How Brokers & Carriers Should Screen Their Customers

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There are bottom feeders in every industry -even customers need to be screened.
Meet experienced industry veterans who will share how they screen their customers to ensure the customer is the right fit for their business.
Share your thoughts and tips in the comments as well!

Guests:
Michael Caney
Adam Wingfield
Todd Waldron

Sponsored By:
OTR Capital, Cassandra's preferred factoring company
https://otrcapital.com/madgaines/

Transcript

0:03

during the most challenging times they'll rise to the occasion this is grace moore with otr capital out here in lithia springs today giving away lunches to truckers when the supply chain was threatened they kept the shelves stuck we're out here today representing marquee insurance group at otr capital giving away a couple hundred lunches to the truck drivers we really care about ah welcome to mad games live it was a little otr clip right there you guys know i love otr they're our factoring company they're sponsored in the show i saw grace in the clip and i probably should have made it a little bit longer but you guys know how i get impatient with stuff what in essence otr had a uh celebratory event for truck drivers where they gave out free lunches and whatnot i thought that was pretty cool of them you will see the otr people in the link and i'm sorry in the uh chat say hi to them reach out to them ask them any questions and i have links in the chat if you want more information on otr we have a really great panel of guests um all come from different backgrounds and they are true veterans of this industry what i want to talk about today is how to vet your customers often when i hear from people is that they they're excited to get a new customer and they'll take anything um they want the revenue to grow and then they realize down the road after a couple problems or slow payments or cargo [ __ ] they'll realize maybe i shouldn't have picked this customer or maybe i don't know as much about the freight as i thought i did or oh they told they told me i was running you know toilet paper and really i'm running some really expensive crap that valued high so there's a lot of things to think about i want to bring you the veterans who are going to tell you guys here's how they vet and screen their customers and then maybe if we get into more discussions um i want to talk about the relationship between brokers and carriers since i have them all on the show with us and lastly i'm going to pay attention to your comments and i'll pop them up if you guys have additional tips on the topic so comment as much as you want jeff dickinson is here in the house he hasn't been around in a while we've got rhonda matt fink i saw otr capital in the comments the free coach is here chris jolly he has a lot of tips he can add to the comments so watch for his comments and troy anders and steve perez steve is my dispatch buddy from texas all right let's get started i'm going to introduce the guests welcome to mad games my three favorite people in the whole world um adam let's start with you everyone knows you but we're going to introduce you just in case people all right happy friday everybody i'm adam i'm with innovative logistics group we're air consulting and carrier services firm located in the southern part of the united states better known as charlotte north carolina i've been in the industry about 20 years and i love metropolis gives us the opportunity to really kind of talk about industry issues and really kind of get them to the forefront people so glad to be here again on another happy friday thank you adam and you guys i follow adam on instagram as well as linkedin adam do you still do your show on instagram we do we do do a private show on instagram so you know just follow us on instagram we obviously where everything is content based so yeah i love it that was the first time that i met you was i was watching your show and i'm like this guy knows his [ __ ] like this is lovely um okay so now we've got todd which many of you already know because he's been on matt gaines quite a bit but i love him to pieces um todd is that snow behind you there might be a little left in there but we've had warm enough weather that most of it's gone for now well welcome could you tell us a little bit about your background and where you're calling from yes good afternoon i'm todd waldron um i i lead q carriers here in shakopee minnesota um we're an asset-based um trucking and logistics company we have both the carrier side and we have a logistics brokerage division grew up in in third party logistics um and spent five and a half years at one of the biggest three pls um and then transitioned over opened a branch for another asset based uh 3pl and spent six years with them um and and so spent four years uh down in arkansas that that gives away any of the hints that linkedin might tell you as well but spent time with them so about 13 years um total in the the industry and then been with two carriers here for a little over a year and a half now so nice welcome thanks for coming on again i appreciate it and then a new face but not new to the industry by any means i've known michael for years michael welcome where are you right now i don't think you're in a snowy region i'm not i'm not a snowy region i'm sitting in chattanooga tennessee today um i've been in a business i guess almost 15 years really kind of broad spectrum management in almost all aspects of the business i've been i've gone from being in brokerage and asset to being in technology being back into brokerage spending time in technology and now i run our freight division for a distribution business uh in savannah georgia called port city logistics and we also just started another business called growth nexus really focused around kind of coaching young leaders in the business and advising freight tech companies things like that so um whether it's good or bad i think there's not a lot of haven't seen in this business um and so uh i'm excited to be able to talk to you about this topic uh when michael and i first met we talked about you might not remember this michael but um you had a whole big team reporting into you and i came and visited you and we talked about how not all freight is good freight um and i think that that's one of the reasons that i wanted to bring you in because i think that's hard to tell your team especially when you have pressure of revenue um and meeting goals and you just want to take take take take whatever you can get and you'll figure it out later um so uh so i would like you to open it up and and if you could give us your thoughts when someone says that hey we've got to make our revenue goals we are just going to take in whatever we can get especially in fourth quarter yeah yeah and i'm probably like other people on this call has had to be sitting between a sales team and an owner on that or the owner just wants to grow or um and todd you may have an opinion on this sometimes um i worked for trucking companies that just thought brokers could literally take anything and so why aren't you just growing and so when we talk about like not all freight is good for it it really has a lot to do with not just commodity or value but like serviceability like the structure of your company like everything has a cost to operate so i worked in a brokerage where we moved a lot of expedited ltl line hall the brokerage today has zero business moving that freight yet because we don't have the structure for it right it's not to say that we that we won't but you have to structure your teams in a certain way that can service that business over dimensional freight like low value high margin freight like the cost to move a load is the cost to move a load in your business so like it has everything to do with i mean people the easy thing is to talk about risk and credit right under like oh is it is it copper is it high value or is the customer credit but oftentimes certain types of business can be operationally disruptive and so if you have a sales team that doesn't understand and this is true in the asset world right like if you if you don't know how to service a customer it's going to cost you money in terms of the way that you operate that and not just from a legal or or like cargo risk perspective but literally from just a bandwidth perspective so i think it's really important to know your business know what you're good at you're not good at um adam what do you usually tell because i know you you do a lot of consulting for on the asset side um what are you usually telling your folks when they're stumbling around with freight and what i mean by that is they're doing what adam said which is taking in freight that they don't quite know especially in the asset side what do you tell them how do they screen the customers how do they know what they're good at so there's there's you know i think on the last call we kind of talked about the limited uh availability to having that screen process right so you know what brokers typically and three pl's they have access to carry a 4-1-1 and they're able to really kind of look at certain data to say okay this is not a good person to put a pallet of freight on this person's truck but on the adverse side from a carrier perspective you don't necessarily have those so there's a couple of things that we tell our folks that you've got to really be good at you gotta you know do they pass the sniff test so the first thing is credit i know michael just talked about it first thing is credit you know that's like absolutely uh so important i can't tell you how many carriers that get started and they're so excited just like kind of how you said cassandra they get out and they just happy to move they're just happy to move freight no matter what it pays i'm just happy to move the freight and then they realize they send it to the factory company and otr says up nope we can't we can't pay you on this one you know good luck on recovering that money and you know you're talking about 40 60 90 and sometimes never seeing that that that pain yeah so credit is important but i think also too uh and and even from a credit perspective even if they're gonna cod our clients we've seen it to where the cod is not even legit they'll get out there and they'll deliver the load and they'll get a a a check a business check they go to cash to check and all of a sudden the bank is closed and that bank account is closed so there's a lot of things that you have to look at from a financial perspective that's number one number two is that reputation right so when they're looking on the thetruckstop.coms and the uh the dats are they looking for certification is that broker got a diamond bond you know what you look at the bond level on it that'll tell you a lot you know are you going into the fmcsa safer portal and looking at that broker to see if they actually have an active broker authority and they're not pending a cancellation so making sure that that broker does have that in place and honestly just just having this you know those certifications like the tia being a part of the transportation and media association is big for me and obviously you'll get that with the larger brokerage firms but what we tell people and when you're dealing business with the smaller brokers you got to be super careful you got to look at you know the first thing is to me the the the eyeball test really is if it's got a credit rating below a then obviously you want to do your homework about it but uh that's a trickle down effect and we just we really really really want our carriers to be educated and just seeing just a few couple points that lead into a further conversation because you know as a carrier you know i can't get down to arkansas or chattanooga tennessee to see what your facility looks like and see what your operations look like and get that you know that warm fuzzy feeling on the inside that i'm okay with doing business with you we've got to have some other variables that we use to kind of gauge that and those are some of the preliminary things that we use to gauge for sure um todd when you when you are working with your teams um and they're pushing you and just saying todd we'll figure it out what do you what's usually your go-to because i'm sure there's some people on here that are going to say in the comments like we'll figure it out if we don't it'll be fine like we're smart and then we'll get more and more shipments and we'll become efficient yeah well i think there's a segment of of it where we can figure it out and so that's where like back up to some of the things that were said is first are they a good company the credit they have a legit website what are the locations like are we going to extend them credit or all of that risk mitigation is the freight right for us right is it hazmat and we've never done hazmat or is it flatbed and or refrigerated or is it our core competency right you can navigate some of that um but a lot of in transportation you can't figure out a lot of those operational characteristics until you get in i do like to lead with a hey i just want to have a conversation i don't like to lead with give me a load give me a load give me a load the old school approach give me a chance it's let me understand your network and through a series of questions understand as much as you can um but still a lot of those operational characteristics that lean on efficiency or that lean on it for a good value fit for each other understanding their procurement strategy and if they actually do what they say a lot of that it comes with time and so i like to start high and try to understand their supply chain and see if there's a value between our companies that we can match what they're doing but a lot of times they'll put you in the rate penalty box right and they'll say well just just give me a rate and so i'm not the type to say well it's just not we do business with them well let's play by their way that they like to play and then start to understand we want an end game and we work towards that and so we got to be cognizant of how much time we're spending on that if we're doing spot quotes and if we never are winning anything and stuff then we might slowly work away and just tell the customer we don't we haven't seen anything fit so i think some of that fit has to come over time and there's a value as a broker and you can figure some of that stuff out but you need to be transparent in that then the customer needs to understand if it's a relationship and they buy from buying from you we'll let them know that we're figuring this out together so you're not you're not trying to make it up or not be transparent it's amazing how many people out there take freight but they have no idea what they're doing because i see see a couple comments here and um and i know like for most of the people who are watching this they they are pretty experienced um afterwards there will be a lot of people who are watching it that are not and taking i've seen example i follow lots i'm in lots of different facebook groups and linkedin groups and a couple other things and so i'll see people post shipments like hey guys i just got a shipment no i'm not no [ __ ] i saw this i just got shipment from home depot and they want me to cross border into canada what do i do and i'm like who the [ __ ] is this they don't even know how to cross into canada so i mean there's a lot of that out there as well so i want people to understand this extreme spectrum of this when i have the veterans on um there's certain areas like that that are like okay this isn't a good uh learning ground right cross border or hazmat or higher risk areas it's like yeah it's not the time to learn that but there are other things in new areas new geographic regions from a logistics perspective where you can or warehousing or crosstalk i mean you can you can learn some of that as you go so you gotta have a segment which which something you want to risk cutting your teeth on or learning but makes sense i saw something from um uh matthew fink from earlier today when i made a post i talked about some of the things you guys talked about how not every customer is a good one not every customer fits your business uh and matthew finkhead said he's one of my favorite people says this is true but many folks sell in this space are spray and pay and don't methodically determine fit until after problems occur so i wanted to point that out that's more the direction that i was going toward um what other thoughts do you guys have on this topic what other tips and tricks do you have or should we move on no i think going back to like risk and credit management that something that i think are probably a big part of the audience especially like adam like your customers i'd be interested in your opinion they don't have a credit department they don't have a credit manager right like so you've got to know how to read a credit report and something that's really important um if you're using dun and bradshaw using cortera look at the total number of companies reporting right and look at don't just look at their average pay look at how they pay their carriers specifically there are a lot of companies a lot of shippers in the mid-market space that maximize their working capital by having a big carrier base that they pay every 90 days you see it a lot in commodities trading you see it a lot in the metals and recycling space that they will they will they will have a big carrier base because they're going to pay you every 90 days yeah and so they'll have a lot of carriers that they just keep they just keep moving the invoices around on so i think that like how they pay their carriers is specifically important as opposed to how they pay some of their other creditors right um yeah you know the other thing i would say too is um you know technology requirements are different for different customers like can you do edi billing can you build them correctly there's a lot of you know when you get into certain types of customers they're going to want you to supplemental build certain things right if you're a small business or you're trying to get going you're going to eat up your working capital billing problems if you don't know how to build those customers correctly and so there's there's different types of customers that do different types of things that are the same like if you're dealing with box plant manufacturers they're all selling to the same people they all have similar problems and all of their employees worked at one of their competitors at one point in time so if you can figure that out you're gonna have a very similar same thing with can manufacturers or packaging manufacturers you get into something where your shippers are all selling to the same people you're going to experience very similar things operationally that'll mitigate some of those back of house problems so even if you even if you manage the credit on the front end you can still lose a ton of time and cash flow in in billing issues on the back end if you if you don't if you don't know how to service that customer um and i'm sure that adam i'm sure you've seen it with small carriers and then todd i know you probably dealt with big customers where it's the same on both spectrums and you know i think michael made a great point on that and the one thing that and i'll add to that payment terms are so important especially on my side i know todd on your side is a little different with the larger carriers but payment terms for a smaller carrier most carriers that get started in this business can't wait 90 days to get paid and the thing about it is it may be that just one shipment it may be that one shipment that they took that's going to pay the insurance payment this month you know what i'm saying so um that's that's one of the key things so there's a couple of points that i have our carriers make sure that they review as well you know number one what does the onboarding process look like just like kind of how michael talked about right you got some things that you look for do they are they registered with carrier you know carrierpackets.com or my carrier packets so it makes it very very easy for them get set up or they have fax paperwork that's like crooked when it comes across in an email that's kind of a red flag to me um but then also man if you've got a broker that just wants to email and doesn't want to get on the phone you know say email for information that's usually a red flag as well and uh realistically if you've got a broker that you know that uses just a gmail or yahoo.com address without having a there's just a little bit of extra effort to get a domain and pay ten dollars extra a month and get a professional you know domain address those things kind of set off as a red flag and i'm not saying i'm not going to sit here and say that you know that we won't do business with with brokers like that but these are just things that these are risks that you want to lower the risk and these are kind of red flags that you've got to do a little bit better on due diligence to make sure that you're selecting the right person to haul a freight for because just just just one load you know i mean and another thing too is that if it just seems too good to be true okay we've got a broker that's going to pay 3700 for 250 miles pick up one pick one drop no no touch freight and you gotta you gotta you gotta think about that a little bit um that's that's that's an opportunity for you to uh to to get misrepresented uh in the marketplace but um that's just a couple of extra points that i would do on my side just from a smaller carrier perspective and i think from everybody's perspective like i do a ton of research um this is going to piss everybody off but when i work in-house and even now if i have a client send me a contract with a shipper um and michael i can't wait to hear your thoughts on this so i get the contract and i will research the shipper myself and it's an old habit from back in the day when i worked for other brokers that were small and i knew they were [ __ ] moving really fast and they weren't vetting their shippers so i did it before we signed that contract so i would search to see the shippers i was crazy the corporate commission status i would pull a dmb report myself i'd check with the credit that we extended to make sure it was right but here's the other thing i did i would go on and research their website to see what the retail value of their goods are because if we're accepting cargo liability and all this other stuff i most most of the time i would say that the shipper's value was high when i got a contract sent to me i so so michael i would ask the salespeople i would turn around and ask the salespeople to send me the contract they'd be like hey um did you ask them could you do you know what commodity we're moving do you know what lanes or any part of the country um and also do you know the value like a full truckload value or if it's ltl happen to know what they're looking for for value per pound um it is very very rare i've ever had a sales person come back and tell me the answer to any of those yeah is is that too much work to do up front should they be doing that kind of work before they even pick up this one and call it shipper or how does it work in the real world because this cassandra's world and then there's we got to make money here's the real world so i think it depends on whose world you're living in um there's a lot of brokerages out there that get to 20 30 even 100 million dollars working fast and loose we work through some of this together right like i took over a brokerage and like i found a desk drawer full of contracts that were being signed by sales people that had zero markup in them for things like electronics and all kinds of that we shouldn't have been like just like like with indemnity provisions that were so egregious just anyway the a contract is going to tell you your operational responsibility with that customer even if a customer says now we've never issued a chargeback if that that contract is going to tell you if you do these two things i can hold your freight charges or i can do certain things so there there are legal things that a sales person will never be able to understand or shouldn't take the time to understand let me say that i will be able to but shouldn't take the tolerance of their job but from an operations perspective like that contract's going to tell you what you're responsible for delivering and it's going to tell you what's important to that customer and more often than not it's going to tell you what is important to their customers customer yep so if you are a good salesperson not trying to get a load but if you are a good sales person you'll want to at least understand the broad strengths of that contract what is this customer asking me to do all right and then they'll say something like well everybody signs this see each i mean everybody right this is what i want right jb okay whatever um the other thing i'll say and i would i know i know ron's not on but i'm sure he's got some hot sports opinions on this some somebody made a comment like i can't believe people don't do research i think what people need to understand is it's not always this a terrible salesperson that's not doing research there are shippers specialize in this there are shippers that specialize in playing the game of just make just doing the carrier rotation no troll only thing that i tell sales people is if you make a phone call and they offer to put you on a list like for for businesses that i run like that's not our customer you make one phone call yeah i'll send you a you know anything about you you don't know anything about me as a carrier you don't know how i vet my carriers and so it's it's incumbent upon the shipper too like if all you care about is a rate you don't know my bond you don't know what my insurance policies are like primary secondary if my contingent cargo is worth like you don't know anything about that and you're going to send me a raid and put let me broker your they can find jackass after we've talked one time like you don't want that customer yeah and i want to go well i want to hit on your question and also that spray and pray question and then ron and ron's question about how much research is done and and at a certain point though i think other industries are spray and prey too it's a numbers game to a certain extent i get hammered with a ton of stuff that clearly has no idea who i am um and so it's like how much you got to research the company have an idea who they are but the contractual all that stuff underneath i'm like to me that happens after initial contact later on down the funnel you got to do it before you move freight and you want to do it before you start moving loads for them but you're going to spend a lot of time and all you're going to hear is these constant notes and we're dealing with an educated buyer and transportation that knows what we're selling and they're buying the same things so are they buying or looking for new transportation or not typically is dependent less on the value you provide so i like to segment my customers into the strategic cell the bigger trying to understand them and what is the value that i'm going to provide to them and then the ones that might be more transactional in nature or i'm going to just see if they're interested in a conversation now before i do a whole ton of research um and and waste that effort and so i i do think there's a lot of spray and prey but i i do also think that is the result like michael was saying of the industry's buying patterns in the past um in in the way that they they buy transportation so it's a tough it's a catch-22 in some areas i wanted just to just from uh to kind of go back and kind of circle it all down into a smaller carrier perspective you know it's great you know just like cassandra said that you know we could go through on that side and you can do a much more due diligence than you can when you're a small carrier you're on a load board and you've got to make a split decision on whether or not i can do business with the customer or not and you have very very very limited kpis that'll tell you that that's a good decision or a bad decision it's very very tough and that's one of the things from a transparent perspective i think that that's one thing that that we lack is you know the ability to kind of see that quickly in real time because you know from a from a customer to a 3pl this is kind of like that that woo in phase that you know let me take you out to dinner type phase but when it comes down to that last piece of the supply chain when it comes from that that shipper or f3pl has already provided that pickup time it's got a pickup number and po numbers and they just need to move the shipment that's not a lot of stuff that you can do in order to be able to vet that person out and that's very very tough and it puts a lot of small carriers in a bad spot because i've seen the times where credit's fine you know you book the loan credit's fine you go submit factoring two months later you get a get a charge back in your factory recruitment because all of a sudden now you know what they're no longer in business or their credit wasn't as good as it was so that's tough it's just tough it's just when i think and i think you need to be key to come back to square zero so the speed might cause you to make a risk in that moment the the issue is that then everybody's like oh there's an approved customer we're gonna haul more loads for them and never nobody thinks twice because they made it through that initial filter so it's like we need a system that says oh they bypassed the main filter let's go back to that filter and do some more due diligence after that after the fact adam are you seeing when you're talking to small carriers are you advising them to stick with brokers that have a triumph pay logo on a load board or a truck stop load pay logo i mean to me like one of the things i think about like i don't want to carry i worked at carriers and i know um i mean todd can wait on this my old boss used to say you know we pick up pennies right like that's that's sometimes in the carrier world you're just you're really just managing that i wouldn't want to carry to have to worry about getting paid i don't want my staff cutting com checks right like i i want carriers to not have to worry about payment and i think with the amount of people that are willing to do third party underwriting on brokers like i don't know why as a business we haven't just taken that out of the equation like if you're a worthwhile broker you can get underwritten by even a small person can get underwritten by trying to pay or a load pay that logo's out there that but you have those that's kind of your clientele i'd be interested in your opinion on it yeah and you know honestly it it's it's it's it's funny you say that because a lot of times in the very beginning when you first get set up as a new authority you don't have access to nothing outside of the typical larger brokerage firms that do have that ability to take on that that that associated risk and that will work with you so you're a little bit limited but we do we do want our clients and we do want our carriers to be looking for those brokers that are either tia certified they've got some sort of outside certification at least at least a bond level that's outside of a silver or going up even into that platinum bond we know that broker's got the reserves to be able to do it and be able to handle it but but but unfortunately in a marketplace like right now with capacity as tight as it as it is there's brokers throwing up freight everywhere and it's like hey who's going to get the highest plan plate that's who i'm going to go with i'm just going to roll the dice and i'm going to take my chances wow and it's it's scary because i would really really really i was looking at a reserve report a couple of weeks ago i was looking at something and i saw the amount of income and receivables on this particular ar but then i saw the collection side of it it was like almost four times the amount of money in collections versus what they had in receivables i'm like what in the world is going on yeah when this time and and i'm sure somebody with factoring can really kind of just speak to that but i have never seen it like that before to where it's almost completely upside down collections are just at an all-time high um just with that particular situation i just glanced and i'm not just thought about it you know you put two and two together the capacity is tight brokers is probably snatching freight from everywhere and now carriers are just going to take the risk hey you know what i'll just give it a shot i'll just haul it but to your point michael we really really want to stay in a small bucket because you want to build up a reputation you want to build up a reputation to where you can now branch and the worst thing that can happen is when you first get started you're you've got tight you're running a tight ship as it is the worst thing that can get started is you miss a couple of loads that don't factor and i have seen that put people out of business very very quickly so um to your point i'd prefer that we stay within a small window of brokers that you can build a great relationship with you know it's nothing wrong with getting a larger 3pl you know maybe todd's got a great 3pl i'm just getting started there's nothing wrong with me working with todd and he's being my soul guy or just having a couple of brokers that i deal with just so i can get my reserves up just so i can understand and learn the business a little bit more and not get caught in this this this this wave of just just just a anomaly so i just think that for a smaller carrier you know for our smaller carriers the risk is not worth the reward i hear you talk about brokers a lot adam um is that because most of the smaller carriers are working with brokers yeah and and um because because they [ __ ] about brokers a lot um and we've talked about this a lot and i'm like they a lot and and but they are the customer at the same time it sounds like and when we talk about this topic you're talking more about brokers these two down here are talking more about shippers i think that's interesting yeah because i mean when you first get started you're not gonna you don't you have no clue on how to land a customer and not just that who the hell am i right i'm gonna go knock on todd's door and say hey i want to move freight for you all right well what's your reputation look like oh yeah my authority should go live in about two weeks i'll be ready to move freight for you the thing about it is he's got a trust he just got to trust to be able to put 200 300 000 worth of freight on my trailer and expect that with no history behind it at all that's like when you get out of school when you get your kids you know you buy your kids a car and the first car you buy them is a maserati or something you got to give them the opportunity to see if they can parallel park first so the thing about it is is that with the smaller carriers they typically traditionally use brokers for the most part and from the standpoint of ambition honestly you got good brokers you got great brokers and you got bad brokers you got good carriers and you got bad carriers and a lot of the the bitching in my opinion is because it's just hearsay you know not really truly educated on what's going on do they even really know what the lanes are and i know we talked about it the last time we was on a call yeah don't [ __ ] about a broker and his rates when you're not when you have no clue on what your business is your operational cost said if you don't know your operational fixed costs if you don't know your operational fixed variable expenses if you don't know what it costs to move your truck don't worry about what what a broker's plan that's not your business your business and that's what you need to worry about yeah gotta love that i think so i'll talk about brokers for a minute uh i are you talking about bottom dwellers cassandra you and i talk about this people that are willing to sign anything or haul any load like one of the reasons that i still have some some coaching and consulting clients is because i i want brokers to be better i want people to get better i want them to be good at vetting their customers but i also want brokers to be really good at taking care of carriers and understanding small carriers like one of the one of the things that i do when i train is i i teach brokers about a basic trucking pnl like because to be a good broker not sometimes you often need to help carriers better understand their own network a guy's got 10 trucks he doesn't have a safety department he's outsourcing that if you can get him running something consistently right and you can help a carrier understand that we talked about this before the call that like a high rate per mile doesn't equal a better network or doesn't equal better deal like like you're now you're partnering with a carrier right if you're just trying to put freight on the internet and you're just trying to beat up on a drive or you're talking about that carrier that driver you're being pejorative about something like um i think there's a i think there's a major problem with brokers not understanding what it costs to run a trucking company not understanding you should have to know that the second thing i'll say is that i worked for a really big trucking company and we had tame drivers right like that's that's running a trucking company so if you're a broker and you're just worried about the cheapest guy out there like what kind of freight is good for q i actually don't know i you should tell me but like you know that that's where i'm going to put my sales staff at 30 people like i'm going to have people go call and find trade that's going to work really well for you and your network yep and and i think that's that's where we segregate or i separate the asset cell and and it's more confined so the more specific your value or niche is the more specific your strategy and target is so on the asset side we run refrigerated food grade freight we can narrow in on that and the regions our asset network is or the areas our asset network is but the logistics there's more flexibility there so we can spray a little bit wider and we can expand into other freight regions and try to grow into those um and so it's like understanding what you're trying where your value is identifying who you are who you want to to work with and what you what you sell and then what's your value you bring to them you better be able to answer that before you pick up the phone and call ron kane at monster or wherever to say let me be a carrier you need to understand your size and scope and say well what is my value going to be to him and i need to understand that and and and that should drive my strategy in in trying to engage that person or that contact but i think that's the bigger issue is people not segmenting the customers and understanding who is in their level of contact or who they should be able to reach or provide value to but i i'm getting a couple things that there is some slow feed so just guys be patient with us the feed will come back i'm sure it happens but guess who's fault it's not it's not my fault because i don't control the technology anymore um i see zeke is gone so maybe that's why anyhow uh this will be available on youtube for replay that's actually the majority of the way people watch these things anyhow not live uh but i'll say that i did so so what especially from adam adam what are you telling people with regards to um how much credit to extend if at all so you know that's a great question because i see times it just depends on it depends on the broker itself i've seen times where if it comes up and we do a credit check and it asks for further review and then we put the further the review in and we ask for like i don't know maybe five thousand dollars and it says well you need to call then we know we might have an issue and it's probably somebody that you don't want to necessarily do business with but you you it just depends it depends on how frequently you plan on using that particular broker because obviously that broker is going to have freight and you're not going to be its only carrier and that broker is going to be have to facilitate multiple movements and if that one shipment is is going to cause that broker to say hey let's let's get a call let's just make sure we can get this thing cleared um that's probably something that you would want to go with but from a carrier side just from a smaller carry perspective any time it has to have a further review on credit probably want to look on that next load on the low board just to be on the safe side just to be honest with you yeah i have a lot of rules with credit um because i worry especially times now when capacity is tight and we may see more collections issues uh i worry about shippers who can pay and then i also worry about what michael is talking about but the shippers who shop uh a lot and they'll pick up a new broker they get their credit and they immediately give a bunch of shipments to that broker then they go to another one do the same thing and so they use up the credit really fast they get payment from their customer and then they bounce on the bill and during times like this this is when it happens uh a lot and it's a it's a lose-lose for carriers and brokers of course um from a size of company standpoint might play into it but is it good to have two different people doing those one that's doing the sales side and one that's doing more of the vetting because does it go against the nature of some typical sales people like you look at the um the stereotypical sales person they might not find energy from doing that a and also do you want them focusing on the sale and then have a good team to support them if possible open that up to the other guys to see what you think i you know obviously size of company gives some limitations there um but in an ideal state when you when you have the size i'd love to hear those thoughts yeah i think there's i think there's those are good points i think there's two things right sales people always want to be hungry and uh i don't want them to have to deal with a bunch of noise yeah that keeps them from being so like i don't want to turn sales people into credit managers right yeah i would always get really excited when my sellers would come and ask me the two or three questions that i made were important hey can you read this and tell me about this this this and this and so um and and i'll plug i'll plug jolly on this like if if you're having issues with vetting customers on the front end not and i'm not talking about risk management i'm talking about just good sales like you should call chris he knows a lot about this um asking just good qualifying questions on the front end right um and then that's where you've got to have really good sales leaders so you should have like a like maybe no more than ten to one four to five to one is better where you've got a good sales leader that's looking at the stuff coming in the door and just knowing like um cassandra we did this together we just had like a one sheet bullet point like what are the four things to look for yeah i think and that's it doesn't have to be complicated and i think that's just good selling discipline like am i asking these questions and then the other thing would be with compensation right like have a good have a good chargeback mechanism and think about your point of credit when you're going to pay somebody all right so i i'm a fan of paying on invoice date right so that if there's paperwork issues and then and then i've got callback provisions for bad debt like and so like i think there's ways to answer your question to put just enough skin in the game where the sales person isn't distracted and i think you have to train your sales leaders really well to know what questions to ask to help their sales people yeah and at a minimum the sales people need to know and understand what that team is looking for and why and so they at least have an understanding of it um and so they can look out for that too that's good oh i see a question from ron kane um obviously people know that he's the uh the wizard behind the screen often with this show um he says with the panel's thoughts on tiered pricing meaning i'm a good shipper i pay quick and manage um something well other providers have rebate programs do you guys have any thoughts on that todd what's your thought on the rebate i mean i want to know from the asset guy first i well i i in theory yes right like like there should be and and that's more you know how dedicated price with some rebates and some gain shares and some more flexibility in the pricing i agree like if especially volume is the main thing that if routing guide volume and the actual volume um that comes through in the business matches the routing guide to me that there should be um you know some agreements worked out so i love one the idea of having a deeper partnership and visibility to what's happening on the shipper side but then the cost on the customer or on the carrier side to what it costs to execute that business and then we work out what happens if the business shifts then we can adjust the pricing accordingly and we're all in this together and so it's great in theory it's this the nature of the industry's pricing structure that that is this circular conversation um where where everybody forces this back to the price and the rfp process and you know i listen to you last time ron talk about the things you did with the co-op style which is is similar in nature in essence it's more of a partnership conversation in the pricing rather than a methodical um bidding against each other and whatever the rate says the award based off of that so i like theory i think the difficulty is executing it you also have a data um integrity aspect and transportation that we're fixing as we try to implement technology in the industry but there's some challenges to that as well i think what i've seen with a lot of rebate programs i i completely agree with todd saying is that they theoretically are good um and they're very difficult to execute for both the shipper and the um and particularly motor carriers are going to struggle with it more than a broker because brokers have bigger technology and bigger back offices we can absorb it more like if i were to if i look at a brokerage p l versus a strict asset p l like it's you know tons of money goes into maintenance and recruiting and retention on and brokers can just have more back office and so then oftentimes rebate programs are third-party managed so now you've got some third-party bank something right and then you've got a bunch of motor carriers and then you've got and so i get them in practice what i can say as a broker is that um i had a customer one time their freight wasn't always the easiest to move because a lot of times it was production and i had to you know i did dispatch trucks on the street and i had to have plywood and load locks and i operationalized that business really well and i bent over backwards for that customer they paid me in 17 days edi like my payment started processing when the bill got scanned i mean they were they were one of the largest customers and we did every because and and i had a billing contact like it was it was the easiest thing in the world to do business with them from an accounting standpoint i've i've had other customers where the bidding is very competitive uh my back offices had to go into two different portals deal with a payment company so i don't know if i'm getting into ron's question but like if you are if i can bill you easily and accurately and i don't have to deal with a bunch of rebuilds and collection issues i'm going to take a margin cut because i can move your bus because that probably means that you are a decent human being and i can actually sell your freight too i don't know i don't know your opinion is todd but i've also know i've often noticed that pain in the ass freight has pain in the ass billing and so i'm i'm going to take a margin cut uh if it's if it's easier for me to do business with you yep with regards to um obviously i've been involved in a lot of unique and different types of freight transactions and contracting i have been involved in rebates with regards to profit sharing um so if we save you this percentage on your lanes on your rates we will split it with you and we'll give you a rebate um it's i haven't seen many successful turnouts like i'm super skeptic skeptical in the beginning and i vet it as best i can um especially from a legal perspective but i haven't really seen good turnouts with that unless it's ltl and ltl obviously is more predictable and easier to do that on and you can negotiate the tariffs in advance but with truckload it's harder especially this year dear god um but i thought the biggest point is and i talked about this with ron a little bit was the trust with the shipper um because we don't know ron we don't know who's who's you're reporting to and you could leave at any point in time we may trust you ron but we don't know who else and anything can change at any moment um so there's a lot of trust that goes in and i i'll say this is that often i don't i don't trust the customers i don't trust carries i'm in the way i don't trust anybody but uh that plays a bigger role in it than anything else like um and ron said before like he wants his partners to make money and not everybody views it like that especially when they've got management above their head breathing down their neck about saving money um it's a good question that's for sure yeah and i think on ron's point too in the profitability volume conversation is yes efficiency should drive a lower cost and that's captured i think today in the rfp process at least we account for that when we're putting a rate on the rfp we take the market and adjust for the relationship adjust for operating characteristics and so i think you see some of that um and and i think yeah it would be great to be able to have more tied directly to activity-based costing so that based off of the activity and all of that then the pricing should follow that the one external factor though that's difficult is the fact in one way transportation you're then reliant on another customer or your call freight that's another thing that we can't control then and is often dependent on market and so it's tricky with we're we're you know luckily this technology that's coming that can help make more decisions like that and be able to say ron i know how much your efficiency actually saves me as an organization and we're trying to get there but the majority of of trucking companies just just aren't there and and can't account for all those variables to be able to articulate exactly how much your efficiency saves us as an organization and that's why i went to volume is to me volume is also a big profitability driver i keep saying we can't build the church easter that's what everybody wants in the industry is they all put their rfp volumes where they might think hit 60 of them throughout the year and then they all bring 100 at the same time of the year and so it's difficult to balance the trucks and the trailers which is your most expensive cost and your biggest cost um and so efficiency helps but it doesn't always account for if there's if there's volume gaps in the routing guide adam when it comes to pricing for your smaller carriers um i is it's safe to assume that you guys aren't doing a lot of rebates and and flat contracts so on that note though how do you how do you recommend your carriers because this does play into vetting a shipper price the lane accurately when you don't know the shipper and you don't know what's going to happen along the road like someone told me like beer is super heavy and and it's more and it's more weight they [ __ ] hate running it uh tires and a couple other things like cowhides make your trailer really really stink but you wouldn't have known that unless you had to go through it so what are you telling folks so there's a lot of things that go into it and you know like you said beer is super heavy and when they load beer they typically load beer on three-quarter tank of fuel and they put you at full i mean you're realistically at full eighty thousand pounds and that's tricky especially if you're taking that freight it's different if i'm taking that beer freight across flat land as opposed to pulling hills so if i've got to pull mountains the entire time i'm blowing diesel fuel out i'm probably getting three miles a gallon the whole the whole trip and that's going to eat into my cost too and one thing that you that i find and it's it's so interesting the heavy and afraid and it almost goes to a point that michael stated earlier that you know all of a sudden there's a correlation there but when you see beer freight and things like that that typically doesn't play market pricing so the problem is is that the accuracy of the information that's available to smaller carriers is very very limited so when it comes to be able predicate to predict the lane there is no real time visibility like on a broker side i would state so you know for instance with freight waves they have this this the sonar technology which at least gives you the actual tenders that were priced in that particular lane versus any other rate watch where the rate watch is based on the actual postings that's in the lane so there's a huge difference if there's if we're counting postings where as a broker or as a 3pl we've seen them post multiple multiple locations for one load i mean it might be like four or five locations for one load and what that does is skews the data on the actual pricing on a lot of the the load boards so the load board might say hey this particular rain lane has been averaging over the last 30 days 237 a mile you call up on that freight and they're like oh yeah absolutely not we can't pay that that's not even you know not even close so that's one problem and i think the second problem is this overall transparency to be able to see what's actually in the lane and understand it because one of the things from a carrier perspective is when you don't know your breakeven point you don't know what it costs to operate your truck you have no clue on where you need to even start with a pricing and one thing we'll see is that they don't really for the most part don't really understand the true supply and demand that plays into that you know as far as like you know you got your markets like you know your south florida markets your upper northeast like in maine those market places where you don't have a lot of commerce coming out of those areas but you got a lot of trucks coming in there so that creates a imbalance right so that puts more trucks and shippers now obviously that's gonna that's gonna that's gonna deter the rates and so giving that education up front and really showing the the the importance of understanding the supply and demand understanding how lanes work understanding how volume is predicated understanding when you're going to have the peaks and valleys there that's really important but it's unfortunate that that again once again and this is for the small carriers out there i love my small carriers they just don't have that information available it's not it's not popular the one thing that you hear all the time is that if you and i'm sure there's brokers on this call they're always talking two dollars a mile oh yeah wow i need two dollars an hour i mean my guys even your dispatchers over here hey my carrier needs two dollars a mile no he doesn't you know let's let's be practical let's be sensible let's make a let's make a rate where me and michael we can both walk away happy right we can walk away happy you know i'm not pulling his leg he's not pulling mine we can take care of the customer but in order for me to do that i need to know how much it's going to cost me to move my truck anyway right so if i don't know how much it's going to cost to move my truck i don't even know where to start with prices i can guess i can say oh yeah okay yeah i need two dollars a mile to move this lane what if my what if my cost of operations is 206. what happens then now i'm just moving freight across the country for free so that's the that's the problem um honestly cassandra is that it's a gap in education you know it's a gap in education and it's certainly a gap in available resources and when you talk about tech tech is one of the biggest gaps that we see and you you you bring all of this stuff together right you know these we've got multiple systems and multiple people just not being able to communicate with one another on one system it just means it makes it just makes it just terrible and that is why it is so important the literacy the financial literacy um in in a trucking organization and trucking business on both sides from a broker side and a carrier side is so important because we see so much where it's just hey you know what i'm just gonna throw a shot in the dart yeah i'm just gonna guess how much you need on this load oh yeah uh hey i'm gonna need at least two dollars a mile in that load and and god you're not even factoring hey you know what the fuel on that lane the surcharge on that lane you have no idea on what you know what what deadhead opportunities it's going to create is there going to be a head hole coming out of there how far am i going to have the backhaul to get into a better rate i'm going to i might have to take something short dollar mile freight to put me in a better marketplace but but i don't think the consideration is yeah adam and you're right like the easy button is not the way to go right like looking at a loaded truck ratio and a posted rate like most people don't realize is that in power lanes right you take atlanta harrisburg dallas to denver dallas to atlanta like the the market makers the three pl's that have those they don't report those rates right and the trucking companies that move that on a back hall they don't because i've worked at them like wow that's a big it's not they're not real raves like you can i challenge any any carrier to go look at a big hot market power lane and look at total number of reports and total number of companies reporting like it the math doesn't work so yeah you're a small carrier you cannot is it is it statistically correlated to the market absolutely but is it accurate no it's not it's way more important to understand your operating cost the other thing i'll say and i'll probably get trolled or flamed or whatever they call it for this but you brought up we all do he brought up beer and water right yeah it's honor at some point we should have a show with ron and some other people and talk about how uh the big beer and water companies who are their top carriers they're not asset carriers they're brokers and they're brokers that don't make money what you saw in 2019 and i saw this like sit at my desk and see those those are that's what todd was talking about how you can control a one-way even if you're running hub and spoke and you only have four or five tireless you maybe can control your one-way outbound but when you rely on certain predictable things to happen in backhaul markets and then your customer takes the freight from you gives it to another broker that's drastically undercutting the market and that broker turns around and gives it back to you for 20 less because guess what you haul 20 a day and you have to haul them to get back to your core customer like that happened in every major market in the country in 2019 to all the big asset carriers and so there's a there's a real issue i think with just stewardship in terms of how are we treating carriers and taking some of those backhaul markets and balances into consideration that's hot sports opinion whatever but i watched it happen brown says you can't pay a lot for transportation when your margin is less than five percent that's a really good point and we know the elise's water bottles you also have to uh this is everybody who's watched me has heard this before but that's another part of screening a customer know their cargo claims because you may be excited about getting that new water bottle company you get all these lanes and you're really excited about it and then you realize why people are passing them up um we have literally two minutes could we can go a little bit over with this question but i really wanted to get your each of your perspectives on this so we'll start with todd todd um in your opinion what does it mean to be a shipper of of choice is that a [ __ ] term like let's just be real about that and adam's already laughing but i hear ron brought it up too and i'm like first of all i'm curious from ron if shippers even care about being shipper of choice or if it's just some pupa like give give this [ __ ] big company an award they're our shipper of choice but really it's just some song and dance and okay i'll stop go ahead todd their care is relative to the market conditions it you know in my opinion like so it was a big term and then yeah and then even big term again shipper of choice right i think it is really important um at least the theme behind the the label um is that trying to allocate transportation costs to activity and the term shipper of choice is based on the activity or operational characteristics of that shipper how well they do what they say they're going to do their their dwell times um their payment terms and etc etc and so i i think there there is a lot of value in being that and i think shippers are starting to care more as over the last five to ten years transportation has become a higher um level on their p l and become more and more as cost increase they they care more about that not only how do they move their freight differently but are they doing it in the best way if possible to lower their cost the trick is is tying a cost to that activity and then allocating the freight based off that activity because the the market weight of the market procurement keeps coming on top of that especially when the market goes down right and it drives down cost um so much that it doesn't even matter and so then when it goes back up i would say carriers do allocate for that they know who the good ones are the loading times i'd say if we compared rfp to rfp in the same markets with good characteristics versus bad i think you would see a difference and so i think there is and has been um some accounting for that um but it's more you know with the win kind of estimates based off of what we think it's going to cost and not saying that this each hour of detention gets you one cent per mile less or something like that yeah so i think that it should encapsulate a lot of things and you know it kind of takes me back and reason why i was laughing because the first thought that came to my mind when you said shipper of choice was the video that you played in the very very beginning like so as a carrier i would you know i'm i'm not going to say i want to pull up to a shipper and people are jumping up and down and and got pizza waiting on for me and got a sign and parade and all that good stuff but i will say i want to feel like i i want to feel important and when i think about that there's a lot of non-verbals and there's a lot of things that can go along with that i look at facilities right yeah how accessible it is you got some places where you go to you open up the shipping office and they'll curse at you as soon as you leave the door open or something like that and then i think about you know hey just like todd said you know what about detention what does that look like you know what is that in terms of hey i'm going to get you in and out get you out very quickly i'm going to get you loaded i'm going to get you unloaded quickly right and also just think about just you know even the smallest things it's like hey you know do you like if i'm i've got a carrier coming in is there parking available is there any place where they can go and stage themselves to prepare themselves into the facility and just to streamline that process as much as possible but i just we did a show um about a couple of months ago and it was just on during the drive appreciation week and you know it's just like our conversation we had a candid conversation you know before the show went on and i just the level of appreciation um should should should resonate you know in terms of of of when you pull up to a shipper that stuff should resonate you know what i mean and there's a lot there's involved you know obviously there's a side on the shipper's side to making sure that they're cost reducing and and those type of things but it's got to go all the way through the entire supply chain process all the way to the end uh and honestly i just think that just to be honest i just think that the the truck driver is the one that gets left out the door in that decision-making process yep yeah i was gonna say i think i'm all i'm all for shipper of choice and if if todd and i get to vote on shipper choice our vote should uh we should be the electoral college that is just uh that is just saying what our accounting departments and drivers feel like so i'm for shipper of choice if the accounting department and the drivers get to vote on it because they're again i have a lot of hot sports opinions about this but there are shippers of choice that are horrible when it comes to processing bills and horrible when it comes to the way they treat drivers yeah michael big awards somebody else please don't leave me alone in this like you know what i mean i don't understand that they don't pay me very fast or they my drivers are all there ten hours and the freight's forty six thousand pounds i don't understand that right so if we can let our county departments and our drivers vote i say let's make sure of choice bigger than ever you ha and that's the the um you have to quantify this aspect adam mentioned and voting or surveys and all of that is going to help do that because detention dwell payment you can quantify that but the how they treat people and the the essence of their facilities and all they have you have to first capture it and then quantify it to then translate it into a price difference and and i think we're getting there as an industry but but we're certainly not there yeah it's just like you know like todd said man it should start with the that first category and then that's kind of like the the the pre-reference in the door you know that's how you get in the doors you know that's that's part of it but you can't you can't consider shipment or shipper of choice if you don't if the end result is hey you know we treat people like crap you know it just just doesn't it doesn't work that way but it has like i saw the shipper i'm not going to say any identifying names or anything like that but there was this big thing that came out in social media like look at these we gave these shippers awards and they were like here are our top five shippers and this is the industry voted and they were literally the worst shippers out there like people rolled their eyes when they saw that um so i think that it's it's this weird thing like why we even do it um and and i'm gonna i'm gonna sure i'll get trolls for saying this hands down but i'm gonna push back on the driver community because i'm all about appreciating the drivers as the ones doing the jobs i am but we all play a role in this industry and sometimes i feel like drivers forget that they're a business they're owner operators that means you're your own business you can go work for a company and be an employee and then you can demand that employer treat you a certain way but when you're an owner operator you decided to have your own company so no one's out there watching your back just you so when you're on the shipper's properties is sometimes they come feeling like oh you know why isn't this clean why aren't there bathrooms why are you trying to push me off your property i know people are gonna hate me for finish i'm gonna be the one who says that and it's often because you show up on the property and you trash a place or you don't have workers comp insurance um or you're driving back into things like i see the problem ends so i get it and i see it but at the end of the day like you're your own company so you've got a plan and know the location you're about to show up and plan for that not to have the facilities that are appropriate for you i'm going to be that [ __ ] on this thing so so i if if i had a magic wand i would get the [ __ ] rid of the shipper choice award completely honestly i i'd have everybody appreciation week because those small carriers that get a whole week of appreciation we got brokers out there that are their sales people we've got shippers out there who are constantly raising their hands saying you guys even like hear us when we tell you what we need um did you guys even forget that we're the ones paying the bills so my rant i'm sure that i'll get [ __ ] for it but that's my rant for the day i'm not saying anybody else down here feels the same way um so to wrap up um this was a really intense episode i have a feeling that a lot of people are going to have to re-watch it because there's a bunch of things that you guys said that i didn't even know about um adam some point in time if you would tell us how to tell the difference between brokers bonds you talked about gold and diamond and stuff like that uh maybe you'll talk about it on instagram and we can follow you that'd be awesome um but you guys all know these i definitely brought you the veterans you guys know who to reach out to now um and thank you guys very much i think we can we can wrap up zeke since i'm no longer in control of the tech