There are two sides to this argument. The Carrier Side and the Broker side. With the mega carriers and dual licensees stuck right in the middle of the broker transparency argument.
The reality is that both Carriers and Brokers both play a vital role in the industry, that in recent years has seen tremendous technological gains both in the brokering and carrier realms of the industry. This is not going to go backwards, because the new rules for Carriers are pointing to the more efficient manners of operation through technology. Whether you agree or not it is here to stay and is forcing all sides of the industry to embrace the technology that is here and on the way.
Broker transparency is one of those double sided coins. It has been at a foreshadow on the industry for a long time without much amendment or thought. However, it has been there.
You mostly see this argument coming from the Carrier side– with the smaller guys– 10 or less trucks that are constantly being battled with market costs, low rates, and take the worst beating when they cannot command the rates that could or possibly should be obtained. My argument with this is that broker transparency is mostly a mindset and education issue.
Let’s examine this
Everyone in business, understands that you must educate yourself on the business. In order to grow any length and always get better, education is a must. We all can agree on this–If we cannot, then this website is not for you; and you should move on to somewhere where else.
The main thing I see is the Carriers are upset that the Brokers are making better margins for their business than the Carriers. Jealousy gets you no where. What the Carriers do not see, is the fact of how much work that actually goes into obtaining these contracts with the Broker’s customer base. The brokers that bid on the large supply chain contracts, have to PRE-BID on the lanes that these large companies run. I have seen packets from these suppliers reach 50 pages or more for their known lanes. They have risk in losing lanes for bidding too high sometimes 12-24 months out. They also carry the risk of losing on those lanes, which can be detrimental to the Broker’s business.
The other thing I am seeing is that there are some brokers who really utilize the “double-brokering” scheme to make a portion of their profit. This I do NOT support, and to be honest about this —This Type of Act Should be ILLEGAL. In reality, I believe this is the most of the cause for the argument for mandatory broker transparency. Ending this scheming in the brokerage sector of the industry, will provide better rates for the markets as a whole.
Could or should the Brokers be allowed to “dispatch” a load to a Carrier- YES!! However, these dispatch fees should be in line with the market. 10% is reasonable-As long as you are not running cheap ass freight. Most standard range from as low as 3% to as high as 12%.
If Broker Transparency Laws Actually Pass
If these Broker Transparency laws actually pass you will see a great blue of business lost. Great for the Mega Carriers, for these guys fighting for transparency — not so good. Either way they are back to where they were.
These Brokers that supply the market with freight, and are forced out of the business because this Broker Transparency fight will force them to not have reasonable profit margins. The larger will be able to stay the course, due to volume– however–the ones that will end up leaving will have the bulk of the business–This could cause rates to skyrocket, however, with as many Carriers who are just trying to take the margins without educating their selves, will eventually drive the rates so low that they end up self destructing the entire market.
Where the Tech Brokers Fit-in
These technology based brokers, are centralized in this. They are turning volume preset to the Carriers, and setting almost a no touch situation for the broker industry. This is really the cause of the argument. I unfortunately do not know the answer for this, especially for the “Old School” Brokers who cannot embrace the technology, or have the means to embrace the technology advances.
The reality these technology brokers bring to the industry is that their systems have preset margins from what the Shipper or Receiver wishes to pay, and they can say this is what it pays– giving the true transparency, because it is all preset, no touch input and output, based on the algorithm they have for their programming. They are paying based on the set percentage of the load payout. Almost like dispatching services in my eyes. They are in the volume business.
Everyone for the Profit, but No one wants the work
That is exactly what these people pushing for Broker Transparency actually want. It is the craziest shit, that they don’t want anyone to say but the reality is, “They want the profit, without the work.” The work of educating the group to improve their selves.
Why not instead of creating this air of BROKERS ARE THE DEVIL, instead, create a vacuum of educating yourself by asking how can I improve my business. Sometimes asking the simplest of questions can drive the best response.
The Reality of how Brokering works that the carriers do not want you to know
The reality of this argument is that Carriers, for the most part, set their rates themselves. They actually accept the low offer rates just to get loaded. They are their worst own enemy.
These industry associations and argumentative professionals do not want to call a spade a spade. They want you to believe that the Brokers are the bad guys when for the most part they provide freight to the guys who cannot compete for the lane(s) they are running. They either cannot afford the added sales pros scouting for their carrier, or refuse to grow, or don’t want to grow.
This right here is what they do not want you to realize. They set their own rates, either through acceptance or pricing the load their selves.
Where I stand
I have always been a huge proponent for the small carriers. However, on this issue and seeing as well as knowing both sides— I AM AGAINST this –This may cause my readership to go what in the hell……The brokers to go even this guy is on OUR side?!?
My suggestion and recommendation is simple.
- Double Brokering should be ILLEGAL!
- Education is the number one cause or lack of for this issue of Broker Transparency. Either you want to learn and Grow or you do not.
- Mindset of scarcity is the cause of fear, and lack of belief in your business to get better rates.
They want you to believe that brokers are always making 70-80% of their margins when in reality most have reasonable margins for their services they provide to the industry. Business all over the world have margins just as large. The reality is most margins in the Brokerage industry are between the 20-30% range. If the Carriers would just start asking the right questions, and quit just accepting the rates as such, then those margins could be squeezed. Education is the best solution, not the forcing of businesses to be transparent.
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