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Tramp1947

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Jun 3, 2011
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I hope this is the right place for this question..

When a broker or carrier sells a load to another carrier what is the COMMON percentage taken?

Is 20% considered fair?
or 30% or ever 40% or more???

When does the percentage for having a phone and a desk get to be hi-way robbery?

I realize that in some cases it is more than that. You have a relationship with the shipper (or receiver) that has been nourished over time. I also know that is not always cheap. However, when does it get too much?
 
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If you are happy with the rate from the broker then who cares how much they made?
 
lowmiler is right but the truth is it varies a lot. The percentage depends on the ticket price of the actual haul and how much you have to touch it.

There are certain things we don't have a problem moving at 5% and other things where based on the ticket, it could be 40%. It's no different from any other business ... the more value added you put in, the higher margin that should be there.
 
In one respect I understand "lowmiler's" comment. The main problem I have with that is there are some of us trying to get the rates up so we all can make money.

ie. The rates from Alberta to the East mainly Ont & Que. If the brokers were FAIR and paid what the loads ACTUALLY paid (instead of what they can get some cheap carrier to do it for) then things could change. They would make the standard brokerage they charge and the truck would opperate at a profit instead of a loss. I know it is hard to actually play fair sometimes especially when someone starts bidding on loads. But is this really a game of how low can you go??

I am old enough to remember the uproar in the 80's and a few companies who got the loads took 50% off the top then farmed them out and still took their brokerage. Sure the companies got very rich doing that. However most are out of business now. The bad part was that when the O/Os finally figured out that they were getting screwed they "back doored" the broker. Then the rate they went for was just a bit more than they got from the broker. This was the start of a down hill slide that has been going on since then.

Believe it or not some of us are in this business to make money. Not just to help others make money.

For me - if a broker is honest and says up front The ACTUAL rate is "X" - but I am taking 40% because of the work I had to do to get it and keep it - that is one thing. But to have a bidding war by 10 carriers for the same load is a dishonest way of doing business.

Bottom line is if you are happy with a carrier - pay a LIVING rate and the job will be done properly. Have a bidding rate...then you get what you pay for.
 
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Tramp1947 said:
"For me if a broker is honest and says up front The ACTUAL rate is X. BUT I am taking 40% becouse of the work put I had to do to get it and keep it and I still agree to the rate that is one thing. But to have a bidding war by 10 carriers for the same load is a dishonest way of doing business"
Click to expand...

Good luck with that Tramp. I don't know of any industry where they tell you what the profit margin is. Try all the retail out there making margins from 100 to 500%. I am not saying I agree with this whole "EBay" trucking that is occurring now, but that is the market we are in and I don't think it's dishonest, but it does drive the rates down for sure.
 
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Tramp1947, the answer to your question is simple. If you want to make money in trucking, don't operate your truck(s) for less than what it costs to operate them. In other words, don't haul freight for anyone, broker or shipper, unless the rate allows you to cover all your costs and incorporates a profit component. If the rate you are offered by a broker meets this criteria, who cares what the broker makes on top of it. There will always be a carrier who will perform the load for less than you would. That is their right, just as it is your right to refuse to do it. Rates are and always will be, determined by the carriers based on their individual needs. Sure, some brokers and shippers may try to play the bidding game, but in the end, it is the carrier who says yes to a low rate that bears the fault. In our economic system (capitalism), sellers and buyers can enter into any agreement they desire and profit or fail from those decisions.
 
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Unfortunatly you are both rite.

The industry is controlled by the low bidders in our system. What the truck makes is and always has been the problem of the O/O. It is just so frustrating to make a GOOD profit on the West bound leg and then LOOSE IT ALL on the East bound. Sure the rounder may make a small profit but it is soooooo agrivating to find out that some broker is making more from a load than you are. I know I know YES I KNOW. Once i agree to a rate it is not my concern.
But it doesn't make it any easier to swollow.

Take care and thanks for the responces
Tramp
 
Tramp1947 said:
In one respect I understand "lowmiler's" comment. The main problem I have with that is there are some of us trying to get the rates up so we all can make money.

ie. The rates from Alberta to the East mainly Ont & Que. If the brokers were FAIR and paid what the loads ACTUALLY paid (instead of what they can get some cheap carrier to do it for) then things could change. They would make the standard brokerage they charge and the truck would opperate at a profit instead of a loss. I know it is hard to actually play fair sometimes especially when someone starts bidding on loads. But is this really a game of how low can you go??

I am old enough to remember the uproar in the 80's and a few companies who got the loads took 50% off the top then farmed them out and still took their brokerage. Sure the companies got very rich doing that. However most are out of business now. The bad part was that when the O/Os finally figured out that they were getting screwed they "back doored" the broker. Then the rate they went for was just a bit more than they got from the broker. This was the start of a down hill slide that has been going on since then.

Believe it or not some of us are in this business to make money. Not just to help others make money.

For me - if a broker is honest and says up front The ACTUAL rate is "X" - but I am taking 40% because of the work I had to do to get it and keep it - that is one thing. But to have a bidding war by 10 carriers for the same load is a dishonest way of doing business.

Bottom line is if you are happy with a carrier - pay a LIVING rate and the job will be done properly. Have a bidding rate...then you get what you pay for.
Click to expand...

The rates out of Alberta have always been bad. It has to do with supply and demand. Too many trucks and not enough loads. The shippers are well aware of this as thus the rates are low. There is very little margin for those loads. The same works for western carriers going out east and having to rely on brokers for loads coming west. If you don't have your own customers at your destination, you are going to take a hit on the return. You need to keep in mind what rates you will get coming back and calculate your rounder to make money.
 
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I think what trucking operates on is capitalism at its very core -- meaning at 'what the market will bear'. Where there is too much market saturation, margins suck, and where there is the fewest serving, there is the highest potential for profits. With brokers it is the same -- when there weren't so many around, and especially if they weren't marketing properly, there was a lot of low hanging fruit that resulted in big profits. Now that everybody and their dog is brokering freight, margins are nothing like they used to be. Also, customer demands are higher than they used to be thanks to TMS and such, so overhead is larger, agent commissions as a % of margin aren't as high as they once were. Generally, freight that gets brokered at high margin now is because of the work that is attached to it.

There's a reason why there are all these M&As happening in the industry, both on the asset and non asset side.
 
I always see the same things written, that people are paying cheap rates because of dirt cheap carriers and its ruining the industry.

Its a juggling act, depending on the customer, the freight, and the $$ annually I will give some freight to a more expensive carrier just to ensure the relation with the client has a higher chance of being kept (less breakdowns, lies , better tracing ect.) Whereas some freight is just cheap freight all around and even the shipper most likely knows it and is aware of the service he pays for (doesnt always keep them quiet though).

I would say the relationship between carrier and broker is important as well, if a carrier helps me out im likely to help them and ect. There are very few outbounds I post on the link at all for this reason, the same guys will run extra miles inbound when im stuck with a load. This keeps the link out of it for the most part and both parties happy. Especially if you are constantly needing brokered freight out of a certain area.

Just cold calling link posts and complaining the rates are being run down is the wrong way to look at it.
 
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I think people just complain about the rates in general. It's not an easy business.

I feel the same way as you about the relationships ... realistically maybe between 10 and 20 percent of our freight hits the link. Usually when it's the case, it's because the lane isn't consistent enough to have a go-to on so you need it as a resource in that regard.
 
You're right on theman! If all loads (regular dry van) paid a minimum of $5.00 per mile, with NE US freight even higher, no one would have to really worry that much about what the costs of running a truck are. Funny how much simpler it becomes when there's lots of money floating around. Unfortunately, making a consistent profit in any business doesn't "just happen", it takes time and lots of hard work and a successful strategy.
 
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