Are Trucking Brokers Necessary?

               I have used trucking brokers to move nursery stock for the past eight years and most of the nurseries I know use brokers as well.  As an industry, we’ve grown very dependent upon these relationships, so I wanted to explore that in today’s post.  The trucking brokers I’ve used do not own their own trucks.  The main service they offer is just facilitating the interactions between customers like nurseries, lumber mills, etc. and carriers. 

               Some business owners have complained about the markup the brokers make on the freight, so I’d like to explore the service brokers provide first and then explore a few of the alternatives that I’ve heard proposed over the years. I can recall one business owner in particular asking, "Are trucking brokers necessary?"

What am I paying you for?

               As I mentioned, I have some experience working with trucking brokers.  Let’s see if I can articulate enough of what they do.  To be clear, I’m referring to trucking brokers who handle nursery stock as a main part of their work. 

1.       They are responsive to calls/emails.  A good broker will typically send you a quote within minutes of requesting it.  Speedy response times are invaluable when you are busy selling at a nursery and coordinating hundreds of combination shipments.

2.       They speak your language.  Yes, brokers act as translators between carriers/drivers and nurseries who may not speak the same languages but I’m actually referring to vernacular.  A good trucking broker who hauls nursery stock will understand your verbiage and speak your language.  If a new broker asks you for pallet dimensions and weight, there’s a 99% chance that they’re not accustomed to hauling nursery material and might not be the best fit. 

3.       They understand your program.  They know how many load locks you need, what temp you need the reefer set at, what kind of load times to expect from your nursery, etc.  This is important because people get upset when they are surprised, as we discussed in my last post about reducing credits. 

4.       They handle billing.  When I work with trucking brokers, I usually ask them to bill my customers directly.  This keeps freight down and keeps me focused on selling plants rather than collecting on freight invoices.  I also use this as a selling tool with my customers because they can rest assured that I’m not making an extra margin on top of their freight and they’re getting the best deal possible. 

5.       They coordinate ETA and schedule deliveries.  This is huge because I can estimate the delivery day based on an average of 600 miles per day OTR, but stuff happens.  Drivers have to reset hours, they have breakdowns, hit detours, etc.  You can sleep easily knowing the broker will be coordinating delivery with the customer.  This helps also if the customer has some issue with timing- letting them talk to one another is a massive blessing.

6.       They have existing relationships with carriers and know which ones to avoid.  As you know, relationships are everything.  I have written in other posts about the value an experienced buyer can bring to your organization, an experienced broker is the same.  They have extremely long memories and hold grudges that would put the Hatfields to shame.  An experienced truck broker has strong relationships with high quality carriers, and you get to benefit from those years and years of weeding out the bad ones. 

7.       They always have trucks.  They have access to the trucking boards but more importantly, they get calls from carriers who are on their way into your region to schedule runs proactively.  I had a truck drop my load at 11:00am on Good Friday, right before Easter weekend.  I called Matt at K&M Distribution, and they had a new truck to me by 1:00pm.  Happy customers, happy me. 

8.       They watch the markets intently and fight to stay competitive.  This is huge!  Although they watch the same boards, each broker has a different strategy.  Freight dropped like a rock when the lockdowns started in early 2020.  Rob at Left Coast Logistics was the first cat to spot the drop and we capitalized on it big time.  My customers were moving multidrop trucks to Michigan for $3700.  As the lockdowns were about to ease up, we shoved the last few orders into trucks right before freight nearly doubled overnight.  That was an extraordinary circumstance but good trucking brokers who know the nursery industry can predict when shipping season begins and ends, when apples start, when Christmas trees hit the market, etc.  They know their ebbs and flows, and you can benefit from that rhythm. 

9.       They are convenient.  If you have a good relationship with them, they can book a truck with a simple text.  Ideally, you have your ducks more in a row than that but when shipping season is in full swing and booking a truck quickly is the difference between shipping this week or next week, having a strong trucking broker in your corner is worth its weight in gold. 

10.  They help with insurance claims when things go wrong.  I once had a full-sized pickup truck drive headlong into the back of my semitruck without even braking.  Guy was ok, trailer was totaled.  Insurance would cover it, but I didn’t have to deal with it at all because the trucking broker handled it.  One of my colleagues had their truck scalped by a low overpass and the trucking broker handled that for them as well.  This one is not very important until it is… and then, it’s vitally important.  Think about the odds.  You’re most likely to have a wreck right when you’re busiest and have the least amount of time to deal with the headache. 

11.  They can find trucks when others cannot.  We talked about finding a truck on short notice and this is an offshoot of that.  Sometimes there is just a severe shortage of trucks on the road and someone’s load will not be carried.  Who do you think gets the truck?  It’s not just the person with the most money, although that helps.  No, it’s the person with the best relationships and that’s the brokers who throw a tremendous amount of business to the carriers.  You can capitalize on that and get on one of those limited trucks while the other guy has to wait over the weekend. 

12.  They catch routing errors.  I’d like to pretend this never happens, but I’ve made more than a few bone-headed shipping requests over the years.  Typically, it’s when I’m in a hurry and think I routed the run the right way but left someone out of order.  A good trucking broker will catch the mistake when they’re running the miles, and it can save everyone a ton of money. 

If you want it done right…

               I’ve heard several business owners suggest they could save a pile of money by just going direct to the carriers and cutting out the middleman.  They run the numbers and figure what they’re giving away.  They reason, “If the broker can make a living doing this, surely we could do it profitably as well.”  

               Maybe.  Maybe not.  Remember, we live in a world of specialists and streamlined efficiency.  This is what the trucking brokers do all day, every day.  It is their primary focus whereas a nursery’s primary focus should be growing and selling plants.  In the book Good to Great by author Jim Collins, he coined the term, “Hedgehog Concept.”  The Hedgehog concept is how great companies found success by intently focusing on only what they do better than anyone else instead of spreading themselves too thin. 

               There’s also a certain arrogance in assuming you’re the only one to think of cutting out the broker and claiming their profit margin for yourself.  Are you really that clever?  Carriers know what the broker’s markup is and will charge you a marked-up rate as well.  It would be tricky to tell if you’re getting a fair rate without an objective measure.  It takes a lot of trust which goes back to relationships and experience working together.  Besides that, I believe brokers only make a modest profit anyway so you’re talking about fighting over a margin of a few hundred bucks.  Better to stick with growing plants. 

In Closing

               Like with most things, there are pros and cons to each scenario.  Some have made a great deal of money working directly with carriers.  It’s just a more complicated process and there are tradeoffs.  That money doesn’t come cheap. 

In my experience, the Hedgehog Concept is a great principle for life. I would rather focus on what I do well and leave the transportation to the pros.  I also enjoy the many benefits I mentioned earlier.  Since I do not choose to mark up the freight, I am happy to let the trucking brokers earn their living.  I consider it well-deserved and am grateful for their efforts every day. 

               I want to give a hat tip to the two trucking brokers I’ve mentioned in today’s post.  Both K&M Distribution and Left Coast Logistics are top notch brokers.  We have worked together for eight years and highly recommend them both.

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