What’s Better? Brokered or Direct Shipper Loads? | Ep 25

Caroline: Welcome to This Week in Trucking, the podcast that tells you what you need to know about the trucking market for the week. My name is Caroline. When I first started in this industry, I didn’t know anything about trucking and I’m still learning new things.

Mostly what I see is carriers helping each other out. There’s a whole corner of YouTube where owner-operators and small fleet managers are giving each other advice on how to get started, how to do maintenance on your truck, how to make more money. On the other hand, I would think about an industry customer-vendor relationship should be really positive.

It’s mutually beneficial. It’s one doesn’t exist without the other. But something I’ve observed is this really thick tension, to put it lightly, between carriers and brokers. And I don’t think I’ve ever seen a customer-vendor relationship as fraught as the one between owner-operators and brokers trying to [00:01:00] book loads off of a load board, even when brokers are the main source, if not the only source of their direct income.

So to learn more about this tension and how carriers can work together with brokers with a little more peace and harmony and maybe even get around some of the brokers every now and then to form some relationships with direct shippers. Today we’re talking to Nate and Jared at eCarrierCheck.

Jared’s been in the trucking industry for I think about 15 years. Jared started on the carrier side as a sales manager and now CEO and founder of eCarrierCheck, and he’s joined by Nate Marquez account executive at eCarrierCheck as well. So thanks for being here, Nate and Jared.

Jared: Glad to be here. Yeah. Thanks for having us on. 

Caroline: What is your take on the carrier broker relationship? We hear in headlines, in fact, I just got an email from Overdrive that said, what are brokers really making on your [00:02:00] loads? So what is it about this conflict between brokers and the carriers?

Tell me what you have seen in your 15 years. 

Jared: Yeah. I think anytime there’s something hidden in a relationship, it doesn’t matter if it’s a broker carrier, if it’s your boyfriend, your girlfriend, whatever it may be. I think there’s always some animosity of what exactly is going on.

You know what I mean? So you get that feeling when your girlfriend or your wife gets a text and you’re like who just texted? And so I think when that part of the relationship is secret, you don’t know. Unfortunately, you’re right. The broker-carrier relationships right now are soured, or at least in the transactional state, they’re rough.

Anybody that’s a carrier that may not have a transactional aspect, that isn’t getting loads off load boards, where it’s just a dog-eat-dog world. There’s a reason why I don’t go to mosh pits anymore, right? Because that’s what the load boards like, it’s a friggin mosh pit. And you don’t know if you’re going to get hit, or if it’s going to be fun, or you don’t know what’s going on.

And so it’s one of those things where the small carrier really has to get off their feet, but eventually they [00:03:00] need to move away from transactional to contract. And that’ll help at least those broker-to-carrier relationships change at that other level. But at transactional levels, it’s very challenging.

When the market does flip, you’re going to see brokers love carriers, right? And it’ll be one of these things where all of a sudden it just evens out. But I promise you this as. With the amount of carriers that have gone out of business over the last, six months here, they’re going to get their steak and eat it too.

It’s just going to take some time when the market flips. 

Nate:Yeah, I  just think there’s just not enough transparency and that’s like Jared says, just very sour, just not enough transparency from what I hear. 

Caroline: Yeah, and I know Jared, you were a broker. Is that right? Did you or you’ve worked with brokers? What is what are your thoughts on transparency? Because Nate, I think it’s really interesting that you bring that up. I don’t think I’ve heard that a lot from brokers saying that maybe we need more transparency here. 

Jared: That’s interesting. Obviously, brokers make what they can make. No, I think the perception from carriers are they’re making huge margins. If you look at the publicly traded [00:04:00] companies, the margins aren’t as big as what, you’re not, it’s not 50%, right? C. H. Robinson isn’t advertising 50%, right? But in a transparency setting from a broker’s side, if you can somehow or another build a relationship with the carrier where you can share some of those things, at least they’ll understand it.

And when you’re black and white with the broker or with the carrier, and I’ve been there, I’m like, hey, I get 1550 from the customer. I need to make something or go to lunch at McDonald’s. It’s your choice, but I’ll give you 1500 because this is all I got. So when that transaction happens in that side of things, People are a little more transparent, but when you’re making more than that, then it gets a little feisty.

So that transparency, it’s a touchy subject for a lot of parties in our industry. 

Caroline: Yeah, definitely. Nate, what do you think would transparency look like? Is it just better relationships? 

Nate: 100 percent I do.

And then, there’s always a conflict where brokers aren’t giving all the details. That [00:05:00] starts with that as well. And then like Jared, I think Jared really hit it on the head with all the transparency, but from what I hear, yeah, just, figuring out what’s, what works for that care and what doesn’t. And just having the right conversation, asking the right questions as well. 

Caroline: Absolutely. So a lot of Bobtail’s factoring and fleet card customers are relatively new to the trucking industry. For a lot of different reasons, factoring is easier to get newer carriers, because they haven’t gotten locked into a contract with another factoring company yet.

Bobtail doesn’t lock you into a contract, but most factoring companies do. And so it’s really hard to get out of those contracts. If someone’s already committed to it. And so a lot of the folks that work with us are brand new carriers. What do you see as some of the most common mistakes that new carriers are making when they’re trying to book their 1st loads or get their 1st freight?

Nate: That’s a good question. In my opinion, we talked to a lot of new carriers as well. And a lot of them just aren’t sure, what’s the good load for them, if you [00:06:00] will. I don’t know, you would probably have more idea on this coming from the carrier side. 

Jared: Yeah, the biggest mistake that a lot of carriers don’t get is maybe their costs, right?

And they focus so much on the trucking side. They’re good at mechanics. They’re good at trucking. These people understand that, but they don’t understand two other things. And this is probably where they need to be educated the most is, A, how do you start to just build relationships with local shippers or local people?

And how do you start to become an industry expert? The people that we deal with, because we share the same clients, right? It’s one of those things where they need to become industry experts, even if they were at the beginning. And the only way they’re going to become industry experts is getting reps in, and that’s picking up the phone, that’s, and that’s what they really need to focus on at the very beginning.

Now, process is another issue, and I’m not going to get into operational things like that, but that they need to make sure they’re billing properly and communicating properly and setting up the proper technology so that brokers do want to work, right? 

Nate: To add to that is when anyone that jumps into this industry, all they hear is low board.

Think about [00:07:00] going, creating that relationship. Trying to find local shippers are trying to find local brokers. They think they got to get a little board and jump on there. Yeah. 

Caroline: One of the reasons that people think that when they first get started is that a lot of brokers won’t work with carriers that don’t have experience, right?

That don’t have time on their authority. And so you might think then I can’t get a direct shipper. If I can’t get a broker to work with me in the first 30, 60, 90 days, then I definitely can’t get a direct shipper contract freight. Is that true? I feel like that’s an idea that a lot of people might share an assumption people might make. Do you find that to be true? 

Jared: It’s hit or miss with brokers, especially large brokers. You get into the large brokers. A, they won’t hire you because how long your authority has been open. Like you just mentioned, or B, they won’t hire you because you don’t have an inspection, right?

We know multiple owner operators that are four years in that still don’t have inspections. But what I do know is that there’s a lot of shippers out there that go by [00:08:00] What’s your equipment look like? What’s the communication like? How has he come to me? And so those owner operators that are out there, don’t be afraid to pull into a parking lot and say hi and just introduce yourself.

You don’t have to be a salesman. You just have to be able to communicate. You know what I mean? And I know that’s tough. I get it. It can be tough for immigrants. It can be tough for first time, business owners, those things can be challenging, but right. 

Caroline: If English isn’t your first language or you’re just not really outgoing there’s a reason, I can imagine because I didn’t choose to drive in a truck for, 10 hours a day by myself, right?

That’s why I have a podcast and why I like talking to people. And I’m pretty outgoing and can reach out to people. I’m sure plenty of owner operators can do that and have that personality as well. But I think a lot of people might’ve chosen that industry or chosen that profession because they don’t actually have to deal with people all that often in person, or at least they don’t have to put themselves out [00:09:00] there.

Do you have any advice for people who might be struggling to make that first move? 

Nate: If I were to be put myself in their shoes. I’m going to maybe reach out to some carriers that have been in this industry a lot longer than I have and try to get some feedback from them and see how they, handled this challenge or, maybe they give me some ideas to get going.

Jared: Yeah. I’ve got a couple of seventh graders and I’ll be honest with you. We’re talking about some things that are intense, right? We’re talking about first kisses. We’re talking about all kinds of things where you’re just sitting there going, what do I do?

How do I put myself out there? And it takes three seconds of courage to be able to spend 100 thousand dollars on a truck and a trailer. You’ve got to have three seconds of courage to pick this thing up (motions to a cell phone) and start to build a relationship locally somehow or another but you’ve got to do it. You’ve had the guts to go get a bank loan, now we got to get the guts to walk in somewhere else other than a bank. I don’t know if that’s exactly what you wanted to [00:10:00] hear 

Caroline: Differences in personality are so wild, right?

Because I have no problem going up to someone and introducing myself and sharing what I do. But put me behind the wheel of a 40, 000 pound truck. Are you kidding me? No way. I would be terrified and I should probably do it at some point and I should probably learn how to do it at some point so I can put myself in the shoes of our customers, but boy, does that freak me out?

I had trouble driving in the passenger seat of a U Haul but a sales call, no problem, sign me up. So I just think that’s so interesting because the kind of personality that’s going to be really good at both of those things is probably really rare, which I think is there’s a lot of competition out there.

There’s a lot of trucks out on the road. 

But the type of person that can run a business well, be outgoing enough or fake it on the phone enough to make some cold calls or to go up [00:11:00] at a local yard and introduce yourself and can competently drive a class eight truck. That combination, I promise you is very rare.

Jared: Very rare. Yeah, absolutely. I would say that, for those people that struggle with making a cold call, that struggle with picking up the phone, there’s other ways to communicate. You can email, you can text. I do think, the first thing that every owner operator does, they all do the same thing.

They get the load boards and they try to transactionally get anything they can. Because they’re two days old, right? However, it doesn’t take much to get a list of local brokers. And send an email to him with a picture of your truck and your insurance and your carrier packet and say, hey, I’m right here.

I’m within 10 miles of you. I could be there to talk to you. You can just form a little email. It doesn’t have to be even written well, and just send it out and say, hey, here’s my carrier packet. I’m from the area. Local brokers have local freight. And it’s amazing what happens when you just at least [00:12:00] columnize those two revenue streams you got the load board and you got local brokers They can be your sales team, right?

Now if you are the ace of spades that you’re talking about here where you can do all those things, getting local shippers is the next step but getting at least two revenue streams set up is so important. Don’t just depend on the load board for everything because you can be out of place. You may not have the right equipment.

There’s a lot going on with the logistics industry. You can get stuck in New Mexico for three days and nobody wants you to do that. 

Caroline: So you touched on a little bit direct shipper relationships. I think those are some of the most sought out after business. That’s one of our top blogs on our website is about how to get direct shippers.

And I think some people, like I said, might be a little intimidated about sourcing that business. So what are some of the things that you see carriers doing right now? To get those relationships. And what are some of the mistakes you see?

Nate: Some of the things that I’ve seen cares doing right is just making an online presence.

You can connect with shipping [00:13:00] managers that way as well. I think some of the mistakes is you call a shipper and don’t know your costs. Yeah, I think you need to be ready to have that talk because they’re going to ask, but that’s where I see. 

Jared: Yeah I’m with Nate having Facebook, having LinkedIn having a social presence is so important.

Because, as a shipping manager, let’s say I was a shipping manager. This guy just called me. I’m going to look him up and I’m going to probably Facebook stalk him or I’m going to LinkedIn stalk him. Let me just do this and see if I can find this guy.

Is he a ghost or not? And that’s probably the first place I would go. You know what I mean? The mistakes that I’m seeing exactly like Nate said you got to know your costs. You got to be prepared to have that conversation and you have to be prepared to say no, because not all business is right for that owner operator.

He’s going to, gosh, dang, I’ve seen too many damn owner operators. Sorry. I shouldn’t cause I’ve seen too many owner operators get stuck in a place that they don’t normally go because they couldn’t say no. And all of a sudden they’re in frigging Vancouver and they’re like, nothing’s shipping, I’m [00:14:00] like that’s why they paid you so well.

Don’t take the looad. You have to know where you want to go and know your business model and just be so clear. It’s I get fired up over this. Sorry, I apologize. Two o’clock coffee is hitting hard, 

Caroline: I got you. No, that’s why we’re here. That’s why you’re the person we’re talking to. What are some of the sources of information that you think are the most valuable for people?

Caroline: A, knowing where to get, find those direct shippers and B, what places, how do I know where I want to go? How do I know what markets are hot or not? 

Jared: That’s a big question. This is such an interesting question, because some people are like should I go to Colorado? It’s paying 3 and 10 cents a mile, right?

But coming out as a buck 10, right? But how do you know that without learning it and getting some scars to say that there’s a full resource? You can go to there’s Freightwaves and they have those pricing models that are set up, for me, if I’m an owner operator, I’m just starting a trucking company.

Boy, I tell you what, I would join some communities like this. Join eCarrierCheck’s community. [00:15:00] We try to educate a lot of people specifically around, okay, set up a triangle and get that going first. And what I mean by that is, let’s stay in the Midwest. Let’s not get carried away and go to the coast.

Or if you’re on the coast, let’s stay in a triangle that makes sense for you so that you can set up local brokers, local carriers, and then you can get on those load boards and see what they’re paying, how they’re paying, and just post out three or four days later. So you have to have some strategy: How am I moving? Where am I moving to? And do I feel comfortable with going there? And am I okay with saying no? 

Caroline: That triangle effect is really interesting. I haven’t heard that before. Obviously, you want to be local where you actually live and where you’re going to want to come home to and go out of every week or every 2 weeks or so but being local in two other places where you can reliably have business, that’s something that I hadn’t considered before.

So how do you become local in a place where you don’t necessarily live, but you want to [00:16:00] be going to?

Jared: yeah, this is a great question. When I worked at the carrier, we had a small flatbed division. It was 12 guys. And we obviously are from Western Nebraska, which is absolutely tiny, and there’s no freight except for the one guy that we had.

We had a direct shipper out of here, 

And we only took his freight to the following states. Colorado, Wyoming, Montana, Idaho, South Dakota, North Dakota, and other parts of Nebraska. That was it. We just went to those states. And we would just do triangles to get home to get that freight. When I first started not to date myself, but you never use brokers to actually get your first load.

It was always a direct shipper. You use brokers to get home. That was the thing. You already had a relationship. You already built. I’ve got four or five different guys that are around town that said, hey, if you buy a flatbed, I’ll put some freight on you. And then I’d call a broker and get home.

What we ended up building at the end was like this triangle or maybe even like a bowtie effect and it would be okay. I got direct shippers in this 1st area. A, [00:17:00] I have direct shippers and direct brokers in this area and then I’d use the load board last and then I knew where I was going.

Because then I could expect what my costs were right? The worst thing about trucking is. Variable cost, right? What are my variables, right? You don’t know if you get out to friggin California, your fuel is way different than what it is if you fill up in Nebraska, right? And so you better make sure if you’re going in, you know what it’s going to cost you to get out, right?

And so that was something that we did all the time. We really focused on building local carriers, local brokers, local shippers, and people knew we were in the area considerably all the time. 

Nate: Yeah, once you start getting it going to, and if you’re on the carriage, and you have that ability to. Sorry, okay if I’m starting at a, and I get to be what happens if a shipment gets canceled.

You can locate brokers that are local or shippers and then same thing with C and then hopefully back home. So you really have that opportunity to be proactive. You have to be proactive. Yeah. 

Caroline: I’ve heard you mentioned before on some of your videos that you think industry [00:18:00] events social events where brokers and shippers and carriers are getting together.

Can you describe what are some of the events that I would search for? Like I’m in, West Michigan. What are some of the things that I would search for as if I was trying to get into that? 

Jared: That’s fair. They have transportation clubs almost in every state. And if they don’t have a transportation club, then let’s say that you drive a dump truck, or let’s say you drive a flatbed.

Those people also have their own little kind of community. There’s Nebraska Trucking Association in Lincoln, and they have little events, and it’s cool. There’s shippers there, there’s brokers there, there’s carriers there, and you have the ability to network, and see these people, and actually shake their hand, and Probably share your scars.

Jared: It’s no different than when I go have coffee with my dad and all his cronies. I don’t want to hear about all the medication they take. It’s the same thing at trucking clubs, right? They all tell you about double brokers and they all tell you about their equipment. I’m driving a long nose p it’s a 58 60.

No, but it’s one of those things, and so when you’re looking for those clubs look up [00:19:00] logistics clubs, transportation clubs, dump truck clubs whatever kind of fits your fancy or niche and if it’s not that side of the niche, then look on the other side from the shipper standpoint.

There’s steel clubs, right? There’s all these different kind of interesting clubs that are out there that you can expose yourself to and just get set up. Usually they’ll allow free guests and things like that. So you don’t have to pay for them up front if you reach out to them, say I’m a carrier that’s trying to haul some of this or whatever maybe and they’ll let you come for free for at least The first time maybe second time if you can Dog suite, 

Caroline: That’s great advice. Can you tell us from your background in trucking, what is the most surprising thing that you’ve learned in the last couple of years, or one of the most surprising changes in trends or shifts in the market that you’ve seen in the last couple of years?

Jared: The most surprising thing is this, the double brokering situation is really carried away. It’s millions upon millions of dollars. [00:20:00] I’m sure it’s probably getting into the billions. That’s probably the most surprising thing. We’ve had to adjust our sourcing website or, software for just this issue, right?

That’s one of the most. I think that sometimes, too, when you look at what’s different from 08 or 07 or 09 or whatever you want to talk about when I got in to now is, people are really struggling even more with communication. And they depend so much on this (motions to cell phone) and they don’t take the time to actually do this.

So as we continue to see younger and younger people come in, they’re really struggling with communication. And that’s something that I’ve really seen it flow up in the last couple of years. 

Nate: Yeah, since he started in what? 07, talking about having to adapt. This guy’s had to adapt quite a bit.

Caroline: I came into the industry right when that was starting right when that was really going, the freight market was imploding in, end of [2022] and double brokering was just crazy on the [00:21:00] rise, a huge amount of double brokering and, carriers are the ones that really suffer the most from that.

And particularly owner-operators, small businesses that really can’t float a 5, 000 loss, 8, 000 loss to their bottom line. And factoring companies are also on the front line. Obviously, we have a bigger volume of business. So there’s more of a cushion there, but, when a, Carrier doesn’t get paid, the factoring company doesn’t get paid. And so we’ve seen that too. It’s been an enormous issue. And really what we’ve tried to focus on is education. So trying to tell people what are the signs and keeping up with the trends in this because, 1 trend will be going and double brokering for a while, and then people will switch tactics and move to something else.

Caroline: What worked before for fraud prevention doesn’t work today. And you have to constantly be keeping up with that so that your systems are able to handle [00:22:00] that. Nate, you’re relatively new to trucking.  Did you have some kind of assumption or idea in your mind about the industry that got challenged when you really came into it and learned more about it?

Nate: When I worked for a, this recycling company, like I’ve talked, I was able to talk with carriers. We only have one carrier really. Cause we’re pretty small, but. When I first got into it with Jared, I was like, holy cow, this is insane. Like it’s something new every single day. And I’m still going to experience more.

That’s still new to me, but I was, it was hectic. That’s what I first thought was hectic. And I was like. Man, I’m losing sleep, I’m getting more sleep now. 

Caroline: Seriously, right? And I probably got into it around the same time that you did a couple of years ago. And I had this sort of realization every, month or so I would learn something new and, different about the industry and just, you don’t really know how the economy works unless you know how trucking works.

And so it’s [00:23:00] really fascinating and problematic to me that more people don’t understand this industry or more people don’t appreciate the work that goes into getting things done. To your doorstep or getting things to your business. And that was the most shocking part of the industry for me was, wow. Okay. Nobody really understands how this works. And every time I talk about it with friends or family members that don’t have any idea about logistics or transportation, they’re shocked. They’re shocked to find out that the vast majority of trucking companies operate between one and four trucks. They’re shocked to learn about the Representation of immigrant family owned or small business and or small business owned trucking companies in the market.

They’re shocked to learn about double brokering. They’re shocked to learn about the danger that drivers have to put themselves and not just behind the [00:24:00] wheel of a fundamentally. dangerous job, but also the danger that they put themselves in because of how much freight theft and fraud happens in this industry.

And so those are the things, I call it the Wild West of the American economy, but it’s basically the basis of it. The basis of everything we do. 

Jared: Yeah, it is so important to when you’re an owner operator, small company, if you don’t identify some really key partners in your life, like factoring companies, at least you guys have their back.

You’re telling them their credit scores of these brokers. You’re telling them, you guys have their back. And I tell you what, if you don’t have a decent factoring company, Which I, honestly, the nice thing with you guys, at least you have no contracts, or you probably have some kind of contract, but it’s not it’s not, you’re not locked in.

It’s not a prison sentence. It makes a huge difference to be able to understand where you’re getting that load from, because anybody can sound good. Anybody can have an MC. Anybody can fake a PDF doc that has insurance on it. It’s wild, so making sure you have those partners like [00:25:00] yourself. Huge. 

Caroline: Yeah, and I think people underestimate, especially when they first get started, how critical that is. And probably the post covid boom of rates per mile on the load boards. That’s probably what really disrupted how people started those businesses. Because you talk about you can’t just depend on the load board. Well, 3 years ago, you could just depend on the load board, right? End of 2020, all of 2021, you could be pretty much anonymous on a load board and just booking freight and making, a lot of money. But I think what a lot of people didn’t realize is that’s not normal. And that’s an anomaly of a couple of years or maybe 18 months where that was the case.

And so people really, I think, started to underestimate the importance of those partnerships and not just with your customers, but also with the people who serve you, right? Your dispatcher dispatching service, your factoring service, your fuel card [00:26:00] company, your everything that you buy and use should have a relationship attached to it.

It should be an excellent service, and you shouldn’t have to pay junk fees or have to get into really complex terms and conditions to access those things as a small business owner. So the last question that I’ll ask that I’ve started to ask all of our guests is who should we talk to next on this week in trucking? Who would you recommend we chat with? 

Jared: I would talk with Adam at DIY. This guy is truly one of the most remarkable people. I think that’s how you came to us.  But people like people like Ed Burns. If you haven’t met Ed Burns, this guy is phenomenal. He’s a second generation 2PL model where he literally just goes and builds carrier and shipper relationships and pairs them up and steps out of it.

He’s the kind of that next pioneer of how relationships should work. So I’d recommend Ed Burns, if you don’t know him, I can get you in touch [00:27:00] with senior or junior. They’re both entertaining. All right. Senior’s a better dancer. But they both smoke cigars and love, love America. Yeah.

Nate: We’ve, Oh man, there’s so many I can think of: Nick Kling and Samantha is another good one. Oh my gosh. I think he could add a lot of value to all these, when our operators are maybe struggling with sales. He just actually dropped a new book as well.

So he’d be another good addition. 

Caroline: Great people that our customers should probably be listening to anyway. So I will try and give them a call. All right. Thank you so much for joining me, Jared and Nate. Really appreciate your time on This Week in Trucking and for everybody watching, please. Give us a like and subscribe.

If you enjoyed this content, leave your questions below. We always send follow up questions to all of the people that we invite to the podcast. And so if you put a question below in the comments, we will send it to Jared and Nate and they will answer it. I believe. 

Jared: Yes, we will. We gotcha. 

Caroline: Awesome. Thanks so much.[00:28:00] 

Jared: Thank you.