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Old 11-17-2014, 10:11 AM   #1
BoredSocial
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AMA about the logistics industry or working at a freight brokerage

I started working at a mid sized freight brokerage in early May. Since starting I've reached the threshold where a freight broker starts being considered successful... Mostly because I'm super interested in the industry and picked it because it was a solid match for my skill set.

I'm sure a lot of BFI people have interacted with supply chains in the past and have questions about the industry. Fire away!
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Old 11-17-2014, 10:26 AM   #2
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Re: AMA about the logistics industry or working at a freight brokerage

can you pick up the story on how you got there from where you've left it in previous threads?
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Old 11-17-2014, 10:35 AM   #3
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Re: AMA about the logistics industry or working at a freight brokerage

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can you pick up the story on how you got there from where you've left it in previous threads?
I was in college before. After graduation I wanted a job that fit my skills as much as possible (while rewarding me for success directly with clearly defined metrics). I was definitely going into sales of some kind but I wanted business savvy and negotiation skills to factor in as well. Being a freight broker was the right fit.

I was in college from right after BF till the end of the spring semester of this year. I did a lot of random extra curricular stuff like investing (which I still dabble in) running a blog, and playing poker between my exit from the car business at the end of 2006 and now. I also held a couple of crappy relatively dead end jobs between the end of 2006 and poker.

After a few months in logistics the shine has worn off and I'm 99% certain that I'll make a career of it. It's a solid (and like me deeply unsexy) industry where there are ample opportunities to make a great living.
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Old 11-17-2014, 12:10 PM   #4
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Re: AMA about the logistics industry or working at a freight brokerage

What was your strategy for obtaining an entry level position with no industry experience?

What does a typical day look like for you?
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Old 11-17-2014, 01:06 PM   #5
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Re: AMA about the logistics industry or working at a freight brokerage

what was the learning curve? it's only been 6 months, how much more do you have left to learn or do you pretty much have it now?

are you paid mostly on commission/bonus? if so, how much has your earnings gone up, in rough percentage, since starting?
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Old 11-17-2014, 03:46 PM   #6
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Re: AMA about the logistics industry or working at a freight brokerage

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What was your strategy for obtaining an entry level position with no industry experience?

What does a typical day look like for you?
I had just graduated with a degree in econ and was fairly qualified compared to other candidates. I actually had 4 different offers and selected what I still consider to be the best one. Most freight brokerages will hire people with rather weak qualifications and then weed them down from there.
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Old 11-17-2014, 03:49 PM   #7
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Re: AMA about the logistics industry or working at a freight brokerage

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what was the learning curve? it's only been 6 months, how much more do you have left to learn or do you pretty much have it now?

are you paid mostly on commission/bonus? if so, how much has your earnings gone up, in rough percentage, since starting?
The learning curve was steep but relatively short when it came to general knowledge. After that the long slog of going from average to excellent can take years. I have a lot to learn about specific freight markets but have a decent grasp of HOW to learn about them in a very efficient way if that makes sense.

I've also become a bona fide expert on some very specific markets (the southern Indiana watermelon season for example).
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Old 11-17-2014, 05:04 PM   #8
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Re: AMA about the logistics industry or working at a freight brokerage

what's the edu requirement?

key skills needed... diligent? organized?
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Old 11-17-2014, 08:02 PM   #9
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Re: AMA about the logistics industry or working at a freight brokerage

recently imported something through freight from china via port, and felt we were overcharged(~$900cdn total for vending machine sized item), but the process seems rather opaque, had hard time looking up quotes online etc.

how do I make sure I get offered fair rates/or save via DIY? thanks
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Old 11-18-2014, 11:29 AM   #10
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Re: AMA about the logistics industry or working at a freight brokerage

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what's the edu requirement?

key skills needed... diligent? organized?
Most freight brokerages hire a lot of recent college grads. That being said they also frequently hire older experienced sales/operations people who do not have degrees. Ex military plays very well as well (especially at my job where the ownership is pretty much 100% ex military).

You need to be comfortable with a job where something is ALWAYS hanging over your head. You need to be diligent enough to do what needs to be done for the freight you have taken and organized enough to keep track of what you've taken responsibility for. It's also pretty crucial to have some sales skills.

The skillset that makes a good broker is like a three legged stool: Operations (managing what you've sold), Sales (finding more freight), and Negotiation (where what you make money wise is decided). You also should be somewhat comfortable telling people things they do not want to hear. It's not an industry for people who have a really difficult time with saying no or giving people bad news.
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Old 11-18-2014, 11:30 AM   #11
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Re: AMA about the logistics industry or working at a freight brokerage

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what was the learning curve? it's only been 6 months, how much more do you have left to learn or do you pretty much have it now?

are you paid mostly on commission/bonus? if so, how much has your earnings gone up, in rough percentage, since starting?
I just noticed I didn't really answer the compensation question. I'm on a draw plan. I'm making ~300% of the base salary I received when I signed on... If I'd signed on at the lowest (new college grad) base pay at the beginning it would be closer to 400%.
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Old 11-18-2014, 07:01 PM   #12
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Re: AMA about the logistics industry or working at a freight brokerage

Still making a few bucks shipping doors?

Also, how many hours per week are you putting in? What happens if you take a day off and one of your customers has a problem?
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Old 11-19-2014, 08:47 AM   #13
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Re: AMA about the logistics industry or working at a freight brokerage

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Still making a few bucks shipping doors?

Also, how many hours per week are you putting in? What happens if you take a day off and one of your customers has a problem?
Yeah I'm still shipping doors. (And thanks for that) If a customer has a problem I decide if I want to deal with it or not... If freight that is already on the road has a problem I take a few phone calls and resolve it as best I can. I seriously doubt that my interruption level is much higher than managers at most businesses.
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Old 11-19-2014, 08:51 AM   #14
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Re: AMA about the logistics industry or working at a freight brokerage

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Originally Posted by Allinlife View Post
recently imported something through freight from china via port, and felt we were overcharged(~$900cdn total for vending machine sized item), but the process seems rather opaque, had hard time looking up quotes online etc.

how do I make sure I get offered fair rates/or save via DIY? thanks
The only way to make sure you're getting fair rates is to get quotes from a variety of sources. You're paying the retail rate (which you should be... you haven't mentioned doing any sort of meaningful volume) no matter who you go with.

International logistics has a lot of steps. You need transportation and a freight forwarder on the chinese side, and a spot on a container ship. Then you need a customs broker on the US side+ transportation to you. Honestly it doesn't sound to me like you got THAT bad of a deal, but even if you would have been happier paying 450 instead of 900 arranging all of the intervening steps would never under any circumstances be worth it... And the potential for something to go wrong would be immense.

It starts to make sense for larger corporations to DIY when they move vast amounts of volume and can cost justify hiring a team of people to handle supply chain management. To be clear though: it takes a team because you need a specialist for almost every stage of the process.
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Old 11-21-2014, 12:05 AM   #15
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Re: AMA about the logistics industry or working at a freight brokerage

do you see an advantage in smaller companies (u100 mil rev) using freight brokers? say 10-12 TL weekly and 25 LTL throughout US

would it be somewhat easy for these smaller companies to get quotes from a dozen carriers from each market theyre in and continue to book from them? or is ur discount for moving so much freight so significant that it makes up for your markup?

thanks for the thread...interested to read
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Old 11-21-2014, 08:53 AM   #16
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Re: AMA about the logistics industry or working at a freight brokerage

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do you see an advantage in smaller companies (u100 mil rev) using freight brokers? say 10-12 TL weekly and 25 LTL throughout US

would it be somewhat easy for these smaller companies to get quotes from a dozen carriers from each market theyre in and continue to book from them? or is ur discount for moving so much freight so significant that it makes up for your markup?

thanks for the thread...interested to read
There's absolutely nothing wrong with calling local trucking companies and seeing if they're willing to work out some kind of contract rate if you run the same lanes every week. You have enough volume to have some leverage in dealing with smaller trucking companies with 1-50 trucks.

No matter what after you've given out as many loads as you can to your reliable locals there will still be a few loads that remain uncovered. These you pretty much have to use a freight brokerage for. Procuring trucks in the spot market is as much about risk management, a process for qualifying carriers, and market visibility as anything else.

That brings me to the biggest unstated thing that freight brokerages do for their customers: insurance. I know those of you with some familiarity are thinking "but doesn't every trucking company pretty much carry 100k in cargo insurance?" And you're right. Unfortunately cargo insurance doesn't cover stupidity. Depending on the freight some variable percentage of loads will end in a freight claim (for those who don't deal with this stuff that means that the load is in some way damaged). Assuming the value of the claim is below the freight rate dealing with this is no problem, but frequently the claim is a rather large number. (42000 lbs of turkey at 2.47 per pound is a lot of money) Unless you owe the trucking company a LOT of money the chances are you'll never see that money again. A reputable freight brokerage will probably cough up the money. Even if they don't you probably have a lot more AP with a freight brokerage than you reasonably could with a smaller trucking company that has probably only done the one load with you... Which means that you have a lot more leverage with a brokerage than you do with the trucking company.

Covering freight in the spot market is a business all by itself. This is why such a huge % of large produce companies (hint: it's close to 100%) have gone out and hired successful freight brokers to run their logistics. It requires a market oriented guy (the broker) who cuts the deals and it requires a robust back end that qualifies the carriers to weed out bad actors (who there are a metric **** ton of). I know my brokerage spends ~15k per pay period on Carrier Services... And only 4 people work back there. It's tedious, high skilled, and very very important work.

On LTL you should just get bids from like 10 vendors. The one with the best contract (the lowest pricing) wins. It's a commodity and the trucks that actually pull up to your dock will have the same names on the sides of them... And that won't be changing. I would make sure to get bids from as many brokerages as possible here, because the LTL carriers do not want to deal with you directly. They do not want to provide you with customer service or educate you on how LTL works, they want you to go deal with someone else who will deal with you instead. Then they can only interact with professional freight people who are MUCH easier to deal with than random x retail customers. That's how the LTL carriers want to structure it so that's how you should do it.

I will say here that figuring out how to use freight brokers correctly is a skill unto itself. I've put a lot of mental energy into thinking about the different ways customers manage brokers so I'll probably pontificate at length about it later in the thread. (If anyone is interested and the whole thing doesn't just die )
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Old 11-21-2014, 10:07 AM   #17
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Re: AMA about the logistics industry or working at a freight brokerage

i would def be interested in hearing more. very interesting thread so far.
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Old 11-21-2014, 11:07 AM   #18
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Re: AMA about the logistics industry or working at a freight brokerage

I guess I should probably lay out in black and white exactly what freight brokerages are doing to earn their cut. I feel like a lot of customers, carriers, and even brokers think that brokers are simply blood sucking middle men who are getting something for nothing. (This view is INCREDIBLY prevalent among truckers.)

1) Insurance. I already covered this so enough said. A significant % of trucking companies need advances to pay for fuel so the odds of them being able to outlay a five figure sum for damages is pretty low.

2) For both customers and truckers we are providing serious financial services. Today my customers owe my brokerage somewhere in the neighborhood of 250k. This is spread out among 4-5 major customers and this is down from nearly double that during the peak of produce season. On the flip side we typically pay truckers significantly faster than our customers pay us, and we provide services like fuel advances and quickpay. (Which is essentially us factoring our own loads for a % of the total load. Personally I feel like any trucking company that needs this service should probably just get factored... But to each his own)

3) We allow trucking companies to find loads in unfamiliar territory. A significant majority of trucking companies have regular customers where they are based who send them all over the place. Then they need loads coming back from all of these disparate locales. It makes absolutely zero sense for them to go out and sell new customers all over the country for the random chance that they are in that area some day and that customer randomly has freight that will get them back towards home. We match those truckers with the customers who need them... Something that neither the trucking company or the shipper could possibly do on their own in an economical way.

4) There are a lot of bad actors among shippers AND among carriers. We protect both groups from those people by being reputable intermediaries who make sure that both sides get taken care of. I'm certainly not denying that there are plenty of bad actors among freight brokers (because there certainly are)... But the best way to avoid that is to look at a brokerages credit ratings before doing business with them.

Cliffs: Like most businesses that service other industries freight brokerages provide services that add value... if we didn't my company wouldn't do so much business with massive corporations.
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Old 11-21-2014, 01:49 PM   #19
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Re: AMA about the logistics industry or working at a freight brokerage

Looking at companies like XPO and CHRW, is this going to be a winner takes all? It seems scale is an advantage for freight brokers?

Or is this going to be a regional thing, like with the cable companies? Where each region is dominated by one company? And you end up with monopoly/duopoly type structures in each region?

Seems like you will a see enormous roll up in this industry in the next few decades?

Thanks.
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Old 11-21-2014, 02:14 PM   #20
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Re: AMA about the logistics industry or working at a freight brokerage

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Looking at companies like XPO and CHRW, is this going to be a winner takes all? It seems scale is an advantage for freight brokers?

Or is this going to be a regional thing, like with the cable companies? Where each region is dominated by one company? And you end up with monopoly/duopoly type structures in each region?

Seems like you will a see enormous roll up in this industry in the next few decades?

Thanks.
None of the above. The massive logistics companies (UPS, CHRW, TQL, Ceva, Menlo, FAC, to name a few) all have niches they fill and have all maxed out the scale advantages they could have.

Logistics fits itself into niches that transcend geographical region. My company for instance does a massive amount of work for the government and other large logistics companies. Because of the requirements of this kind of freight our company looks a certain way and isn't ideal for certain kinds of customers.

What I'm trying to say is that it's not really feasible to be all things to all customers and logistics is as diverse as the businesses it services. UPS, Fedex, BNSF... these are all logistics companies. Technically so is every steamship line, customs broker, freight forwarder, or anyone else involved in moving goods from point A to point B.

It's also important to note that one of the reasons my company does so much business with larger logistics firms is that there are significant problems associated with scaling too large in logistics mostly to do with waste in a super competitive industry.
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Old 11-21-2014, 02:46 PM   #21
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Re: AMA about the logistics industry or working at a freight brokerage

Speaking to chilled TL but applies to all industries. When bidding on consistent weekly TL to large dustributors (us foods/Sysco) we'll offer delivered price based on quotes from several brokers) and PU price. 90% they take PU and arrange their own freight. Is this common bc they have an in house team of brokers or bc my guys are dealing with wrong contacts?

Do brokerage companies invest a lot on learning the future diesel cist and how do you use it to your advantage?

Do you have some sort of program with a network of carriers that constantly alerts u of real time info on trucks that are on the road with no backhaul lined up? Or is a lot of it ur experience/hard work to know which carriers are normally looking for backhauls in certain areas?

Sorry if questions are too specific to make good AMA thread.
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Old 11-21-2014, 03:29 PM   #22
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Re: AMA about the logistics industry or working at a freight brokerage

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Speaking to chilled TL but applies to all industries. When bidding on consistent weekly TL to large dustributors (us foods/Sysco) we'll offer delivered price based on quotes from several brokers) and PU price. 90% they take PU and arrange their own freight. Is this common bc they have an in house team of brokers or bc my guys are dealing with wrong contacts?

A big part of the reason they arrange their own freight is that it gives them a lot of flexibility on the receiving end. They might ALSO have better freight costs, but I can't really speak to that without knowing more about the details. I DO know that inbound freight is a massive source of headaches to a lot of our larger customers, and they definitely prefer to arrange the freight themselves so that they can have more control over their own supply chain. They would probably use your transportation if you owned your own trucks and were offering them a below market rate. Failing that they would definitely rather just handle it themselves.

Do brokerage companies invest a lot on learning the future diesel cist and how do you use it to your advantage?

No. Fuel is only one of several major factors affecting the price of freight. Honestly the market moves constantly in price based on supply/demand issues that absolutely dwarf any fuel cost changes.

Do you have some sort of program with a network of carriers that constantly alerts u of real time info on trucks that are on the road with no backhaul lined up? Or is a lot of it ur experience/hard work to know which carriers are normally looking for backhauls in certain areas?

Most trucking companies send their trucks out without a backhaul lined up. They just handle getting back on the fly. Also a significant % of long haul truckers operate on a 'one week home three weeks out' model where they literally only 'backhaul' once a month, and otherwise just take the best lane they can find money wise the rest of the time. These are the guys who you really truly have to use brokers to access.

Sorry if questions are too specific to make good AMA thread.

The questions are awesome and I feel like they give other posters something to latch onto. You're actually almost the exact audience for a threat like this. I feel like a lot of people interact with freight markets every day and wonder what it looks like from the inside.
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Old 11-21-2014, 03:55 PM   #23
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Re: AMA about the logistics industry or working at a freight brokerage

On the subject of backhauls and how you find them... It's important to realize that there IS a market rate for freight. Just because a trucking company wants to go to a certain place doesn't mean that they will randomly take 1.75/mile when the market rate for that lane is 3.00/mile. In fact in my experience most trucking companies have the most accurate pricing data for lanes home because they go there so often. When you draw a 200 mile radius from your dock you'll suddenly realize just what a spectacular amount of freight there is in the world. Anyone within that 200 mile radius is competing with you for the same trucks you're trying to secure... Which means you have to be more attractive than they are. Admittedly it's a pretty big selling point if the truck is right next to you... But that doesn't mean that he's not liable to drive a hundred miles to get significantly more money from a different shipper.

As a broker my goal with regards to carriers is to build relationships with reliable ones. If a carrier does a good job for me repeatedly I am apt to pay them slightly more than the market rate to ensure that I keep them hauling my stuff and to get them to call me up whenever they need a backhaul out of that area before they even talk to anyone else.
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Old 11-21-2014, 05:23 PM   #24
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Re: AMA about the logistics industry or working at a freight brokerage

I see that you mentioned the produce industry a few times in your responses. Do you/your brokerage handle a lot of produce? I married into a family that has a medium-size farm in the northeast that ships about 100 40,000lb loads annually and they deal with a broker for about 75% of the loads and their fee is about $250 per load off the top. How is this compared to your fee schedule? Do you set up sales to the purchaser? The produce industry can be quite archaic and behind the times and I feel that there is an opportunity to carve a niche in buying from the supplier/grower and selling to the distributor. Can you provide any insight?

I've tried to convince my father-in-law to provide trucking in house in the past and he wasn't interested. However, I feel that there is definitely some more money to be made (all farms can use a little extra income) on the brokerage side as well as freight side. We can charge about $3.10 per mile for a refrigerated truck if we provide trucking, which I think is potentially profitable once you buy a truck, hire a driver, and pay insurance among other things. Is it really a big headache to deal with all of these things like my father-in-law has said or do you think there is potential?
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Old 11-21-2014, 07:02 PM   #25
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Re: AMA about the logistics industry or working at a freight brokerage

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I see that you mentioned the produce industry a few times in your responses. Do you/your brokerage handle a lot of produce? I married into a family that has a medium-size farm in the northeast that ships about 100 40,000lb loads annually and they deal with a broker for about 75% of the loads and their fee is about $250 per load off the top. How is this compared to your fee schedule? Do you set up sales to the purchaser? The produce industry can be quite archaic and behind the times and I feel that there is an opportunity to carve a niche in buying from the supplier/grower and selling to the distributor. Can you provide any insight?

I've tried to convince my father-in-law to provide trucking in house in the past and he wasn't interested. However, I feel that there is definitely some more money to be made (all farms can use a little extra income) on the brokerage side as well as freight side. We can charge about $3.10 per mile for a refrigerated truck if we provide trucking, which I think is potentially profitable once you buy a truck, hire a driver, and pay insurance among other things. Is it really a big headache to deal with all of these things like my father-in-law has said or do you think there is potential?
My company (like the vast majority of freight brokerages) moves a significant amount of produce. The niche you're describing absolutely exists and they are called 'shippers'. A lot of smaller farms sell their product right out of the field to a shipper who handles everything from that point forward. I have a sneaking suspicion this isn't the best possible deal, and I'm 100% certain that being a shipper is a decent business. (If it weren't CH Robinson wouldn't be buying them up)

A flat per load fee is either a very good deal or a truly horrible deal depending on a lot of different factors. I know that on most of my loads I do better than that, but I mostly do longer runs (think 800+ miles).

An important thing to realize is that running a trucking company is a very different business than farming. Don't get me wrong there are quite a few farms that own their own fleet of trucks profitably... but I said 'fleet' for a reason. You need to have somewhere in the neighborhood of 5-10 trucks for them to start being profitable... And you own those trucks year round. You have to hire drivers (a nightmare right now), keep up insurance, deal with all of the regulatory stuff with trucking, and you know run a trucking company.

It's also important to realize that the rates you can ask for for shipping are the 'produce season' rates. The hot and cold trucking markets throughout the country are 100% driven by produce. Everything else causes small supply and demand blips, but when produce starts getting harvested there is suddenly a vast amount of freight that needs to go right ****ing now... and that always drives up prices drastically. In Georgia this year we paid 4.00 a mile during produce season to North NJ... We're running poultry out of the same areas for 2.05 a mile right now, and have been since the middle of July. THAT is what produce season means.
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