Thoughts?

[Deisel1]

Here's a interesting topic that I have recently experienced for the 1st time in many years.
I am a bit old school and can be clouded on this subject.

A longtime client that we have used for several years has decided to go around our back and contact the carrier directly on certain lanes. For transparency purposes, this customer used 2 to 3 different brokers (best quote wins) but it seemed whoever won the bid would give the freight to 1 carrier. In other words, the carrier didn't care who won the bid, as 75% of the time, it would go on their trucks.

Now, it seems, the customer, has eliminated the brokers out of the equation and has gone directly with the carrier. Surprisingly, I would give this carrier 3 to 5 shipments a week, which didn't include the customer in question.

I find this fascinating in many different ways, which is why I thought getting direct ideas from my colleagues on this site who are both carriers and freight brokers to get your thoughts and opinion on this one.

 

[Fr8Guru]

What amazes me is that 1 carrier is constantly the lowest bidder, between 3 different brokers.

I am guessing this is a bit of an obscure ship point?

In your situation, what value are the brokers bringing to the equation? Everyone is asking the same carrier for a price, marking it up and tendering it off. That's what the customer is saying. Seeing the same XYZ carrier show up everyday.

Do you know for sure it was the customer contacting the carrier directly and not the other way around?

I will be watching intrigued to see other view points.

 

[MLCAR]

As a carrier, it just makes much more sense for the shipper and the carrier if these are regular shipments with volume on an on-going basis. It eliminates hoops to jump through just to get to the last 2 parties who get the freight delivered. Here's an example from our own house, we work with a broker, who in turn gets handed freight from a 3PL who works for the shipper. The shipper will tell the 3PL they want to book a truck who in turn tells our broker the freight is ready for pick up, who then lets us know, our drivers then head to the pick up and wouldn't you know it...the freights not ready! Now we go back up the same chain for the shipper to advise they meant it was ready for tomorrow... Now when you read this it doesn't seem all that complicated, but when things are being done in the moment, it takes time, causes services failures and costs money. I can go on and on about all of the reasons this makes no sense, but truly when it comes to regular shipments it makes sense for brokers to pair a carrier with a shipper and collect a "finders fee" or minimal percentage on all orders and let the shipper and carrier manage the rest. I know that suggestion's not going to be welcomed with open arms here but truth of the matter is this isn't the 80's where a shipper had no clue he had 10 carrier around the block from them and needed a freight broker to secure capacity.

 

[LrgCar]

From an ethical perspective, it may seem questionable, but in practice, this is how things typically play out. As consumers, we often approach situations this way. Take a restaurant, for instance if you buy ingredients from a reseller who sources them from a local producer and marks up the price, you might be inclined to go straight to the producer to cut costs. However, that’s not the whole picture reseller still serves an important role. They provide items that might not be consistently available from the producer or handle special requests the producer can’t fulfill, so you end up relying on both.

Similarly, the broker-carrier relationship works the same way. If you’re running a consistent lane for a shipper with the same carrier, I could understand that the shipper might consider going direct. But where the broker truly adds value is with specialized shipments those irregular lanes, equipment needs, or requirements that the primary carrier can’t cover another big thing CAPACITY when assets are out chasing big bucks and dont have trucks to service their clients.

Ultimately, it depends on the shipper’s needs. I’d recommend sitting down with the carrier to discuss options, maybe even considering a finder’s fee, as MLCAR suggested. Punishing either the shipper or the carrier won’t really get you any positive results, as the shipper may still seek out a direct relationship if they've already decided to do so. you risk damaging a strong relationship with the carrier over a shipper’s push for more pesos in their pockets. So while it’s tempting to push back, I would say it’s better to accept that the shipper has made their choice and preserve valuable partnerships elsewhere. Just my $0.02

 

[AgentSmith]

Personally I would put the carrier on the DNU list, their relationship with you and the other two brokers was transactional, you were never their customer, it was always the shipper. Your customer is also transactional, there is no relationship there either.

When the carrier can't cover 25% of the loads, will the customer send out the request to three brokers and take the lowest bid. Brokers being brokers will fight for the work like the simps we are, go in tight on the margin thinking they can eventually get the rest of freight back.

I would have done the same thing as a the customer if I saw the same carrier regardless of the broker. I use a cornucopia of carriers for each account, never one carrier for 75% of the loads. I'm sure you knew this day was coming and hope you made your margin and banked it.

@MLCAR I agree 100% with what you described and it works very well in a loose market. When the economy improves and the truck market tightens up plus certain times of the year depending on the freight, i.e.. nursery stock, blueberries, Christmas, winter .... you will find your year round steady carrier suddenly has "no capacity brother". Too many trucks in the shop, drivers went to their home country, truck stuck and can't get a backhaul, we all know the story and it only happens when there are big $$$ to chase.

Back to work I go, I have to simp for more freight to keep the lights on.

 

[loaders]

The moment your carrier partner received the call or email from your customer requesting him to quote rates directly, he should have been on the phone immediately to tell you what was happening. Isn’t that the least you deserve after feeding this carrier regular freight from this shipper and others that obviously fit into his schedule quite nicely? Having that information in hand, you could have approached the shipper for a little chit chat about how things were going. Maybe they needed a rate adjustment, maybe the traffic manager was under pressure from above to chip away at costs. The carrier in question has jeopardized not only the freight from this particular shipper, but also the other lanes you give to him. And for what….a few bucks? In my books, if I am paying the bill, that makes me the customer and I should be treated as such.

 

[LrgCar]

The moment your carrier partner received the call or email from your customer requesting him to quote rates directly, he should have been on the phone immediately to tell you what was happening. Isn’t that the least you deserve after feeding this carrier regular freight from this shipper and others that obviously fit into his schedule quite nicely? Having that information in hand, you could have approached the shipper for a little chit chat about how things were going. Maybe they needed a rate adjustment, maybe the traffic manager was under pressure from above to chip away at costs. The carrier in question has jeopardized not only the freight from this particular shipper, but also the other lanes you give to him. And for what….a few bucks? In my books, if I am paying the bill, that makes me the customer and I should be treated as such.

At this stage, if the customer has indeed approached the carrier directly, the reality is that the decision is already made and you as the intermediary are cooked. Could be that they find it easier to work directly with the carrier, or maybe they've simply developed a strong relationship, not just a rate that comes into consideration. Either way, there's likely no turning this around. Even if you lower your rate, you’d have to push the carrier to lower theirs as well, only to end up back where you started

I completely agree that the carrier ideally should have informed you, but that’s in a perfect world. Customers also need to be held to a higher standard here. it’s not on the carrier to play "couples therapist" between you and your customer.

 

[bubba-one]

As a carrier we've run into this situation of 3 or more brokers calling us for service on the same account, We are usually fair with giving the same price to all for the same shipper. As this shipper has special requirements for service and expectations we are awarded the freight almost 95% of the time from one of the three brokers. Would it make sense to cut any of the 3 brokers out? No as this gives the shipper the ability to get 3 rates to show management they are doing their job. As a Carrier the only time we've become frustrated with this situation is if one of the brokers has hired a new agent to handle this said account and he/she has no clue of what the product is or customer and carrier requirements while trying to make a name for themselves. Do the 3 brokers know we are the same go to carrier for rate and service? I think they likely do, as they likely know who the competing brokers are. Brokers who treat Carriers fairly and pay promptly will always get great service.