In spite of the growth of non-asset-based truck transportation, there are still a lot of negative connotations about this particular transportation business model. The core negative issue is that these companies don’t own the trucks or freight. As a result, other individuals in the trucking field and customers, don’t understand how these businesses actually operate. Below are some of the more prevalent true / false concepts that are surrounding this trucking sector.
FALSE: Non-asset truck brokers lack direct access to trucks.
TRUTH: It’s true that non-asset-based brokers don’t really own any of the trucks they use, but this isn’t to say that they don’t have direct access to them. In fact, most non-asset-based brokers have hundreds of close relationships with contact in the trucking industry who provide trucks to them. These relationships provide access to thousands of trucks by creating partnerships with these carriers. As an example, the asset-based carrier may have 50 trucks compared to non-asset broker who could have 50 carrier contacts with each one having 25 trucks for a total of 1,250 trucks. So the system is there to move cargo efficiently despite being a non-asset brokerage not owning those trucks.
FALSE: Brokerage Companies Bring Nothing Unique to the Table
TRUTH: While is this a common criticism of the brokerage industry, its wrong as non-asset back companies profit from the expertise and flexibility they offer to their customers. Not all the customers are the same and they have different needs and the brokerage company is there to service that need.
FALSE: Brokerage firms provide less control over the freight than asset-based companies.
TRUTH: This is a very common complaint about the industry which is not true. Most freight brokerage companies set KPI’s for compliance and performance that they require their carriers to commit to. By law the FMCSA requires brokerage firms to perform due diligence on every carrier they use. This involves guaranteeing that their drivers are insured, that their vehicles meet safety standards and that they are upholding high service levels, such as meeting estimated pick-up and delivery times.
Non-asset brokers also have an advantage when it comes to companies who have issues with the current freight customers. When a polar vortex occurs in whatever part of the country, brokerage firms have an advantage over asset-based companies. Brokerage companies can reach out to their wide array of contacts in less temperate areas, while asset-based carriers have to scramble to find alternate carriage. When it comes to weather or traffic delays or equipment malfunctions, non-asset providers have he upper hand in control.
When a truck carrier legally or illegally brokers a load, any claims filed as a result of that load will not be covered by the carrier’s primary cargo insurance. Plus, non-asset brokers are required by the FMCSA to carry a $75K surety bond. Most brokerage companies carry more than that. So your potential claims are covered when you use a broker.
A lot of shippers are reluctant to use non-asset brokerage firms because they don’t have a clear understanding of how this sector operates. After debunking three common yet false misconceptions that are listed above, shippers can be on their way to becoming better informed. There are four key components if a truck broker provides they will have greater opportunities to convert those few reluctant shippers into customers. These four components are: education, expectation, execution and delivery.
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At Crabtree & Eller we recruit specifically in Transportation and Logistics and focus on a high level of service in the areas of Ocean Freight, Air Freight, Logistics, Trucking and Rail. If you have hiring needs we can help. Give me a call at 303-814-5878 or email me at Steve@crabtreeandeller.com .