Jag Trucking Inc. Freight Agent Training Is being a Freight Agent right for you? • • • • • • As a Freight Broker Agent you perform the same duties as the “Freight Agent” under the watchful eyed of the Broker You are the responsibility of the broker, everything you do as a broker needs to be monitored somewhat by the Broker to insure that it meets the guidelines of the FMCSA You transactions as a Broker Agent are covered by the Broker’s bond and BOC-3. The buck stops with the Freight Broker so it’s important to keep the relationship clean and error free with each transaction. You need to find a reputable honest broker to work with. A reputable broker pays all parties to your transactions and pays you your hard earned commissions in a quick timely manner. Prompt and timely payment is very important to the success of broker agents, reason being if you are late or checks bounce to your carriers will go with the Brokers who pay on time. This affects your bottom line and means that you do not get paid on time as well. Day to Day Operations • • • Lets say you decide to become a Freight Broker Agent, considered to be a good and advancing field to be in. As we have indicated being an agent is essentially the same as being a broker without the fiscal or financial responsibilities associated with the shippers, carriers, and you commission. With this being taken care of by your reputable broke r you can focus on building you brokerage business. This consists of several things that you need to do well on a day to day basis. Negotiation skills: First you need negotiation skills to work with and build relationships with both shippers and carriers, as you are negotiating price, timing, and details between the shipper, carrier & broker. A good broker believes in strong personal relationships with the customers as the essential component to sustain a successful operation. As the broker Agent you carry the Brokers torch to accomplish these objectives. Trustworthy and Honest: Business credibility is a must and is established by, the credit strength of the broker or 3PL, all bonds, trust and insurance documents are in place. The rest is up to you and your reputation to solve the shipping needs of your client’s requirement as they arise on demand. Honest prompt communication between all parties is a must have trait, even if the news is bad such as the occurrence of a accident, truck break down ect. Day to Day operations Cont’D. • • • • • Have Great Carriers/ Trucker Sources: On the other hand in order to ship goods you need carriers (trucks). The Broker Agent and the carrier’s sign a broker/carrier agreement for load transportation. It is important to work with reliable carriers who diligently attend to the detail of moving the covered load. It is up to you to develop well established carrier relationships. This is done by, paying air market for carrying your loads, prompt payment to your carrier relationships, keeping them busy which helps them with their business including helping with backloads to backhauls. The Process: the Broker Agent establishes the relationship with the shipper using the Broker’s credentials and correspondingly establishes relationships with carriers who are available to carry goods. When a shipping order is taken the Broker Agent springs into action to find the appropriate truck resource to move the goods for the shipper from point A to B. Once the shipment is delivered by the carrier the carrier bills the broker. The invoice includes the bill of laden and many carriers want to be funded at time of delivery (Brokers front this expense) The broker then bills the shipper and collects the monies which is typically 30 days out, or net 30. Expected Pay Commissions for Independent Broker Agents • • • You need to be paid fairly for the efforts, skill, experience, and clients that you bring to the job at hand even when you are working under your brokers flag, this is your business and livelihood. There are two types of Independent Broker Agents: Commission- You can expect to be paid 50 to 60% of the gross profit proceeds of the transactions you bring in minus the carrier costs. It is important that your contracted Broker has financial strength to keep everyone paid and the relevant financial institutions happy. Employee Type Broker Agent: Depending on the type and size of logistics company there are positions where you are a direct employee, where most are compensated with a base pay + commission. Note: If you have no shipper clients or experience this is a good place to start with, but often salary agents are under a non-compete agreement which makes it difficult to transition to an independent broker agent position because clients remain with the company. Expected Pay Commissions for inDepenDent Broker agents Cont’D • • • • • The below graph results are from a voluntary survey of industry specific segments conducted by Payscale.com (* note keep in mind that most surveyed within the logistics industry are from direct employee type companies.) 2010 Freight Agent Job - direct vs. commission salary plus experience in truck freight brokering Interpretation: Direct Freight Broker Agents with 5+ years’ experience; pull a higher average pay rate with a 3.5% increase in salary. Watch out for: When you see Brokers advertising commissions higher that 50-60% make sure you read your contract agreement carefully and do your due diligence on the broker and his or her operation to insure they are credit worthy. There can be no worse fate than to sign an exclusive Broker Agent agreement with a Broker who is in financial trouble. The failure of your broker to pay your carriers and collect from your shippers will quickly torpedo your business opportunities, prospects and reputation. The best Freight Brokers are interested in your success as a Freight Broker Agent and are available to support your efforts with no hidden agendas or funny pay/commission schemes. For example, we train you, you work for considerably less than industry standard for a year or more and more so, the exclusive or non-compete, work for hire type contract which means that they own the client relationships that you develop and you can't take them with you if you want to go independent. Consider the following when looking into your Freight Broker Agent positions: • Does the Freight Broker have a good • • • • • • • • • reputation? Does the Freight Broker have a good credit score? Do Freight Broker Agents like working with the Freight Broker? Is the compensation package fair 50-60%? Does the Freight Broker offer tools and resources to make your work easier? Is the Freight Broker Agent agreement fair for all parties? (Most Important) Is the Freight Broker a person you can see yourself working with successfully? Does the Freight Broker offer assistance and support if necessary? Does the Freight Broker have a good marketing plan to help support your operations? Answer these questions when you look to find the best and most profitable operation for your professional efforts. Recommendation for those thinking about being a Broker or a Broker Agent • For Brokers: Most established Brokers were Brokers Agents at • • • one time. The complexities that go with running any business require experience and know how. On the job training is the best way to get the relevant experience to determine if you have what it takes to be a Freight Broker. So the recommendation to start as a Freight Broker Agent is valid in that you can focus on one slice of the business that is considered the most important aspect of the business, relationship building. Once you establish your ability to do this well you can then consider taking the next step to owning and running your own independent Freight Broker operation. You will find that many Broker Agents prefer to remain such and leave all the other associated financial, administrative and daily responsibilities to the Broker. Broker Agents: New To Industry While just starting out, with no contacts or book, no specialty niche or you need the surety of a guaranteed check and benefits a direct employee pay + commission might be the option for starting out. Many who start this way soon find that once they gain the experience, established contacts that it is financially far superior option to work as a independent Broker Agent even with buying their own benefits and office set ups. reCommenDation Cont’D • Vertical Industry Experienced: Getting or having core experience as a shipping clerk, dispatch agent, truck driver would be a good start for independent broker agents because you’ve had contact & relationships with shippers & carriers that you could bring with you. You will find a job with a well qualified 3PL much easier with this experience in your background. You could negotiate an on the job training period to learn the administrative responsibilities, tools and methods as well as set up your office and begin working with or marketing to your contact list. You should • Make sure that you are not under a non-compete arrangement if you intend to use the contacts you've made on the job. • Before you make the jump to independent agent, poll some of your contacts to see if they would move their freight with you. This will give you an idea if you'll have business to start with. • • • • • Company direct based Broker Agents or other 3PL experienced broker agents: Before you make the jump into working as an independent Make sure that you have the right to market or broker your current client shipments. Meaning that you did not sign any legal documents/ non-compete agreements with your employer such as a work for hire or that all clients that you serviced were proprietorial to the company. Have a copy of your shipper data and carrier relationships - this is the core of your business as a independent freight agent and how you'll derive an income. When applying for a independent freight agent position, be prepared to demonstrate that you have active shippers and carrier relationships. Know your numbers. Know what your average monthly gross profit and margins are as this information further demonstrates your ability as a freight agent as well as the logistics company potential support/ financial responsibility. Conclusion • In this hub page we have looked into aspects of being a Freight Broker Agent. In the process we have covered the differences between being a “Freight Broker” and a “Freight Broker Agent” to provide a foundation to consider when entering the industry or making the transition between Freight Brokers. • In addition we have tried to dispel the myth that you can be a successful Freight Broker in as little as two weeks, we think it could possibly be two years or more depending on your individual aptitude.