How Many Brokers Is Enough?

May I speak candidly with you for a moment? I have an idea about how brokering works best which may be of interest to you. I firmly believe that, through a good working trust relationship between you and your transportation broker(s), you can get the best transportation for the least cost.

Let’s take an example from the real estate industry. How confusing and inefficient it would be to have more than one broker representing the sale of a home at any one time? Can you imagine several different “yard signs” out in front of a house, and interested parties trying to decide which one to call? Then, having several agents trying to schedule “Open Houses” & “Showings” with the seller. Or, worse yet, (from the sellers standpoint) having a great buyer prospect negotiating along with an agent in good faith, and then, finding out that the house had already been sold, perhaps all along? Can you imagine interested buyers working the several agents against one another for the best buy or how the agents would be working the price down or up in order to be the first agent to bring together a deal? This confusion and duplication of activity, for obvious counter-productive reasons, is just not tolerated in the Real Estate industry.

Similarly, in the Truck Finding and Booking Industry (Brokering) the practice of listing the same load(s) with multiple brokers creates this same type of confusion. It happens that some loads are posted (listed) at the same time by several to a dozen or more brokers on the same internet load boards, some with no prices and some with varying prices listed. You can bet, in a hard market (more loads than trucks) with stiff competition for available trucks, that the Carriers will work this scenario to their best advantage working that shipper’s own brokers against each other and many times utilizing their shipper’s highest allowable ceiling price in order to be the one to book the truck first.

This practice sets up a scenario where the shipper’s own load, represented by it’s use of multiple brokers, falsely “increases competition”(hardens the market) for available trucking capacity, actually making it more difficult and less likely for the shipper to obtain the desired best service at the lowest cost. Sometimes the results are fast, but are they cost effective? How many trucks “fall off” of these loads?

The competition for available trucking capacity should only be the freight of other shippers. In a soft market (more trucks than loads) carriers avoid these type of load postings (same load, multiple brokers) preferring to call on the solo (non-duplicate) postings in order to speak with the responsible party (by making one phone call) to see about the load desired, being busy people (now enjoying the superior negotiating position) who have no time for “Shell Games”.

I believe that the best practice towards obtaining the best result is when the Shipper calls upon only one Broker to represent any one given shipment at any one time, working for a fixed (agreed upon) mark up (commission), this broker could then negotiate with the available interested carriers who know that they are dealing with the party which will, eventually, book the load. The interaction becomes less of a shell game and more of a business negotiation and transaction. This broker would also be able to contact back haulers to find out who is or is going to have equipment in the pickup area in the very near future. Also, this approach encourages repeat hauling from these backhaul carriers when they know which trusted broker to contact to satisfy their backhaul needs in the future (for repeat loads) in a given lane. The Shipper, through clear and timely communication with his broker(s), remains in control over each and every load in a cool, calculated fashion, obtaining the best transportation for the least cost. Thank you for your time and consideration. Please let me know how I may best serve you now and into the future.

Sincerely,
Tom Duregger, JTC, President

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