“The strength of the team is each individual member. The strength of each member is the team.” – Phil Jackson 💪 We are grateful to work with our AMAZING team everyday at Freight Tec! 🤝#gratitude #bestteam #notallpictured #freightagent #bestagentprogram #freightbroker #freightbrokerage
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.
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.
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.
The automated, driverless vehicle is something we keep hearing more and more about. They could potentially remove the human error factor in driving, it could save a lot of lives. But it’s expensive, and not everyone is going to want to give up control of their vehicles.
But you have to admit, there’s something fascinating about the idea. Take a ride in world’s first road-ready self-driving truck:
What do you think? Is this our generation’s “Flying Car”? Fun to think about, but never gonna happen?
A company in the UK called Mole Solutions thinks so. They’ve designed pods, that would travel underground to deliver goods currently hauled by trucks. They travel via a computer controlled smart track, using electromagnets.
The company claims they could ship goods for 20% the cost of road shipping.
But is it feasible? Laying that much pipeline would be a massive undertaking that would take years, if not decades to complete.
What do you think? Are underground pipelines just a pipe dream?
Here’s some footage of the test pods in action:
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!