Backsolicitation

In your opinions is this back solicitation?

We moved about 300 loads via CP Intermodal last year, the season ending in May 2015. Originally CP did not want to move the loads, so we worked out a plan with the shipper and consignees that were acceptable to all. The CP sales representative then makes sales calls on the shipper, takes them to hockey games, and other perks, all of this without asking us. The shipper in the summer asks CP to quote directly on the movement for this year, and they quote the same price that there were giving us, and they did not even inform us as to the fact that they were asked or that they had even quoted the customer. Needless to say we lost that business. In talking to the sales manager, not the sales representative but one level higher, I was told “that CP Intermodal if approached by any shipper that they are hauling for at this time even if that shipper is a 3PL customer, they will quote directly to the customer if they are asked”.

What do you think, is this back solicitation or not? And if so what recourse is there?
 
Yes, it is back solicitation, but its a dog eat dog world and what are you going to do. The best cure for back solicitation is to find customers with diverse shipping needs. Steady loads that move in the same lanes week after week are an open invitation to back solicitation. And the broker must ask himself, what value am I providing if the shipper and the carrier can just as easily work together without my involvement? Back solicitation usually happens when the broker's involvement is no longer required.
 
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Whenever we get a lane specific rate from CP they ask us who the beneficial owner of the freight is. It was my understanding that if they are already doing the freight, they will tell us they can't quote on it. I just assumed they did the same thing if the shipper called them directly. I am emailing my rep now to ask his standpoint on this.
 
"In talking to the sales manager, not the sales representative but one level higher, I was told “that CP Intermodal if approached by any shipper that they are hauling for at this time even if that shipper is a 3PL customer, they will quote directly to the customer if they are asked”."

That is usually the caveat in every transportation contract with brokers and 3PLs. If the customer approaches the carrier, the carrier is free to quote, however, usually by contract the carrier cannot approach the shipper. It's word of mouth as to who contacted who and it's pretty easy for the carrier (CP in this case) and the shipper to agree beforehand who called who first. Unless you have something in writing forbidding CP to transport for the shipper directly, which I doubt they would have signed anyways, it would be my opinion that you're hooped on this one.

Back-solicitation is a moral concept. There is no law, rule, or regulation against it. The only thing you can do to protect yourself is to have it written into a transportation contract.
 
That's a caveat when you don't have any equipment. If you're an IMC that is running its own containers and controlling its own drayage, the relationship with the rails is different, even if you are using rail-owned equipment for the specific move. Railways want skin in the game from their partners, plain and simple.
 
The railway's position is that they are not about to start competing against themselves. If a 3PL offers them business they need to know if they are currently handling or if they have in the past. They are not going to offer a 3PL a better rate than they might be currently getting directly from the customer. Ya cant really compare a railway's policy on backsolicitation to that of a trucking companies. When there are only 2 players in the Canadian rail market you can pretty much do whatever you want.
 
My rep left me a voice mail on this issue this morning and basically stated that if CP gets a call from a customer direct, they will quote on it directly. However, if it was assigned to him and he recognized it was one of our clients, he would call us first. That being said, we have a lot of clients who don't do large volumes at around 1 to 2 containers per month where whey would not get the Tier 1 pricing and most likely be higher than what we are giving them anyway. Due to this issue was such a high volume, he is assuming that the client also received their Tier 1 pricing.
 
That's usually the case. The railways aren't interested in the onesy-twosy deals. Those kinds of customers don't get the attention from them than they would get from other players like IMCs such as Hub, Mode, Pacer (now XPO), Wheels Clipper etc.

When it's a larger volume deal, it's always at risk unless you are the type of IMC with clout on the rails (meaning you are running a fairly significant number of containers on their lines). The IMCs use the rail lines for the linehaul obviously, but where they are different is in how they run the ramp to door ends of the movements, plus most IMCs also do OTR of some sort that lets them act more in a consultative way.

Being a broker doing business with CN/CP is just a dog's breakfast unfortunately. Their attitude isn't going to change because it doesn't need to. A far different relationship that what 3PLs have with OTR carrier partners.
 
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I've only have one carrier back solicit a company that would ship regularly from Toronto to Montreal. This was when I used to work at the brokerage for a large company with over 500 trucks. The margins were way too high for a lane that is really competitive.

If you are not going to provide any significant service in a hot lane, you have to be very careful about who you use.
 
Rail works great if you're in the consolidation/distribution business. They're not going to go after your little accounts even if they do find out who your shippers are.
 
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I have been in the trucking business for a VERY LONG TIME. Probably driven more years than most of the truck pimps have been alive.. To sit and complain about a company driver giving out a owners card to a customer is hypercritical. Be thankful that you have a loyal client.
The reason I say hypercritical is because Every Piece Of freight was someone else's before you got it. How did you get it? Probably by sending a salesman out to the customer and soliciting the business. ( Probably at a discount rate just t get it ) Explain to me the difference in doing that and a Driver who represents a company chatting with a receiver or shipper.
Sure some of you may be second or even third generation owners. The freight MAY have been with the company for years and years. BUT unless you hauled the very first load from that customer you BACK DOORED SOMEONE .
 
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@Tramp1947 ... A few things to mention ....
First, there's no need to yell at everyone so lose the bold typeface.
Second, I'm pretty sure you mean hypocritical, and not hypercritical. Two vastly different definitions.
Third, if you want to spend your time bashing load brokers, please do it elsewhere. No one here really wants to hear about it.
It is a forgone conclusion that load brokers are in this business to stay. If you believe the supply chain can operate without them, then I have to tell you I believe you are sadly mistaken, and woefully ill-informed.
The reality is that extra-provincial and/or international trucking companies, with a mandate to grow, cannot survive without them. Even the largest of carriers south of the border depend on load brokers to round out their unbalanced lanes. No one person or entity can manage it all. It's a global economy, and a global supply chain now.
The only thing that really remains to be seen is how long it will take the good brokers to run the bad ones out of business.
Just my very humble two cents worth.
 
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Well said Michael. I was just about to craft a rebuttal to this backsolicitaion opinion, but realized it would probably fall on deaf ears. If Tramp1947's moniker is an indication of the year of his birth, he is only 5 years my senior, so our experience in this business is comparable. Too bad he hasn't kept his eyes, ears and mind open to see the way things have and will continue to change for those of us who have chosen transportation as our business.
 
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Solicitation and backsolicitation are two VERY different things. Yes, most freight belonged to someone else at some point but there is a difference between "aquiring" new business through the proper channels vs "stealing" it. Yes, it happens all the time but that's a different discussion...
 
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Michael Ludwig said:
@Tramp1947 ... A few things to mention ....
First, there's no need to yell at everyone so lose the bold typeface.
Second, I'm pretty sure you mean hypocritical, and not hypercritical. Two vastly different definitions.
Third, if you want to spend your time bashing load brokers, please do it elsewhere. No one here really wants to hear about it.
It is a forgone conclusion that load brokers are in this business to stay. If you believe the supply chain can operate without them, then I have to tell you I believe you are sadly mistaken, and woefully ill-informed.
The reality is that extra-provincial and/or international trucking companies, with a mandate to grow, cannot survive without them. Even the largest of carriers south of the border depend on load brokers to round out their unbalanced lanes. No one person or entity can manage it all. It's a global economy, and a global supply chain now.
The only thing that really remains to be seen is how long it will take the good brokers to run the bad ones out of business.
Just my very humble two cents worth.
Click to expand...
Very well said Michael !!
 
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