a 24-hour facility, and then some of them are even detention doesn't start until four hours after we're closed our hours of operations. So it's really important that if you're on a tracking, if the brokerage requires some sort of tracking, that you have that and you know that it's working, or if there's some communication, step within that policy, that you're communicating along the guidelines of it, as we've mentioned, because a lot of these things are going to vary and, again, always verify the policy with your shippers and carriers, with your brokers, so that you understand that you're not going to miss out on any money.

Speaker 1: 26:13

Yep For sure. Awesome man, Anything you want to wrap with?

Speaker 2: 26:20

No, no, I think that's it. I mean, nate's not here today, he's out gallivanting in Nashville. So you know, being from Cincinnati, until next time, go Bengals.

Speaker 1: 26:32

And whether you believe you can or believe you can't, you're right.