When it comes to finding freight as an owner-operator you have several options. There is a good chance you will choose to partner with a broker to maximize your freight rate. Brokers work as intermediaries between your business and shippers. They make a profit by negotiating rates with shippers and carriers. Once they negotiate a rate with the shipper, they offer a certain rate based off the agreed upon rate to you, the carrier. The difference between the two rates is the broker’s commission to pocket. So how do you know if the broker you choose is looking out for your best interest? Besides knowing your operating cost and pay rates, it is crucial to look out for certain traits and red flags when partnering with a broker. By being selective, you can choose a partner that will be beneficial to your business, not sink it. We rounded up the good, the bad, and the ugly, to give you a cheat sheet next time you are searching for a quality broker to maximize your freight rate potential.
Verify that the Broker is Insured
If you are working with a broker for the first time, the first step you want to take is to verify that they are in good standing. This is important to protect your profit in case they don’t pay you for the load and you need to file a claim to collect. By checking to confirm their insurance is current you can be assured that your claim will be covered if you are not compensated after the load is delivered. Use this handy search engine on FMCSA’s website to double check that your broker is the real deal for your next load.
Only Partner with Licensed Brokers
Not only do you want to verify that the broker is insured, but checking to confirm that the broker has a proper authority is a crucial step before accepting a load. A broker license will have a “B” after it that insures they are licensed through the FMCSA. Even if the load is enticing and they are offering a high freight rate, under no circumstances should you partner with a broker that does not have proper authority.
Communication is Key
As a carrier, you can’t always predict when outside elements like weather or traffic might interfere with your load. However, minimize your surprises by choosing a freight broker that communicates with you throughout the process. A quality freight broker will provide you with the information you need to haul that load and how you will be matched with loads in the future. By requesting that a broker provide you with a clear cut process from pick up to drop off, you have a transparent partnership with no surprises down the road.
Run a Credit Check
Don’t run the risk of getting stiffed or slow paid on a load with any broker. Due diligence will save you the headache of having to file a claim down the road. Run a credit check on any broker to make sure that they are in good standing financially. You should also check how many days on average it takes them to pay and if they have ever defaulted. Many factoring companies provide this service for free so that you are able to credit check at your leisure. You can also run a credit check yourself through a paid service like Ansonia before diving into a partnership with a new broker.
Choose a Broker with Experience
As an owner operator, you understand how difficult the first year is when starting your business in the trucking industry. Although there are exceptions to the rule, choosing a broker that has been in business for three to four years allows you to benefit from the experience and shipper relationships he’s been able to accrue since he started. By choosing an experienced broker, you will have more security that you are receiving the best rates.
Utilize Other Resources to Compare Rates
Don’t just take the broker’s word for it. Stay up to date on what the going rate is by utilizing other resources. Using an experienced dispatcher from time to time allows you to see if they can negotiate a better rate and evaluate if your broker is offering you the best freight rates in the current spot market. Also, it is beneficial to diversify what resources you use to find loads. By utilizing a variety of resources like load boards, dispatchers and brokers, you are able to access more opportunities of higher paying freight.
Evaluate Your Business’s Track Record
Have you been late on past loads? Or unreliable with following through on a freight agreement? It’s understandable that quality brokers want to partner with quality carriers they can count on. If a carrier backs out on a load last second, it can damage the relationship between the broker and shipper too. A broker must ensure that he can rely on a carrier to follow through with the load to protect his reputation with shippers. By evaluating your own track record as a carrier, you can assure that your reputation will attract quality brokers who want to partner with your business.