You’ve used a respectable national freight carrier for your freight shipments for a long time, perhaps even years, and you’re happy enough. What’s not to like? Your rep is a nice guy, he stops by every month to ask about your kids and drop some company schwag, and it’s just easier to keep doing what you’ve been doing.
But could a freight broker be even better for your business?
In this post I’ll go into detail about the 3 approaches to shipping LTL freight:
Direct to Carrier
Direct to Carrier with a Backup
1. Direct to Carrier: The American Airlines of Freight Carriers
LTL common carriers are asset based (meaning they own trucks, terminals) companies that pick up and deliver less-than-truckload freight for hire. A good analogy is the airline industry; the carriers are companies who own/operate planes such as American Airlines, Delta, Southwest, etc. Without these airlines, it would be cost-prohibitive to travel. If you wanted to get to California from Boston, you would have to drive, take the train or hitchhike, if you were up for it. You could charter a private flight but that could cost thousands of dollars. Your options aren’t great. Asset-based airlines work for the same reason asset-based LTL trucking companies do, they allow people/freight moving in the same direction to share space on the plane/truck. This brings the cost down to an acceptable level for everyone and stimulates travel/business in the process.
Just like airlines, trucking carriers give discounts to “frequent flyers” so if you ship on a daily basis with a carrier they are likely to offer you better pricing. The higher your volume, the better your pricing and the more rep guy stops in to chew up your morning and give you pens for your undying loyalty to the Company.
Sound good so far? But what if there is a problem with Company’s service
Their employees go on strike.
They start consistently damaging your freight.
They start consistently reclassifying your freight.
They stop making daily deliveries to your best customer’s zip code?
I can go on all day...
Enter your backup plan:
2. Direct to Carrier w/ a Backup: Flying the Friendly Skies w/ Delta...and American
It’s always good to have a backup because it only takes one incident for things to go sideways.. Okay, so you hedge your bets and sign up with Truck, the Delta Airlines of freight. Now you’ve got all your lanes covered and in case anything happens you’re good to go. As an added bonus you get Rep Guy twice a month now asking about your wife and how he can get that business back AND you now also get New Rep Guy in dropping off his knick knacks and asking you about dogs. To top it off you’ve now split your business and your loyalties and as a result there’s less pie to go around so you don’t have quite as much clout with either carrier. And next year your discount level will drop as a result of the fractured business.
Beside this additional relationship you will also be quoting 2 websites for each shipment (or making 2 phone calls) and working with 2 different invoicing/accounting systems. But, if you can spare the extra time and headspace it’s a working alternative.
Or, you could try a broker.
3. Broker: The Kayak.com of Freight Shipping
After juggling multiple independent relationships with the different carriers you decide to see what this broker thing is all about. The best way to think of it is like the “kayak.com” of freight shipping but with your own personal concierge to guide you as much or as little as needed.
One un-biased relationship to manage
One set of invoices
A whole lot of choices.
You can have your cake and eat it too.
Brokers leverage volumes of scale with their entire customer base (In DLS Worldwide’s case we also leverage our parent company’s $2 Bil annual freight spend) to get really low rates with carriers at wholesale levels. They can then turn around and resell these rates to you at a lower level then you can get on your own and offer the value-added services described above. It’s the best of both worlds (Read more about this here). Welcome to First Class where you’ll be served cost & time savings with some other nice perks like invoice audit and a single source website for all your quotes.
Recap: Your Return Flight
So, there you have it those are some options for navigating the friendly freight skies. To recap:
Direct to Carrier - Simple but missing opportunities for cost savings and added value
Direct to Carrier with a Backup - Dials in services needed but adds complexity and can reduce pricing leverage
Broker - Broad range of carriers, competitive pricing and value added services
No matter what you do make sure your freight service provider is working to save you time, money and headaches and you will be in good shape. If you find you are spending any significant amount of time dealing with anything related to freight shipments you aren’t doing it right and it’s time to ask yourself: Do I need a Freight Broker?
Looking for a reliable, experienced freight broker who can take everything off your plate and always find you the best rates? Contact Chris.