That was my point as well in my earlier post. Only those at the bottom will have the issues.
Senate Proposes New 100k Surity Bond For Freight Brokers!
- Thread starter blizzard2014
- Start date
That was my point as well in my earlier post. Only those at the bottom will have the issues.
What about new brokers like me, John? I've only been a broker for four months and haven't really moved much freight. Me and my business partner have good credit, but we do not have a customer base to establish financials? I guess we got into it at the wrong time. I think they should grandfather everyone into the way it is right now and place the regulations on even newer brokers. Any how, like it was stated earlier, if we have to drop 5k a year for a bond, we'll just pass that upcharge onto the customer.
I have well more then the five thousand dollars. The problem is that you have to have collateral to get that high of a bond. If you do not have at least a 750 credit rating, it can run you up to 3k a year just for a 10k bond as things are right now. A lot of people are going to have to shell out a lot of money to get the higher bond.
I think they should just have a better rating and monitoring system for brokers to track bad behavior. A lot of brokers go under because the shipper stiffs them on the bill. They should just require shippers to have a 100k bond or set up a third party payment system that collects the money from the shipper and disburses it to the brokers and carriers. A higher bond is not going to stop a lot of the fraud.
The bond companies have a way of weeding out a lot of claims when brokers go under. They have large legal teams that fight the legitimacy of every claim - you have to take them to court and all of that hoop la to get your money if a broker defrauds you. Brokers will still be able to open up shop under new names just as before as long as they have the bond. I think this bill is poorly thought out.
I think they should just have a better rating and monitoring system for brokers to track bad behavior. A lot of brokers go under because the shipper stiffs them on the bill. They should just require shippers to have a 100k bond or set up a third party payment system that collects the money from the shipper and disburses it to the brokers and carriers. A higher bond is not going to stop a lot of the fraud.
The bond companies have a way of weeding out a lot of claims when brokers go under. They have large legal teams that fight the legitimacy of every claim - you have to take them to court and all of that hoop la to get your money if a broker defrauds you. Brokers will still be able to open up shop under new names just as before as long as they have the bond. I think this bill is poorly thought out.
Again, I am no fan of increased regulation. I agree, it may create difficulties for small start ups. I think OOIDA's goal is good, but I agree that I do not think this is the ultimate answer or the best solution. Bonds are in insurance product and are based on underwriting. Much as why some carriers pay more for truck insurance than other carriers. As companies grow in size and/or financial strength they gain access to improved pricing on insurance, banking, equipment and a number of items. To be completely fair, I think the size of the bond should be tied to the size of the business.
I also think if this does become law, the cost may come down as demand for these higher bonds will jump on the supply and demand change.
I also think if this does become law, the cost may come down as demand for these higher bonds will jump on the supply and demand change.
I understand the need for the bond, but I still think they are going about it the wrong way. I wasn't trying to discredit what you said, John, i'm just getting so frustrated with how hard it is to become a carrier in today's market as opposed to a few years ago! A lot of carriers (and I know you are not one of them) are like we got in already and they act like there is no future for newer entrants. It just makes me feel like i'm fighting for my company and the government and other outside forces are fighting to shut me down. I'm just venting some of my frustrations in here. I hope it all turns out for the best.
I understand. But maybe it was too easy for guys to become carriers in the past? Easy entry often lead many to easy exit. When a company is small they have to really work with disadvantages to succeed. I started off by renting my tractors. Very little profit, but I rolled everything I made back in to it and over time built a financial history. Took me a few years to build the credit to buy new trucks. A few years later the credit market changed and they would give anybody a new truck. Well we know where that ended up...record trucking failures. Bliz, good operates may struggle but they will find a way to succeed.
Yeah I know, John. I just waited a bit too long to start things up and the market went south. It's a very hard business environment right now for new companies. I kind of planned on things being slow - I can still meet all of my monthly expenses with the one cargo van we have with a driver in it. It's not going to breaks us - but I hope there are no more monkey wrenches thrown into the machine before we grow stronger.
A new business is like a new born infant - it will take some time before it becomes stronger and before it can stand on its own two feet. I like the way you rolled most of your profits back into the business instead of buying all kinds of personal stuff - that is what separates the men from the boys.
There is a time for nice cars, golf, and all of that, but it is well after the business can sustain itself and after a proper foundation can be laid. I'm just glad me and my business partner have low expectations - after all we are both cargo van drivers lol! If you aim low, you'll be quite impressed when you achieve success, if not then it will be easier to accept. You have a great business model to follow. I hope I can run a really driver friendly company in the future that has long term success. My business partner jokes with me all of the time that "as soon as we have OVM, TJP, and Chef in our orientation" - we'll have arrived.
A new business is like a new born infant - it will take some time before it becomes stronger and before it can stand on its own two feet. I like the way you rolled most of your profits back into the business instead of buying all kinds of personal stuff - that is what separates the men from the boys.
There is a time for nice cars, golf, and all of that, but it is well after the business can sustain itself and after a proper foundation can be laid. I'm just glad me and my business partner have low expectations - after all we are both cargo van drivers lol! If you aim low, you'll be quite impressed when you achieve success, if not then it will be easier to accept. You have a great business model to follow. I hope I can run a really driver friendly company in the future that has long term success. My business partner jokes with me all of the time that "as soon as we have OVM, TJP, and Chef in our orientation" - we'll have arrived.
(kidding I love my boys).turritrans
Expert Expediter
Regulation will never replace due diligence
CharlesD
Expert Expediter
Yes, the little guy does start out with some disadvantages, but over time a small carrier can build a good reputation by providing something called good service. I've learned a few things about that in the 4 1/2 years we've been operating. I started out just running myself under my authority and one thing I always did was make sure I was on time for everything and I always communicated everything to the customer. Then when I started adding drivers I was fortunate to have some good ones who helped me to keep that level of service. We still benefit from that reputation with a few customers who will sometimes give us loads even though there are lower offers on the table. On the other side, we've had a couple drivers we had to get rid of because their level of service was not up to that standard and we couldn't run the risk of screwing up our reputation.
At the beginning it can be really rough, and to a degree it still is, but the best thing a new carrier can do is to be very discriminating when it comes to who is hauling the load. One or two screwups can really hurt when you're small and not moving as much volume, but if you have a couple drivers who consistently provide good professional service (like a prominent poster in this thread before he moved on to bigger and better things) the benefit to the carrier can be immeasurable.
I think the toughest thing to starting out small is the small profit margins you have to work with at the beginning. In order to pay our drivers a rate that is competitive with the larger carriers, we have to run at smaller margins most of the time. A small carrier usually ends up doing more brokered freight, or in a lot of cases double brokered, which usually doesn't pay nearly as much as it does if you get it from closer to the source. You're doing a lot of hand me down loads from larger carriers and what not. As you get access to more of the freight sources the larger carriers have access to, things start improving, but that takes time and getting your foot in the door with those other freight sources takes time and a lot of legwork. Then you have to utilize factoring services until you get to the point where you're capitalized enough and that eats up a healthy chunk of revenue. Bottom line is this: A small carrier can still make it in today's environment, but it's not easy and it involves a lot of hard work. We've had a few bumps in the road along the way, and some of those bumps were doozies, but we're learning from the mistakes, making adjustments where necessary, and things are improving. It is frustrating at times, but it still beats sitting at a desk at someone else's company and being passed over for promotions because your coworker is a better butt kisser than you are. I did that for too many years.
At the beginning it can be really rough, and to a degree it still is, but the best thing a new carrier can do is to be very discriminating when it comes to who is hauling the load. One or two screwups can really hurt when you're small and not moving as much volume, but if you have a couple drivers who consistently provide good professional service (like a prominent poster in this thread before he moved on to bigger and better things) the benefit to the carrier can be immeasurable.
I think the toughest thing to starting out small is the small profit margins you have to work with at the beginning. In order to pay our drivers a rate that is competitive with the larger carriers, we have to run at smaller margins most of the time. A small carrier usually ends up doing more brokered freight, or in a lot of cases double brokered, which usually doesn't pay nearly as much as it does if you get it from closer to the source. You're doing a lot of hand me down loads from larger carriers and what not. As you get access to more of the freight sources the larger carriers have access to, things start improving, but that takes time and getting your foot in the door with those other freight sources takes time and a lot of legwork. Then you have to utilize factoring services until you get to the point where you're capitalized enough and that eats up a healthy chunk of revenue. Bottom line is this: A small carrier can still make it in today's environment, but it's not easy and it involves a lot of hard work. We've had a few bumps in the road along the way, and some of those bumps were doozies, but we're learning from the mistakes, making adjustments where necessary, and things are improving. It is frustrating at times, but it still beats sitting at a desk at someone else's company and being passed over for promotions because your coworker is a better butt kisser than you are. I did that for too many years.
And THAT, ladies and gentlemen, is the secret to success in expediting.
It does not matter if you are driving a fleet owner's truck, a truck of your own that you lease to a carrier(s), or run a truck under your own authority. The people you serve all want to know that they can count on you to transport their freight safely and on time, and to keep them informed.
Other business tasks must be done well too, but if you begin by doing the basics exceptionally well every time, the way gets paved to more easily accomplish the rest.
When Diane and I left one carrier for another last year and were saying goodbye to the dispatchers we had come to know over the years, they had high praise for us but the form it took surprised me a bit.
They did not praise us for always being in uniform, or for having a good looking truck, or for our exceptionally good service numbers (percentage of loads picked up and delivered on time), or for our excellent safety record, or for our good communications skills, or for having zero freight damage claims, or for the great customer relations work we did when circumstances grew difficult, or for good numbers and all the money we made for the company.
To a person, they praised us with words like, "When I put a load on your truck, I knew that I did not have to worry about it."
Think about that. They could have said many things but they said, "When I put a load on your truck, I knew that I did not have to worry about it."
They did not care about the things we cared about and focused on when we worked with the customers and the freight. They cared about themselves and whether they would have to worry about a load after it had been dispatched.
To them, and to all others you serve, the measure of a truck driver is not how much they think of you. It is how little they have to worry once they have trusted you with freight.
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CharlesD
Expert Expediter
That doesn't surprise me one bit. There is no better feeling for a dispatcher.
Too bad we can't make all of our leased on guys drive like we do. I always get the job done - period! That is what this business is all about.
CharlesD
Expert Expediter
Tell me about it. I know when you were hauling our stuff all I had to do was give you the info and forget about it. That's peace of mind there.
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