How to Run a Profitable Freight Brokerage

(Photo:  freepik )   Arik Bibicoff  Contributor   Marketing Director at Eagle Express Service

(Photo: freepik)

Arik Bibicoff Contributor

Marketing Director at Eagle Express Service


adapt to the market

The transportation industry finds itself in a very interesting situation right now. With the shortage of drivers and trucks out on the road, rates have increased as a result. Increased rates is reflects positively on carriers, but can place brokers in some tight positions. To compensate for the lack of driver supply, brokers will find themselves occasionally overpaying to acquire a truck and move their load. However, if this becomes a common occurrence, it could be detrimental to the profitability of the broker. To operate a successful brokerage, one must learn how to maximize profitability. As you may know, simply decreasing offer rates to carriers will not get you very far. Here are some tips to making a fair wage while keeping both your shipper and driver happy.

 

KEEP YOUR RATES UP TO DATE

During these times, rates can tend to fluctuate, especially when there is seasonal merchandise and fresh produce that need to be transported. Although shippers may pay more to move the shipment, increased rates to accommodate the load can offset the difference. You’re not going to win on every shipment you book, but you can certainly increase your odds through volume by using the necessary tools. As a freight broker or agent, you have access to some of the best software and load posting platforms available. One of the add-ons to leading load board – DAT, will ensure that you are getting real figures from what other carriers are willing to haul for. You can also use DAT RateView, where you’ll be provided rates over the past 7- 15 days or 90-day rolling averages. With this tool, you will greatly minimize the chances of you overpaying for a load. Again, sometimes you may scrape $100 off a shipment due to various circumstances, but it’s not the end of the world. You’re in it for the long haul. Volume and repetition will get you to those $600, $700, and $1,000 profits that you’re looking for.

 

MOVE EASY SHIPMENTS

If you’ve moved a load in the past for a certain amount, and other brokers have moved the load for less, then you can assume that you may have missed on that one. Before moving any load, it is important that you know what the going rates are. This is not to say there is no padding in the rates, for there may be other contributors to why a load moved for what it did. Variable factors like weather, location, and time influence what carriers are willing to haul for. Obviously, a truckload of apparel will move much quicker and easier than an oversized trailer. Because all loads are not created equal, brokers must account for variable pricing, and ensure the shipment can be delivered adequately, and on time. Another example would be transporting perishable goods against the heat in the summer time, which can make preservation difficult during long hauls, especially in the desert out west. A good asset to combat these issues is RateView’s performance report feature to compare carrier payment history to average spot market and contract rates in similar lanes.

 

BE APPEALING TO CARRIERS

This is now a carrier’s market, and they are getting all kinds of great pay due to the shortage. Because of this, the approach of the broker will have to change to accommodate the driver. It can’t just be an effort on your part, shippers are well-aware of the shortage, and should be understanding to the situation. Even if they are not willing to cough up more to move the shipment, they can accommodate the drivers by providing adequate parking measures and comfortable areas for the drivers to take breaks. Shippers and brokers with poor reputations can also be cause for elevated rates as a method of avoiding working with them.

 

LET CARRIERS KNOW WHAT YOUR OFFERING

This is a much more efficient way of weeding out carriers with too high of an asking price. Also, you can attract carriers you wouldn’t normally respond to your load. By posting the rate on DAT, they will place the posting to the top, resulting in more options and negotiating power on that load. Overall, brokers need to realize that the market is undergoing a shift, with the rates going in the favor of the drivers. To be successful in this kind of market, brokers will need to accommodate more to the needs of the carriers. Loads need to get moved and the carrier side ultimately decides whether they want to move them. This is only possible if you have the necessary tools to know what the ongoing market rates are, which is made possible by DAT’s great assortment of products to cater to all of a broker’s logistics needs.


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