Why 1+0 Doesn't = 2...
I was asked the other day, by a new freight broker agent, why are my shippers protected but my trucks aren’t? Why, since I’m spending most of my time looking for trucks, when I find a truck and set them up for my company does everyone else get to use them and I make nothing as the agent for them using the truck I set up? In short, I set-up my shippers and they are mine and my broker won’t allow another agent in the company to work them, but trucks…anyone can.
At first read, I’m sure you were just as dumfounded as I. But try to answer that question…Why is the broker agent rewarded nothing for setting up the carrier? Obvious answer is that the shipper is the one paying the bill and we (the broker) are paying the carrier. True but a considerable amount of time and effort went into locating that carrier, so shouldn’t the agent be rewarded when another in the company use that carrier to move their load?
Believe me when I say that when I first tried to answer this question I knew the answer was no. An absolute no, the agent should not be rewarded for another agent using the carrier that the original agent had set-up. However, when you try to explain this (minus the obvious answer of the shipper pays) you find yourself starting to wonder the same thing. The arguments for protecting the agent’s carrier and providing a financial reward to the agent when one uses the carrier they set up are compelling.
But the answer is still no! Agents do not and should not be paid for setting up carriers. Besides the obvious, the shippers pay the freight bill, let’s look at several other reasons…
1) A carrier set-up is not with the agent, but with the company. Carriers are not set-up for financial consideration to the company per se, but as a vendor. We contract the carrier’s services to perform a function for our client (whom is set-up for a financial consideration), the shipper. As a rule we must “set-up” the carrier in order to perform our due diligence in order to assure that this “vendor” will meet our clients “shippers” needs. Once the carrier is set-up with the information on file at the company, the agent is free to use that carrier with any shipper that is now or may become a shipper of the company. Allowing agents to have protected carriers would literally hog tie the company where no one could benefit. For instance, broker 1 set up a carrier, broker 2 has a shipper that can use that carrier. Broker 2 notices that the carrier is available, however broker 1 was the originating agent for that carrier. What does broker 2 do? Call the carrier direct and forego a percentage of their commission only because broker 1 was the agent that set the carrier up, or call another carrier? For now, let’s say broker 2 decided to find another carrier. Now broker 2 and the company has lost. Broker 1 was never really in the equation except only to halt the deal.
2) Continuing from the preceding scenario, broker 2 sees that almost any truck they find to move one of their loads has already been set up by another broker. Finally broker 2 decides to quit prospecting shippers and only prospect carriers. Why not, it’s really easy to call a trucking company and say I’m going to set you up so if you have an empty truck you will be able to use our company. With this type of attitude it won’t be long before the broker is out of business. They have plenty of carriers, but no loads. This is nearly the equivalent to stopping people on the street and saying, hey I have a product that you might buy in the future can I get your shipping information now so if you buy it, I’ll have it?
3) In order to complete a load we need a shipper and a truck. I can have all the truck’s I want, but without someone to pay me to use them I only have trucks. The same can be said about loads, I can have all the loads I want but without a truck I only have loads. However there is a huge difference. The shipper is a customer while the truck is a vendor. Let’s stretch that out a bit further… the shipper is our customer, we are the shipper’s vendor and the carrier is our vendor. As shippers use numerous vendors to complete their business so do we. A broker only seeking trucks will never make a dime. How could they? They have no customers to pay them, only vendors in which to pay which they can’t because they have no work for the vendor to perform.
Are you more confused now than when this started? Me too…almost. The only reason I believe that I brought this to the table was because I’ve seen agents first seek to prospect carriers first. They attempt to build a relationship with the carrier then move to setting up accounts. This is fine if that’s the way you choose to work, not my way but fine just the same. However when you wish to be paid for only sending some paperwork back and forth and nothing else (no load, no financial consideration, no shipper) forget it, that’s not business. The person doing the negotiating, finding the shipper, the load, the truck…that’s the person that is doing business.
If you are one that has chosen to contact carriers and set them up first, that’s fine. But you need to ask yourself a question and be 100% honest about it... are you contacting the carriers first because you are afraid of contacting the shippers? Eventually you are going to have to call a shipper…Today’s a good day to call shippers and prospect!
At first read, I’m sure you were just as dumfounded as I. But try to answer that question…Why is the broker agent rewarded nothing for setting up the carrier? Obvious answer is that the shipper is the one paying the bill and we (the broker) are paying the carrier. True but a considerable amount of time and effort went into locating that carrier, so shouldn’t the agent be rewarded when another in the company use that carrier to move their load?
Believe me when I say that when I first tried to answer this question I knew the answer was no. An absolute no, the agent should not be rewarded for another agent using the carrier that the original agent had set-up. However, when you try to explain this (minus the obvious answer of the shipper pays) you find yourself starting to wonder the same thing. The arguments for protecting the agent’s carrier and providing a financial reward to the agent when one uses the carrier they set up are compelling.
But the answer is still no! Agents do not and should not be paid for setting up carriers. Besides the obvious, the shippers pay the freight bill, let’s look at several other reasons…
1) A carrier set-up is not with the agent, but with the company. Carriers are not set-up for financial consideration to the company per se, but as a vendor. We contract the carrier’s services to perform a function for our client (whom is set-up for a financial consideration), the shipper. As a rule we must “set-up” the carrier in order to perform our due diligence in order to assure that this “vendor” will meet our clients “shippers” needs. Once the carrier is set-up with the information on file at the company, the agent is free to use that carrier with any shipper that is now or may become a shipper of the company. Allowing agents to have protected carriers would literally hog tie the company where no one could benefit. For instance, broker 1 set up a carrier, broker 2 has a shipper that can use that carrier. Broker 2 notices that the carrier is available, however broker 1 was the originating agent for that carrier. What does broker 2 do? Call the carrier direct and forego a percentage of their commission only because broker 1 was the agent that set the carrier up, or call another carrier? For now, let’s say broker 2 decided to find another carrier. Now broker 2 and the company has lost. Broker 1 was never really in the equation except only to halt the deal.
2) Continuing from the preceding scenario, broker 2 sees that almost any truck they find to move one of their loads has already been set up by another broker. Finally broker 2 decides to quit prospecting shippers and only prospect carriers. Why not, it’s really easy to call a trucking company and say I’m going to set you up so if you have an empty truck you will be able to use our company. With this type of attitude it won’t be long before the broker is out of business. They have plenty of carriers, but no loads. This is nearly the equivalent to stopping people on the street and saying, hey I have a product that you might buy in the future can I get your shipping information now so if you buy it, I’ll have it?
3) In order to complete a load we need a shipper and a truck. I can have all the truck’s I want, but without someone to pay me to use them I only have trucks. The same can be said about loads, I can have all the loads I want but without a truck I only have loads. However there is a huge difference. The shipper is a customer while the truck is a vendor. Let’s stretch that out a bit further… the shipper is our customer, we are the shipper’s vendor and the carrier is our vendor. As shippers use numerous vendors to complete their business so do we. A broker only seeking trucks will never make a dime. How could they? They have no customers to pay them, only vendors in which to pay which they can’t because they have no work for the vendor to perform.
Are you more confused now than when this started? Me too…almost. The only reason I believe that I brought this to the table was because I’ve seen agents first seek to prospect carriers first. They attempt to build a relationship with the carrier then move to setting up accounts. This is fine if that’s the way you choose to work, not my way but fine just the same. However when you wish to be paid for only sending some paperwork back and forth and nothing else (no load, no financial consideration, no shipper) forget it, that’s not business. The person doing the negotiating, finding the shipper, the load, the truck…that’s the person that is doing business.
If you are one that has chosen to contact carriers and set them up first, that’s fine. But you need to ask yourself a question and be 100% honest about it... are you contacting the carriers first because you are afraid of contacting the shippers? Eventually you are going to have to call a shipper…Today’s a good day to call shippers and prospect!
Labels: finding loads for trucks, finding new accounts, freight broker agents, frieght broker training, prospecting
posted by TALTOA at
10:20 AM
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