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Why Joining a Company With an Internal Brokerage Could Cost You Your Business

In the right circumstances, becoming a freight agent can be a fantastic career choice, filled with opportunities to focus on bringing in first-time clients, building relationships, and exceeding the expectations of shippers and carriers. The freedom, pay, and level of control can be enticing. However, in the wrong situation, joining a freight brokerage can be a debilitating decision.

One of the riskiest moves for a freight agent is stepping into an organization that runs its own internal brokerage. As an agent, you shouldn’t have to compete within your company to keep the business you’ve already secured.

The professional relationships you’ve developed are a huge part of your success — both now and for many years to come. You may lose some of those relationships through natural attrition, but that healthy fear of competition should stem from external agents, not from people within your company. Freight agents who are forced to compete with an internal brokerage spend too much time looking over their shoulders.

Burning Out From Unnecessary Competition

The constant struggle to drum up new business is as American as apple pie, but it’s not always necessary. While a certain level of competition is good for keeping you sharp, undue competition — the type that’s common with internal brokerages — burns salespeople out far too quickly.

Within a brokerage, each independent freight agent should be able to plan his or her business development strategy based on the tools at hand, without fear of being blindsided by salespeople who supposedly are on their own team. Natural growth unfolds as a result of healthy competition — not because of stressful, excessive pressure from an internal brokerage.

At Freight Tec, we sign a non-compete, non-disclosure agreement every time we partner with a freight agent. Read over the document here.

Lack of Freedom and Support

Many experienced freight agents are recognizing there’s a balance between too little freedom and too little support. The sweet spot is where independent freight agents thrive.

With a company like Freight Tec,  these talented independent agents have the autonomy to use their time-tested processes to close deals, enjoy the fair gross profit commission split they deserve and have the back-office support that’s so difficult to obtain outside an established company. Benefits such as paid-for technology platforms and exhaustive back-office administrative help are game-changers for many agents.

Leave Internal Brokerages Behind

The presence of internal brokerages is a thorn in the side of many excellent freight agents. If you’re interested in leaving internal brokerages behind, explore the benefits of becoming an independent freight agent by emailing your questions to info@freight-tec.com. Or, learn more about the perks of the independent freight agent lifestyle in our infographic.

Learn More About Our Freight Agent Program

5 Tips For Making the Leap to Independent Freight Agent

Whether you’re a longtime veteran of the freight industry or coming from a totally different industry, becoming an independent freight agent is a big step. If you know what you’re doing, the transition can be very smooth, with success from the outset. Even if you don’t, there are some key things to remember to make the transition more smooth.

Make Sure to Find the Right Brokerage

The most important component of your success will be your own talent and hard work, but joining a great brokerage is vital, too. Look for one that is interested in supporting you in a variety of ways, including:

  • Providing a fair commission split
  • Not requiring agents to sign a non-compete
  • Guaranteeing it won’t steal agents’ clients from within
  • Providing back-office support and operating capital

Finish a Business Plan

Business plans come in all shapes and sizes, but the most important thing is the process. Developing goals, a timeline, and action items is vital for getting in the right frame of mind for the job at hand. Regardless of the extent to which you actually reference your business plan as you move forward, the benefits of the critical thinking process will prove invaluable.

Make Sure You Have the Right Technology

In today’s market, independent freight agents need a robust portfolio of software solutions and platforms at their disposal such as cloud-based TMS (Transportation Management Systems), web based MS systems and access to industry leading load boards and online market places.

If a brokerage pays for the technology tools that its agents use, that’s a good sign that the organization is well-invested in each person’s success.

Ongoing Learning & Training

Even the best salespeople are in a state of constant learning. In hopes of staying competitive for many years, highly motivated independent freight agents often are committed to ongoing education opportunities.

There are many online freight-related courses and events all over the U.S. that can be very helpful, but even outside-the-box training can prove valuable. Anything that keeps you growing as a person and a freight forwarder can help contribute to long-term success.

Learn More About Becoming an Independent Freight Agent

To learn more about what it takes to become an independent freight agent, check out Freight Tec’s Become an Agent infographic.

3 Surprising Ways to Improve Your Bottom Line As a Freight Agent

For freight agents, there is strong, vast potential to grow a client base and make a lot of money. Of course, like in any industry, there are challenges that must be overcome.

Many of today’s freight brokers and agents feel pressured to stay up to date with the latest software — the type of industry-specific platforms that quickly are becoming “table stakes.” They also struggle to keep up with the escalating number of back-office administrative tasks necessary to run a successful freight business. What’s more, freight agents feel the burden of ages-old issues such as exorbitant overhead expenses.

Luckily, there are ways to improve your bottom line as a freight agent, including:

How to Attract the Right Clients to Grow Your Business

On many levels, freight agent clients are no different than customers in any other industry. They want their needs met, they need to be treated fairly, and they crave predictability.

Sounds simple enough, right? However, it definitely takes a certain type of person to attract the right clients to increase freight business. It takes an exceptional freight agent, not just someone who is extroverted and great on the phone.

Independent freight agents with a special set of skills display these qualities that help them find and retain the right clients, or shippers:

Agents Liable for Customer Bad Debt?

Should Agents be 100% liable for their customer’s Bad Debts?

Imagine one of your largest customers going belly up… and they owe you and your Broker company $50,000.00…

You soon learn there is no hope of collecting any of the money owed…

Who should pay for that bad debt?

It should be split the same way your commission was paid out between you and your Broker. If you are on a 50% / 50% split with your Broker, then you should both pay $25,000.00 of the bad debt.  If you are on a 60%/40% split, you would pay $30,000, and the Broker would pay $20,000.

Why?

Its fair. Its ethical. And both parties always have great interest in doing business with customers who will pay you.

I’ve heard of Brokers paying 100% of any bad debts from their Agents… They are CRAZY !

Lets me share a story with you…

I know of a company who practiced the policy of paying 100% of any bad debts from their agents. They did it because they thought it would lure agents into their company, and you what? They were right! They did lure a lot of agents into their company!

A few years down the road, they were hit for a $400,000.00 bad debt from one customer, then another one for 109,000.00, then another one for $55,000.00. The agent (who’s customers they were) didn’t care… he didn’t have to pay any of that $500,000.00+ back. No worries for him…

But there was great pain and anguish for all the other agents, and the broker. The broker was not in position to handle these rapidly mounting bad debts (there were more that rolled in). The broker tried to work things out… but the hole they were in got deeper and deeper too fast.

The broker quit paying the carriers.

The carriers sued all of the customers (and I mean EVERY single customer).

The customers had to pay all the freight bills again. (after already paying the broker months ago).

The customers were very angry.

The customers no longer trusted the agents they had worked with for years.

Good agents and several other good people lost their customer base – and their jobs. They could no longer provide for their families.

Agents now had to start over – their previous customer relationships were ruined because their broker ended up going belly up and not paying the carriers.

The criminal thing behind it all was this: There was a rotten apple agent who PURPOSELY did business with companies he knew were at risk of not paying their freight bills for one reason or another. Because he was paid his commission each week – he knew he would be paid before the bad debts hit the broker.  One bad apple spoiled the bunch… Actually, he put them out of business.

The Pros and Cons of Starting a Freight Brokerage Company

Before entering any industry, gathering as much information as possible is vital. Of course, fact-finding alone isn’t enough. In a highly competitive industry such as freight transportation, stacking up the potential benefits against the likely drawbacks is a key way to determine whether the rewards are worth the risk.

When it comes to opening up a freight brokerage, there are some really powerful pros and cons to consider.

Does Your Freight Brokerage Do These Three Things?

 

Whether you work for a freight brokerage or operate your own, it’s important to now and again take stock of what’s working and what’s not. There are some key questions to ask yourself about the industry and your brokerage.

Most of these questions are about common freight broker frustrations such as tedious, tiresome administrative tasks that take time away from actual sales activities. For brokerage owners, it’s important to think about the status of ongoing operating costs and risks. For agents, it’s worth asking, “Am I being supported by my company? Am I being enabled to thrive?”

If you’re being honest about your future in the shipping industry, think about whether your freight brokerage does these three things:

How to Expand Your Customer Relationships as a Freight Agent

For a freight agent, having loyal, high-volume shipping customers is a must. But securing MANY of these reliable customers really is a key indicator of long-term success and low stress.

A lot of agents are good at maintaining strong relationships with existing customers, but how about finding new ones? With the combination of diligence, talent, and skill, you can forge new bonds on a regular basis. Here are several tips for how to expand your customer relationships as a freight agent:

Shippers Can’t Be Too Careful in Qualifying Carriers

This is a True Story.  A carrier calls our office to book a load we had shared with our network.  We start our Carrier Qualification Process and find out that the Carrier wants to use an owner-operator.  We advised the Carrier that we needed to see their federal operating authority, Certificate of Insurance, W-9, and a signed copy of our Broker/Carrier Agreement.  When we receive everything back, we find that the Certificate of Insurance shows CARGO LIABILITY INSURANCE ONLY.

So, we called the Carrier back and asked if they had a separate Certificate of Insurance for Auto Liability.  He said, “No. Our owner operator carries Auto Liability Insurance.  All we provide is Cargo Insurance on the load and trailer.”   When we talked to the Owner-Operator, he forwarded to us a Certificate of Insurance showing Auto Liability Insurance.  At this point, most companies don’t check any further.  But our Carrier Qualification clerk, Kellie, called both of the insurance agents to verify insurance coverage.  This is what she found:

The Owner-Operator only had “Non-Loaded” Auto Liability insurance commonly referred to as “bobtail” insurance.  HE WAS NOT INSURED IF HE WAS HAULING A LOAD!!! The company for whom the Owner-Operator was hauling DID NOT HAVE AUTO LIABILITY INSURANCE.  Therefore, if we would have given this Carrier our load, our Shipper and we would have had a huge public liability risk since nobody was insured to protect the public. Imagine what would have happened if this truck was involved in an accident while hauling a load for one of our shippers.  The injured parties would have sued everybody—including our shipper and us—for damages.  The trucker and the company probably are “judgment proof” as all of their operating assets are most likely heavily financed with little or no equity.  That would leave only Freight Tec and its shipper liable.  As a result, we would have had to pay.  Freight Tec carries Professional Errors and Omissions Liability Insurance (the same insurance as medical doctors, lawyers, CPA’s, and engineers carry) in the event we make a mistake.  Fewer than 50 property brokers out of over 15,000 carry this insurance to protect their shippers.  Freight Tec is one of a select group of brokers who does.

BOTTOM LINE: You cannot be too careful in Qualifying Carriers.  Freight Tec does this every day on a FULL-TIME basis to protect our Shippers and ourselves from potentially devastating lawsuits.  To further protect our Shippers, we also carry Professional Errors and Omissions Liability Insurance.