Common Freight Broker Mistakes and How to Avoid Them
Freight brokers are those important intermediaries who assist the shippers in finding the carriers with the hope that goods can be moved efficiently. On the other hand, the freight broker may find this career rewarding but sometimes very challenging, especially for a person who is new in this field or has never been trained in freight brokerage.
Mistakes are bound to occur while working, but the right knowledge and how to eliminate them will define success. Below are some of the common freight broker mistakes that may be helpful for everyone to avoid.
Not Having Proper Freight Broker Training
The major mistake that a new freight broker can commit is the lack of training in the freight brokerage industry. Freight brokerage is a very closely guarded profession that involves a wide area of logistics, legal compliance, legal contracts, and many more. Some of the brokers do not ensure that their freight brokers acquire proper training, and this turns out to be very costly in terms of bringing misunderstandings and even legal complications in the contract forms.
How to avoid it: Join a freight broker training program that covers all the important facets of the job description. These should entail matters concerning industry regulations, how to access the carriers, how to negotiate for costs, and how to use technology in the handling of loads. Training will equip you with the confidence and the right tools you need to run your business as planned.
Poor Communication with Shippers and Carriers
Freight brokerage involves several contacts through telecommunications between shippers, carriers, and brokers. Conflicts concerning communication can result in created misunderstandings, negative consequences such as late delivery, and strained relations. In situations where you have not updated your clients or carriers on new trends in the market, then there are high chances of business loss.
How to avoid it: Develop early and definitive communication with shippers and carriers whenever third-party logistics is required. It is crucial that all parties concerned are aware of the basic information regarding the shipment, for example, the time of pickup, the time of delivery, the load requirement, and other specific information as may be required. Thus, use the load tracking software that will provide all the stakeholders with the information in real time.
Overpromising and Underdelivering
Perhaps the most common mistake made is overpromising services to shippers, whether that may be faster delivery times, lower costs, or specialized services one cannot deliver. While this may sound like the way to win business, it can quickly turn around and work against you when expectations are not met.
How to avoid it: Be realistic about what you can offer. If you know a carrier might not be able to do a job by a tight deadline, for instance, it is better to tell them this upfront rather than scrambling around afterward trying to troubleshoot problems. This will make you win clients’ trust and build long-term relationships.
Mismanaging Cash Flow
Bad cash flow management is a problem for many freight brokers, especially the new ones. Brokers usually pay carriers in advance of being paid by the shipper. This makes it tough on a broker’s finances. Failure to manage your cash flow properly may risk not paying carriers on time and will damage your relationship with them, as well as your reputation.
How to avoid it: Use factoring services to help bridge the gap between paying carriers and receiving payment from shippers. These will give you an upfront percentage of your invoice to cover your immediate costs. Be diligent about invoicing shippers promptly and follow up regularly on outstanding accounts.
Neglecting to Build Relationships
Freight brokerage is equally about the relationships, not only the logistics. Without adding value to the transaction by building long-term partnerships with shippers and carriers, your growth will be limited. One of the major mistakes brokers in this business make is to consider every deal a one-time transaction instead of an investment in relationships.
How to avoid it: You must take some time in building strong relationships with the shippers and also carriers. Your core should be good service, transparency, and good communication. These relationships will develop your bottom line over time through repeat business and referrals.
Final thoughts
Knowing how to be a successful freight broker involves knowledge of the skills and careful attention to details. First, set yourself up for success with comprehensive freight broker training to equip you with the ability and knowledge to handle the unique complexities of this industry. Proper training, adequate communication, and having the right tools to support your business will help you avoid some of the common mistakes made while building up a freight brokerage business.