So, you want to be a freight broker?

In part one of our three-part series, hear from an industry expert on exactly what it takes to become a broker and how you can run a successful brokerage business.

In this 30-minute webinar, we’ll cover:

• The basics of what a freight broker does and how brokers operate within the supply chain.
• How to find freight, including helpful resources, tactics, and tips.
• How to find compliant carriers and establish beneficial partnerships.
• Regulations, taxes, insurance and other key aspects of running your business.

Speaker:

Brett Jendra
Channel Partner Marketing Manager, Truckstop

Transcript

Hi, everyone. I’m Brett Jendra with Truckstop. I’m a veteran of the transportation industry with over a decade of experience, and I’ve done everything from unloading trucks to large brokerage carrier sales by phone to face-to-face shipper client relationship management with some of the midwest’s largest companies.

But enough about me. I’m here to help you today. Today’s webinar is designed for anyone who’s thinking about becoming a freight broker or is new to the business.

This is part one of a three-part series designed to give an overview of what it takes to become a broker and run a successful brokerage business.

We’ll have more information coming soon about parts two and three, but I want to be clear. This is not a sales pitch. I’m not going to tell you to buy a training program or a service, but I will try to point out where Truckstop solutions fit within the brokerage business model.

You should run your business your way. Truckstop is here to support you.

Today’s call will give you a foundational understanding of how the industry works and the first steps you should take to set yourself up for success.

We’re going to discuss the basics of being a broker, of running a business, specifically a freight brokerage business, and how to find freight carriers.

So first off, what exactly does a broker do? To put it in the simplest terms, a shipper hires a broker to move a load. The broker hires a carrier to move the load. The shipper pays the broker, the broker pays the carrier, and the broker keeps the margin as profit. So, essentially, a broker is a third party that helps connect shippers to carriers to get loads moved to their destinations.

A broker can be asset- based or non-asset based. Asset-based means they own their own trucks, and non-asset based means they own zero trucks.

The job of the broker is to build relationships with shippers. So the broker should start to understand the needs of the shipper, what their schedule is, what their load and unload process is, what lanes they run in, what lanes do they potentially have the ability to run in, and what equipment requirements they have for their carriers.

The broker is basically an extended network of carriers that business can access to move their freight.

The shipper is only building one relationship with the broker instead of having to build relationships with the hundreds of thousands of carriers in the market. They also don’t have to track or facilitate the movement of the goods. The broker’s responsibility is to track and communicate the details of the load between the parties.

The other part of the broker’s job is to build relationships with the carriers and connect them with the appropriate loads to fill their trucks. They need to understand what the carriers are looking for as far as their schedules, their lanes, their equipment, and their preferences.

Let’s break this down. If we look at two variables, let’s say home location and equipment type, if your shipper customer is a meat packing plant in Iowa, it’s going to be in your best interest to start building relationships with Iowa-based carriers that operate a food-grade reefer trailer.

The meat packing plant has agreed to pay you $1,000 to move their load. You have started to build relationships with food- grade reefer haulers in this market, and you find a carrier to haul this load for eight hundred dollars. You then facilitate the movement. You track the movement. And upon delivery, the shipper is going to pay you a thousand bucks, and you’re going to pay the carrier eight hundred bucks.

So you’ve made two hundred dollars. The shipper has paid you and outsourced that particular portion of the job and the relationship process, and the carrier made eight hundred bucks. So everyone’s happy. The final consideration to think about here, and this is where you have to think about how you’re going to run your business from a cash flow perspective, is this process in general.

So the load is going to be delivered, and at that point, you are now allowed to invoice the shipper. At the same time that the load delivers, the carrier is going to invoice the broker. So you have negotiated terms and payment with your shipper, and you have negotiated terms and payment with your carrier. These could be different, and there could be an overlap.

So you have to think about how you’re going to potentially pay the carrier if the shipper hasn’t paid you. There’s a whole process of cash flow, but that’s something to think about from a business aspect. We won’t dive too much into it right now, but it is a very important piece of freight brokering.

Now onto the next piece. You understand the process and the basic benefits from the relationship. But before you jump into brokering, what do you really know about the industry, and how do you plan to learn more?

If you have a washer and dryer and you need it fixed, who are you going to look for to do that? Are you going to look for an appliance repairman, or a general handyman?

And what’s going to make you choose one over the other? How does each one of these individuals make you feel more comfortable that they can handle the job?

So, essentially, what are the pros and cons of choosing one over the other? Is it cost? Is it time? Is it the knowledge? Is it the relationship? So this is essentially what you’re going to be doing when you’re calling a shipper or carrier.

If you have no industry experience, how do you plan to get some? If you do have industry experience, how do you plan to articulate that to the potential customers, and how do you keep improving that knowledge on a day-to-day basis? I’m guessing a chunk of you have probably had some relationship to the transportation industry, but you might not. Have you worked as a carrier and you’re now moving into this space? Have you worked for a large brokerage and you’re now going out on your own?

Do you actually read industry publications like Freight Waves, Transport Topics, Heavy Duty Trucking, Fleet Owner? There are hundreds of other publications.

I definitely recommend that you start reading these if you intend to be successful.

When speaking with shippers and carriers, it’s going to be extremely important to portray yourself as a knowledgeable industry expert. This is the way you make yourself stand out, and this is the way you prove to these individuals that you’re even worth their time to take the phone call.

For those of you that have little industry experience, I recommend that you do some sort of shadowing or education.

Think about reaching out to a friend or networking to find some sort of mentor to learn more about the industry. It’s going to be a challenge if you’re coming in cold and you know nothing about transportation.

If you do choose the formal training route, there are many broker programs available. You can actually check out our Truckstop partner marketplace at marketplace dot Truckstop dot com and look under the training and education filter to find partners that run these types of programs.

We also offer our own broker education training series through our RMIS lite compliance product and the new broker package. But, again, you have to do what’s right for you, but with no industry experience, you will need some form of industry knowledge if you want a higher chance of being successful.

Either way, you need to be prepared to work extremely hard to build your book of business.

Speaking of business, are you actually prepared to run a business? This is where your background, work experience, volunteer experience, and education are going to come into play. What have you done that translates into being prepared to actually run a business?

Think about the big picture. What are your strengths in these areas? What are your weaknesses in these areas? Understand where you might need help, and don’t be afraid to ask for it.

The number one thing is, you’d actually be extremely surprised at the willingness of people in this community to help each other. And if you reach out and there are people that decide they’re not going to help you, there’s another person behind them that’s willing to. So you’re going to have to be okay with hearing no and hearing weird things and just moving on and doing what’s right for you. The first thing that I recommend, though, before you even get into brokering is asking yourself why you want to be a broker and what your goals are.

Is this a full-time gig? Are you looking for it just to be part time?

How long do you want to do this? Two years? Thirty years? Are you just trying to stay small and independent? Do you want to grow rapidly?

Are you looking to just make x per month?

You’re going to need to then think about what you need to know to run a business. And, again, on marketplace.truckstop.com, the partner marketplace, under training and education, there are some lists of a few partners that do this type of work, meaning they train you on how to run a business, and it can be helpful. But, again, there are ways around it.

Some of the things that you’re going to need to think about regarding running a business are going to be how do you set up your business in the state you reside in. What are the business tax implications, employee benefits, business related insurance needed, or other insurance needs that are outside of your typical cargo or transportation insurance?

Do you have the right financial requirements to start and maintain your business? Again, we talked about the cash flow challenges.

Do you have a line of credit? Do you have debt?

You need to make sure that you have a financial plan for success before you just jump right out there.

What tools do you need to run your business from a business perspective?

It’s not just a laptop and a phone and Internet connection. Although those are going to be your keys, you may want to think about what type of bookkeeping software you’re going to use. Maybe what type of tax preparation software you’re going to use.

Excel, QuickBooks, TurboTax, these can be things that you do by pen and paper, but that’s a very manual process.

Again, some of the Truckstop partner marketplace partners, under the financial services area, offer funding, tax solutions, and bookkeeping solutions. They may be able to help you get things rolling.

The last piece to think about is your customer management system. And when I say that word, I don’t want to scare you that you need something massive like a Salesforce. You don’t. A customer management system can be any system.

A piece of paper. A whiteboard. An Excel sheet. A Google doc. It’s where you have your shipper customers and prospects and your carrier customers and prospects, and you’re able to manage where you are at the stage of relationship with each of those.

So, now you understand what a broker does. You understand how to learn about the industry. You understand what you need to know about running a business. Now we’re going to get back to brokering.

How do you plan to find freight? There are many different ways to find freight, but they all have one thing in common. All will require you to pick up the phone, knock on a door, or send an email. Where are you going to get your leads from? That’s all about prospecting.

Some people say, well, I’m just going to buy a business directory for contact information and start calling away, which is great. But is it a good use of your time to just go down a list?

Some people that have built relationships in the industry are going to find that leveraging their own personal networks first is going to be a good way to get things off the ground and running.

For example, a friend is going to be more willing to overlook that you’ve just started in the industry if there’s a long history and they know you’re a knowledgeable, trustworthy person and they can work with you. Because at certain point in my career, somebody had to give me the benefit of the doubt.

The next piece, though, is you’re eventually going to hit a point where you need new business, and you’re going to have to do it the good old-fashioned way, and that’s cold calling. So that’s emailing, maybe even text messaging. But this is where you need to be prepared to work hard and find freight because it is competitive out there.

But before you just start going to Google and making phone calls, make sure you have a strategy. What separates you from every other phone call a transportation manager or shipping manager fields on a given day? What’s going to give you the opportunity to work with their business? It’s going to be a combination of timing, luck, and the most important piece, being well prepared before you get the customer on the phone.

Research the type of freight the shipper is moving before you call. You might want to start out by trying to find a niche, a state you’re going to work in, a lane you’re going to work in, an equipment type you work in, an industry you work in.

This way, you have a small little pot that you pull from and you’re trying to build around as you grow that brokerage.

For example, “Hi. I’m Brett. I work for Freight Brokerage ABC. We specialize in full truck movement of aircraft and aerospace products.”

And then I’ll start my probing questions.

At that moment, I’m also I’ve done that pre-call planning, and I’m prepared to start to build that relationship now. Start to build that relationship the moment you get them on the phone.

Before you get to this point, you do need to do some of that pre-call research, and even finding a shipper might be part of that. So with my aircraft example, let’s try to find a solution utilizing Google. So first, we’re going to try aircraft parts.

I know that Arizona tends to be a good place to look for aircraft parts. So I’m going to start with Arizona. Now I’ve narrowed it down a little bit more, but I want to get even more specific.

I want to make sure I’m getting people that are producing the product because they’re going to have full-truck freight. So, I might be looking for words like, manufacturer.

I use manufacturer here, but, warehouse, distribution, those are other good terms to use. And I’m going to actually narrow it down again by Phoenix’s ZIP code, 85034.

Boom. So now I’ve narrowed it down in industry, in area, and a more specific term. I like to go to this maps area.

Now I can zoom in and I’m looking at an aerospace company.

Here’s another one. Now in this one, I can actually see there is freight—something going on a flatbed. So this could be something useful.

So, I’ve already got a phone number and website. So let’s check out the website.

Let’s go to about us.

Leading manufacturer.

Can look at the management team.

Get into the manufacturing area.

And here we go. They’ve got a Chicago facility, and they’ve got a Phoenix facility. So now, potentially, I’ve got a Phoenix facility. I’ve got an address.

I’ve got a couple of different contacts. If I go to the about section, I’ve got some other names, and I’ve got all this website information I can look at.

So now this is a site called LinkedIn. I hope all of you are familiar with it. If you’re not, I would suggest you get familiar with it. But I could put that company name in here.

I’m going to put in Truckstop just to kind of show you an example. But I put that company name in, and now I’ve pulled up that company page. What I can also do is go to the people page, and now I can start to look for who works here. I can actually look for their titles.

I would be looking for titles like transportation manager, titles like warehouse manager, operations manager, to see where the individual may fit in the decision-making process. And that way, when you make that phone call to this particular group, you’re in a situation where you already know you might be talking to the right person, or you at least know who to ask for and you sound knowledgeable.

So now at this point, I’ve done some great pre-call research, and I found out where they ship from. I have an idea what they might ship. I have an idea who might be their decision maker, and I have some basic contact information. It’s now up to you to make that call and actually start building the relationship.

So the next piece here is you just got awarded your piece of freight, but you realize you don’t have any carriers in your network. Now what?

It’s back to the same type of strategy. Pick up the phone, utilize business directories, utilize your personal network, scratch, call, and fight to find a carrier who will do the job and do a good job and be the right fit.

Now don’t always be worried about who’s the cheapest. You get what you pay for. Think about it in the term of business sense. If the shipper just gave me one load and I do a great job for them, I might get hundreds of loads over the lifetime in that relationship.

This could be a massive long term value for you. If you try to make an extra fifty bucks on margin on this load, you could blow a relationship that is literally going to yield you thousands, potentially hundreds of thousands of dollars over the lifetime value, all because you wanted to save twenty five bucks to put a carrier on there. The most important thing when you’re looking for carriers is that you try to find someone that, a, can do the job, b, is trustworthy, and, c, they’re reliable.

So the ways you do that is by vetting the carriers through processes like joining a load board, which doesn’t always mean the carrier is vetted, but, typically, they have some sort of rating system built in.

There’s also the company’s online presence, Joe Schmo Trucking. When you’re on the phone with them or you get a hold of them or before you call them, Google them. See what people say about them. But a great way for you to find capacity when just starting out is through a load board.

One load board is Truckstop.com. What you can do on Truckstop.com is post the origin of the load, the destination of the load, the dates, the equipment type, the rate you’re looking for, the weight. You post every single thing you need to know about the load, and this gives an opportunity for carriers to actually reach out or accept calls from you.

By posting this load from Phoenix to Las Vegas, you might get three calls on this load. And if you detailed it correctly, you might have identified three carriers willing to haul aerospace loads.

One might be able to take this load, but now when you call your next shipper, in the area that you can talk to them about, you now can say, hey, I know three carriers that I have relationships in your region who haul aerospace loads. So, you’re building a network there. And in addition to being able to post your load, you can also search for trucks.

For example, I can search for Phoenix to Vegas trucks in the area, and it’s going to tell me who has posted their trucks on the load board. I’ve also got their contact information. At the same time, you ask those carriers what they like to haul. Because the carrier who called about an aerospace load might also say, I like to haul rolls of paper.

I’ve got this carrier I have a relationship with, and I can look for paper companies where he likes to run to find him a load. And then when you get that load, you post that load, and then you start to find more carriers who like paper. Now you’ve got a little bit of paper business going on, a little bit of aerospace business going on, and you’re filling the gaps as they come to you. It really is all about building and scaling through hard work and relationships.

Relationships are the lifeblood of this industry, and being a successful broker is all about relationships. Remember, the carriers and shippers are fielding calls all day. What separates you from everybody else?

And lastly, with a load board, you’re also going to find a myriad of tools to help you with other parts of your business, like rate estimates, real time rate insights, and that’s going to help you understand what a shipper would pay for this load. What should I offer to accept it from a shipper, and what would a carrier pay for this type of load?

It’s also going to help you understand things like market density. If there tends to be more trucks than loads in a particular part of the market, due to supply and demand, the cost to hire a carrier in that area is actually going to go down. So, it’s going to be helpful to understand those types of things when speaking with carriers and shippers.

To quickly recap what we discussed today, we talked about what a broker does and how they make money. We talked about what knowledge you need to be successful in this role, and we talked about what you need to think about and understand from a business perspective to set yourself up for success in a brokerage business, as well as tips and tactics to find freight and carriers. And, of course, one of the most effective ways to find and build a carrier network is through load boards.

Now becoming a freight broker can seem overwhelming, but it doesn’t have to be. Take the time to educate yourself on the industry using the resources we’ve listed here, and make sure that you keep an eye out in the coming weeks for part two and three of the webinar series where we’ll dig deeper into the ins and outs of becoming a freight broker.

For those of you who haven’t gotten your authority, you can do that through Truckstop, through our Get Your Authority program, and we will give you a couple months of the load board built into that program.

To learn more, explore Truckstop’s website or the Truckstop partner marketplace. We look forward to building a long relationship and helping you become a successful broker. On behalf of Truckstop, thank you for your time.