Truck Cargo Brokering
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14-Sep-2014 -
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Transcript of Truck Cargo Brokering
TRUCK CARGO BROKERING
A Presentation by:
Katrina R. DeloachApril 7, 2023
MGT 309-Introduction to Logistics
Saint Leo UniversityFort Lee Center
ELEMENTS OF TRUCK CARGO BROKERING?
Involves the use of a licensed company who ships goods belonging to someone else that are arranged by a broker
Hired by outside carriers for the actual transportation of goods
Broker does not assume responsibility or take possession of cargo
Certain fees are collected from both the shippers and the truckers
ADVANTAGES / DISADVANTAGES OF TRUCK CARGO BROKERING
Advantages: Help optimize fleet usage/profits Increase revenue per mile-through reduction of empty backhaul milesDisadvantages: Brokers reap most of the benefits Reinforces directional imbalances
DIRECTIONAL IMBALANCES… Directional Imbalance is a divergence between
inbound and outbound traffic, which usually results in different freight rates
Directional imbalance in trade between countries implies that many carriers are forced to haul empty containers back, which will make the costs of shipping in one direction higher
DIRECTIONAL IMBALANCES CON’T
The effect of carriers' transport costs on freight prices depends on the directional imbalance in transport flows
Directional imbalance occurs in truck cargo brokering when there is a mismatch that happens along the same corridor causing large numbers of empty containers to be shipped back to the source…basically, this means “large surplus of containers at one side and a deficit of containers on another”
SHIPPER AND TRUCKER FEES Brokers TL average 10-
20%...LTL over 20% Heavy haul flatbed
ranges between $6,000 - $15,000
Iowa reported IB/OB rates $1.30 - $3.00
Arkansas reported IB/OB rates $2.00 - $3.00
DOUBLE BROKERING
Practice of having two agents involved on brokering a shipment. The first one gives it to the second one, and the second to an end carrier….Is this legal
Double brokering is legal and ethical ONLY if all parties involved are in the “know”
Becomes a problem when trucker has no authority or insurance in the company for which he/she loads
Double brokering of freight has become an all-too-frequent practice, probably due to the truck and driver shortages
Big problem if broker goes out of business…leaving the potential for double-billing
BROKERING HIGH VALUE High value loads that are
stolen are usually organized
To avoid such loss…brokering of high value loads must be defined in advance
Shippers of high-value loads should never allow brokerage, or should be certain that the brokering entity is included in the security protocol
CHALLENGES BROKERS FACE
SUMMARY Truck Cargo Brokering can benefit all parties involved as
long as expectations are communicated Beware of double-brokering, especially where the risk of
the broker going out of business is concerned Brokering high-value loads are a high risk to theft and are
usually organized Directional imbalance occurs when there are a large
surplus of containers at one side and a deficit of containers on another
Shipper/Trucker fees varies depending on the market, type of freight, time of year and other economic factors