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.