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Freight Agents: How Internal Brokerages Kill Agent Entrepreneurship

Entrepreneurial individuals have been shown to possess certain character traits—passion, risk tolerance, leadership, and others—at a higher percentage than the rest of the professional population. All of these characteristics are important, but the trait that sets many entrepreneurs apart is a strong desire to enjoy the fruits of their own success.

Freight agents are truly the entrepreneurs of the transportation industry. Most of them founded and continue to run their own businesses. Nearly all of them possess a desire to work hard and to enjoy the results of that hard work. Unfortunately, many freight agents end up working with transportation companies that also have internal brokerages. By preventing them from capitalizing on their own hard work, those internal brokerages can kill the spirit of entrepreneurship (and the motivation) of freight agents.

As entrepreneurs with an independent streak, most freight agents run very small operations. Oftentimes, these are one-man or one-woman operations. They work hard to find, convert, and close prospective customers that they hope will grow their businesses. Sometimes, however, when those accounts do grow, the small operations of independent agents can no longer manage the associated workload. Unfortunately, it is at this point that many independent freight agents lose control of their own accounts.

While independent freight agents sometimes have trouble scaling their resources, large trucking and transportation companies have plentiful resources and can scale up or down easily. For this reason, they often “step in” to fill the deficiencies of their freight agent partners with their own internal resources. Most transportation companies pull in business from two competing sources—independent freight agents and internal brokers. Unfortunately, that line can become blurred when an account grows beyond an agent’s ability to manage it and their resources become mashed with those of an internal brokerage. Of course, this also complicates the attribution of revenue and, therefore, the distribution of gross profit.

Certainly, agents have the option to hire additional help. Indeed, many agents try to bring on a second person (first employee) when an account begins to grow. But hiring and managing an employee is an entirely new undertaking for most agents. Many find that they lack the experience to bring on an employee and get them up to speed quickly. And, in a fast-moving industry, those delays can be extremely costly. Transportation companies understand those costs and, therefore, quickly apply pressure to supplement using company resources. It is through this seemingly logical process that some agents have their accounts stolen by the internal brokerages that claim to support them.

Freight-Tec is entirely different than other trucking and transportation companies. Freight-Tec has never managed  (and will never manage) an internal brokerage. From the beginning, the company’s success has depended upon its healthy relationships with independent freight agents. As the sole source of the company’s business, freight agents are highly valued and actively supported through an industry-best freight agent program. Among other things, the purpose of that program is to respect and nurture the entrepreneurial ambitions of independent freight agents.

Freight Agents: Building your business on a Level Playing Field

In business, the notion of a level playing field is essential to long-term success. A level playing field is defined as an “economic and legal environment in which all competitors, irrespective of their size or financial strength, follow the same rules and get equal opportunity to compete.” Great business people can be clever, cunning, and shrewd, but they always respect the need for a level playing field. Unfortunately, level playing fields are hard to find for freight agents.

The vast majority of trucking and transportation companies run their own internal brokerages, while also soliciting freight from independent agents. In doing so, they have failed to create a level playing field for their agents. For obvious reasons, this system creates numerous conflicts of interest within the company. Sharing a single set of resources, internal and external agents cannot be expected to play by the same rules and cannot receive equal opportunities to compete. In nearly every instance, the needs of internal agents will win out over the needs of external, independent agents.

In these environments, transportation companies do not view freight agents as true partners. Rather, they are seen as lead generation vendors—a channel for supplementing the leads brought in by their internal brokerages. Naturally, independent agents find themselves low down a long list of priorities for the brokerage. In extreme cases, independent agents have even seen their freight customers stolen by an internal brokerage.

At Freight-Tec, we built our business differently. We don’t have an internal brokerage company. In fact, as our only source of business, our agent program entirely determines our success. That reliance on freight agents is a primary differentiator for our company. Because our agents are so important to our business, we view them as true partners and we take customer service very seriously. Local, personable, and responsive, our offices provide agents with everything they need to succeed. Most importantly, Freight-Tec is the only company that will guarantee, in writing, that it will never steal from its agents.

Freight agents looking for a level playing field must seek out a transportation partner that does not manage its own internal brokerage. Unfortunately, such companies are a rarity in the industry. Many agents select a transportation partner, only to find that they are competing with an internal brokerage and that the fight isn’t fair. Freight-Tec built its business model on the success of its agent program and, in doing so, created an ideal working environment for hardworking agents.

Freight Agents: Red Flags When Selecting a Broker

When selecting a brokerage partner, freight agents generally know what to look for. They look for a partner that offers a generous gross profit revenue split, capable support, and sufficient insurance. But, sometimes freight agents should pay less attention to what is there and more attention to what is not there. In particular, these red flags can help agents to know which brokerages to stay away from.

Red Flag 1: A Disconnected Team

In the transportation industry, teams rely on each other for information and support. Effective teamwork is an essential part of a freight agent’s success. In the transportation industry, nearly all companies are made up of virtual teams, with separate team members working hundreds or thousands of miles apart. With some team members on the road, and others working remotely, it’s essential to look at how cooperatively the team works together.

Red Flag 2: Outdated Technology

A company’s technology is often a reflection of its broader culture. Company’s that invest in the latest technologies frequently emphasize growth, innovation, and employee satisfaction. Outdated technology can signal a lack of efficiency and an unwillingness to change. Unfortunately, failure to invest in new technologies can cause some transportation companies to lose their financial edge and sink into obscurity. When investigating freight broker, agents should inquire about the software platforms and other technologies utilized by the company. Agents should avoid companies that appear to have actively avoided upgrades in technology.

Red Flag 3: Excess Focus on Gross Profit Revenue Split

The gross profit revenue split is a major factor for agents when choosing a freight broker. Unfortunately, many agents place too much emphasis on this singular factor. A favorable split can distract agents from other shortcomings that will cause problems down the road.

Red Flag 4: Poor Communication

As a freight agent, your success depends on your ability to communicate with the other members of your team. In the virtual teams common to the transportation industry, that communication can be a challenge. In fact, you’re likely to end up communicating less in person and more through technology. You should be sure that your team communicates regularly and effectively. Long distance teams, which aren’t well connected quickly, become dysfunctional in other ways. Poor communication is a major red flag and agents should be very wary of these circumstances.

When looking for a broker-partner, freight agents should perform their due diligence before making a final decision. But, rather than simply looking at the positive attributes of each company, agents should also look at the potential weaknesses. Instead of getting distracted by flashy “good deals,” agents should use a critical eye.

Freight Agents: Tips for Selecting a Broker

We all recognize a good friend when we see one. Good friends share, they look out for others, and they support us when we need it. No matter what our stage in life, we all need good friends to do these things for us. Business partnerships, including agent-broker arrangements, are a lot like friendships. Before you pick a freight broker, be sure to ask yourself if they do the sorts of things you’re used to seeing good friends do. In particular, watching for the following friendship-inspired behaviors can help agents make better decisions when establishing broker relationships.

Good Friends Always Share

Over the years, much has been made of the gross profit commission split between agents and brokers. Agents should only partner with brokers that provide a fair and generous percentage of the business they bring in. Agents should also inquire about what the brokerage provides for the percentage of the money it keeps. While this split isn’t the only consideration when forming a new partnership, it is a foundational matter that should be given careful consideration.

Good Friends are Supportive

Chances are, your best friends have always been there for you through thick and thin. Agents should ensure that their brokerage partners are going to offer them a similar level of support. Comprehensive back-office support and expertise can be a valuable resource to agents as they source and secure new business.

Good Friends are in it for the Long Haul

You know those friends that moved on as soon as they found something better? Some freight brokers are no better than those fair-weather friends. A good broker partner should express a long-term interest in agents by providing career and retirement planning services.

Good Friends Aren’t Selfish

A true friend doesn’t need to be the exclusive recipient of your friendship. So why do some brokerages make agents sign non-compete agreements? A good brokerage will allow agents to earn a healthy living by engaging with multiple partnerships and harnessing multiple revenue streams.

So, if you’re a freight agent looking to establish a partnership with a broker, be sure to give them the friend test first. Do they meet the criteria that you’ve always used to measure successful partnerships? Specifically, do they share commissions fairly, provide excellent office support, and give you the freedom that you need to advance your career? If not, break it off as soon as you can and look for a broker willing to treat you as a true partner.

Moved: 3 Komatsu HD 785-7

Here are some pictures from a recent move of 3 Komatsu HD 785-7 Off Highway Rock Trucks.  These weighed in at a massive 165,000 lbs, 35′ L x 22’6″ W x 18’6″ H on the ground. The trucks were split – removing the beds and outside tires.  Chassis shipped at 30′ L x 18′ W x 15′ H at 100,000 lbs, while the beds shipped at 28′ L x 22’6″ W x 16′ H at 65,000 lbs.

Have pictures of a recent move you’re proud of? Drop us a comment or contact us!











Highway Bill, and what it means for You

Congress approved the Highway Bill, and President Obama is set to sign it on Friday, July 6, 2012. The report contains the TIA-OOIDA-ATA compromise language almost exactly.

How will this affect you?

Read the great blog post and summary from DAT.com.

Leave a comment below and let us know what you think!

Driving Truck and Getting Back Home to Family

One of the very top values at Freight Tec is Family.

We believe in trying to find a different load for a Carrier, who wants to be home for the weekend to spend time with his family…  Taking care of some of the extra headaches for a Shipping Manager so he can spend more time with his family… or making sure our Agents and Employees get the time they need to spend with their own families. We consider each of these part of the our Freight Tec Family as well.

This article – Myths about the Trucking Industry – is about Truck Drivers in general, and it really struck a chord with me as I read it this morning.

Quoted from the article:

“Next time you see a semi-truck on the road, think about the driver behind the wheel, and realize he—or she—is a person just like you, working toward a goal, delivering goods you depend on, and looking forward to getting back home to family.”

If you get a chance, be sure to thank a Truck Driver – and at the very least, respect what they do and the part they play in keeping this country rolling.

Are you an Agent or Broker interested in joining the Freight Tec Family?

 

Ban On Cell Phone Use While Driving Hits Commercial Drivers

Well, it’s official.  Effective January 3, 2012, the U.S. Department of Transportation’s Federal Motor Carrier Safety Administration (FMCSA) and others implemented a rule banning the use of cell phones while driving for all commercial truck drivers.

Violations can be severe – up to $2,750 fine for each offense and possible commercial license suspension for multiple violations.  It’s not just the drivers either – companies that allow their drivers to use cell phones while driving could be hit with fines up to $11,000.

While this restriction will undoubtedly affect many carriers, Freight Tec strongly supports the FMCSA in this decision with the ultimate objective in keeping our public roads safer.