May 20, 2025 • 20 mins
Nate Cross & Ben Kowalski answer your freight brokering questions and discuss:
MC Authority Delay? New brokerage struggling on DAT — is 1.5 years to gain traction
legit?
Broker Contracts Help Lawyer vs. templates — what’s best for new logistics
brokerages?
Insurance Needed Hard time raising liability to $2M? Here's where to look.
Cameron Pechia: Cameron@AllLinesInsure.com
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome back for another edition of the Final
Mile.
We got three questions comingfrom us today.
These are all from our Facebookgroup, so continue to
participate in there.
There's a link in the shownotes.
We got close to 100,000 of youactively involved in that group,
so thanks for engaging with oneanother.
(00:20):
We see a lot of folks in therelooking for job opportunities,
looking to cover loads,sometimes just to network and
ask questions.
So no question is a stupidquestion, all right.
First one up here is how longdoes it typically take for a new
brokerage MC authority tobecome fully active on DAT?
I've been a broker for fiveplus years, but my new company
(00:42):
is struggling to cover laneslike Georgia to Georgia, florida
to Florida.
They're telling me it couldtake a year and a half to gain
traction.
Is this accurate?
All right, so the meat andpotatoes of this question is how
long does your authority needto be active before people
essentially have trust in yourcompany?
Right?
That's kind of what we'regetting to here.
I think it's probably twothings here there's two things
(01:07):
age.
But it's like how much are youactually doing?
Because I was like you'rereally good on like the credit
and how you're doing it, butI've seen people.
They're like, yeah, I'm justgoing to, I'm going to open an
MC, let it age, and then, like,once it's a couple of years old,
I'll be good, and it's like, no, well, yeah, it'll show that
(01:29):
you've been open for that long,but if you're not doing anything
, you've, you're not going toshow anything on DAT.
So, ben, what's your?
You've broken this down in thepast.
What is what have you?
Speaker 2 (01:33):
found out as far as like a ton of time with the past
few years.
So the analogy I would use isOK.
Well, when you turn 18, it'shard to get a credit card.
I mean you can get a small onebecause you have no credit
history.
All credit history is is thereporting agencies look at how
much have you borrowed and howdo you make the monthly payments
(01:55):
.
Are they on time or not enough?
Right?
It's your ability to repay debt.
Is your credit rating right?
So, to your point, if you justdon't get a credit card when you
turn 18 and try to get one at25, you still have zero credit.
You're going to start at thesame place.
Getting older doesn't increaseyour credit rating because you
haven't shown the ability toborrow and repay debt.
It's the same with a companystarting your MC and leaving at
(02:19):
age for two years, shows yourauthority date, but doesn't do
anything in the credit reportingspace to show your business has
the ability to pay its bills.
That is your credit risk, right?
So DAT is tied to Ansonia.
So when you see the creditscore and days to pay, when a
carrier looks at a broker that'scoming from Ansonia Now, if you
(02:40):
click in that, it'll take youto this link in Ansonia.
That will give you the exactverbiage, but I can tell you
it's and it's a little vaguebecause it says, like, on the
fourth month of doing, I think,two transactions per month and
Sonia will basically give you acredit rating.
Speaker 1 (03:00):
So it typically takes four months after the fourth
month or on the fourth month.
Speaker 2 (03:04):
Yeah, and it's weird and like I have never been able
to get anyone to clarify that.
I've asked Ansonia, I've askedDat, I've tried to get more
specifics.
Like that is as close as I canget and what I saw like,
practically speaking, it waslike the fourth month, but you
need two different loadsbasically every month.
And this is the important piecehow you do this.
(03:29):
So if I agree with Nate'strucking company to run freight
until I get credit but I justpay Nate through ACHs and wires,
that's not getting reported tothe credit agency.
So, like, even if I'm doingthat, you need to make sure that
information gets to the creditdepartments.
So the next thing is like that'swhy I suggest you try to get a
factoring company that will workwith a newer broker, because
even if you process yourpayments through it and you self
(03:51):
fund, like literally deposityour own money in it, some
factoring companies will let youpay through their system.
In those scenarios, at leastyou know the factoring company
is going to make sure it getsreported.
So making sure it gets reportedis important too.
So at least two transactionsmaking sure they're reported is
the second thing, and the thirdthing is the time.
(04:12):
And we broke this down withComfrate in that episode before.
But basically the sweet spot isyou want to be paying your
carriers at like 21 days, like18 to 21 days if you're going
through a factoring company oryou're automating, and here's
why If you pay all of thecarriers you work with
(04:32):
immediately, it also doesn't getreported with the same weight
and I'm not going to go intolike a huge.
It almost looks like you'retrying to like cheat the system.
Well, it's not that you'retrying to cheat the system, but
the system has a bunch of mathand algorithms.
It's trying to determine canyou borrow money and repay it?
So if you're just paying themright away, like it just shows,
(04:54):
you're just have the cash to paythem, which isn't the same as
borrowing money and being ableto repay it later.
And I'll give you a like, alittle analogy on the consumer
finance side.
So if you get a credit card andyou're 18 and say you have a
$2,000 limit, if you borrow andspend $1,900 the first month,
you get that card and you paythe whole balance off before the
(05:16):
month ends, so you don't getcharged interest.
That does not increase yourcredit score because you
literally didn't borrow themoney and you didn't make
payments.
If you want your credit scoreto go up as a consumer, you want
to not max out your creditcards, because there's two
things maxing, riding your lines, they call it.
So if you've got a $2,000credit card, you want to spend
$1,500 or $1,200.
(05:38):
And then what you ideally wantto do is make payments close to
the minimum but a little higherfor like six months to a year.
So you got a $2,000 credit card, you borrow 1,500 and you pay
$150 a month for the nextwhatever 10 or 11 months with
interest, that makes your creditscore go up faster.
Why?
Because all that math is tryingto see is if you borrow money,
(06:01):
do you have like the characterand the income and restraint to
be paying it back long after youborrowed it?
That's really what it's tryingto tell.
So it's the same with thebusiness, like if you're paying
your carriers at, like, 21 days.
That's the sweet spot where itis going to report most
effectively to the creditagencies.
If you pay them on 30 days,it's a little too long.
(06:21):
You pay them too soon.
It doesn't show your ability toborrow money and repay.
It just shows you had more cashwhen you were doing this.
So automate it through afactoring company, do two
transactions a month.
By your fourth month you'll geta score from Mansonia.
That's the first thing.
So now that gets you throughyour first hurdle of a new
(06:43):
brokerage.
But there's a second one, andthe second one are the trucking
factoring companies.
There's three major factoringcompanies that basically most of
the carriers operate RTS,triumph and OTR.
All three of them havedifferent standards.
I would say to when they willallow a trucking company to work
(07:05):
with a new broker.
Most of them are like ninemonths to a year.
So even once you got creditreported on Insonia, call it at
month four or five.
Usually most of the carriersthat will call you and want to
work with you are going to go.
What's your MC, you'll give itto them, you'll have reporting,
it'll show days to pay on thatand Insonia but they go.
(07:27):
Sorry, rts won't approve you.
You need to be in business ninemonths or 12 years.
They want to see a longerhistory before they allow their
trucking companies to factorwith your brokerage.
So the reality is is fourmonths of you're doing two loads
and they're being reportedcorrectly.
But to really access the openmarket to book loads like you
would at a normal or an agedcompany that's been in business
(07:50):
a while, like you're closer tolike nine months to a year, is
really around where that happens.
Speaker 1 (07:53):
Yeah, the takeaway here is it's not impossible to
do business.
It just is going to require alot more work and, um, you know,
curating relationships withcarriers through trust before,
like you said, you get access tothat full of the market.
Speaker 2 (08:09):
And I'll add one thing, the analogy that I think
is really good for your firstyear.
Most of the time, if you workedat a brokerage and you had a
job like you get the freight,then find the truck through the
open market because you havecredit.
And why?
Because it's the speed of thetransaction.
You could have a milliondollars in your bank account,
but the carrier doesn't knowthat and doesn't know if you're
willing to give it to them.
That's what the credit scoretells them.
(08:30):
Are you willing to pay themeven if you have the money?
So what I always suggest is workit backwards.
Start talking to carriers,build relationships with them,
negotiate some terms wherethey're willing to work with a
new company and in return,you'll help them.
What are you going to help themwith?
Ask them what lanes they run,ask them what shippers they
(08:50):
would want to work with thatthey aren't already, or what
lanes they need.
Then go and find the shippersthat move the freight on the
lanes that the carrier wants,because now you have the carrier
already lined up and paymentterms agreed with them.
Now go find them the freight,and then you give it right back
to the carrier, which is verydifficult to do If you don't
(09:10):
have credit and you got loads.
It's so hard to get a loadmoved in a short amount of time
like in an hour, half an hourbecause you just can't work
through all these things thatquick.
That's a great.
Speaker 1 (09:18):
It's a great tactic.
I love it.
All right, all right.
Our next question when can Icreate forms and contracts for a
new brokerage joining a lawyerto draft or review them, or are
there any reliable templates Ican use?
Yes, to both and a little bitof both, is my initial answer is
(09:50):
there are good templates.
So, tia, great model contracts.
If you're a TIA member, we'vegot a few of our own on our
website that you can look at.
But back to our conversationwith Matt Leffler, the armchair
attorney.
You should have a lawyerreviewing your contracts.
I would say before you know,this is both for like, when
you're signing them and whenyou're creating your own.
(10:11):
So I would do both.
I would probably start with amodel contract so you're not
reinventing the wheel, but thenyou're going to have your own
specific language to yourcompany that you know is in
addition to the baseline modelcontract and have a lawyer
review those like.
And here's the danger now is,like with AI, you could
(10:33):
legitimately like, just havechat GPT probably craft you up
an agreement, but I wouldn'tfeel comfortable without a you
know, a seasoned lawyer givingtheir stamp of approval on any
of any of our contracts.
And this goes with like whytransformations, broker carrier
agreements, co brokers, all thatstuff, what's your take?
Speaker 2 (10:53):
So there was a case like last year an attorney had
Chad GBT write a bunch of briefsfor a case he was trying and
one we know it hallucinates.
If it doesn't know the answer,it'll just make shit up Like so
it'll absolutely make up URLlinks that don't work, like I've
.
I just listened to this reallylong thing on like education
(11:14):
kids using this in college andthe professor just look at the
links and most of the timethey're just not real.
So that's how they can tellthey wrote it with AI.
But it's the same thing with alegal document Meaning like if
it doesn't know, it'll just makeup precedents.
Meaning like it'll referencecases that never happened.
It will put in language thatabsolutely never occurred.
(11:36):
So like this judge was readingthrough this, found this out and
he's like, researching thecases and precedents, he's like
these never happened and then herealized none of them happened
in any of these briefs and likethat guy was disbarred.
Speaker 1 (11:48):
But it goes to show you because, like here's why the
agreement really matters.
Speaker 2 (11:51):
It doesn't matter at all when things go well.
It matters only when things goto shit and you got a claim and
like the customers withholdingyour payment and the carrier
might not be responding, but youalso owe the carrier money.
They file on your bond but thecustomer won't pay you because
they said they had the rightinsurance.
And like when you work throughthese messes, that legal, the
(12:16):
legal, my mind's blankingverbiage, like how it's actually
written in that agreementdetermines what is going to
happen.
And like we're literally goingthrough ours again right now
because, like, there are thingsthat need to be updated.
If you work with a new shipperand they've got many different
things in their agreement youagree to you, better be sure you
have something similar on theother side.
(12:38):
Because, like, if you're beingheld to something and you can't
hold the carrier to it, you endup stuck in the middle with no
recourse.
So, 100%, I wouldn't use AI,maybe to research, but I
certainly wouldn't use it towrite a legal agreement and risk
my entire business on it.
Speaker 1 (12:54):
The last thing I'll say on is this is all relative
to where you're at in yourbusiness, so you don't need to
hire an attorney.
That's $1,000 an hour whenyou're a brand new broker, right
.
A thousand bucks an hour whenyou're a brand new broker right
you may be using Zoom or somesort of a service that like,
well, you know, give you ad hoc,you know, advice and all that
(13:15):
stuff as needed, versus likehaving you don't need in-house
counsel on day one.
Well, you know, to go to theextreme route.
So, yeah, it's all relative,all right.
Final question here we're asmall brokerage in need of
insurance, need to increase ourgeneral liability to 2 million
and add additional coverages,but we're having trouble finding
the right fit.
Any suggestions?
(13:36):
My advice on insurance actuallyI talked to a guy yesterday
about this and last week anotherguy about this exact same thing
.
Because, like common questionslike what do I need, where do I
find it?
And the two things I'll say islike number one, the insurance
that you need is really dictatedby your customers and you need
(13:59):
to make that decision.
You know, is the cost of thispolicy worth the business I'll
get from them?
So if someone wants $5 millionin liability and umbrella
coverage, well, it's going tocost you some money.
Is the business going to bethere to justify it.
Same thing with if they wantsome out-of-the-box rare policy
(14:21):
or a high limit, like I justmentioned.
You just got to justify that onthe business.
So that's the first thing is.
That's where your need comesfrom.
The second part is how do youget it?
Some carriers won't cover youbased on where you're at in your
journey as a broker.
But, like you know, we had MeltGodwin on a couple of years
(14:42):
back.
Right, he's an insurance broker.
Insurance brokers have the sameway that us, as freight brokers,
have, access to the open marketof motor carriers.
Insurance brokers can go shoppolicies for you, um, and find a
carrier that will underwritewhatever you're looking for, and
you typically find thedifferent options at different
prices, like I did this.
So we did this a lot.
(15:03):
Last month, when looking forcredit insurance, we had like,
here's what we want.
The broker shopped it.
We had five underwritinginsurance carriers come back and
say here is the five companies,here's what they're offering
you, here's the details of it,because they're not all credit
equally, and here's the premiumsand the deductibles, et cetera.
(15:23):
Narrowed it down to two.
They sharpened their pencil alittle bit and then we got the
one that was the best fit for us.
What do you got, ben?
Speaker 2 (15:32):
I'm going to add.
We'll add a link in the shownotes.
Cameron Pescia has been on theshow A couple times now I think
right.
Yeah, so we can throw a link inthere to go to his website.
He's a broker so he can get youdifferent options and help you
shop it and find the right fit.
Also, does a lot in our space.
Free, gives back a lot, so goodguy worth reaching out to if
(15:54):
you're really having troublefinding somebody.
Yeah, I mean I think yousummarized it Like all insurance
is is reducing risk.
If your customer's requiring it,you need to make sure whatever
you're going to pay for thatyou're going to recoup, and then
some to be able to justify it.
That's not always easy.
Shippers don't typicallyguarantee loads when you're
getting onboarded, so you've gotto justify if the cost you're
(16:17):
going to pay is going to be madeup with them.
That's also just the risk ofbeing a business owner, I mean.
I think having somebody you canactually talk to is super
important.
We talk about this a lot Likesomebody you can trust.
Talk to that when they explainthe coverage, what it actually
covers and if it covers thingsis super important because so
many shippers will requestthings that never come into play
(16:39):
, that, like I've seen brokersget what are called like dead
policies on things where they'relike oh, we want workman's comp
and we're like well, we're aremote brokerage, we don't have
an office and we're neversending employees to your site,
but the shipper wants workman'scomp to cover the carrier.
Well, even if the broker hasworkman's comp, it doesn't cover
the driver at your facilityanyway.
So this policy you're asking mefor absolutely has no situation
(17:03):
where it would pay out.
Speaker 1 (17:04):
No applicable purpose .
Speaker 2 (17:05):
No applicable purpose and, like I've talked to
insurance companies, they'relike yeah, we can create a dead
policy for 500 bucks.
We add it to you.
It is an insurance policy butit basically pays out under no
circumstance because there's nocircumstances.
What happened anyway?
So it makes the shipper happy.
They get it on the document andyou don't pay four grand for a
policy that's covering peoplethat never go there.
Speaker 1 (17:24):
Yep exactly I for a policy that's covering people
that never go there.
Yep, exactly, I've seen that alot.
I remember my boss was tellingme a customer this is like
probably like 20 years ago acustomer was like yeah, we need
you as the broker to have autoliability.
So he's like obviously theydon't know what they're asking
for because we're not a carrierand insurance guy's like I can
(17:47):
get you out of liability.
He's like take your truck, likeyour personal Chevy Silverado,
we'll call it a, we'll call it atruck that your company owns
and we'll write you an autoliability policy on it.
He's like OK, so like, butagain, would never pay out.
Speaker 2 (18:06):
So Correct Understanding what and how these
things are.
Why you need that.
It's very important and I cantell you most shippers require
things that are never going tocome into play, like the most
common thing I see I talk aboutthis constantly is most shippers
don't vet the carrier's cargoinsurance.
They just vet the brokers andwe're like okay, so you're
(18:29):
requiring me, as a broker, tohave 300 grand in contingent,
but you have no idea if thetrucks I'm sending in have any
cargo.
Hey, guess what?
Contingent cargo is not cargo,but almost every shipper just
goes.
As long as the brokerage has it, we're good and I'm like.
That effectively does nothinglike you required something.
Speaker 1 (18:46):
It's like the dumbest policy, in my opinion.
So ridiculous, but yes, anyway,good questions, keep them
coming our way.
I'm actually curious what isour audience count?
Up to now it is in our groupNinety one thousand four hundred
members.
So yeah, keep asking questions.
(19:07):
There's a lot of stuff in thatgroup.
So if you have a really goodquestion that you want to get
our attention on, just do itright through our website,
freight360.net.
That will be the best way forus to see it.
Speaker 2 (19:23):
So, final thoughts, ben, Whether you believe you can
or believe you can't, you'reright.
Speaker 1 (19:30):
And until next time go Bills.
Welcome back for another edition of the Final
Mile.
We got three questions comingfrom us today.
These are all from our Facebookgroup, so continue to
participate in there.
There's a link in the shownotes.
We got close to 100,000 of youactively involved in that group,
so thanks for engaging with oneanother.
(00:20):
We see a lot of folks in therelooking for job opportunities,
looking to cover loads,sometimes just to network and
ask questions.
So no question is a stupidquestion, all right.
First one up here is how longdoes it typically take for a new
brokerage MC authority tobecome fully active on DAT?
I've been a broker for fiveplus years, but my new company
(00:42):
is struggling to cover laneslike Georgia to Georgia, florida
to Florida.
They're telling me it couldtake a year and a half to gain
traction.
Is this accurate?
All right, so the meat andpotatoes of this question is how
long does your authority needto be active before people
essentially have trust in yourcompany?
Right?
That's kind of what we'regetting to here.
I think it's probably twothings here there's two things
(01:07):
age.
But it's like how much are youactually doing?
Because I was like you'rereally good on like the credit
and how you're doing it, butI've seen people.
They're like, yeah, I'm justgoing to, I'm going to open an
MC, let it age, and then, like,once it's a couple of years old,
I'll be good, and it's like, no, well, yeah, it'll show that
(01:29):
you've been open for that long,but if you're not doing anything
, you've, you're not going toshow anything on DAT.
So, ben, what's your?
You've broken this down in thepast.
What is what have you?
Speaker 2 (01:33):
found out as far as like a ton of time with the past
few years.
So the analogy I would use isOK.
Well, when you turn 18, it'shard to get a credit card.
I mean you can get a small onebecause you have no credit
history.
All credit history is is thereporting agencies look at how
much have you borrowed and howdo you make the monthly payments
(01:55):
.
Are they on time or not enough?
Right?
It's your ability to repay debt.
Is your credit rating right?
So, to your point, if you justdon't get a credit card when you
turn 18 and try to get one at25, you still have zero credit.
You're going to start at thesame place.
Getting older doesn't increaseyour credit rating because you
haven't shown the ability toborrow and repay debt.
It's the same with a companystarting your MC and leaving at
(02:19):
age for two years, shows yourauthority date, but doesn't do
anything in the credit reportingspace to show your business has
the ability to pay its bills.
That is your credit risk, right?
So DAT is tied to Ansonia.
So when you see the creditscore and days to pay, when a
carrier looks at a broker that'scoming from Ansonia Now, if you
(02:40):
click in that, it'll take youto this link in Ansonia.
That will give you the exactverbiage, but I can tell you
it's and it's a little vaguebecause it says, like, on the
fourth month of doing, I think,two transactions per month and
Sonia will basically give you acredit rating.
Speaker 1 (03:00):
So it typically takes four months after the fourth
month or on the fourth month.
Speaker 2 (03:04):
Yeah, and it's weird and like I have never been able
to get anyone to clarify that.
I've asked Ansonia, I've askedDat, I've tried to get more
specifics.
Like that is as close as I canget and what I saw like,
practically speaking, it waslike the fourth month, but you
need two different loadsbasically every month.
And this is the important piecehow you do this.
(03:29):
So if I agree with Nate'strucking company to run freight
until I get credit but I justpay Nate through ACHs and wires,
that's not getting reported tothe credit agency.
So, like, even if I'm doingthat, you need to make sure that
information gets to the creditdepartments.
So the next thing is like that'swhy I suggest you try to get a
factoring company that will workwith a newer broker, because
even if you process yourpayments through it and you self
(03:51):
fund, like literally deposityour own money in it, some
factoring companies will let youpay through their system.
In those scenarios, at leastyou know the factoring company
is going to make sure it getsreported.
So making sure it gets reportedis important too.
So at least two transactionsmaking sure they're reported is
the second thing, and the thirdthing is the time.
(04:12):
And we broke this down withComfrate in that episode before.
But basically the sweet spot isyou want to be paying your
carriers at like 21 days, like18 to 21 days if you're going
through a factoring company oryou're automating, and here's
why If you pay all of thecarriers you work with
(04:32):
immediately, it also doesn't getreported with the same weight
and I'm not going to go intolike a huge.
It almost looks like you'retrying to like cheat the system.
Well, it's not that you'retrying to cheat the system, but
the system has a bunch of mathand algorithms.
It's trying to determine canyou borrow money and repay it?
So if you're just paying themright away, like it just shows,
(04:54):
you're just have the cash to paythem, which isn't the same as
borrowing money and being ableto repay it later.
And I'll give you a like, alittle analogy on the consumer
finance side.
So if you get a credit card andyou're 18 and say you have a
$2,000 limit, if you borrow andspend $1,900 the first month,
you get that card and you paythe whole balance off before the
(05:16):
month ends, so you don't getcharged interest.
That does not increase yourcredit score because you
literally didn't borrow themoney and you didn't make
payments.
If you want your credit scoreto go up as a consumer, you want
to not max out your creditcards, because there's two
things maxing, riding your lines, they call it.
So if you've got a $2,000credit card, you want to spend
$1,500 or $1,200.
(05:38):
And then what you ideally wantto do is make payments close to
the minimum but a little higherfor like six months to a year.
So you got a $2,000 credit card, you borrow 1,500 and you pay
$150 a month for the nextwhatever 10 or 11 months with
interest, that makes your creditscore go up faster.
Why?
Because all that math is tryingto see is if you borrow money,
(06:01):
do you have like the characterand the income and restraint to
be paying it back long after youborrowed it?
That's really what it's tryingto tell.
So it's the same with thebusiness, like if you're paying
your carriers at, like, 21 days.
That's the sweet spot where itis going to report most
effectively to the creditagencies.
If you pay them on 30 days,it's a little too long.
(06:21):
You pay them too soon.
It doesn't show your ability toborrow money and repay.
It just shows you had more cashwhen you were doing this.
So automate it through afactoring company, do two
transactions a month.
By your fourth month you'll geta score from Mansonia.
That's the first thing.
So now that gets you throughyour first hurdle of a new
(06:43):
brokerage.
But there's a second one, andthe second one are the trucking
factoring companies.
There's three major factoringcompanies that basically most of
the carriers operate RTS,triumph and OTR.
All three of them havedifferent standards.
I would say to when they willallow a trucking company to work
(07:05):
with a new broker.
Most of them are like ninemonths to a year.
So even once you got creditreported on Insonia, call it at
month four or five.
Usually most of the carriersthat will call you and want to
work with you are going to go.
What's your MC, you'll give itto them, you'll have reporting,
it'll show days to pay on thatand Insonia but they go.
(07:27):
Sorry, rts won't approve you.
You need to be in business ninemonths or 12 years.
They want to see a longerhistory before they allow their
trucking companies to factorwith your brokerage.
So the reality is is fourmonths of you're doing two loads
and they're being reportedcorrectly.
But to really access the openmarket to book loads like you
would at a normal or an agedcompany that's been in business
(07:50):
a while, like you're closer tolike nine months to a year, is
really around where that happens.
Speaker 1 (07:53):
Yeah, the takeaway here is it's not impossible to
do business.
It just is going to require alot more work and, um, you know,
curating relationships withcarriers through trust before,
like you said, you get access tothat full of the market.
Speaker 2 (08:09):
And I'll add one thing, the analogy that I think
is really good for your firstyear.
Most of the time, if you workedat a brokerage and you had a
job like you get the freight,then find the truck through the
open market because you havecredit.
And why?
Because it's the speed of thetransaction.
You could have a milliondollars in your bank account,
but the carrier doesn't knowthat and doesn't know if you're
willing to give it to them.
That's what the credit scoretells them.
(08:30):
Are you willing to pay themeven if you have the money?
So what I always suggest is workit backwards.
Start talking to carriers,build relationships with them,
negotiate some terms wherethey're willing to work with a
new company and in return,you'll help them.
What are you going to help themwith?
Ask them what lanes they run,ask them what shippers they
(08:50):
would want to work with thatthey aren't already, or what
lanes they need.
Then go and find the shippersthat move the freight on the
lanes that the carrier wants,because now you have the carrier
already lined up and paymentterms agreed with them.
Now go find them the freight,and then you give it right back
to the carrier, which is verydifficult to do If you don't
(09:10):
have credit and you got loads.
It's so hard to get a loadmoved in a short amount of time
like in an hour, half an hourbecause you just can't work
through all these things thatquick.
That's a great.
Speaker 1 (09:18):
It's a great tactic.
I love it.
All right, all right.
Our next question when can Icreate forms and contracts for a
new brokerage joining a lawyerto draft or review them, or are
there any reliable templates Ican use?
Yes, to both and a little bitof both, is my initial answer is
(09:50):
there are good templates.
So, tia, great model contracts.
If you're a TIA member, we'vegot a few of our own on our
website that you can look at.
But back to our conversationwith Matt Leffler, the armchair
attorney.
You should have a lawyerreviewing your contracts.
I would say before you know,this is both for like, when
you're signing them and whenyou're creating your own.
(10:11):
So I would do both.
I would probably start with amodel contract so you're not
reinventing the wheel, but thenyou're going to have your own
specific language to yourcompany that you know is in
addition to the baseline modelcontract and have a lawyer
review those like.
And here's the danger now is,like with AI, you could
(10:33):
legitimately like, just havechat GPT probably craft you up
an agreement, but I wouldn'tfeel comfortable without a you
know, a seasoned lawyer givingtheir stamp of approval on any
of any of our contracts.
And this goes with like whytransformations, broker carrier
agreements, co brokers, all thatstuff, what's your take?
Speaker 2 (10:53):
So there was a case like last year an attorney had
Chad GBT write a bunch of briefsfor a case he was trying and
one we know it hallucinates.
If it doesn't know the answer,it'll just make shit up Like so
it'll absolutely make up URLlinks that don't work, like I've
.
I just listened to this reallylong thing on like education
(11:14):
kids using this in college andthe professor just look at the
links and most of the timethey're just not real.
So that's how they can tellthey wrote it with AI.
But it's the same thing with alegal document Meaning like if
it doesn't know, it'll just makeup precedents.
Meaning like it'll referencecases that never happened.
It will put in language thatabsolutely never occurred.
(11:36):
So like this judge was readingthrough this, found this out and
he's like, researching thecases and precedents, he's like
these never happened and then herealized none of them happened
in any of these briefs and likethat guy was disbarred.
Speaker 1 (11:48):
But it goes to show you because, like here's why the
agreement really matters.
Speaker 2 (11:51):
It doesn't matter at all when things go well.
It matters only when things goto shit and you got a claim and
like the customers withholdingyour payment and the carrier
might not be responding, but youalso owe the carrier money.
They file on your bond but thecustomer won't pay you because
they said they had the rightinsurance.
And like when you work throughthese messes, that legal, the
(12:16):
legal, my mind's blankingverbiage, like how it's actually
written in that agreementdetermines what is going to
happen.
And like we're literally goingthrough ours again right now
because, like, there are thingsthat need to be updated.
If you work with a new shipperand they've got many different
things in their agreement youagree to you, better be sure you
have something similar on theother side.
(12:38):
Because, like, if you're beingheld to something and you can't
hold the carrier to it, you endup stuck in the middle with no
recourse.
So, 100%, I wouldn't use AI,maybe to research, but I
certainly wouldn't use it towrite a legal agreement and risk
my entire business on it.
Speaker 1 (12:54):
The last thing I'll say on is this is all relative
to where you're at in yourbusiness, so you don't need to
hire an attorney.
That's $1,000 an hour whenyou're a brand new broker, right
.
A thousand bucks an hour whenyou're a brand new broker right
you may be using Zoom or somesort of a service that like,
well, you know, give you ad hoc,you know, advice and all that
(13:15):
stuff as needed, versus likehaving you don't need in-house
counsel on day one.
Well, you know, to go to theextreme route.
So, yeah, it's all relative,all right.
Final question here we're asmall brokerage in need of
insurance, need to increase ourgeneral liability to 2 million
and add additional coverages,but we're having trouble finding
the right fit.
Any suggestions?
(13:36):
My advice on insurance actuallyI talked to a guy yesterday
about this and last week anotherguy about this exact same thing
.
Because, like common questionslike what do I need, where do I
find it?
And the two things I'll say islike number one, the insurance
that you need is really dictatedby your customers and you need
(13:59):
to make that decision.
You know, is the cost of thispolicy worth the business I'll
get from them?
So if someone wants $5 millionin liability and umbrella
coverage, well, it's going tocost you some money.
Is the business going to bethere to justify it.
Same thing with if they wantsome out-of-the-box rare policy
(14:21):
or a high limit, like I justmentioned.
You just got to justify that onthe business.
So that's the first thing is.
That's where your need comesfrom.
The second part is how do youget it?
Some carriers won't cover youbased on where you're at in your
journey as a broker.
But, like you know, we had MeltGodwin on a couple of years
(14:42):
back.
Right, he's an insurance broker.
Insurance brokers have the sameway that us, as freight brokers,
have, access to the open marketof motor carriers.
Insurance brokers can go shoppolicies for you, um, and find a
carrier that will underwritewhatever you're looking for, and
you typically find thedifferent options at different
prices, like I did this.
So we did this a lot.
(15:03):
Last month, when looking forcredit insurance, we had like,
here's what we want.
The broker shopped it.
We had five underwritinginsurance carriers come back and
say here is the five companies,here's what they're offering
you, here's the details of it,because they're not all credit
equally, and here's the premiumsand the deductibles, et cetera.
(15:23):
Narrowed it down to two.
They sharpened their pencil alittle bit and then we got the
one that was the best fit for us.
What do you got, ben?
Speaker 2 (15:32):
I'm going to add.
We'll add a link in the shownotes.
Cameron Pescia has been on theshow A couple times now I think
right.
Yeah, so we can throw a link inthere to go to his website.
He's a broker so he can get youdifferent options and help you
shop it and find the right fit.
Also, does a lot in our space.
Free, gives back a lot, so goodguy worth reaching out to if
(15:54):
you're really having troublefinding somebody.
Yeah, I mean I think yousummarized it Like all insurance
is is reducing risk.
If your customer's requiring it,you need to make sure whatever
you're going to pay for thatyou're going to recoup, and then
some to be able to justify it.
That's not always easy.
Shippers don't typicallyguarantee loads when you're
getting onboarded, so you've gotto justify if the cost you're
(16:17):
going to pay is going to be madeup with them.
That's also just the risk ofbeing a business owner, I mean.
I think having somebody you canactually talk to is super
important.
We talk about this a lot Likesomebody you can trust.
Talk to that when they explainthe coverage, what it actually
covers and if it covers thingsis super important because so
many shippers will requestthings that never come into play
(16:39):
, that, like I've seen brokersget what are called like dead
policies on things where they'relike oh, we want workman's comp
and we're like well, we're aremote brokerage, we don't have
an office and we're neversending employees to your site,
but the shipper wants workman'scomp to cover the carrier.
Well, even if the broker hasworkman's comp, it doesn't cover
the driver at your facilityanyway.
So this policy you're asking mefor absolutely has no situation
(17:03):
where it would pay out.
Speaker 1 (17:04):
No applicable purpose .
Speaker 2 (17:05):
No applicable purpose and, like I've talked to
insurance companies, they'relike yeah, we can create a dead
policy for 500 bucks.
We add it to you.
It is an insurance policy butit basically pays out under no
circumstance because there's nocircumstances.
What happened anyway?
So it makes the shipper happy.
They get it on the document andyou don't pay four grand for a
policy that's covering peoplethat never go there.
Speaker 1 (17:24):
Yep exactly I for a policy that's covering people
that never go there.
Yep, exactly, I've seen that alot.
I remember my boss was tellingme a customer this is like
probably like 20 years ago acustomer was like yeah, we need
you as the broker to have autoliability.
So he's like obviously theydon't know what they're asking
for because we're not a carrierand insurance guy's like I can
(17:47):
get you out of liability.
He's like take your truck, likeyour personal Chevy Silverado,
we'll call it a, we'll call it atruck that your company owns
and we'll write you an autoliability policy on it.
He's like OK, so like, butagain, would never pay out.
Speaker 2 (18:06):
So Correct Understanding what and how these
things are.
Why you need that.
It's very important and I cantell you most shippers require
things that are never going tocome into play, like the most
common thing I see I talk aboutthis constantly is most shippers
don't vet the carrier's cargoinsurance.
They just vet the brokers andwe're like okay, so you're
(18:29):
requiring me, as a broker, tohave 300 grand in contingent,
but you have no idea if thetrucks I'm sending in have any
cargo.
Hey, guess what?
Contingent cargo is not cargo,but almost every shipper just
goes.
As long as the brokerage has it, we're good and I'm like.
That effectively does nothinglike you required something.
Speaker 1 (18:46):
It's like the dumbest policy, in my opinion.
So ridiculous, but yes, anyway,good questions, keep them
coming our way.
I'm actually curious what isour audience count?
Up to now it is in our groupNinety one thousand four hundred
members.
So yeah, keep asking questions.
(19:07):
There's a lot of stuff in thatgroup.
So if you have a really goodquestion that you want to get
our attention on, just do itright through our website,
freight360.net.
That will be the best way forus to see it.
Speaker 2 (19:23):
So, final thoughts, ben, Whether you believe you can
or believe you can't, you'reright.
Speaker 1 (19:30):
And until next time go Bills.
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