Understanding The Importance Of Freight Broker Bonds: What You Need To Know To Protect Your Business

Lets face it, trucking has become a commodity, there are some freight payers (I like to call them Beneficial Freight Owners or BFO) that identify in having a good carrier through thick and thin is the best option but the spreadsheet function of SORT Z-A is the tool of choice when it comes to the decision makers. In the example above, the carrier whose loads are being brokered out by the BFO due to cost, the carrier might even be picking them up through the broker to keep the trucks moving. Every carrier utilizes brokers to fill in the gaps and this example just shows how fluid this becomes. Sure, the freight line may be lower but if you look closely, you may find that other line items or metrics may have increased.

Think about the dock personnel that had to stay overtime to load the late carrier, or the damaged freight that may have had to be reshipped, or the customer who is freaking out because it didn’t arrive on the correct day. Sure they may shave off a couple of points on their freight line item but the real crunch comes down to broker and the carrier. This process takes the profit out of the bottom line of the carrier and places a large portion into the profit of the freight broker.

The carrier takes on a mountain of risk and has much more capital invested per freight dollar than the freight broker. As soft freight prices extend over the long term, carriers are forced to make the decisions outlined in many of the comments above which is decrease their spend on maintenance, training and in house support staff all items that should not be cut. As long as freight is considered a line item cost at the BFO level, and a commodity that is purchased at the time it is needed, you will continue to have these ebbs and flows of freight pricing. Source:https://www.freightwaves.com/news/wheres-my-freight