If you’re in the load-hauling business you need to find a great freight broker. There are horror stories around the shipping industry of bad freight brokers and you don’t want to experience one.
You don’t want products showing up late or not at all. Or, something completely different shows up than what you expected. There are a few things you can do to choose the best haul freight broker. Read on to find out how.
What Is a Freight Broker?
A freight broker is a liaison between transportation carriers and a company that has shipping requirements. The freight broker arranges the deal between the carrier and the shipper. The haul freight broker is basically the middle man.
Do You Need One?
Before you go looking for a freight broker, you need to determine if you need one or not. If you want to better your transportation process then it may be time to hire a freight broker.
If you want to reduce the time and the cost of transportation, you should hire a broker. Also, if you need more resources and capacity then you should hire one.
Another reason to hire a haul freight broker is that you’re having problems with your current broker. Perhaps they’ve become less dependable over time. Make sure you find a fully functional service provider.
Are They Legally Bonded and Insured?
The requirement to become bonded these days is $75,000. To meet this requirement, brokers need to secure additional coverage with respect to the Map-21 legislation.
Years ago, the bond went from $10,000 to $75,000 and this left nearly 8,000 brokers who were previously licensed out in the cold. They couldn’t make up for the $65,000 and lost their licenses.
Also, keep in mind that if you hire a freight broker without a license there could be fines and penalties involved. Make sure you verify anyone or company you hire
In order to operate legally as a freight broker, you simply need a $75,000 Surety Bond. However, additional insurance policies are highly recommended such as Contigent Cargo (for high value freight), General Liabilty, etc.
Traditionally, most carrier’s are required to have $100,000 of Cargo Insurance. However, having a Contigent Cargo Policy in addition to to the carrier’s $100,000 for more expensive materials such as high alloys (nickel, chrome, etc) and equipment such as Excavator’s and Back Hoe’s is critical when brokering high dollar commodities.
Make sure you choose the right freight broker with the right insurance converage. Insurance is critical to all business.
Experience counts when choosing a freight broker for trucking. This doesn’t mean a new broker is automatically bad. But, if you can see a track record of solid and professional work then you can make a more informed choice.
If you can pick a broker that’s given great service over several years then you’ll be ahead of the game. It will not only give you peace of mind, but you’ll also have confidence knowing they perform their job with integrity.
Remember, third party logistics are important to your company and a solid track record with this is something you should be searching for.
Hire a 3PL (Third Party Logistics)
A 3PL is a one-stop-shop. You get a logistics provider that also provides supply chain services. With a 3PL you’ll get value-added services and a fully developed network.
A straight-up broker probably won’t have that. A 3PL will provide a more detailed service as well. 3PLs work with a select group of carriers, typically in the thousands.
3PL’s also have additional services such as indoor and/or outdoor storage, fork lift capabilities for load and unload and cross-docking.
You’ll want to look for a broker with multiple modes. A broker with multiple options is able to back up shortages easier. They can make up for them with capacity in other areas.
They have a range of options such as rail intermodal, reefers, flatbeds, vans, air freight, warehousing, LTL, and logistics management.
The Selection Process
You’ll want to look into your potential brokers’ selection process. Don’t go blindly into a situation. Your broker should at least be verifying the operating authority of a carrier before they hire them to transport owner-operator loads.
They should also check out the insurance coverage and safety rating of the carrier. Another thing they should do is secure a written contract with the carrier.
After you’ve looked into their carrier selection process, you should check to see what their truck selection process is like. Confirm they have a systematic process to approve carrier’s to haul their freight.
Find out if they only use electronic posting or do they use other fleets along with it? Private fleets and large motor carriers are great resources. Make sure your broker uses these tools.
You should ensure that the broker has the proper management skills. They should be communicating by phone and in writing with their carriers. They should write down the proper information and instructions by sending detailed rate confirmations for all freight hauls.
They also need to communicate with carriers often. Make sure you ask the potential broker how they match loads with carriers. Also, find out how they confirm pickups and deliveries (i.e GPS, pictures of freight at pick up and delivery, etc).
Finally, ask the broker if they can show you their correspondence with their carriers. This will let you see if it’s thorough or not.
Check Their Credit
Running a credit check on a potential freight broker is a great idea. Find out if they pay their carriers and vendors on time. Are they financially solvent?
Are there any judgments or liens pending against them? Do they turn a profit? If there are any financial issues, stay away from that broker.
Everything in Writing
Get everything in writing. When you choose a broker make sure the contract is clear and concise. All the terms and conditions must be covered in the contract.
Having things laid out clearly and in writing reduces misunderstandings which can cost you a lot of money. The contract will also help both parties manage expectations.
Also, don’t use a motor carrier contract. Check nitl.org and tianet.org for a model carrier contract template.
The Final Load
We’ve covered the ins and outs of hiring a freight broker. Now you’ll be able to hire the best one possible.
Just utilize these tips and ask the right questions and you’ll have peace of mind that your shipping and carrier needs are met with confidence and professionalism. Click here to get started today.