OK so let me explain my title.
Have you ever heard of a show called GOLD RUSH ALASKA on the Discovery Channel?
Yesterday I watched it for the first my first time and while my wife laughed hysterically as I got drawn in by yet another of these crazy reality TV show, I couldn’t help but think about my life as an entrepreneur over the past 17 years.
To many people factoring sounds as complicated as Chinese math but the reality is, the concept is fairly simple. Factoring is the process of selling an invoice to a factoring company which then advances up to 95% of the money as quickly as 2 days, rather than having to wait 30-60 days for the customer to pay.
So how exactly does factoring work if you are a freight broker?
Step 1: Provide the service and then invoice your customer
Step 2: Provide copy of invoice to factoring company and you can typically have your first installment, ranging from 70-95% of the total invoice, within 2 days.
In my last post I explained what a truckload shipment is, so today I am going to answer the questions, what is a less-than-truckload shipment? Less-than-truckload shipments, also known as LTL, take up less than a full truckload and typically weighs between 151 lbs and 20,000 lbs. LTL carriers focus on consolidating many shippers cargo into truckloads and then transport them long distances between hubs or terminals, where they will eventually get delivered to their final destination by a local truck and drivers. The long distance shipment between hubs or terminals is typically referred to as the line haul.
Shipments come in various shapes and sizes just like people. 
While the term truckload may seem self explanatory to some, I believe it’s worth going into a little more details to better understand exactly how exactly it works.
Truckload shipments are usually larger shipments of similar cargo which require the exclusive use of the trailer, sometimes referred to as a full truckload or FTL. Carriers that specialize in truckload shipments are called truckload carriers and usually contract the entire space on their trailer to one shipper. In my experience most freight brokers and freight agents prefer to focus on moving full truckload shipments versus less-than-truckload (LTL) because they are less likely to be involved in a freight claim and the fact that the profit potential per load is higher.
A backhaul, as it relates to trucking and logistics, is the return trip of a commercial truck that is transporting freight back over all or part of the same route it took to get to its current location.
Both freight brokers and motor carriers rely heavily on one another when it comes to backhauls. Let me explain how and why. After delivering their customer’s freight, motor carriers typically want and need to get their trucks back to their home base quickly so they can pick up another load for one of their primary customers. If one of the carrier’s primary customers calls him for service and he doesn’t have any available equipment to pick up the load, that customer is most likely going to call another carrier which presents a lost revenue opportunity. Carriers typically call on freight brokers to provide them loads back home, backhauls, in an effort to save both time and money. In exchange, freight brokers are typically able to negotiate a reduced per mile freight rate of 10-30%, which allows brokers to earn a profit for the service rendered to their customer.
An Internet load board is a hub/website where motor carriers and freight brokers share information in an effort to develop mutually beneficial relationships. The concept is simple, motor carriers post trucks and freight brokers post loads in an effort to provide both parties the visibility necessary to achieve their goals. Freight broker are interested in finding cost effective capacity for their clients and motor carriers are trying to find profitable loads to haul or possibly as a way to re-position their trucks to another area so they can get access to profitable loads.
I receive a lot of emails from people that want to become freight brokers or freight agents and recently I was asked why I believe now is such a great time to get into the freight industry….so let me explain.
The freight industry is driven by supply and demand just like virtually any product or service out there. The more demand, the higher the value/price and with less demand the value/price goes down. This is the primary reason why I believe the next 3-5 years will present one of the great opportunities to become a freight broker or freight agent.
I hear this question all the time and there are many misconceptions about becoming a ”certified freight broker”. The answer is NO, neither freight brokers or freight agents are required to be “certified” to legally broker freight.
There are many freight broker and freight agent training schools out there that use the word “certified”, “certification” or ”certificate” as a part of their marketing efforts to make the training appear more valuable or official I guess?
If you are are planning on becoming a freight agent a certificate of completion could potentially be useful to a company that is considering hiring you as an agent, as proof that you did attend and/or pass the course.
Back in 2003, before I got involved in the logistics industry, a friend of mine asked me if I knew what a freight broker was….honestly I didn’t have a clue. Based upon that fact, I figured it was a good way to start off this new blog by answering…What is a freight broker?
In it’s most basic form, a freight broker is an intermediary that brings together shippers, needing transportation services, and asset based motor carriers that actually perform the services. Freight brokers, also known as property brokers, truck brokers, load brokers and logistics brokers do not act as either the shipper or the motor carrier but play an active role in the movement of cargo.
Welcome to our new freight broker and freight agent blog!
The goal of this blog is to provide the trucking/logistics community interesting and useful information including training, tips, trends, strategies, news & more!
I plan on posting new updates weekly so check back frequently or better yet subscribe to receive BLOG UPDATES directly to your email when new posts are added.
I look forward to sharing and more importantly…hearing your feedback!
Regards,
Dennis Brown
www.freightbrokerbootcamp.com
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