Starting a Third Party Logistics Company: Developing a Carrier Network

When you are starting a third party logistics company, there are a lot of variables to consider. From freight broker software to drafting the operating agreement and more. But perhaps the most important is identifying the right people and companies to partner with to ensure your business is successful. It’s obvious that every broker or shipper ideally wants a carrier that delivers cargo on-time, at a reasonable price, and with very minimal damage. But as with most things in supply chain management, this is easier said than done. Developing a carrier network that meets all of your expectations can seem daunting, but with a little time and consistency, you’ll have the strong network you need to grow your business.

The following list will help you establish a valuable carrier network we all hope for.

1.Define Your Needs

Start by specifically defining what you need in a carrier. Create a document that outlines your current and forecasted needs.  Do you need an LTL carrier? Dry vans or refrigerated trailers? How much space is necessary? What are your expectations for updates from their staff and from their drivers? It’s important to get as specific and granular as possible from the start, because as your business grows and your customer’s demands evolve, so too will the complexities of your carrier network.

2. Conduct Thorough Research

Once you’ve mapped out your specific needs you can begin the in-depth research process. Start with a few simple Google searches and compile a list of vendors with specific notes for each.  You may also find referrals, listservs, and tradeshows useful research tools as well. You should also leverage referrals from industry contacts. If you know any carrier sales managers with 10+ years of experience they should know of reliable carriers in certain regions that over certain lanes, have certain inventory of trailers, or have certain reputations. Hiring an experienced carrier sales manager can be as good as vetting several carriers from a 3rd party source. If the carrier sales manager has good relationships, he will bring those into your business and can help you decide who’s most reliable for servicing your precious early customers.

3. Build & Maintain Good Relationships

Cultivating relationships is an essential part of owning and maintaining any successful business, but this is especially true for a logistics company. The very nature of a supply chain depends on strategic relationships and connections. Bad relationship management affects all areas of the supply chain and can easily impact performance. Which is why when you are developing a carrier network, it’s imperative that you establish good relationships from the get-go. Where do good relationships start? Honesty. When do good relationships turn ugly? Dishonesty. Whether it be human error on your part, the customer’s part or something is wrong due to weather related problems, the best way to keep good relationships with carriers is to be honest about them. Don’t assign blame or act like you’re Bobby Knight and the carrier is a redshirt freshman. Own up to mistakes and your carriers will appreciate the transparency with which you operate. Relationships are grown and destroyed with open and honest communication.

4. Listen & Establish Open Communication

This leads us to number 4 – The more available you are to discuss possible hiccups and listen to carriers’ feedback, the more opportunity you will have to improve.  With an open line of communication, it not only ensures the carriers are happy but it also allows you to make minor adjustments to routes and weights, ultimately improving efficiency. Try adding an automatic feedback email that goes out after a load has been delivered. You might be surprised with what the feedback is that comes through. It might be hard to hear at times, but what’s important is that you take this feedback and use it as an opportunity to improve things. Otherwise, who knows how long the problem may go on for!

5. Pay Invoices On-Time

Maintaining good standing with your carriers should be obvious, it’s a simple and easy way to show that you value their services. Paying invoices promptly strengthens your relationship with carriers and helps to instill loyalty among both parties. Dilligence with cash-flow management is essential in order to make on-time payment an all-the-time reality. Don’t take this for granted, as delay in payment or non payment at all can land you in hot water, and blacklisted by the carrier at the very least. Defaulting on invoices is one of the quickest ways to end up completely out of business.

6. Network with Carriers & Drivers

Networking with carriers and drivers is a great way to ensure you continue to build your carrier network. You can do this both in person and online. Utilize social platforms like LinkedIn and Facebook to reach out to new people, share ideas and inform them about your business. If you remain dedicated to doing this on a regular basis, you will undoubtedly create a web of good relationships. Spend a little time one line making LinkedIn connections or contributing to certain message boards. It’s not just a phones-to-ears business like it used to be.

7. Use Technology to Your Advantage

As you already know, data is relied on heavily in the supply chain industry. Shippers depend on carriers to provide accurate, real-time data on their shipments. Without them, it would make their job a lot more difficult. In the same light, shippers should be willing to use technology that is available to increase transparency and ensure smooth data transfers.

Building a solid network of carriers takes time, consistency and dedication.  Don’t expect miracles overnight. However, if you continue to stay invested in building good relationships and following the above recommendations, your network of carriers will expand.

Start a Logistics Company: The Science of Cold Calling

Your sales team might know everything there is to know about your company and what you offer your customers. But let’s face it, when you start a logistics company, generating new business requires cold calling. And there’s a science to cold calling that can be hard to master, especially in a market as competitive as third-party logistics.  Cold calling involves starting a new (and positive) relationship with someone within a few minutes, over the phone. The concept can be scary just to think about. But, as uncomfortable as cold calling may seem, it can be an integral part of your outbound sales strategy.

Making a science out of cold calling and using the tactic successfully to acquire new customers can be done. Here’s how you can get started down the right path.

Start a Logistics Company: Start with a Plan or Even a Script

Not only will starting with a plan calm your nerves, it will also give you a better idea of where you want the conversation to go. Who are you going to be speaking with? What do you know about the person you are calling? Map out how you want the conversation to go before placing the phone call. What is the purpose of the call? What are you trying to accomplish? In addition to mapping out the goals of the call, it can be helpful to use a brief sales script if you are nervous. You basically have about 10 seconds to convince the person on the other end of the phone that you’re worth their time. What might that script look like? Here are several examples to take a look at. 

Work Towards Decision Makers, but You Don’t Have To Start at The Top

To add customers and begin moving freight for new people, you will eventually need to reach decision makers. The trouble is, every other freight broker on the planet knows this, and is trying to reach them too. Decision makers may be especially adept at avoiding your calls. If you keep calling and you only reach the dock manager, does that mean you should give up all hope? Of course not! You can still reach the decision maker, but you just have to know how to work your way past the person guarding the gate. It’s important to remember that everybody, no matter what their job title, wants to feel respected and appreciated. If you think the gate keeper isn’t important, odds are they can feel that in the way you speak with them. 

Rather than simply asking to be connected to the decision maker, invest time in establishing a rapport with the gatekeeper. Make small talk. Be charming. Ask them how their day is going. Let’s be honest; working in the shipping department isn’t the most exciting job in the world. What makes the job enjoyable is the people they get to work with. Focus on being someone who’s enjoyable to talk to. If you can put a smile on the gatekeeper’s face with a joke, or some friendly banter, you don’t guarantee access to the decision maker. But you’ll definitely improve your chances over time. When you start a logistics company, you’re responsible for making everyone feel like the most important person in the room.

Ask The Right Questions, But Ask Permission First.

You can make all the calls you want, but you have to remember, just because you start a logistics company doesn’t mean people owe you anything. You could start a call by firing off a quick round of questions. But more often than not, your call is interrupting someone else’s day. When you’re starting out, this will also be someone with whom you have little to no relationship with. Once you do get on the phone with a live human, don’t immediately launch into the value proposition. Introduce yourself, then ask if they have 28 seconds to hear why you’re calling. Why 28 seconds? Well for one, you should time your value proposition and two, it makes the engagement feel like a very low commitment. Who doesn’t have 28 seconds to spare?

Once your prospect has given you permission to proceed, you can make your value proposition, followed by some pointed questions that will help you determine if the prospect is a good fit or not. Asking questions allows you to learn about your prospect’s business, their pain points and their needs.  

In addition to asking questions, think about ways in which you can actually add something of value during the call. Is there a unique industry trend you have some perspective on? See if an issue like self-driving trucks is a topic that sparks some debate.

Leverage Social Media to Engage Key Contacts

Connecting and networking with contacts via social media before calling can greatly improve your chances of the prospect not only speaking to you, but also listening to what you have to say. In a recent study from Vorsight, the study found that if the person you are calling is in a common LinkedIn group you are 70 percent more likely to get to speak with them on a cold call. Some pre-call research before you actually get on the phone can give you a small but needed leg up when it comes to showing the prospect that you’ve done your homework. 

Take Notes & Keep Records in a CRM

Although it can be difficult to take notes during the phone call, make it a point to jot down some key differentiators about the call once you’ve hung up. Logging diligent call notes after the call is essential. If it is a short call, do it right away. With the amount of calls you’ll be making, keeping all the key details straight in your head will be nearly impossible. This will also give you an opportunity to reflect on the phone call. What could you have done differently? What went well? How could you have prepared more thoroughly? When you start a logistics company, you want your team to grow. And as your team grows, diligent call notes will help new sales reps pick up where you left off.

Establish a Connection & Mention Referrals

When you start a logistics company, successful sales calling will come from your ability to make a connect with your prospect quickly. Mentioning referrals can help immensely in getting your prospects more interested. Do some research, check to see if you have a common connection via social media. LinkedIn is an excellent resource to see referrals and common similarities. Even a subtle similarity, like having a friend from the same hometown, for instance, can be useful when you’re trying to establish a connection. Even the dock manager can be a referral, as long as you treated them well when you first talked to them.

Cold calling is actionable, strategic and highly effective in many instances.  By implementing these strategies and remaining consistent, the more effective your sales tactic will be.

Starting a logistics company: Infrastructure you need to get started

So you’ve formed an LLC and established an operating agreement with your business partners. Great – but now what? What will you need to get started? Starting a logistics company requires some basic infrastructure needs you want to have in order to be successful.

Set up a professional-looking website.

You’ve gone through the process of setting up your LLC and operating agreement so you can be a real business. That’s great. Now you just need to look like one. If you’re going to be calling shippers and carriers to broker freight, you might get Googled. Those who look you up need to like what they find.

This doesn’t have to be super complicated. You’re going to need to:

  • Buy your domain name
  • Set up your website

Squarespace is probably the best platform to do this all on. It will be really simple.

What should you put on your website when starting a logistics company? Good question.

You are creating a website so you can establish credibility with customers, suppliers and new hires. If you want to get something simple up and then wait until you can delegate creation of the rest of the site to someone who’s a little more web-development savvy, then focus on achieving the following two things:

  • Show who you are. Use a friendly-looking photo of yourself.
  • Write, in your own words, how important great service is to you.

You are in a service business. What ultimately will decide your success or failure as a freight broker when starting a logistics company will be, do you deliver great service, and do people like you? There are a million other guys out there just like you. They would all be happy to take your freight. But assuming you’re price competitive, you have a great on-time percentage and that your shippers like you, you can survive.

The on-time percentage will come. Right now, you need people who visit your website to 1) Like you and 2) Read how much you value delivering great service.

 

Set yourself up on easy-to-use freight broker software.

You’re new to the game, so you really need to impress your first couple of clients. You really, really need those first loads to get picked up one time, get delivered on time and know exactly where that load is, preferably using GPS to track it vs. a log of driver update calls.

Most importantly, you need a software that has been built to make all your day-to-day freight-related tasks as simple to do as possible. You’re going to be spending a lot of time on a computer, clicking through screens to log information. If you had to chose, would you pick a software that takes 16 clicks to accomplish a task, or would you chose the freight broker software that has taken that same task and made it so the task can be completed in 1 click?

16 clicks or 1 click? When it comes to getting stuff done, clicks matter. Pick the most simple freight broker software solution.

Starting a logistics company: Affordable office space

Your office space doesn’t have to be fancy when starting a logistics company, but you may want to consider starting at a WeWork or other co-working space. This will allow you to list their address as your address. Showing you operate out of an office building can help increase your credibility with customers and carriers. Not only are co-working spaces great for getting started, but they will allow you to expand more easily as you grow and add people.

Starting a logistics company by setting up shop in a co-working space can also be beneficial from a quality of life standpoint. If you’re not used to working alone, the loneliness of self-employment can be a drag at times. Co-working spaces are generally filled with other entrepreneurs who know what it’s like to build a business. Not only can you meet new people, but those new people might know people who know customers. Referrals are great. What can you do to get more? Know more people.

 

Next: Starting Your Own Logistics Company – The Financial Model

 

Manage your freight remotely. Complete visibility to your transportation supply chain is as close as your phone, tablet or computer. Freightflow freight broker software is the most easy-to-use freight broker software available today. The best part? It’s completely free to try. Don’t wait. Get started today with your no obligation, 100% free trial.

 

How to start a logistics business: Drafting the Operating Agreement

Thinking about how to start a logistics business? First, you set up your new business as an official legal entity. Right after, an operating agreement is very important. Especially if you are going into business with a partner. What do you need to consider when learning how to start a logistics company and set up an operating agreement? We’ll explain in this article.

How to start a logistics business: the necessity of LLC operating agreements

Depending upon the state that you are running your freight broker business in, you may be required to create an operating agreement for your company. But, even if you’re not, it’s still a good idea so that you and your partners have a clear understanding for how things will and should work.

By setting the rules at the very beginning, you can protect yourself from a myriad of issues that, while may not be probable, could in fact become reality down the line. The future is anything but certain. Starting a business in the first place is taking a risk. Setting up an operating agreement is an act in reducing your risk. Take it seriously. Because, even if you choose to pass on creating an operating agreement, the state you do business in may have default laws to govern the way your business should be operated. This is your opportunity to set your own rules, and to have the company run your way.

 

How to start a logistics business: Laying out the Ownership and Management

One of the most important reason for having an operating agreement when learning how to start a logistics business is division of ownership. Put simply, how much of the business profits go into your bank account, vs how many go into your business partners’ back accounts? In addition, the operating agreement of your freight broker business should clearly define managerial structure. Processes for decision making about the business as well as what would happen if an owner wants to leave a business, should be defined. If you chose to go without an operating agreement, you may run into problems when you are making record profits, or if your partner chooses to leave.

Avoid State Default Rules

In many states, the default role for division of profits is that they are divided equally among all owners, regardless of interest. By setting up your own operating agreement, you can clarify that the shares of profits and losses be split according to percentage of ownership of each member.

Elements to Include in LLC Operating Agreements for freight brokerage businesses

Every operating agreement will be a little different, since even businesses in the same line of work are different. That being said, there are a few essentials that are contained in the majority of operating agreements. These terms include:

  • A breakdown of the ownership percentage of each LLC member;
  • The rights and responsibilities of the LLC members;
  • A detailed plan explaining the distribution of losses and profits;
  • The voting rights of all LLC members;
  • The management plan for the freight brokerage business;
  • Rules for meetings voting rights
  • The buyout or buy-sell rules that govern when a member’s sale of an ownership stake, or a member’s death or disability.

Ownership Percentage

Most often, each individual’s ownership percentage will be determined by the amount they contributed at the start of the business, compared to the total amount given by all members. But, you don’t have to do this. You can set up the ownership percentages in any way you would like. Just as long as it is written out and agreed to by all members who have an interest in the business.

Shares of Profits and Losses

This is most often referred to as a distributive share. Under most LLC operating agreements, a member’s distributive share is often just a simple calculation under their ownership percentage. If they own 25% of the company, they would take on 25% of the losses.

Profits and Losses Special Considerations

You may also want to make some special arrangements within the operating agreement that deal with unique situations. The operating agreement should dictate how much of the distributive share a member is allowed to take each year.

If, for example, the business is new, you may want to consider limiting each member to only taking half of his or her distributive share each year. So, to follow the above example, a member who owns 25% of the profits would only be allowed to take 50% of his distributive share, leaving the remainder of the capital in the bank to help aid growth of the business.

Meetings and Voting Rights

The operating agreement for your freight brokerage business should lay out details about how often formal meetings are to be conducted, and voting rights for decisions made in those meetings. In general, there are two voting rights agreements that LLCs commonly use. In the first example, each member votes their membership percentage. When you use this scheme, a person with a 35% ownership share has much larger voting power than a person that only has 5% ownership share. The other option is where each member gets one vote, regardless of the size of their ownership shares.

Transitions of Ownership

Freight brokerage businesses can see people come and go. It’s not entirely uncommon when learning how to start a logistics business to make sure your operating agreement states the procedures required for transition of ownership. Often times, operating agreements have different procedures for this, depending on the circumstances. What if someone dies? It’s not pleasant to think about, but for the sake of clarity in your business dealings, it’s necessary. What happens most often is operating agreements include simple buyout schemes that allow continuing owners to buy out the ownership share of a member that is leaving the company.

How to start a logistics business: Creating an Operating Agreement

Hopefully this article has helped give you an overview of what you should need when you do create that operating agreement as you learn how to start a logistics business. But, it would be extremely wise for you to work with a business or commercial law attorney to make sure you’re not leaving out anything essential to your specific business. You may want to consider a service like LegalZoom first. For $30 a month, you can speak with an attorney fluent in your area of need who has been rated by previous customers. Something to consider before sitting down with someone who will charge you $100 an hour or more.

 

Next: How to start a 3rd party logistics company: Infrastructure to Get Started

 

Manage your freight remotely. Complete visibility to your transportation supply chain is as close as your phone, tablet or computer. Freightflow freight broker software is the most easy-to-use freight broker software available today. The best part? It’s completely free to try. Don’t wait. Get started today with your no obligation, 100% free trial.

How to Start a Logistics Brokerage: Setting Up Your Legal Entity

Learning how to start a logistics brokerage? If you think you can do it, you’re right. You just need some guidance on how to do it correctly. This is the first in a series of articles which will explain how to start a logistics company. We will try to leave no detail uncovered. From officially forming a business, to scaling your enterprise and building the business of your dreams.

First, are you looking to leave an existing logistics company, and did you have a non-compete?

How to start aSetting up your business as a legal entity.

There are many benefits to officially incorporating your business as a limited liability company (LLC). Those benefits include:

  • Protected assets. LLCs provide limited liability protection to their owners who are typically not personally liable for the business debts and liabilities of the LLC.
  • Pass-through taxation. LLCs generally don’t pay taxes at the business level. Any tax due is paid at the individual level.
  • Increased credibility. Showing you’re official will give you credibility with shippers, carriers and the entire industry. And credibility in freight brokerage is really important.
  • Limited compliance requirements. LLCs face fewer state-imposed annual requirements and ongoing formalities.
  • Flexible management structure. In an LLC, owners can establish any organizational structure agreed upon by the company owners.
  • Few restrictions. There are few restrictions on who can be an LLC owner or how many owners an LLC may have.

Source: http://www.bizfilings.com/learn/creating-llc.aspx

How to start a logistics brokerage: Selecting a business partner(s).

It’s not impossible for you to sell to customers and also broker the freight, but you might want to consider starting the business with a partner. This way, one can focus on getting customers, and the other can focus on finding carriers. But this way you both can work on getting customers when there are no loads to be covered in the earliest of days. If you want to figure this out later, you can form an LLC and then add in your partner(s) in the operating agreement.

More importantly, you may want to spend time with someone before deciding you could go into business with them. This is a big, big decision and not one that should be taken lightly. Be particularly careful of getting into business with a friend, or someone whom you like to hang out with. When things get tough, are they going to have the grit to grind through long days and “get shit done”, with you?

Before selecting a partner, spend some time being honest with yourself about your own strengths and weaknesses. What are you good at? What are you not good at? Do you have relationships that you can leverage to benefit the business? What do you have a lot of experience doing, and what do you want to get away from doing? Once you’ve determined your strengths and weaknesses, you will then be in better position to figure out what you need most in a business partner as you figure out how to start a logistics brokerage.

 

Create an operating agreement.

What is an operating agreement?

“an agreement among a limited liability company members governing the LLC’s business and members’ financial and managerial rights and duties. Many states in the United States require an LLC to have an operating agreement. LLCs operating without an operating agreement are governed by the state’s default rules contained in the relevant statue and developed through state court decisions.”

Source: https://en.wikipedia.org/wiki/Operating_agreement

You’re going to want an operating agreement that spells out the details of how things will work if you’re going to partner with someone to build your new business. The operating agreement will be used to define your organization’s operating terms and help protect your legal rights and responsibilities. Protecting yourself is imperative when learning how to start a logistics brokerage. Having a written record that outlines your company’s management policies and procedures will allow you to get down to business. Maybe most importantly, the operating agreement should spell out how you and your partner(s) will divide the profit.

There are many templates available if you Google “how to create an operating agreement”. Work with a good attorney to get things squared away. You want to know you haven’t left any stone unturned. Operating agreements can be tricky and may be written in “Legalese”. Again, you want to make sure a trained professional has walked you through every piece of language in the contract. If you’re strapped for cash, try LegalZoom. It’s about $160 for a 6-month subscription, which includes unlimited calls with an attorney.

 

Next: How to Start a Logistics Business: Structuring Your Operating Agreement

 

Manage your freight remotely. Complete visibility to your transportation supply chain is as close as your phone, tablet or computer. Freightflow freight broker software is the most easy-to-use freight broker software available today. The best part? It’s completely free to try. Don’t wait. Get started today with your no obligation, 100% free trial.

How to Become a Freight Broker – Steps to Do It Right

Want to know how to become a freight broker? Third Party Logistics can be a very rewarding career; you just need to know where to start. What are the steps to take to get started? Here’s what you absolutely need to know.

 

How to Become a Freight Broker: Stay Legal from the Start

Register with the Federal Motor Carrier Safety Administration.

Freight brokers are regulated by the government. The first thing you need to do fill out an application the Federal Motor Carrier Safety Administration. Then, post a $10,000 surety bond and fill out a proper process agent form called a BOC-3. There is a long road ahead. This is just the start.

 

Register to get a USDOT number with the Department of Transportation

While this is not specifically required in order to become a freight broker, the USDOT number is required when you apply to be a freight broker through the Federal Motor Carrier Safety Administration (FMCSA). The rules states:

“If you are going to be a company that operates commercial vehicles transporting passengers or hauling cargo in interstate commerce must be registered with the FMCSA and must have a USDOT number.”

What does this get you? A USDOT number serves as a unique identifier when collecting and monitoring a company’s safety information, acquired during audits, compliance reviews, crash investigations and inspections. Want to be 100% sure if you need a USDOT number, you can take this short quiz to find out, here.

Obtain Broker Authority

What is Broker Authority? It’s is a license from the FMCSA authorizing individuals or companies to act as a freight broker. How do you obtain broker authority, by application of course. You apply for broker authority by filling out MFCSA form OP-1 and selecting the “broker of property” option. Form OP-1 requires contact information for an individual or company, and your USDOT number. This application comes with a $300 fee.

You need to get a surety bond or trust fund.

What does the surety bond provide? The surety bond or trust find acts as insurance to guarantee that the shipping companies will be paid for their cargo space. If a shipper doesn’t pay for the shipping service, the cost fall on the freight brokerage. So what happens if the freight broker can’t cover the cost? This is where the bond company or trust fund covers the cost. Not only does a freight broker need to have a $10,000 surety bond or trust fund, but they’ll need to pass a background and credit check.

Have Legal Process Agents

If you want to understand how to become a freight broker and grow your freight brokerage business, you’re going to be operating in multiple states. Hopefully many, many states! And when you get to this point, your freight brokerage business needs to register legal process agents for every state they operate in with the FMCSA. The process agent provides legal representation within their state for any situation where legal representation may be necessary. Law firms with offices in multiple states should be retained in replacement of a process agent.

 

Forming your LLC for your freight brokerage business.

Part of understanding how to become a freight broker is understanding how to set up your LLC. If you don’t feel 100% comfortable forming an LLC on your own, it is best to speak with an attorney who is well versed in handling this type of matter. But, the steps are generally as follows:

  1. Choose an available business name that complies with your state’s LLC rules.
  2. File formal paperwork, usually called articles of organization, and pay the filing fee (ranging from about $100 to $800, depending on your state’s rules).
  3. Create an LLC operating agreement, which sets out the rights and responsibilities of the LLC members.
  4. Publish a notice of your intent to form an LLC (required in only a few states).
  5. Obtain licenses and permits that are required for your business.

 

Manage your freight remotely. Complete visibility to your transportation supply chain is as close as your phone, tablet or computer. Freightflow freight broker software is the most easy-to-use freight broker software available today. The best part? It’s completely free to try. Don’t wait. Get started today with your no obligation, 100% free trial.

How to find freight shippers: 3 Keys to Expanding Your Logistics Business

Wondering how to find freight shippers? It’s a question as old as the industry itself. You have your feet (or wheels in this business) under you, and feel like you have several clients where you’re moving enough steady freight to at least sleep through the night. Or, maybe it’s the opposite. You’re shipping only very niche freight, say produce, from a specific region of the country. Either way, your business could benefit greatly from expanding beyond what you’re currently doing. Expanding your logistics business is definitely possible. You just have to be smart about how you do it. How? Here are three keys that explain how to find freight shippers.

How to find freight shippers: hire pros who know the industry

Logistics is a relationships business. Whether you’re on the customer side or the carrier side, an experienced professionals relationships are what can allow someone to flourish or flounder. But when you bring in someone with a track record of success in a particular niche, this can be a win-win situation. But, you should base some of the compensation on performance. Let’s say you’ve made steady inroads with the dry van full truckload market. You see opportunity to capture more freight from an existing customer who does a lot of LTL work. This could be the perfect opportunity to grow business with a current customer while expanding into a separate niche all together. Spend some time on LinkedIn to see if you can find people with LTL experience. Maybe even people who are running their own small operation. Would they be swayed to join your team with the promise of being able to do even more? Maybe they’re growing tired of being a small-time operation and would enjoy a change of scenery. Regardless, look for professionals who can come in and leverage their existing relationships to help you expand your business. This is essential when learning how to find freight shippers.

Start a new business so support your existing one.

You know you need to grow your client base in one mode of transportation. You also know you have to grow important relationships within one organization. This may be an opportunity to serve different customer needs. If you start as a straight 3PL, have you thought about creating a separate asset-based division to handle short runs within a large metro area? Adding assets to an otherwise entirely-brokered fleet could help you manage questions from future customers who want to know you have some of your own trucks who could handle freight for you. Would it be possible to consolidate services with a fulfillment business, or a corrugate manufacturer? What related services could you offer key clients that would see you as more of a single-source provider?

Protect Your Reputation at all Costs

In order to create opportunities to expand, focus on building the best reputation possible. Ask customers whom you’ve done great work for to post a review on Glassdoor or LinkedIn. Putting positive customer feedback in places where future partners and customers can see it will grease the wheels for your own success, since much of the background checking into your credibility will be done unbeknownst to you. No matter how big of an industry you’re in, and the transportation industry is surprisingly not that big. Starting a business isn’t supposed to be a smooth ride, particularly not in the early days. If you’re in the freight brokerage business, you have to remember that it’s a volume business. You have to move a lot of freight to make a lot of money. So, it’s going to take several years to move a lot of freight, or build up a large enough customer base to move a lot of freight. This also means you need to accept that there will be times where you need to tighten the belt, reduce costs and feel stress. So, don’t cut corners. Provide great service, every time. Over time, you’ll find that the golden rule will be your best margin protection. Good carriers will help you out. Customers will give you the benefit of the doubt. And your business will grow.

 

Manage your freight remotely. Complete visibility to your transportation supply chain is as close as your phone, tablet or computer. Freightflow freight broker software is the most easy-to-use freight broker software available today. The best part? It’s completely free to try. Don’t wait. Get started today with your no obligation, 100% free trial.

What Self-Driving Trucks Mean for Your Third Party Logistics Company

What do self-driving trucks mean for third party logistics? How will trucks operated entirely by computers impact the industry? There is sure to be a duel between regulation and automation. And it may not be a matter of if, but when, that these machines take to the right lane in droves. What do you need to know We’ve done the research so you don’t have to.

 

The state of self-driving trucks in the world

In the US alone, truck drivers move 10 billion tons of freight annually. But the job can be very tough. The hours are long and life on the open road can be lonely. Not to mention driving doesn’t leave a lot of time for physical activity. Drivers sit for a long, long time. There are 3.5 million truck drivers in the US. It seems impossible that they could all be replaced by machines. Or is that so far fetched?

Australian mining giant Rio Tinto already uses 45 240-ton driverless trucks to move iron ore in two mines. Why? It’s simply safer and cheaper. Just last year, in May of 2015, the first self-driving truck hit the road in America in Nevada. In Europe, an entire convoy of trucks drove across Europe to the port of Rotterdam. “Truck Platooning”, as it’s called is when self-driving trucks drive together in a single line to achieve further fuel efficiency with the reduction of wind drag. The truck at the front sets the speed while the others follow closely behind. The tactic also can help reduce congestion on heavily-driven highways.

There has been as much if not more discussion about self-driving cars, but self-driving trucks may beat cars to market. Why? Long stretches of highway driving offer simplified decision-making situation for computers to manage, thereby reducing the risk to humans when compared to more complex urban driving environments with more variables in play. Shippers are presented with a bigger economic incentive to adopt self-driving trucks. Whereas humans primarily benefit from an increase in travel safety, shippers stand to save a lot of money while improving output.

A strong feeling of denial from industry incumbents

Even with self-driving trucks in active testing phases, and clear tremendous economical advantages, industry incumbents don’t see innovation taking hold.

“You are not going to see a truck without a driver in it for a long time,” says Ted Scott from the American Trucking Associations. “The human being is an excellent driver 99.9% of the time. It’s just a tiny instance every now and then that causes a problem. Computers break down more than that.”

Scott further argues that public perception will remain a problem.

“People generally don’t like to drive around trucks even when they have a driver in them. Now you start telling them there is no driver in that truck?”

Safety is another huge concern, and rightfully so. The most obvious question is, how can a 40 ton self-driving 18-wheeler be safe?

According to atbsshow.com:

“In 2012, over 330,000 large trucks were involved in crashes that killed about 4,000 people in the United States. Close to 90% of those were caused by driver error. Truck drivers are human. We can be tired, stressed, and angry. Thankfully self-driving vehicles are computers that don’t share human emotions. In the recent years, some of the country’s largest freight carriers have started to equip their trucks with active safety features like lane control and automatic braking. It only makes sense to continue adding more autonomous features to trucks. While self-driving technology could potentially reduce accidents caused by driver fatigue and distraction, no system is foolproof.”

Despite valid safety concerns, economics of self-driving trucks will be hard for shippers to not take advantage of, given the cost transportation plays in the overall cost of the goods being shipped.

The economics and benefits

The potential saving to the freight transportation industry is estimated to be $168 billion annually.

Here’s how that breaks down:

Labor: $70 billion

Fuel efficiency: $35 billion

Productivity: $27 billion

Accidents: $36 billion

This is before including any estimates from non-truck freight modes like air and rail.

Let’s break those numbers down with a more tangible example.

According to TechCrunch:

“Shipping a full truckload from L.A. to New York costs around $4,500 today, with labor representing 75 percent of that cost. But those labor savings aren’t the only gains to be had from the adoption of driverless trucks. Where drivers are restricted by law from driving more than 11 hours per day without taking an 8-hour break, a driverless truck can drive nearly 24 hours per day. That means the technology would effectively double the output of the U.S. transportation network at 25 percent of the cost.”

Semi-autonomous freight trucks might also help curve the driver shortage. According to The American Trucking Association:

“The trucking industry employs more than 7 million drivers, but the number of drivers have fallen in the recent years. The ATA estimate a shortage of about 40,000 drivers that could grow to about 240,000 by 2022. As you know, truck driving is a tough job and not everyone is cut out for its physical and mental demands. With self-driving trucks and the potential for pelotons, less drivers will be needed in the future.”

Clearly, the transportation industry is ripe for disruption. But how would innovation impact the lives of third party logistics providers?

What this all means for third party logistics

So what does this mean for the third-party-logistics company? In short, it means more truck supply, with reduced cost, and higher productivity. It should mean higher margins in the short term, but as more brokers begin to attain lower means of transporting their customers’ freight, they will inevitably compete on price. The rates customers are willing to pay for freight will go down, and the only way to offset the declining pay rate is more volume, which could be supplied by autonomous trucks that can travel 24 hours a day, 7 days a week, 365 days a year.

The biggest risk to third party logistics companies comes when a technology company, like Uber, begins to make driverless trucks available to shippers just as they currently make uber drivers available to people. A shipper could merely order 4 autonomous trucks for a pickup on a Monday. The trucks would drive themselves, back themselves into the dock and then take off for their destinations when loading has been completed. Possibly when loading has been completed by an autonomous forklift.

 

Manage your freight remotely. Complete visibility to your transportation supply chain is as close as your phone, tablet or computer. Freightflow freight broker software is the most easy-to-use freight broker software available today. The best part? It’s completely free to try. Don’t wait. Get started today with your no obligation, 100% free trial.

How to Prepare for Fluctuations in a Freight Brokerage Business

Steady income you can rely on. What freight brokerage business doesn’t want that? Heck, every business, no matter how big, wants predictable revenue. But as you know all too well, there are fluctuations that can hit a freight brokerage business if your portfolio of clients is not well balanced. Here are some things to think about to add stability to your 3PL operation.

 

Sniff out the type of fluctuation your clients may experience during the sales process.

Ever had a costume store customer? I bet your July – September were busy. But what about February? As a freight brokerage business, it’s on you to know that the client you’re taking on has seasonality to their business. If you’re just getting your freight brokerage business started, you certainly should turn down freight you can cover profitably, but if you take it on, don’t start spending money like you’re Jordan Belfort in The Wolf of Wall Street. Be conservative with your cash; you’re probably going to need some down the road.

Seasonal fluctuations can be easy to spot, but what about economic, cyclical or irregular fluctuations to the customers of your freight brokerage business? Those can be less predictable and much less predictable. If you’re not following general economic trends, you should start. Because as the economy goes, so goes freight. For example, when there’s income growth, this usually signals higher consumer spending. This generally leads to an increase in business spending. Is unemployment on the rise? This could foreshadow a dip in consumer spending, which means lower business revenues and profits.

Cyclical fluctuations are alternating periods of contraction and expansion that can last 18 months or longer. During contraction, consumer and business demand falls. During expansion, demand goes back up. In periods of contraction, businesses will look to cut costs by reducing staff, cutting back on operating expenses and delaying investment decisions. During expansion, consumer spending increases, which leads to higher demand for cars and other big-ticket items. In a time of expansion, your customers will be increasing production, which increases their need for trucks.

Have carrier sales inform their carriers that you’ll have freight in lanes they cover at a particular time.

This can be particularly important if you’re vying against other carriers for the seasonal customer’s freight. But, get at least a verbal from your carrier sales team and you can approach your customer with more confidence and let them know that you’ll have capacity to cover the influx of trucks they’ll need during their busy season. Now, we know trucks are generally reserved no more than 72 hours in advance, but by communicating this information ahead of time, you can stay top of mind with carriers and have a leg up on other brokers who wait to the 11th hour to call and expect their carriers to pull of miracles for them.

Think about how you can make life easier for your customer(s).

Your customer may be dealing with a seasonal downturn, but what if it’s bigger than that? What if the downturn is specific to their business? Are there any ways you can make life easier for them outside of the freight that you’re already moving? Your freight brokerage business is going to succeed or fail on relationships. You have to have good relationships with your carriers, but you have to have even better relationships with your customers who supply the freight. Talk to them and figure out what they’re struggling with. Even if it’s not related to supplying trucks and making pickups. The more ways you can add value in creative ways can take you really far in the freight brokerage business. It’s more than just providing GPS tracking for the exact location of the freight. Think people skills.

 

Be conservative with your cash.

The phrase “don’t spend it all in one place.” could probably be written above the door in your freight brokerage business. That way everyone could be reminded of this valuable piece of advice. If you’re going to have seasonal clients as a smaller(ish) freight brokerage business, you’re going to need to get better at squirreling away money so you have it if you hit a lull in customer activity. If you are trying to forecast revenue for all your clients for a year, a simple trick to stay in a conservative mindset is to simply divide the revenue by 12. This way, you start to look at revenue by what it means per month over a 12 month period.

 

Manage your freight remotely. Complete visibility to your transportation supply chain is as close as your phone, tablet or computer. Freightflow freight broker software is the most easy-to-use freight broker software available today. The best part? It’s completely free to try. Don’t wait. Get started today with your no obligation, 100% free trial.

4 Essential Freight Broker Sales Tips to Grow Revenue

If you’re going to make it as a freight broker, you’re going to have to develop your sales skills. Freight broker sales tips are everywhere, but we’ve compiled a list of the 5 best freight broker sales tips from around the internet so you don’t have to.

 

Cold Calling is about Process, Confidence and Commitment

Freight broker sales tips are wide ranging, but when it comes to growing a logistics company, you’re going to have to become good at cold calling. There’s just no way around it.

Process: First off, you need to have a script. Why? Because you need to manage how you talk to prospects and control the variables involved in selling. The script you follow will work. As you go, you can test a different variant of your script to see if it works better than the first version. You may also eventually develop a different style of script for people in different regions of the country. You may find that your cold open for a female in Alabama is different than how you start a conversation with a male in Massachusetts. The more variables in your process you can control, the faster you will find a process and style that works best for you.

Confidence: The problem with making cold calls isn’t that you’re annoying the person you’re calling. The problems start when you don’t present yourself and speak with confidence once someone does pick up the phone. Don’t get me wrong, it can be a draining process. But be regimented about the times of day you make calls, and be disciplined with the number of calls you make. Maybe you could improve if you had click-t0-call functionality as part of your CRM system?

HubSpot has a solid, free system to try. But, you want to be feeling confident, energetic but relaxed when making calls. If you are uncomfortable, that tension, that discomfort is going to come through in your tone, whether you realize it or not. So, set out a plan each day. Break your calling up into quarters. And remember, smile before you dial. Of all the freight broker sales tips you come across in your research, this one is probably the most important.

Focus on pulling out problems. Don’t sell anything unless explicitly asked.

When you do get a shipper on the phone, your mission is not the one call close. Unfortunately, just because you are cold calling does not mean you can use the Jordan Belfort penny stock pitch from The Wolf of Wall Street. (But, you should take note of the fact that he is enjoying himself while on the call.)

What you should do when you get someone on the phone is get your prospect talking, and hopefully talking about any problems or pain points they may be experiencing. This is how you learn about their business and learn about the opportunities you have to become a freight supplier that they value greatly. When you get a prospect to hit on something that’s not going quite right for them, ask more questions about that problem. You want to focus on digging deeper into that specific problem. The more you can uncover the pain, and even pain the prospect didn’t realize they were experiencing, the more opportunity you will find to become their pain relief, or problem solver.

Do your research before the call.

Want to really get a shipper’s attention? Do your research before the call. Yes, this takes time, but, if a shipper receives 100 calls a day, answers the phone 20 times, 10 people are friendly and five demonstrate that they know something about the shipper’s business, you can see who has moved to the front of the line pretty quickly.

If the prospect that you’re calling on makes a component that goes into some other finished product, well, what is the finished product? Are you calling on a muffler manufacturer in Sandusky OH? Those mufflers could very well be on their way to Detroit to be put into a car. Now, you might be saying to yourself, “but they have 1,001 freight brokers calling them for business.”. You’re right. BUT, you can apply this same logic to other industries. Use it to differentiate yourself through showing you are already familiar with their business.

Freight broker sales tips: know your own stats.

There is an off-chance that a prospect asks you specifically about your freight, your current customers and your capabilities. You need to be able to talk competently about your business. The best way to do this is to have everything tracked in your transportation management software. You will you be able to tell your prospect that you can see exactly where your freight is at all times. And you could even share impressive (hopefully) details around your on time delivery percentage over the last week or month. Maybe even mention how you have plenty of capacity in key areas where your prospect might need support. The data you track should be used as an asset. Particularly when it makes sense to demonstrate your abilities to a prospect.

 

Manage your freight remotely. Complete visibility to your transportation supply chain is as close as your phone, tablet or computer. Freightflow freight broker software is the most easy-to-use freight broker software available today. The best part? It’s completely free to try. Don’t wait. Get started today with your no obligation, 100% free trial.