Freight forwarders act as intermediaries by arranging freight transportation between shippers and motor carriers. The freight broker then receives a commission for their matchmaking skills. Freight brokers are also known as trucking agents, transportation brokers, real estate agents, and third-party brokers.
While the business concept in freight brokerage is very simple, there are many details and procedures that need to be mastered. The broker needs to know what to do, when to do it, how to do it, why it is done and with whom to do it. Since this is a service-oriented business, it only makes sense to learn the multitude of demands and requirements, especially in light of the fast-paced environment that only seems to get bigger and bigger.
While real “on the job” experience is the best teacher, it’s hard to find brokers willing to hire new agents. Formal training with qualified individuals who have actual brokerage experience helps put everything into perspective for the beginning broker. As a result of using a good mentor, the new broker not only gains the tools of the trade, but also gains a trustworthy note.
With that being said, let’s take a look at a typical day in the life of a freight forwarder.
After the freight broker has made many phone calls to potential customers, they should have maybe 20, 30, 40 or more shippers in their database. The initial information that each broker will collect will be of a general nature: what type of cargo is the carrier shipping, where are the normal pickup and delivery points located, what type of truck is required, etc.
1. With a client base at hand, the broker will want to start placing the order by making phone calls to shippers early in the morning, perhaps 7:30am to 10:30am. This is when most shippers are putting the finishing touches on your needs. Basically, the broker asks if the carrier is looking for any trucks on that particular day.
If the answer is “No”, the runner goes on to the next and the next. At some point, the broker finds a “hot” one (or several) and that’s when the action begins.
After the broker has “proven” itself, the sender will actually initiate calls to the broker instead of the broker always calling the sender. And the carrier may want to work more proactively by sourcing trucks 3-5 days in advance rather than just day to day.
2. Once the shipper has a load for which he needs a truck, the next step is to take the order from the shipper. The sender will go into detail about what is required. Any uncertainties the broker has should be cleared up immediately. It is imperative that the broker communicates the correct information to each truck driver or dispatcher when they begin calling.
3. The broker will then estimate the rate needed and contact the carrier; or the broker will simply ask the carrier how much he wants to pay. After some calculations, the freight forwarder will get an amount that he will offer to the truck. The ideal starting point is to make at least a 10% profit margin on each load.
4. The next step is to post these loads on Internet load boards. There are numerous load boards where loads are posted, as well as truck searches that can be done.
5. After posting these loads, the broker will go to their database of available trucks. The broker will then call each carrier to see if they have an available truck. In the meantime, the broker may be receiving incoming calls from people who are responding to the upload board posts.
6. At some point, the broker is looking for the driver or dispatcher who will say, “Yes, I want the load.” Sometimes the broker will not find a truck. This is not like shooting fish in a barrel; however, with experience and winning repeat business, the broker will “cover” more and more loads.
7. After the broker receives the “Yes” from the carrier, he or she immediately calls the carrier to tell them that the load is being booked.
8. The broker will then fax your setup package to the carrier. While the carrier processes the agreement and other documents, the broker will check the carrier to make sure the carrier is properly licensed and insured. This is done over the Internet or by phone.
9. The last item sent to the carrier is the “confirmation”. The carrier must immediately sign and date this document and return it by fax to the broker.
10. Once the broker has this confirmation in hand, the broker will want to call the truck driver if the driver himself has not called the broker. The cargo details are then given to the driver along with instructions. For example, the broker will ask the driver to call when they are loaded and when they are emptied or if there is a problem. The broker will also ask the driver to call at least every morning if it is a multi-day trip. These are important requirements that every broker must be ready to implement.
11. After the cargo is delivered and the carrier has informed the broker, the broker will want to call the shipper with the status.
12. Any delivery issues that may include missing parts or damaged cargo must be discussed between the shipper and the carrier. Sometimes the broker will intervene; however, the broker is never responsible for any damage or missing parts unless the broker is negligent.
13. Finally, with cargo delivered safely and in a timely manner, the broker is ready to go through the process again and again.
While this routine may seem casual and boring at times, this is not the truth. Most of the time, the broker will experience smooth operation. However, there will be times when problems arise: late deliveries, failure of the carrier to pick up a load, damaged cargo or missing parts, long delays in cargo pickup or delivery, all of these must be dealt with by the broker. .
It is impossible to avoid problems, but it IS possible to stay alert and ready to deal with problems proactively. If the broker works hard and smart for the carrier, if the broker deals honestly with the truck and pays on time, the broker is well on his way to a successful business.