June 10, 2025 • 23 mins
Stephen Ruhe & Ben Kowalski answer your freight brokering questions and discuss:
- ✅ Insurance and surety bond requirements for starting a freight brokerage in Florida
- 📦 How brokers find loads and the role of load boards vs. direct shippers
- 🚫 Handling the "we only work with asset-based carriers" objection
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Hey, welcome to this week's Final Mile episode, where
we answer all the questionsthat you guys send us, either on
YouTube you guys email usdirectly or on our Facebook
group.
So let's jump right in.
First question we have is hi, Iwould like to start a freight
brokerage company in Florida.
(00:21):
Do you know what insurance Ineed to have and how much are a
surety bond?
You want to give that one astab first.
Speaker 2 (00:30):
Yeah, so your insurance is really kind of
dependent on you know shippers,customers, what the requirements
are.
You're going to need contingentcargo and then your surety bond
.
It's 75,000.
But how you go about gettingthat?
I think I think there was somefmcsa instruction on, like uh,
(00:50):
bond versus something else.
I can't remember.
I know it changed, yeah, thetrust fund thing, but um, yeah,
that's.
That's kind of what I've got interms of insurance and bonds.
Speaker 1 (01:01):
I'll start with where they started this, saying I
would like to start a freightbrokerage.
So there's two steps, basically, what do you need to operate a
freight brokerage?
Just legally, the FMCSA isgoing to require a surety bond.
Like you said, it's either a$75,000 bond or 75 grand sitting
(01:22):
in a trust.
What is a bond Bond isbasically an insurance product
where an insurance company isgoing to say hey, we'll set
aside 75 grand for you and we'regoing to charge you a small
amount in case it gets used.
And it's way less than 75 grand.
So, like, you might pay athousand, you might pay three
grand, based on how likely it isyour company needs to use this
(01:48):
bucket of 75 grand, and how theydetermine what you're going to
pay is usually based on yourpersonal credit rating.
Like, hey, either your businessmaybe your business and you,
you've got a track record,you've got good credit, you've
paid your bills You're going topay usually a lower price for
that bond.
If you don't, you're going topay a little bit of a higher
price.
So they are priced according tothe person actually applying.
(02:10):
There's not one flat number.
I mean, that's pretty much it.
That's what you need to legallyoperate a freight brokerage.
And what is the point of thebond?
That is hey, if you do businesswith a shipper and you don't
pay your carrier, the carriergoes to that insurance company
(02:31):
who has your bond and says, hey,Benjamin's Freight Brokerage
did not pay me five grand.
The bond company reviews thesituation, decides, hey, if you
owe that trucking company moneyand you didn't pay them, they
cut them the five grand and thenyour bond amount goes down and
then your premium goes up.
Right, it works just likeinsurance, but it is a bond.
Now what you alluded to is thereare lots of other insurances
you will need to work withspecific shippers.
Those are outlined anddetermined by the shipper, not
(02:54):
the freight brokerage.
The most common insurancesthey're going to require you to
have are what you saidcontingent cargo insurance.
And the second is usually likean umbrella policy or a general
liability policy.
The third you'll sometimes seelike workers comp, which never
comes into play but can berequired, and contingent cargo.
(03:16):
This is the most oftenunderstood one by shippers and
brokers.
Contingent cargo is not the sameas cargo insurance.
So, just basically speaking, ifI hire Steven's trucking
company, he has a hundred grandin cargo insurance.
My shipper is going to requirethat I have contingent cargo
(03:36):
insurance, usually for a hundredgrand.
Okay, well, the shipperrequires to vet me the broker
for that contingent cargo.
Most shippers don't understandthat contingent cargo does not
pay a claim.
If there's a claim on the loadI ran with Stephen's company for
80 grand that claim is filed onthe carrier, because the
carrier is the only type ofentity.
(03:56):
You need to own a truck to havecargo insurance.
Contingent cargo is required byshippers but rarely comes into
play and only pays out in veryobscure situations where
something should have happenedthat didn't happen and we can
bring somebody on insurance toreally go into it.
But they rarely ever come intoplay.
But almost all of thebrokerages have contingent cargo
(04:17):
, mostly because shippersrequire it.
But it rarely comes in andactually pays out.
Rarely comes in and actuallypays out.
The same with workers' comp.
I'm never sending an employee tomy shipper's facility where
they could get hurt, fall benear a forklift, fall off a
truck or a dock.
That's why they want it.
That's why a carrier has it.
But they often require brokersto have the same requirements as
(04:38):
their motor carriers forsimplicity and liability.
But our insurance is nowherenear the same, does the same
thing or covers the same thingas a motor carrier.
That's why the main function inour job, and why it's so
important to do this correctly,is vetting your carrier's
insurance, because the realityis is what it really looks like
(04:59):
for a freight broker is myshipper gives me their insurance
requirements I got to meetwhatever it is to just get a
load, but my job every day isthat every time I send a truck
in, I've got to make sure thoserequirements are met by the
companies I hire, because theirinsurance is the one that is
really protecting my shipper andtheir cargo Right and just to
(05:20):
add a little extra to that isyou know, what a lot of brokers
miss is exclusions on cargoinsurance.
Speaker 2 (05:28):
Yeah, Go through a couple, yeah.
So the Prime example is seafood.
A lot of people do notunderstand that seafood is
typically not covered oninsurance and if you're not
looking for that exclusion listor getting a breakdown of the
whole insurance policy and youhaul seafood with this carrier,
it is 100% not going to getcovered.
Speaker 1 (05:49):
Reefer breakdown insurance.
Speaker 2 (05:51):
Yeah, reefer breakdown, errors and emissions,
things like that.
Yeah, reefer breakdown, errorsand emissions, you know things
like that Like, for example,like a reefer breakdown if if
they have cargo insurance andthey have reefer coverage, but
if a reefer breaks down becauseof a driver's error, reefer
breakdown coverage will notapply.
Speaker 1 (06:23):
Yeah, If it runs out of fuel because the driver
didn't put fuel in.
You know different things likethat.
So, like looking into thepolicy is also as important as
making sure they have thatnumber that covers the cargo
value.
You really should, If you own acompany, train all of your
carrier team and your brokers tounderstand the basics of
insurance.
So, like scheduled auto versusall auto versus like leased on
trucks versus rented trucks thatare rented or leased by the
(06:44):
carrier that has a staff driverin it.
There's all very differentspecifics on which ones apply
and which ones don't.
And if you don't know this, youcould be hiring a truck that
you think is insured and itdoesn't.
And if you don't know this, youcould be hiring a truck that
you think is insured and itdoesn't.
The other is just a simplemaking sure when you book a
carrier you ask the driver ontheir checkout is your reefer in
good working order and everyonegoes well, why does that matter
(07:06):
?
Like that seems like a sillything to ask and I'll give you
an example of like.
I had an instance one time yearsago where somebody booked a
reefer.
They forgot to ask the driver.
The driver had an instance onetime years ago where somebody
booked a reefer, they forgot toask the driver.
The driver had an alert on histruck.
It wasn't related to the reefer, it was related to, like an oil
filter, right.
But since that alert went intothe computer of that carrier
(07:28):
before they picked up the load,the reefer wasn't working right.
There was a claim and theirinsurance said no like we're not
paying this claim because therewas an alert for maintenance
and this driver should have hadthis truck checked by an
authorized maintenance person,you know a facility, before they
loaded.
Since they didn't, even thoughit wasn't a reefer alert, we're
(07:49):
not paying the claim.
So it's very important thatyou're checking and making sure
that the drivers are bookingknow whether or not their
equipment is in good workingorder because that is a
determining fact and whether ornot that insurance will actually
pay if something goes wrong yep, yeah, and I've got um, I
require it now and everything.
Speaker 2 (08:06):
But one of my customers I started doing it
ahead of time was, uh, makingsure that whatever reefer
they're using is new enough thatthe information can be
downloaded, whether it's at ashop or they can do it remotely,
like if I can't download thelogs from your reefer, that
you're not going to halt myfreight it's just, and nine
times out of ten you don't needit.
(08:26):
Everything goes great, but it'sthat one edge case that could
really put, ruin your your week,your, your month or your year,
you know they're huge.
Speaker 1 (08:35):
I mean you're talking about trying to make a hundred
or 200 bucks on a load here andthere you end up in a scenario
like this.
You could lose a hundredthousand dollars like that.
So these are not small things,all right.
Next question I appreciate thevaluable information you share
with the community.
I've got three questions.
The spot market for loads isn'tnecessarily available on load
(08:57):
boards.
Can brokers find loads directlyon those boards or is the only
way to secure shipments to finda customer or shipper
independently and then to postthose loads to move their
freight?
Thanks for your time.
Yes, kind of answered your ownquestion.
The only way for you to secureloads as a freight broker is
(09:18):
directly from a shipper.
Then you use the load boards tonegotiate or to find a carrier.
Carriers can find loads on aload board because brokers put
them there, but a carrierdoesn't have a license to give
that load to another party.
That's why it primarily worksthat way.
Brokers, as intermediaries, weare licensed to take a load from
a shipper and then negotiate itwith a carrier.
(09:41):
Carrier can only take it andthen haul it.
So that's why you see carrierson the load board and brokers
Shippers technically could useit but don't, and for one
primary reason they're not built, staffed or usually have the
software and tools to vetcarriers very quickly, get them
onboarded very fast and book aload in a short amount of time.
That's the value brokers provideto shippers.
(10:03):
That shippers can't typicallydo, which is also another reason
why when all these carriers saywe don't need brokers, we'll
just work with shippers directly, I don't think they necessarily
understand shippers wouldn't dothat, because shippers don't
have the staff, the software orthe understanding to do this
quickly or the operatingprotocols from their legal and
(10:23):
risk teams.
Just because a shipper hiredmore people theoretically other
brokers and they go oh, I coulddo this.
Most of the time their legaland risk team won't allow them
to onboard a carrier in 30seconds to two minutes the way a
freight broker does, becausethat's not the business they're
in, that's not what they do,right?
Speaker 2 (10:42):
yeah, it's, definitely it's.
It's a uh, you know it's a costof doing business for them
rather than the actual nature ofthe business.
And, uh, and one of the thingsI kind of want to point out to
the whole, you know anyone out,especially if they're not
knowledgeable of the business,like, well, is there like a load
board I can go to?
No, you can't.
But on top of that, I was in aconversation with Ken Adamo and
(11:06):
Craig Fuller Ken Adamo with DATand Craig Fuller with
Freightways and Sonar and theyboth agreed that you know at any
given time whether the market'sgood or bad.
The spot freight that you seeon load boards makes up anywhere
from 2% to 6% of all domesticfreight Yep.
So why would you go to thesmallest basket to get business?
(11:28):
You got to go elsewhere and youcan't even get business there
anyways as a broker.
But why would you go there inthe first place?
Speaker 1 (11:39):
Very, very true.
All right, Next up, we onlywork with asset-based companies.
If I give you a load, I'mtaking all the risk and you've
got no skin in the game Ifthings go wrong.
How would you handle this verycommon objection?
It is a very common objectionand it's not untrue.
If you don't have a contractwith a shipper, right Like you,
really don't have liability,you're just the intermediary,
(12:00):
which means if you hire rightLike you really don't have
liability, you're just theintermediary.
Which means if you hire atrucking company that doesn't
have the insurance, doesn't havethe right equipment, has, like
you said, a reefer that isbroken down and isn't maintained
and there's a claim if there'san accident or if the load gets
(12:20):
stolen, as a broker you reallydon't have any skin in the game
and the only thing a shipper cando is not pay you for one load.
So, unless the shipper owes youa whole lot of money from other
loads they've ran, that is theonly skin you have in the game,
which is why shippers will oftenhold 50 or 100 grand in
unrelated invoices if a claimhappens, because we don't as
(12:41):
brokers, we're intermediaries,we don't own trucks.
If they sue us, there's notmuch they can go after in assets
.
That's a very real risk thatshippers take when using brokers
.
Why do they do that?
Because most of them still needbrokers to get them trucks last
minute to be able to hire andvet them, like we said earlier,
very quickly.
They're not built to do that.
(13:01):
So a shipper that only workswith motor carriers probably
doesn't have a lot of freightevery day, meaning they probably
ship less than 20 loads a week,which means if that truck can't
make it that they booked theycan wait until the next day when
another carrier can come in.
Not every shipper has thatability.
So the first thing I would sayis like if a shipper is loading
(13:22):
such a small volume, like fiveto 10 loads a week, sometimes
they don't need a broker becauseagain their freight can sit
there an extra day or two and itdoesn't have a negative effect
on their business.
So it makes sense for them toonly work with carriers 20 to 25
loads a week, five to 10 a day.
Like they almost have to use abroker because too much of their
(13:43):
freight would get backed upbecause of trucks just getting
stuck in traffic and held up atreceivers.
So that's the thing tounderstand from the shipper's
point of view, from a brokerhandling the objection, how do
you handle this one Well?
Speaker 2 (13:54):
the first thing is yeah, so the person is comes off
a standoffish right Because youknow you have no, you have no
risk.
And so you comes off astandoffish right Because you
know you have no, you have norisk.
And, uh, so you want to, youwant to step that down a little
bit.
Well, you know, what I wouldsay is I'm sorry you feel that
way about brokers.
Obviously you've been burned inthe past.
But let me ask you are you justnot using brokers at all, um,
(14:17):
in your business?
And then they'll give you somemore information.
And so you're alluding to thefact that there are bad brokers.
You've obviously had a badsituation.
But then you end it with so youjust don't use any brokers at
all, right, and maybe they'lltell you, no, we don't.
And you can try to dig in alittle bit more with well, what
(14:38):
are you using assets for?
Do you have a lot of volume?
Just kind of trying to get theinformation you were talking
about out of them, and you knowthey may just be irritated and
not want to talk to you that day, and that's something like, hey
, this is the information I got,and then two or three weeks, a
month, later, you've called themback.
Speaker 1 (14:54):
Yeah, yeah, and it's a good first step.
You've got to be able to getmore information to be able to
progress it.
I think that's the first thingin an objection.
I think the way that I approachthem is like I don't ever
approach them combatively, right, because it's like saying it's
like you might win the battlebut you're going to lose the war
.
I'm not trying to prove themwrong, right.
I'm trying to get them to trustme and to provide more
(15:15):
information to see if there's anopportunity.
So the only thing different islike I'm going to just address a
head on and be like yeah,absolutely.
I mean there's very differentliability for a broker than
directly with a motor carrier,right For sure.
There's different things incase law.
There's different things inliability.
Out of curiosity, like do youguys have a shipper broker
agreement in place?
(15:35):
Would be the first question Iask, and they might say, no, why
would I need that?
And I can say, well, you know,I have other customers that they
put things in their agreementsthat do move the risk onto
brokers differently than if wedon't have one, whether it's
subrogation, whether it'sincreased liability, whether
it's the ability to withholdpayments of unrelated loads if
(15:56):
something goes wrong.
There are things we can put inwriting that can make you feel a
little more comfortable withthat risk.
But even putting that aside,steven, the thing I would also
ask is like, hey, you know, likewhat is your kind of load
volume look like on a daily,weekly business?
Like it might not make sensefor you guys to use brokers If
you don't need trucks lastminute and you don't have orders
coming in that need to go outin a short amount of time.
(16:16):
Like it might make sense foryou just to work with carriers.
Can you tell me a little bitabout, like, your load volume
and your need to get producteither picked up or delivered?
Because if they come back andsay, yeah, you know what, like
we ship whatever buildingmaterials and none of it really
needs to go out same day, we'veusually got three or four days
to get a load picked up anddelivered and we got plenty of
(16:37):
space at the warehouse and mycustomer doesn't need it that
fast.
Hey, that makes perfect sense.
If you ever do need anything, alast minute load, shoot me an
email.
I'd be happy to help.
We can get some things inwriting to help you with the
liability, but it sounds likeyou really don't have a need for
a broker, because now I'mbuilding trust by going directly
at their concern, explainingthere are things we could do.
(16:57):
If that makes sense.
Maybe it doesn't trying tounderstand a little bit more,
like you said, about theiroperations to see if, hey, if
there are instances where youmight need that or a project
maybe or things like hey, we cantake a look at it with you and
take the steps to make you feela little safer and more secure
and I can use maybe, possibly,if that does come up like a
third party story right Of likehey, I've got other customers
(17:18):
that have expressed this concern.
We've gotten agreements inwriting that put more of that
risk on us.
As brokers We'll take more ofthe responsibility, as we should
, to make you feel better andalso maybe we'll negotiate the
right for you to withhold moneyshould anything go wrong.
So you know we do have skin inthe game because the reality is
is on the first load or twothere's not much skin.
But if you're moving 10 loads aweek with me as a broker, I do
(17:41):
have skin in the game becauseyou probably owe me four weeks,
10 loads a week.
You might have accountsreceivable to me at any given
time of 100 or 150 grand.
So, like, there are skin in thegame in the scenario as things
progress in a relationship.
Being able to walk through andexplain how you could mitigate
those individually could createan opportunity.
(18:03):
Or you might find out at theend of this conversation or, to
your point, two or threeconversations.
There really isn't anopportunity.
But this is the job of asalesperson it's to understand
their concerns, walk throughthem, find out whether or not
you can address them and if youcan address them in a way that
makes them comfortable enough towork with you.
Sometimes the answer is no, butsometimes it's yes.
(18:25):
And it's an odds game, right?
Like, do this 20 times a day,you'll get one or two that work
out and probably 18 no's right.
Your job isn't to get everybodyto say yes to you.
Your job is to find the rightfit and it is weeding through a
lot of no's to get to the yes.
That's why we get paid as salespeople.
(18:45):
It's not because everyone youcall is getting giving you a yes
.
You wouldn't get paid a lot ofcommission if that was the case.
Speaker 2 (18:49):
You can hire anybody to do that job right.
Speaker 1 (18:51):
The job of a salesperson is really to address
more no's than you're ever toget yes.
It is a job that shouldn't becalled sales.
I always say like it should becalled rejection, because that's
what you do all day.
You get rejected all day andmaybe get a yes.
That's really what sales is.
Speaker 2 (19:06):
Right, and and one of the like.
So the thing most people hateand you know I'm generalizing,
but it's probably prettyaccurate the most thing most
people hate is getting stuck onsales calls.
You answer the phone, they saysomething that kind of hooks you
in the first like 20 secondsand then you realize, oh, this
(19:32):
is a sales call, um, but whatpeople do like to talk about is
themselves or their job or whatthey're interested in.
So one of the things, um, thatI tried to tailor all my
communication to, whether it'semail or on the phone, is, you
know, I tried to get across thisisn't a sales call, without
saying the words this is not asales call, um, and showing
general interest in theiroperations, like I want to learn
(19:54):
more about what you're doing sothat I know if I want to work
with you or not.
And also conveying that I don'tknow if I want you to be my
customer, but I do want to knowmore about your business, is
also something that is going tomake them step back and think,
because most of the phone callsare getting 15, 20, 30 a day.
(20:15):
Are people like, hey, we've gotthe cheapest freights with the
most?
Speaker 1 (20:20):
trucks we can clearly want.
We can do all this.
Don't know anything about you.
Yeah, and it's.
It's like self-interested.
Speaker 2 (20:26):
Yeah, yeah, it's every sales call you get, like
right now I'm getting a bunch oflike estate calls, like hey,
we've got this silver that wegot off this estate sale, and
then within like the first 45seconds I'm like, dude, I can't
talk to you right now.
You're, you're driving me nuts.
It's definitely feeling outthat just conveying that right
(20:47):
away, that like it's not a salescall.
I just want to talk to youabout your thing and see if I
want to work with you.
Speaker 1 (20:54):
My favorite can line.
For that is hey, look, Igenuinely don't know if we'd be
a fit to work together at all,but hey, for this reason, this
reason and this reason, Ithought it was worth a
conversation to chat to see ifit might be a fit.
But again, like I don't evenknow if we could work with you,
but I thought it was worth ashort conversation to see if,
hey, this lane I think you guysrun works really well for this
other customer I run.
It seems like the lanes matchup If the days of the week seem
(21:17):
to match, no-transcript givingyou a ring right, just trying to
connect with them, telling themvery quickly why you think it
might be a fit.
Speaker 2 (21:33):
But I always take all the pressure out of the room,
you can understand a little bitmore of whether that is a fit
and then see where it goes fromthere.
Speaker 1 (21:50):
Yep, A hundred percent agree.
Great man.
Any final thoughts?
Speaker 2 (21:53):
No, yeah, keep leaving us questions comments.
Let us know what you're workingon, what areas you're seeing
problems in, and ask us thequestions so we can keep
answering them every week.
Speaker 1 (22:05):
Sweet and remember whether you believe you can or
believe you can't, you're right.
Hey, welcome to this week's Final Mile episode, where
we answer all the questionsthat you guys send us, either on
YouTube you guys email usdirectly or on our Facebook
group.
So let's jump right in.
First question we have is hi, Iwould like to start a freight
brokerage company in Florida.
(00:21):
Do you know what insurance Ineed to have and how much are a
surety bond?
You want to give that one astab first.
Speaker 2 (00:30):
Yeah, so your insurance is really kind of
dependent on you know shippers,customers, what the requirements
are.
You're going to need contingentcargo and then your surety bond
.
It's 75,000.
But how you go about gettingthat?
I think I think there was somefmcsa instruction on, like uh,
(00:50):
bond versus something else.
I can't remember.
I know it changed, yeah, thetrust fund thing, but um, yeah,
that's.
That's kind of what I've got interms of insurance and bonds.
Speaker 1 (01:01):
I'll start with where they started this, saying I
would like to start a freightbrokerage.
So there's two steps, basically, what do you need to operate a
freight brokerage?
Just legally, the FMCSA isgoing to require a surety bond.
Like you said, it's either a$75,000 bond or 75 grand sitting
(01:22):
in a trust.
What is a bond Bond isbasically an insurance product
where an insurance company isgoing to say hey, we'll set
aside 75 grand for you and we'regoing to charge you a small
amount in case it gets used.
And it's way less than 75 grand.
So, like, you might pay athousand, you might pay three
grand, based on how likely it isyour company needs to use this
(01:48):
bucket of 75 grand, and how theydetermine what you're going to
pay is usually based on yourpersonal credit rating.
Like, hey, either your businessmaybe your business and you,
you've got a track record,you've got good credit, you've
paid your bills You're going topay usually a lower price for
that bond.
If you don't, you're going topay a little bit of a higher
price.
So they are priced according tothe person actually applying.
(02:10):
There's not one flat number.
I mean, that's pretty much it.
That's what you need to legallyoperate a freight brokerage.
And what is the point of thebond?
That is hey, if you do businesswith a shipper and you don't
pay your carrier, the carriergoes to that insurance company
(02:31):
who has your bond and says, hey,Benjamin's Freight Brokerage
did not pay me five grand.
The bond company reviews thesituation, decides, hey, if you
owe that trucking company moneyand you didn't pay them, they
cut them the five grand and thenyour bond amount goes down and
then your premium goes up.
Right, it works just likeinsurance, but it is a bond.
Now what you alluded to is thereare lots of other insurances
you will need to work withspecific shippers.
Those are outlined anddetermined by the shipper, not
(02:54):
the freight brokerage.
The most common insurancesthey're going to require you to
have are what you saidcontingent cargo insurance.
And the second is usually likean umbrella policy or a general
liability policy.
The third you'll sometimes seelike workers comp, which never
comes into play but can berequired, and contingent cargo.
(03:16):
This is the most oftenunderstood one by shippers and
brokers.
Contingent cargo is not the sameas cargo insurance.
So, just basically speaking, ifI hire Steven's trucking
company, he has a hundred grandin cargo insurance.
My shipper is going to requirethat I have contingent cargo
(03:36):
insurance, usually for a hundredgrand.
Okay, well, the shipperrequires to vet me the broker
for that contingent cargo.
Most shippers don't understandthat contingent cargo does not
pay a claim.
If there's a claim on the loadI ran with Stephen's company for
80 grand that claim is filed onthe carrier, because the
carrier is the only type ofentity.
(03:56):
You need to own a truck to havecargo insurance.
Contingent cargo is required byshippers but rarely comes into
play and only pays out in veryobscure situations where
something should have happenedthat didn't happen and we can
bring somebody on insurance toreally go into it.
But they rarely ever come intoplay.
But almost all of thebrokerages have contingent cargo
(04:17):
, mostly because shippersrequire it.
But it rarely comes in andactually pays out.
Rarely comes in and actuallypays out.
The same with workers' comp.
I'm never sending an employee tomy shipper's facility where
they could get hurt, fall benear a forklift, fall off a
truck or a dock.
That's why they want it.
That's why a carrier has it.
But they often require brokersto have the same requirements as
(04:38):
their motor carriers forsimplicity and liability.
But our insurance is nowherenear the same, does the same
thing or covers the same thingas a motor carrier.
That's why the main function inour job, and why it's so
important to do this correctly,is vetting your carrier's
insurance, because the realityis is what it really looks like
(04:59):
for a freight broker is myshipper gives me their insurance
requirements I got to meetwhatever it is to just get a
load, but my job every day isthat every time I send a truck
in, I've got to make sure thoserequirements are met by the
companies I hire, because theirinsurance is the one that is
really protecting my shipper andtheir cargo Right and just to
(05:20):
add a little extra to that isyou know, what a lot of brokers
miss is exclusions on cargoinsurance.
Speaker 2 (05:28):
Yeah, Go through a couple, yeah.
So the Prime example is seafood.
A lot of people do notunderstand that seafood is
typically not covered oninsurance and if you're not
looking for that exclusion listor getting a breakdown of the
whole insurance policy and youhaul seafood with this carrier,
it is 100% not going to getcovered.
Speaker 1 (05:49):
Reefer breakdown insurance.
Speaker 2 (05:51):
Yeah, reefer breakdown, errors and emissions,
things like that.
Yeah, reefer breakdown, errorsand emissions, you know things
like that Like, for example,like a reefer breakdown if if
they have cargo insurance andthey have reefer coverage, but
if a reefer breaks down becauseof a driver's error, reefer
breakdown coverage will notapply.
Speaker 1 (06:23):
Yeah, If it runs out of fuel because the driver
didn't put fuel in.
You know different things likethat.
So, like looking into thepolicy is also as important as
making sure they have thatnumber that covers the cargo
value.
You really should, If you own acompany, train all of your
carrier team and your brokers tounderstand the basics of
insurance.
So, like scheduled auto versusall auto versus like leased on
trucks versus rented trucks thatare rented or leased by the
(06:44):
carrier that has a staff driverin it.
There's all very differentspecifics on which ones apply
and which ones don't.
And if you don't know this, youcould be hiring a truck that
you think is insured and itdoesn't.
And if you don't know this, youcould be hiring a truck that
you think is insured and itdoesn't.
The other is just a simplemaking sure when you book a
carrier you ask the driver ontheir checkout is your reefer in
good working order and everyonegoes well, why does that matter
(07:06):
?
Like that seems like a sillything to ask and I'll give you
an example of like.
I had an instance one time yearsago where somebody booked a
reefer.
They forgot to ask the driver.
The driver had an instance onetime years ago where somebody
booked a reefer, they forgot toask the driver.
The driver had an alert on histruck.
It wasn't related to the reefer, it was related to, like an oil
filter, right.
But since that alert went intothe computer of that carrier
(07:28):
before they picked up the load,the reefer wasn't working right.
There was a claim and theirinsurance said no like we're not
paying this claim because therewas an alert for maintenance
and this driver should have hadthis truck checked by an
authorized maintenance person,you know a facility, before they
loaded.
Since they didn't, even thoughit wasn't a reefer alert, we're
(07:49):
not paying the claim.
So it's very important thatyou're checking and making sure
that the drivers are bookingknow whether or not their
equipment is in good workingorder because that is a
determining fact and whether ornot that insurance will actually
pay if something goes wrong yep, yeah, and I've got um, I
require it now and everything.
Speaker 2 (08:06):
But one of my customers I started doing it
ahead of time was, uh, makingsure that whatever reefer
they're using is new enough thatthe information can be
downloaded, whether it's at ashop or they can do it remotely,
like if I can't download thelogs from your reefer, that
you're not going to halt myfreight it's just, and nine
times out of ten you don't needit.
(08:26):
Everything goes great, but it'sthat one edge case that could
really put, ruin your your week,your, your month or your year,
you know they're huge.
Speaker 1 (08:35):
I mean you're talking about trying to make a hundred
or 200 bucks on a load here andthere you end up in a scenario
like this.
You could lose a hundredthousand dollars like that.
So these are not small things,all right.
Next question I appreciate thevaluable information you share
with the community.
I've got three questions.
The spot market for loads isn'tnecessarily available on load
(08:57):
boards.
Can brokers find loads directlyon those boards or is the only
way to secure shipments to finda customer or shipper
independently and then to postthose loads to move their
freight?
Thanks for your time.
Yes, kind of answered your ownquestion.
The only way for you to secureloads as a freight broker is
(09:18):
directly from a shipper.
Then you use the load boards tonegotiate or to find a carrier.
Carriers can find loads on aload board because brokers put
them there, but a carrierdoesn't have a license to give
that load to another party.
That's why it primarily worksthat way.
Brokers, as intermediaries, weare licensed to take a load from
a shipper and then negotiate itwith a carrier.
(09:41):
Carrier can only take it andthen haul it.
So that's why you see carrierson the load board and brokers
Shippers technically could useit but don't, and for one
primary reason they're not built, staffed or usually have the
software and tools to vetcarriers very quickly, get them
onboarded very fast and book aload in a short amount of time.
That's the value brokers provideto shippers.
(10:03):
That shippers can't typicallydo, which is also another reason
why when all these carriers saywe don't need brokers, we'll
just work with shippers directly, I don't think they necessarily
understand shippers wouldn't dothat, because shippers don't
have the staff, the software orthe understanding to do this
quickly or the operatingprotocols from their legal and
(10:23):
risk teams.
Just because a shipper hiredmore people theoretically other
brokers and they go oh, I coulddo this.
Most of the time their legaland risk team won't allow them
to onboard a carrier in 30seconds to two minutes the way a
freight broker does, becausethat's not the business they're
in, that's not what they do,right?
Speaker 2 (10:42):
yeah, it's, definitely it's.
It's a uh, you know it's a costof doing business for them
rather than the actual nature ofthe business.
And, uh, and one of the thingsI kind of want to point out to
the whole, you know anyone out,especially if they're not
knowledgeable of the business,like, well, is there like a load
board I can go to?
No, you can't.
But on top of that, I was in aconversation with Ken Adamo and
(11:06):
Craig Fuller Ken Adamo with DATand Craig Fuller with
Freightways and Sonar and theyboth agreed that you know at any
given time whether the market'sgood or bad.
The spot freight that you seeon load boards makes up anywhere
from 2% to 6% of all domesticfreight Yep.
So why would you go to thesmallest basket to get business?
(11:28):
You got to go elsewhere and youcan't even get business there
anyways as a broker.
But why would you go there inthe first place?
Speaker 1 (11:39):
Very, very true.
All right, Next up, we onlywork with asset-based companies.
If I give you a load, I'mtaking all the risk and you've
got no skin in the game Ifthings go wrong.
How would you handle this verycommon objection?
It is a very common objectionand it's not untrue.
If you don't have a contractwith a shipper, right Like you,
really don't have liability,you're just the intermediary,
(12:00):
which means if you hire rightLike you really don't have
liability, you're just theintermediary.
Which means if you hire atrucking company that doesn't
have the insurance, doesn't havethe right equipment, has, like
you said, a reefer that isbroken down and isn't maintained
and there's a claim if there'san accident or if the load gets
(12:20):
stolen, as a broker you reallydon't have any skin in the game
and the only thing a shipper cando is not pay you for one load.
So, unless the shipper owes youa whole lot of money from other
loads they've ran, that is theonly skin you have in the game,
which is why shippers will oftenhold 50 or 100 grand in
unrelated invoices if a claimhappens, because we don't as
(12:41):
brokers, we're intermediaries,we don't own trucks.
If they sue us, there's notmuch they can go after in assets
.
That's a very real risk thatshippers take when using brokers
.
Why do they do that?
Because most of them still needbrokers to get them trucks last
minute to be able to hire andvet them, like we said earlier,
very quickly.
They're not built to do that.
(13:01):
So a shipper that only workswith motor carriers probably
doesn't have a lot of freightevery day, meaning they probably
ship less than 20 loads a week,which means if that truck can't
make it that they booked theycan wait until the next day when
another carrier can come in.
Not every shipper has thatability.
So the first thing I would sayis like if a shipper is loading
(13:22):
such a small volume, like fiveto 10 loads a week, sometimes
they don't need a broker becauseagain their freight can sit
there an extra day or two and itdoesn't have a negative effect
on their business.
So it makes sense for them toonly work with carriers 20 to 25
loads a week, five to 10 a day.
Like they almost have to use abroker because too much of their
(13:43):
freight would get backed upbecause of trucks just getting
stuck in traffic and held up atreceivers.
So that's the thing tounderstand from the shipper's
point of view, from a brokerhandling the objection, how do
you handle this one Well?
Speaker 2 (13:54):
the first thing is yeah, so the person is comes off
a standoffish right Because youknow you have no, you have no
risk.
And so you comes off astandoffish right Because you
know you have no, you have norisk.
And, uh, so you want to, youwant to step that down a little
bit.
Well, you know, what I wouldsay is I'm sorry you feel that
way about brokers.
Obviously you've been burned inthe past.
But let me ask you are you justnot using brokers at all, um,
(14:17):
in your business?
And then they'll give you somemore information.
And so you're alluding to thefact that there are bad brokers.
You've obviously had a badsituation.
But then you end it with so youjust don't use any brokers at
all, right, and maybe they'lltell you, no, we don't.
And you can try to dig in alittle bit more with well, what
(14:38):
are you using assets for?
Do you have a lot of volume?
Just kind of trying to get theinformation you were talking
about out of them, and you knowthey may just be irritated and
not want to talk to you that day, and that's something like, hey
, this is the information I got,and then two or three weeks, a
month, later, you've called themback.
Speaker 1 (14:54):
Yeah, yeah, and it's a good first step.
You've got to be able to getmore information to be able to
progress it.
I think that's the first thingin an objection.
I think the way that I approachthem is like I don't ever
approach them combatively, right, because it's like saying it's
like you might win the battlebut you're going to lose the war
.
I'm not trying to prove themwrong, right.
I'm trying to get them to trustme and to provide more
(15:15):
information to see if there's anopportunity.
So the only thing different islike I'm going to just address a
head on and be like yeah,absolutely.
I mean there's very differentliability for a broker than
directly with a motor carrier,right For sure.
There's different things incase law.
There's different things inliability.
Out of curiosity, like do youguys have a shipper broker
agreement in place?
(15:35):
Would be the first question Iask, and they might say, no, why
would I need that?
And I can say, well, you know,I have other customers that they
put things in their agreementsthat do move the risk onto
brokers differently than if wedon't have one, whether it's
subrogation, whether it'sincreased liability, whether
it's the ability to withholdpayments of unrelated loads if
(15:56):
something goes wrong.
There are things we can put inwriting that can make you feel a
little more comfortable withthat risk.
But even putting that aside,steven, the thing I would also
ask is like, hey, you know, likewhat is your kind of load
volume look like on a daily,weekly business?
Like it might not make sensefor you guys to use brokers If
you don't need trucks lastminute and you don't have orders
coming in that need to go outin a short amount of time.
(16:16):
Like it might make sense foryou just to work with carriers.
Can you tell me a little bitabout, like, your load volume
and your need to get producteither picked up or delivered?
Because if they come back andsay, yeah, you know what, like
we ship whatever buildingmaterials and none of it really
needs to go out same day, we'veusually got three or four days
to get a load picked up anddelivered and we got plenty of
(16:37):
space at the warehouse and mycustomer doesn't need it that
fast.
Hey, that makes perfect sense.
If you ever do need anything, alast minute load, shoot me an
email.
I'd be happy to help.
We can get some things inwriting to help you with the
liability, but it sounds likeyou really don't have a need for
a broker, because now I'mbuilding trust by going directly
at their concern, explainingthere are things we could do.
(16:57):
If that makes sense.
Maybe it doesn't trying tounderstand a little bit more,
like you said, about theiroperations to see if, hey, if
there are instances where youmight need that or a project
maybe or things like hey, we cantake a look at it with you and
take the steps to make you feela little safer and more secure
and I can use maybe, possibly,if that does come up like a
third party story right Of likehey, I've got other customers
(17:18):
that have expressed this concern.
We've gotten agreements inwriting that put more of that
risk on us.
As brokers We'll take more ofthe responsibility, as we should
, to make you feel better andalso maybe we'll negotiate the
right for you to withhold moneyshould anything go wrong.
So you know we do have skin inthe game because the reality is
is on the first load or twothere's not much skin.
But if you're moving 10 loads aweek with me as a broker, I do
(17:41):
have skin in the game becauseyou probably owe me four weeks,
10 loads a week.
You might have accountsreceivable to me at any given
time of 100 or 150 grand.
So, like, there are skin in thegame in the scenario as things
progress in a relationship.
Being able to walk through andexplain how you could mitigate
those individually could createan opportunity.
(18:03):
Or you might find out at theend of this conversation or, to
your point, two or threeconversations.
There really isn't anopportunity.
But this is the job of asalesperson it's to understand
their concerns, walk throughthem, find out whether or not
you can address them and if youcan address them in a way that
makes them comfortable enough towork with you.
Sometimes the answer is no, butsometimes it's yes.
(18:25):
And it's an odds game, right?
Like, do this 20 times a day,you'll get one or two that work
out and probably 18 no's right.
Your job isn't to get everybodyto say yes to you.
Your job is to find the rightfit and it is weeding through a
lot of no's to get to the yes.
That's why we get paid as salespeople.
(18:45):
It's not because everyone youcall is getting giving you a yes
.
You wouldn't get paid a lot ofcommission if that was the case.
Speaker 2 (18:49):
You can hire anybody to do that job right.
Speaker 1 (18:51):
The job of a salesperson is really to address
more no's than you're ever toget yes.
It is a job that shouldn't becalled sales.
I always say like it should becalled rejection, because that's
what you do all day.
You get rejected all day andmaybe get a yes.
That's really what sales is.
Speaker 2 (19:06):
Right, and and one of the like.
So the thing most people hateand you know I'm generalizing,
but it's probably prettyaccurate the most thing most
people hate is getting stuck onsales calls.
You answer the phone, they saysomething that kind of hooks you
in the first like 20 secondsand then you realize, oh, this
(19:32):
is a sales call, um, but whatpeople do like to talk about is
themselves or their job or whatthey're interested in.
So one of the things, um, thatI tried to tailor all my
communication to, whether it'semail or on the phone, is, you
know, I tried to get across thisisn't a sales call, without
saying the words this is not asales call, um, and showing
general interest in theiroperations, like I want to learn
(19:54):
more about what you're doing sothat I know if I want to work
with you or not.
And also conveying that I don'tknow if I want you to be my
customer, but I do want to knowmore about your business, is
also something that is going tomake them step back and think,
because most of the phone callsare getting 15, 20, 30 a day.
(20:15):
Are people like, hey, we've gotthe cheapest freights with the
most?
Speaker 1 (20:20):
trucks we can clearly want.
We can do all this.
Don't know anything about you.
Yeah, and it's.
It's like self-interested.
Speaker 2 (20:26):
Yeah, yeah, it's every sales call you get, like
right now I'm getting a bunch oflike estate calls, like hey,
we've got this silver that wegot off this estate sale, and
then within like the first 45seconds I'm like, dude, I can't
talk to you right now.
You're, you're driving me nuts.
It's definitely feeling outthat just conveying that right
(20:47):
away, that like it's not a salescall.
I just want to talk to youabout your thing and see if I
want to work with you.
Speaker 1 (20:54):
My favorite can line.
For that is hey, look, Igenuinely don't know if we'd be
a fit to work together at all,but hey, for this reason, this
reason and this reason, Ithought it was worth a
conversation to chat to see ifit might be a fit.
But again, like I don't evenknow if we could work with you,
but I thought it was worth ashort conversation to see if,
hey, this lane I think you guysrun works really well for this
other customer I run.
It seems like the lanes matchup If the days of the week seem
(21:17):
to match, no-transcript givingyou a ring right, just trying to
connect with them, telling themvery quickly why you think it
might be a fit.
Speaker 2 (21:33):
But I always take all the pressure out of the room,
you can understand a little bitmore of whether that is a fit
and then see where it goes fromthere.
Speaker 1 (21:50):
Yep, A hundred percent agree.
Great man.
Any final thoughts?
Speaker 2 (21:53):
No, yeah, keep leaving us questions comments.
Let us know what you're workingon, what areas you're seeing
problems in, and ask us thequestions so we can keep
answering them every week.
Speaker 1 (22:05):
Sweet and remember whether you believe you can or
believe you can't, you're right.
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