Dry Van Full Truckload Companies Unite (and The Brokers Who need you)

Posted On 17th July 2018

The top 5 broker/carrier disputes, from our perspective, are:

  • Not being paid for detention, even 4 or 5 hours after the appointment time.
  • Being paid a paltry sum for an overnight stay because the warehouse could not honor the set appointment time.
  • Being penalized an arbitrary amount for being late for a delivery.
  • Being penalized an arbitrary amount for missing an appointment, due to a legitimate mechanical failure.
  • Factoring companies taking advantage of carriers to the tune of 1.5-4 percent per month, even though most brokers now pay in within 10 to 15 days.

Why can’t the freight shipping companies, especially ones booking on the spot market, agree to certain common standards from which they will rarely deviate? 95% of the dry van loads booked on load boards such as DAT Solutions or TruckStop.com could be booked under the following:

Proposed Load Guarantee Standards

  1. Detention begins 2 hours after the agreed to pick up or delivery time and at a rate of $75 per hour, to a maximum of 8 hours.
  2. Overnight stays due to receiver failure at $350 per night for a 7:00 a.m. to 9:00 a.m. appointment the next day. Detention begins again after 11:00 a.m. at $75 per hour.
  3. If the trucker is late for pick up or delivery, the Carrier agrees to subtract $40 per hour for overtime caused to the shipper or receiver.
  4. No factoring by the carrier. Instead, the broker must pay the carrier electronically (if requested by the carrier) on the same date it receives the proof of delivery (POD). This assumes there are no disputes.

By adopting these proposed load guarantee standards, we could make the existing spot truck market more transparent, viable, and ultimately more efficient and expansive. The first 3 standards could eliminate up to 85% of the existing disputes and should be modified only in rare cases.

The carrier and broker should discuss such modifications in advance and agree to them in writing, and they should be highlighted on the confirmation. However, in most cases, the broker could simply state online when he posts the load and stamp his confirmation in bold letters with LOAD GUARANTEE STANDARDS APPLY.

Furthermore, in most spot markets the settlement day is one day after, or the same day as the transaction. So, once a trucker has done its job, why shouldn’t the carrier be immediately paid that day? Brokers don’t earn much interest from the bank, so what is the reason brokers should hold onto the money and force our partner carriers into ridiculous interest rates with factoring companies?

There isn’t a good reason to impoverish our truckers by forcing them into the factoring industry’s chains. Wiping out the plague of factoring companies “managing the payables” of our carriers would be good for brokers as the truckers will be more profitable and more likely to buy another truck, i.e. increase capacity which is what brokers really need right now.

Everybody important wins with such a market reform. Freight brokers usually pay factoring companies within a few days of receiving the invoice via the mail – a very inefficient way to do business for us. I’d rather pay the carriers electronically the day they deliver. If these proposed load guarantee standards are adopted, the carriers will basically be operating in a credit risk-free environment.

The US spot market is already the largest clearinghouse of its kind but does suffer from a few rotten apples on both sides of the aisle. There are ethically challenged brokers out there for sure who still think it is 1995, and of course, there are a few extremely greedy truckers out there as well.

By having standards and insisting on these standards, the spot market becomes a much friendlier place for carriers to operate in, and because of that, brokers will get more liquidity which is what they need more than anything right now.

Some of you out there might disagree with the standards we suggested – we’d love to hear your feedback.