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The Illegal Practice of Double Brokering

 

Double Brokering occurs when a carrier accepts a load and then rebrokers it to another motor carrier. This is not a legal practice. Likely, the motor carrier that rebrokers the load is not authorized or in compliance with Federal Motor Carrier Safety Administration (FMCSA).

There are many challenges when this practice occurs. For example, it is easy for fraud to be committed. The motor carrier initially hired can keep the payment and leave the second motor carrier on the hook for shipping expenses.

The broker of the load does not know who is hauling the load. The carrier hired to move the load could be vetted to the broker’s standards but then gives the load to his friend, and that motor carrier might not have the proper authority or safety rating to move the load. This puts the broker and the shipper at significant risk of any liability, loss, or claim that could occur through the actions of an unqualified motor carrier.

Double brokering is frowned upon by shippers and brokers due to the hazards of this practice. Transportation agreements often do not allow double brokering or re-brokering. Frequently, the trucker transporting the freight has little or no communication with the original broker, and the trucker must fight to be paid if they are paid.

It is said that double brokering scams are costing our industry over $100M annually.

MAP-21 laws (which were passed in 2012 and implemented in 2016) say that if you broker a load and do not have authority with the FMCSA, you are subject to a fine of $10,000. At this time, the FMCSA has not enforced this section of the regulation.

Insurance Implications

Unfortunately, accidents happen, and when double brokering occurs, insurance matters get complicated. Here is a claim example showing the complexities. A load was initially picked up on May 2, 2022, in Vernon, CA, and intended to be delivered in Lansing, MI, on May 7, 2022. This load was booked with Motor carrier A on May 2, 2022, who then brokered the freight to Motor carrier B. Motor Carrier A does not have brokerage authority. Motor Carrier B then brokered the load out to Motor carrier C. Motor carrier C added an extra pickup and stop to this shipment. The initial load was supposed to only have bedding and comforters. However, Motor Carrier C added pallets of rice cakes to the load. Per the original Broker, the rate confirmations were exclusive use.

While Motor Carrier C was in transit and in possession of the goods, he was rear-ended by another tractor-trailer. The accident resulted in a trailer fire and a fatality. The truck and trailer were towed to a tow yard in Winslow, AZ, where the trailer and product sat for months. Motor carrier C did not have the proceeds to pay for the tow bill and would not help salvage the product. Motor carrier C’s insurance adjuster sent out an inspector who said the product was not damaged. Luckily, the Broker found a secondary market to salvage the comforters for $6,552.00 and was able to offset some of the linehaul amounts. The total amount owed was $11,068.00. Motor Carrier A and Motor Carrier B will not cooperate.

Best Practices

There are things you can do to prevent this from happening:

The claim example mentioned above illustrates the importance of reporting the bad actors and staying diligent in the motor carrier selection and vetting processes. Do not hesitate to contact Jodie Maher, Account Executive with Avalon Risk Management if you have any questions or would like to review your insurance coverages.

How to Make Paying and Getting Paid Easier as a Freight Broker

Like with any business struggling to stay afloat during these times of market uncertainty, cash flow is critical. This is especially true for companies operating in the shipping and transportation industry, including freight brokers. To survive continued recovery and market pressures, shipping companies must quickly turn orders into cash by processing shipping invoices as swiftly and accurately as possible. The slightest error or delay in freight invoice processing and payment can lead to massive financial disruption. Commercial Carrier Journal pointed out, “as shippers and 3pls have become stricter in their auditing of freight invoices to catch errors, carriers and brokers are focusing on eliminating billing mistakes that cause delays in payments and rework that compresses their profit margins.” Most transportation management systems have options to set custom alerts and can flag specific billing requirements for each customer or load type. They can also help to streamline order entry processes and improve the invoicing tracking and payment process. Freight brokers must simplify processing various invoices of shipment documents and maintain adequate cash flow. The following steps can help enhance freight invoice management across the entire supply chain network and help companies get paid for more loads.

1. Know What Your Carriers Charge and How

Managing shipping invoices and tracking payments hinges mainly on the type of setup your drivers are operating under with their freight brokerage partner. There are three primary pricing method options used in the industry today: per-mile, “all-in” and hourly rate. With a per-mile payment process, a freight invoice is set up based on the mileage the driver racks up during delivery. With “all-in” this is typically represented with a flat linehaul rate that includes everything in one rate. With an hourly rate, drivers are paid a rate based on miles driven by other tasks related to the shipment. Both methods have pros and cons and can affect how a freight broker invoice needs to be set up and paid. There is more granular breakdown in many invoices that includes line items for fuel surcharge and other accessorial and it helps to have an invoicing service that can account for all of these cases and take this hassle off of your plate.

2. Aggregate All Invoice Data Faster Through Digital Systems 

Get the right invoice factoring for freight brokers set up in place early on to streamline the entire process. Pulling all invoice data from carriers is easier with a digital and cloud-based system. It is easier to upload and manage files, report invoices, share to shippers, and send all the information to the factoring systems, so transportation companies get paid. This streamlining is possible with an automated invoice shipment process and an aggregate freight invoice processing system. HaulPay actually enables you to have carriers and drivers upload their docs directly to your payment cloud for faster document review. You can also integrate your TMS so that docs flow to HaulPay for real time invoicing, payments and settlement as well. Cleaning up another big mess.

3. Don’t Get Lost in the Weeds of Endless Fees for Invoice Factoring for Brokers 

Freight brokers should know their expenses for invoice of shipment management and their factoring costs for getting paid for any job they accept. Shippers and carriers alike are looking for a simple solution that provides them with the freight invoice services they need without costing them an excessive amount of fees. A good balance between profits for those managing freight broker invoices and shippers must be maintained and is the foundation of a mutually beneficial partnership.

4.  Integrate Trucker Payments With Your Systems of Record to Initiate Payments ASAP 

An essential piece of the freight broker invoice management puzzle is properly integrating multiple management systems and processes throughout the existing platform network. With the right collaborative platforms and dashboards in place and real-time data tracking and access, freight invoice processing becomes more accessible and much more simplified. Optimizing the invoice payment process and automating payment initiation can make it easier to track cash flow and invoice factoring for freight brokers from start to finish. This is easy with HaulPay and helps keep invoice transaction records and trail of updates current and matching to what payments are expected to go to carriers and what invoice amounts are expected to be paid by shippers.

5. Know the Credit Risk of Each Shipper and Prioritize Low-Risk Shippers

There is always a certain level of risk inherent with freight shipping but reducing errors and the possibility of issues during invoice of shipment payment can help improve shipper relations. Knowing the credit risks of shippers and choosing those that are less likely to increase risks overall will make freight invoice management much more straightforward. Even complicated loads and more detailed freight invoices and payment schedules will benefit. With HaulPay you’ll be able to selectively factor invoices or take advances only when you want to and you’ll be shielded from the credit risk of those shippers when you do. Credit risk of your shippers is always available at your fingertips in our web app for Brokers.

6. Get Paid Faster From Shippers With Freight Payment Solutions Like HaulPay 

Opting for online digital processes is the final option that can help speed up shipping invoice payments and streamline overall techniques. Invoice factoring and payments for freight brokers can benefit significantly from innovative advancements and automated tools and processes becoming more common in today’s shipping and transportation industry. Keep your back office running like a well-oiled machine and eliminate risk of errors and bottlenecks with a digital invoicing and payment solution like HaulPay. Decide if and when you want to factor, finance a payable to carrier or just use the system as your invoicing service with full transparency and automation.

Streamline Freight Invoice Processing and Scale Your Brokerage Faster With HaulPay

Ultimately, the goal of improving invoice of shipment processing and payment is to maximize profits and maintain good cash flow, even amid uncertain markets and shifting customer demands. Freight invoices are a vital part of the carrier, broker, and shipper relationship and are just some of the many services where freight invoice management can assist. Improving routine freight invoice processes can help reduce fees and expenses while maximizing overall profit margins.

Maximizing income is vital to improving operational costs and freight invoice processing and avoiding costly delays and mistakes with bill payment tracking. To take advantage of the latest invoice services, be sure to sign up for HaulPay by ComFreight as a way to get loads and to maximize freight invoice income, even amid market volatility.

Keeping up with invoice billing and the payment ins and outs can be a challenge for even seasoned transportation companies and management teams. Partnering with industry experts familiar with invoice factoring for freight brokers and shippers can make a world of difference in both short- and long-term income. Get a demo of ComFreights HaulPay invoice tracking and management system today and see how easy freight broker invoice management can be!

The TIA Bond Program and Bond Claims

We hope you benefited from our Annual Bond Webinar hosted by TIA. In case you missed it, the following is a recap of some of the claims topics covered during the webinar.

MAP-21 has been in effect since October 2013 and requires property brokers to be licensed with the Federal Motor Carrier Safety Administration (FMCSA) and establish proof of financial responsibility in the form of a bond or trust fund agreement. A property broker can fulfil this requirement by obtaining a BMC-84 bond or BMC-85 trust fund agreement.

The TIA Bond Program

TIA offers the FMCSA mandated $75,000 to qualifying property brokers and domestic freight forwarders. In addition, TIA members can obtain bonds with higher limits in the amounts of $100,000 or $250,000 and Avalon handles all claims that are submitted in accordance with MAP-21 regulations.

The bond is in place to protect carriers against broker insolvency and a broker’s failure to pay freight charges owed to the carrier for services rendered. The bond is in place only to cover unpaid freight charges and is not able to cover lost or damaged goods, or damage to property. Under MAP-21 regulations, the surety must respond to the claim on or before the 30th day on which the notice is received.

What happens if a claim is filed against your bond?

If a claim is filed, we will notify you of the open claim. You are given the opportunity to pay the claim or provide a written dispute. If payment has been made or is pending, we will request proof of payment. If there is a dispute over the invoice, the dispute should be supported with agreed upon terms of a rate confirmation or a broker-carrier agreement.

Broker Insolvency
If claims are unresolved after 30 days, the surety must investigate the broker for suspected insolvency.
Insolvent brokers are published for 60 days on our website, in accordance with 49 USC 13906, as amended by Map-21, Division C, Subtitle I, Section 32918.

Payment of claims
According to the regulations passed by MAP–21, the surety may only pay a claim if one of three conditions are met:
(i) subject to the review by the surety provider, the broker consents to the payment;
(ii) in any case in which the broker does not respond to adequate notice to address the validity of the claim, the surety provider determines that the claim is valid; or, (iii) the claim is not resolved within a reasonable period of time following a reasonable attempt by the claimant to resolve the claim under clauses (i) and (ii), and the claim is reduced to a judgment against the broker.

The surety must pay all valid claims received before or during the 60-day advertising period. After the advertising period has concluded, the surety will review all remaining valid claims received. Payment will be made in whole if total claims are under the bond amount. However, if total claims received are over the bond amount, the surety will issue payment on a pro-rata basis. In the event that the surety issues payment from the bond, the broker is responsible for reimbursement to the surety for any claim payments.

Exclusions
There are instances where a claim may not be considered valid. There are three main exemptions found under 49 USC 14705:
• Claims must be submitted to the surety within 18 months of the shipment pickup date. If a claim is submitted to the surety beyond the 18 month statute of limitations, we are unable to accept the claim.
• The bond cannot cover claims containing exempt commodities. If a shipment contains exempt commodities, mostly produce, agricultural commodities, dairy, and poultry, the claim is exempt from coverage.
• If a shipment does not cross a state or federal line at any point during the shipment, it is exempt from coverage

For a comprehensive list of commodities that are considered exempt, please visit https://www.fmcsa.dot.gov/sites/fmcsa.dot.gov/files/docs/Administrative_Ruling_119.pdf. 

Additionally, if the claimant does not have active carrier authority at the time of the shipment, the claim is not considered valid. A motor carrier must be licensed with the FMCSA and have active motor carrier authority at the time that the shipment took place.

Lastly, if a claimant is not a motor carrier or shipper operating as a motor carrier, we cannot accept the claim. The bond language states that the bond is for the benefit of motor carriers and shippers by way of motor carrier. If a claimant is not operating in the capacity of a motor carrier, they are not considered a valid party to the bond.

Best Practices
• Have clearly defined terms and conditions in any contract with carriers.
• Acknowledge receipt of clam as soon as possible and forward to the appropriate party for a response.
• The surety only has 30 days to respond. If there is a dispute, provide information on the dispute as soon as possible for the surety to make a decision and resolve the claim.
• To aid a disputed claim, provide the Broker- Carrier Agreement on file with the carrier and reference any terms of the agreement that support your dispute.
• Since the surety only has 30 days to respond, the sooner you can provide information on your dispute, the sooner we can issue a decision and resolve the claim.

Claim Trends

An analysis of our claims data indicates an increasing number of claims received for the following reasons:
• A deduction was made against the carrier for late delivery or missed appointments.
• The carrier billed unapproved accessorial charges.
• A deduction was made against the carrier for noncompliance with tracking requirements.
• There is an unresolved damage claim against the carrier and an offset has been placed against them.

Having a bond through the TIA Bond Program allows you the peace of mind that claims are not automatically paid and are handled in accordance with MAP-21.
For more information on the application process, please visit https://www.tianet.org/tiabond/.

If you have any questions regarding claims against your bond or MAP-21 regulations, you may contact the TIA claims department at (847) 235-6283 or via email at [email protected] .

Author: James Francis, Avalon Surety Claims Lead, Education Dept.

What Can Freight Brokers Do When It’s Tough To Find Load Coverage?

Freight brokers are on the front lines of the trucking industry. They act as an intermediary between shippers and carriers, which is not an easy job. Plenty of freight brokers claim to have been under pressure from their shippers because they could not find trucking companies who could provide them with quality service in a timely manner.

What do freight brokers do when it’s tough to find load coverage? What should they consider before hiring new carriers?

The Problem

A scenario where a broker gets a call from their shipper complaining about truck drivers is not uncommon. Perhaps the trucker was late, handled the freight poorly, or was even impolite.

The consequences of this issue are evident – the shipper will not want to work with the broker again. The next time a customer has freight that needs to be moved, the broker is forced to scramble for available and reputable carriers. This problem could lead to an even bigger issue – lack of load coverage, which means increased wait times for their customers’ shipments.

Carrier Sourcing

What are the best methods for finding reputable, high-performing carriers? Carrier sourcing is one way to begin this process.

Referrals

Arguably the easiest and most effective way to find carriers is through referrals. Ask other licensed freight brokers you come in contact with if they have any carriers they would recommend.

A list of recommended carriers can also be compiled based on past experiences, for example, how long it takes for their shipments to reach the destination, what was done with the freight during transit, and whether or not they were on time.

Load Boards

Load boards are online places that provide brokers with a way to list their available loads and find carriers capable of moving that type of shipment. If the broker is not looking for anything in particular or has open slots on their trucks, load boards allow them to take bids from potential carriers interested in working with them.

This method is beneficial because it allows brokers to compare rates and customer feedback about carriers interested in their loads.

Using software with integrated load boards is a great way to streamline the process of finding carriers. Software is one way in which a broker can save time when looking for new carriers, but they should always double-check references before signing with a new company.

FMCSA Data

Although it is presented as a viable option for finding carriers, the Federal Motor Carrier Safety Administration (FMCSA) data should be used with caution. Some brokers are wary about the information reported in this database because there have been cases where shippers or drivers report false grievances against competitors to take business away from them.

Other Options

Social media and Google are not the best options for finding carriers, especially when a broker is under pressure to find load coverage quickly.

If a load is posted using such services, drivers who are only close by and on social media may assist you. A Google search will not provide a broker with an accurate picture of the available carriers.

Pinpointing a Good Carrier

Once you find a viable carrier option for your next load, it is important to know what you are looking for to make the right choice. What makes a carrier high-quality?

Being on time is one of the most critical factors when determining if a carrier will benefit your brokerage business. Being late can cause many issues that could create problems down the line, such as missed connections and unhappy shippers.

Are they insured? What types of loads do they typically carry? Will there be enough room for other items you need to transfer, or will they need to be transported on a different truck? What is the carrier’s payment policy, and what is their online reputation like?

Focus on these points as a way of finding carriers who are high-quality.

Price Points

Understandably, no one wants to go for the most expensive carrier, but, keep in mind, quality services come at a price.

Be sure to find out what the cost of the load will be before you choose which carrier to use. Low-paying loads typically come with low-quality drivers. There are exceptions to the rule, but they are not the norm.

There is also a chance you may have to pay more than what was quoted if unexpected charges or fees are involved in transporting your shipment.

High-quality carriers charge higher than average rates for their services, but they also typically provide better customer service and have more experience behind them.

Being a Reliable Broker

You will obtain better odds in finding good-quality carriers for yourself and your customers if you establish yourself as a trustworthy broker.

What is it that makes a broker reliable?

One factor would be how often you offer your services and the types of rates and charges you give out. If there are constant changes or difficulties in getting payments from clients, this can make it harder for drivers to trust you as a broker.

One of the most significant factors is respecting the Hours of Service (HOS) regulations. HOS determines the number of hours truck drivers are allowed to work, the off-time they need between shifts, and how long they can drive.

As a broker, it’s your responsibility to know these regulations so you’re not giving out loads to carriers who will be breaking them or giving impossible deadlines. If you do this, it won’t be easy to find good-quality carriers who are willing to work with you and your brokerage business.

Speeding Up Your Processes

Lastly, as a broker, choosing an appropriate carrier can be difficult if your process slows you down.

What can be done to speed up your workflow?

The first thing is utilizing your resources and contacts as much as possible. They will most likely know the best carriers around and may even have worked with them before. Existing relationships can also make it easier for drivers to trust brokers with whom they work frequently.

Having a designated system in place is also essential to ensure that you aren’t wasting time and energy with tedious and inefficient workflows. Having your schedule, invoices, contracts, etc., all set up in one place can help you access them quickly when needed.

Transportation management system (TMS) software helps brokers implement automatic processes by creating an organized structure that makes it easy for drivers and carriers who you work with to access information.

Conclusion

Finding efficient, timely, and responsible carriers can be tricky when you are in the freight brokerage business.

Speeding up your processes also plays a role in how quickly you can find suitable carriers to provide reliable transportation for loads. This means having an organized system that makes it easy to access the necessary information when needed. Additionally, using TMS software will make sure everything runs smoothly and efficiently.

If you’re interested in checking out freight brokerage software that will revolutionize your business and help you find load coverage in no time, contact us at Tai Software for more information. We’d be happy to help you out!

 

HR as a Retention Strategy: Employee Pay

 

The Great Resignation: a term most leaders are probably tired of hearing but can’t ignore. So, instead, let’s talk about The Great Retention! We know tackling retention can be a daunting task, which is why we’re here to help you break it down and take it one step at a time.

THE GREAT RESIGNATION

Retention is becoming increasingly important as The Great Resignation shows no signs of slowing down.

“While U.S. workers are quitting in droves, employers are reporting record-high job openings—10.4 million in September—creating a scenario in which strained industries are competing for talent and driving up compensation.” –SHRM

This means that not only are your leadership and HR teams feeling the impacts of these numbers, but your recruiting team is, and your employees likely are too. More competition in your industry means more pressure on your recruiting team, which probably means increased time in filling positions.

The effects don’t just stop there, though. Increased time in filling positions means more work on your people who are staying. This can lead to burnout and create a vicious cycle of resignations.

This is why it’s so important to take this seriously and try to get ahead of it. And if you’re still with us, that’s exactly what you’re doing!

THE GREAT RETENTION

While there’s no foolproof plan for keeping employees in any scenario, we’d like to share some strategies we’ve had success with at Nextep. We’re breaking it down to highlight how HR can be used to drive employee retention, starting with employee pay.

EMPLOYEE PAY

The Great Resignation and the impacts of an ongoing pandemic have long-lasting effects. As a result, employees are evaluating their personal and work lives and listing their non-negotiables. You’ll find that things like culture, work-life balance, and flexibility are increasingly important. But compensation remains a pivotal factor in choosing whether employees stay at a current job or look for new opportunities with better pay.

“Other outside factors may be at play as well,” said Lindsey Nichols, Nextep’s Vice President of Human Resources. “At Nextep, we’ve seen other companies, often located in high cost-of-living areas, attempt to recruit employees by offering higher salaries than we typically see in our lower cost-of-living location. As a result, this shift has prompted us to fine-tune our compensation strategy as an organization.”

A Pew Research Center study from February 2022 found that 63% of workers who quit a job in 2021 said low pay was why they left. Significantly, an average of 3.98 million workers quit their jobs each month in 2021, and similar trends continue into 2022. Now is therefore the time to take a serious look at your company’s compensation as a key part of your employee retention strategy.

A compensation review is a great retention tool to keep in your company’s tool belt. Let’s take a look at some general tips on how to go about using a compensation review to review employee pay at your company.

WHO’S IN CHARGE?

Firstly, take the time to establish who will take charge of your company’s compensation review. Depending on the size of your company and how many employees you have, an individual could manage the project. Alternatively, you can put together a committee to handle it. Departments involved with company-wide compensation reviews are typically human resources, business operations, and finance.

TAKE THE PULSE OF YOUR COMPANY

Go right to the source! Ideally, you’re talking to departing employees about their reason(s) for leaving. If compensation factored into their departure, be bold and ask them what their new pay and job title will be. Use this information in conjunction with other data to help you make compensation decisions.

Also, conducting an anonymous employee survey may be part of your regular process. Include a question about employees’ satisfaction with pay. What are they telling you? Use that data to your advantage!

GATHER MARKET DATA

It takes a lot more than gut feelings to set competitive salaries at your company. Getting access to accurate and verified salary data from trusted sources will be critical in your compensation research. It’s crucial to understand precisely where your company falls in terms of pay – businesses conducting salary assessments typically pay labor research firms for access to verified salary information.

For example, Nextep uses Payscale to help us compare our salaries based on job title, experience, and location to ensure we’re offering pay that’s competitive in the current job market.

Since the market changes often, it’s essential to do these assessments regularly, at least annually. We have found that COVID, inflation, current market conditions, The Great Resignation, and the rapidly changing way people work have caused a big shift in salary data and expectations in the past year, for example.

Once you’ve obtained reliable salary data, your next big task is to spend time analyzing the data you’ve gathered. Compare your company’s pay against the verified salary data to identify gaps in employee compensation and use that information to develop salary ranges and benchmarks for each role within your organization.

PUT THE RESEARCH INTO ACTION

Now you have up-to-date salary ranges for your company, it’s time to put the research to good use! Firstly, compare your employees’ current pay against the new salary ranges you’ve created. Then, determine if anyone is underpaid or where you can increase compensation to be more competitive.

From here, you can work on matching employee salaries to market trends. Compare the two to ensure you’re offering the most competitive pay possible for your organization. This step will help you retain employees and stand out to potential candidates in the current job market.

COMMUNICATE

To sum up, being compensated fairly and competitively at work can go a long way to make your people feel valued and appreciated! Be transparent with your people. Let your employees know your company is working to monitor trends in the current job market and actively taking steps to ensure pay is as competitive as possible.

Attracting and retaining top talent is something we pride ourselves on at Nextep. We’d love to chat with you about how we can help your business conduct a compensation review! Our goal is to help you bring in the best and brightest talent and keep them around in today’s changing market.

Let’s talk so we can help your company can join The Great Retention!

 

Where Are All the Freight Broker Insurance Markets Going?

Insurance in the 3PL space has evolved over the past decade. Does it sound backwards that exciting innovations in this arena have led to wariness among insurance providers, supported by an unprecedented cadence of claims? Innovation should be enthralling, though it has caused some big pivots for insurance providers of 3PLs.

What this means is that a traditionally static industry has become fluid in order to accommodate the changing landscape of risk management. It has been highly publicized that freight brokers and their insurance partners are being named in lawsuits and claims in which they may not even be liable. Freight brokers are easy targets in litigation being directly involved with a majority of the over-the-road shipments in the US. This necessitates their having to respond to claims which is a financial burden on both brokers and insurance companies.

Even the ways in which a 3PL may be found liable have shifted, causing insurance markets to have to pay out on a broader variety of claims situations or deny their trusting clients’ claims altogether. These changes and innovations have reformed the ways in which insurance providers are willing to work with clients, and have even changed the roster of insurance providers willing to write 3PL coverages – companies keep bowing out altogether.

Where did it start? With the misconceptions of insurance agencies.

Like with any trend generating revenue, property/ casualty insurance agencies who didn’t have a firm grasp on transportation risk jumped at the thought of 3PLs being lucrative clients. Several of these markets jumped head first into the logistics pool customizing coverages which sound like logistical coverages, but don’t necessarily respond as described. Think of an experienced market writing a true Contingent Cargo form versus a less experienced but eager market writing a Contingent Property in Transit Floater coverage. Their Floater coverage may be seen as more of a business personal property coverage for goods in transit, but isn’t created to necessarily respond in the same fashion or cover the full value of brokered goods. In a land grab, many of these inexperienced in transportation markets wrote coverage for as many 3PLs as possible without having seen true loss history or knowing the premium to claims ratio they would experience.

Cue reality – policies designed by emulating true logistical coverages had to decide how they would respond to the variety of claims which were being filed against freight brokers. Workers Compensation markets struggled to reconcile an employee who works out of an office but is closely connected to over the road truckers. As claims began to stack up, some markets took major losses at a higher frequency than anticipated. These losses would impact their pricing for the core business outside of transportation as well, raising their premiums across the board. This unappetizing loss ratio was becoming a common occurrence as freight brokers were increasingly looped into nuclear verdict cases which have put both transportation companies and their insurance providers in the most challenging situations.

On the other side of the coin, some markets decided to limit their liability and cost by exercising an OPTION to defend their 3PL clients instead of a DUTY to defend clients in the event of a claim, which is now more common. Freight Brokers could see that many of these insurance markets didn’t offer true protection in their policies and claims were getting denied at a high frequency.

What was the result of clients feeling misled by weak coverages and standard property/ casualty insurance companies being in over their skis on claims? An exodus of insurance markets able to write these coverages. In the past seven years, numerous reputable insurance markets have pulled out of the 3PL game and each time they do, other agencies are either strengthened in absorbing their clients or weakened in dealing with more losses and then having to sell at higher premiums to offset said losses.

There are fewer insurance companies writing coverage for the modern 3PL and it may be speculated that another few insurance markets could be dropping out of writing coverage in the coming years. The direct response to the limited number of insurance companies currently playing ball and their higher number of losses is increased premiums across the board.

Freight brokers have asked, “If I have no losses and my revenue hasn’t increased, why are some markets quoting higher prices than last year?”

While most insurance quotes will be rated on the gross freight receipts of a 3PL, the sheer volume of losses has raised the rate at which many 3PLs will be rated. This means that even if the same GFRs are maintained year over year, losses on cargo could raise every company’s cargo premium across the board in a certain market.

Reliance Partners

Does this mean that the freight broker insurance landscape is becoming monopolistic with fewer major players?

Not necessarily, and with good news attached. Most of the market leaders who have pulled to the top of insurance underwriting are specialized in their approaches to risk management. As with evolution, the strongest are forefront and able to absorb the large cadence of claims and continue to support their transportation clients. We are seeing the strongest and most innovative coverages on everything from usage-based cargo solutions to auto liability limits of coverage extending higher than were previously attainable for the price. Even if insureds only have their pick of the 4 – 7 top insurance markets, their broker/agents have the task of knowing coverages and market highlights in order to assign clients the best markets for their needs.

What we may see is a deeper loyalty to insurance markets from their clients and agents. Doing right by a client is as effective as ever in winning and keeping business. Conversely, those same insurance markets doing wrong by clients could lead to fewer submissions, binds, and less financial stability. There are exciting times ahead as insurance continues to pace with the innovation of 3PLs. Risk may be evolving, but risk management is making leaps and bounds to predict the coming trends in what was once seen as a more static industry. Finding the right broker/agent to help navigate the changing landscape is crucial now more than ever to ensure a 3PL isn’t getting an “off the rack” policy which may look great on a COI but has so many exclusions it excuses itself from many claims situations.

Reliance Partners is the nation’s fastest-growing and most diverse insurance brokerage with a sole focus on the logistics and transportation space. Their Logistics Team writes coverage for 50 of the top 100 freight brokerages in the country as well as that of the ambitious new venture and everything in between. Reliance leverages its relationships with the top insurance markets to find the best coverage for each 3PL client. Graham Gonzales manages Reliance Partners’ non-insurance partnerships and is a licensed insurance agent for the modern 3PL.

Marketplace- Reliance Partners

The Benefits of Digital Freight Finance for Brokers

Poor cash flow is the precursor to bankruptcy. In 2019, declining freight rates led to bankruptcy filings and shuttering of 640 trucking companies, reported Scott Simanek of FreightWaves. Since the onset of the pandemic, bankruptcy has seemed like a far-fetched risk.

Rates have been higher through 2021, but rising fuel costs and market headwinds are pushing rates down. Some have expressed worry over what the rest of 2022 will bring. The brokers that source capacity for shippers face a very clear threat, regardless of demand trends.

If the rates fluctuate upward and extended payment windows remain, there’s a risk of burning through cash faster than it’s replaced. However, digital freight finance for brokers is poised to save the day, and it’s important to understand what it is, what it is not, and what it means for the future of freight management in 2022 and beyond.

What Is Digital Freight Finance?

Digital freight finance can be a complete solution that allows brokers to establish or repair their credit following strained cash flows. It also helps create more fidelity in the payment process. This is an in-demand need for a post-COVID world of soaring rates soared while brokers still had to pay carriers. Furthermore, digital freight finance goes a step further by allowing brokers to leverage factoring options and additional software to support changing finances and workflows.

Solutions for freight finance can help you accelerate your own cash flow through forms of invoice factoring and often help you streamline the payment process to your contracted carriers. In recent years solutions have been moving digital, leading to even more transparency for all parties on the transaction and more options to pay and get paid at different speeds.

Keep your carriers happy and their cashflows rapid, and they’ll be more likely to be there when you need them most. With rising fuel and headwinds for carriers in more aggressive markets, you can also leverage the right freight finance partner to accelerate payments keeping carriers in business longer. A clear, easy automated payment process for carriers also means less time juggling carrier payment issues and invoicing requests. The best solutions take this busy work off your team and roll this up as an included part of the product or service.

However, digital freight finance is not an end-all solution. It’s not a magic key that can force shippers to pay. It is, however, the key to getting payment for services rendered and holding shippers accountable, not your brokerage’s value, when shippers do not pay on time.

Finding a flexible solution that fits your needs as you grow or encounter challenges can mean the difference between just surviving or continuing to grow even in choppy markets.

See a quick demo of HaulPay’s funding request process from the recent FreightWaves Future of Supply Chain Conference in May 22 by Steve Kochan, Founder & CEO of ComFreight.

What Are the Benefits of Digital Freight Finance for Brokers?

A digital freight finance solution for brokers helps streamline many typical processes that eat away at cash flow. The top benefits of using such a service include:

  • Option for payment on invoices within one day of making a funding request.
  • Ability to process payments to partnering carriers faster and digital management of payments and invoices.
  • Automated software to track payment status and expected deposits, as well as integration into your TMS.
  • Non-recourse solutions mean that shippers are responsible for failure to pay, not your brokerage.
  • Clear, concise. and competitive fee structures are built to help you succeed.
  • The best options also reduce the possibility of fraud with carrier account vetting.
  • Access to more carriers with credit-building opportunities through established partnerships and a growing trusted payment network.

 

What Are Today’s Brokers Saying About Freight Finance?

There’s a saying that the proof is in the pudding, and that’s certainly true of ComFreight’s HaulPay digital freight finance customers. Here are a few of their stories:

“The team at ComFreight HaulPay continues to impress with their ability to reshape the idea of what it means to be a factoring partner. From seamless TMS integrations for automated accounting to capacity matching from within the system, their heavy investments into the technology platform and engineering team are abundantly clear,” said Nathan McGuire, COO of Wicker Park Logistics.

“ComFreight is the best factoring company which we came across. Double A Logistics is very grateful to have such a factoring company. We are pleased to do business with such a company who has always put our needs first. It’s one company who is always there to help and our relationship is that of trust,” said Akashna Singh, CEO of Double A Logistics and Dispatch.

Secure Your Brokerage’s Financial Future

As the future unfolds, everyone must manage the inevitable disruptions at play in the freight market. Meanwhile, brokers that take their needs and find the right solutions to financial straits will have the opportunity to survive and thrive. That’s the potential of working with a digital freight finance solution like ComFreight’s HaulPay. Get started today by signing up, which is free too, and see how the benefits can help your team get back in the cockpit of your next carrier or shipper interaction.

Do You Need More Than Just Travel Insurance These Days? (Hint YES)

By John Gobbels
30-Year Health and Public Safety Expert / Chief Operating Officer of Medjet

Despite the current geopolitical tensions in Europe, and the emergence of BA.2 (the newest Omicron variant) in the news, many people will nonetheless be heading out on spring and summer travel abroad. If there’s one thing the pandemic taught us, it was the value of travel insurance, especially “Cancel for Any Reason” insurance (commonly known as CFAR) and medical coverage. But is additional travel protection necessary?

Air medical transport and travel security memberships have been receiving a lot of attention in the media lately, are they really worth the extra cost? For most travel experts, the answer is an emphatic “yes.”

Travel Insurance Has Limitations

Travel insurance is important. The best will cover a good chunk of money back should you not be able (or feel safe enough) to go on the trip. It will cover trip interruption (extra hotel nights if you get delayed, or test positive for your return), medical expenses should you become ill or have an accident, and medical evacuation should you require medevac to the nearest hospital capable of treating you. But even with the best policies, that’s likely where you’ll stay.

You should always read the fine print in your travel insurance plan because the medical coverage is always limited to some extent. Medical treatment costs are capped at a certain dollar amount, transfer by air ambulance to a hospital at home (“repatriation”) is typically only done if “medically necessary”, and “hospital of choice” is frequently misread as “hospital of choice at home” (but really only means hospital of choice in the city you’re currently in).

Membership in a medical transport program like Medjet is affordable, and gives travelers greater control over where they receive medical care. Getting moved to a hospital at home becomes your choice, not left up to an insurance company to determine whether the current facility is “adequate” or not, and whether moving you is “medically necessary”. As medical professionals, you also understand the importance of getting back into a system of care you trust, and back under the higher limits of your own health insurance coverage.

Should you incur treatment costs above covered limits, or desire services not covered, the financial responsibility lies with you alone. A serious injury can quickly turn into a serious out-of-pocket bill, and a single medical transport to get moved home can range from $30,000 (domestic) to $180,000 (international).

Compared to a $99 Medjet membership, you begin to see why so many experts recommend this additional protection.

Security Threats Abroad

While tensions in Europe obviously have travelers nervous, violent crime is also on the rise globally. The pandemic stressed many economies, but perhaps the hardest hit were countries whose economies relied heavily on tourism. Crime has always been present in tourist destinations, but since the pandemic the U.S. Department of State’s Travel Advisory system has shown elevated security warnings for many areas typically thought of as “very safe”.

Medjet’s elevated membership, MedjetHorizon, adds a 24/7 security response line benefit, with in-country response to a wide variety of safety threats: Terrorism, political threat, violent crime, disappearance, kidnap for ransom, natural disaster and more. While travel insurance may also cover some security evacuations, they typically wait for the government to officially issue a mandate to evacuate, which puts you in the same last-minute scramble to get out as everyone else. MedjetHorizon members have access to security responses any time they begin to feel threatened.

It’s Not Just For “Dangerous” Travel

Travelers often dismiss the idea of getting a supplemental travel protection because they aren’t planning excursions like cage diving with sharks or participating in events like Spain’s annual Running With the Bulls. The extra protection doesn’t seem necessary if they’re just sightseeing. In reality, unexpected injuries and emergencies can happen at any time, and to anyone, not just people who are going on potentially “dangerous excursions” or participating in extreme sports or activities. If those types of activities ARE in your travel agenda, again, read the limitations of your insurance policy because many won’t cover injuries sustained while doing them. Medjet has no “adventure travel” exclusions (and no pre-existing condition exclusions under age 75).

Accidents Happen Close to Home Too

An added bonus of being an annual Medjet member is that it covers domestic travel as well, any time you venture more than 150 miles from home. Most of our members buy our protection for the “big international trip” but many of our transports each year end up being for accidents like a slip and fall at a wedding, or a serious illness landing a member in a hospital just a few states away. Right now, we’re inundated with spring skiing accidents and summer will likely bring its typical heavy load of downed motorcycle transports. People don’t think about our program for domestic travel because most health insurance covers emergency treatment in other states. But it can be just as unsettling to be stuck in an unfamiliar hospital a few states away as it is to be stuck in one halfway around the world.

 

TIA members receive discounts on annual Medjet Memberships by using the link Medjet.com/TIA, or by calling 800-527-7478 and mentioning Transportation Intermediaries Association (TIA).

 

What Should Freight Brokers Look for in Their TMS Software?

Freight brokers are a major aspect in the business world, who make sure that cargo is delivered on time and without any issues. Freight brokers need TMS software that will help them increase their efficiency and provide a return on investment for the freight brokerage. TMS software needs to be able to do everything from order tracking, customer service, and accounting in one place. Before choosing any TMS software, freight brokers must ensure that it includes a variety of TMS capabilities in order to maximize its use and get the most out of it.

TMS software should allow the freight brokerage business to handle many, if not all, tasks in managing their company. That may include truck dispatch, driver billing/payroll, route planning, GPS tracking of vehicles, and more.

Consider the different types of TMS software that will cater to your needs. For example, for a small organization of freight brokers who are only responsible for facilitating one shipment between two manufacturers (and not considering many other points), there may be less need to dedicate resources or features towards procurement management.

What Will The Right TMS Software Do For Your Freight Brokerage Operation?

The TMS freight broker software should have the right features including access to various carriers, detailed cargo tracking and reporting tools for load pickups, and delivery status updates. That being said, there are several reasons why businesses might need something more freight industry-specific than traditional TMS.

A freight brokerage company will have the opportunity to save time, money, and resources for its clients. In other words, it will act as an outsourced shipping department for companies by providing them with value in the form of business cost savings.

It’s for this reason why the TMS freight broker software should not only cover TMS features but also customer-specific needs. That said, there are several common features that all freight broker-specific TMS systems need to have. Among these, we can include the following:

Matching Specific Freight to the Right Carriers

One of the most important TMS features that freight brokers need to look out for is the ability to match specific freight with carriers. Aside from basic freight matching, the TMS software also needs to be able to identify which carrier will offer the most cost-effective solution for a given shipment or modes of transportation and provide an accurate estimate of delivery times and costs associated with each option.

A TMS system should also allow freight brokers to set up their preferred shipping options and carriers. If they need to ship refrigerated freight, for instance, the TMS platform should be able to consider the needs of the shipment and present only carriers that offer refrigerated trucks.

Carrier Pricing Comparisons

Freight brokers need to be able to compare prices so that they’re always getting the best available deal for their customers – even if this means shipping with a less popular carrier at times because it will offer rates that are better than the alternative.

In addition, the TMS freight broker software should allow for more than just a simple price comparison. It’s also necessary to have access to carrier information such as operating guidelines and hours of service. The TMS freight broker software should also provide real-time carrier rates constantly updated throughout each day or week.

Automation Capabilities

TMS freight brokerage software should also be able to automate many of the day-to-day tasks associated with managing a logistics business.

For instance, most transportation management software comes equipped with automated functions like shipment creation and tracking; these are features that make life easier for busy brokers who don’t have time to worry about minor tasks.

In addition, TMS freight broker software should come equipped with its own electronic document management system that can be accessed from any device. This helps manage the work efficiently and is especially handy when a professional freight broker needs access to documents or reports while on location at an airport terminal, for example.

The TMS freight management software should also track and integrate with the TMS of customers, vendors, carriers, and trucking companies.

Integrate with Load Boards

Another essential transportation management software feature that’s important is integrating with load boards and other freight brokerage software. The majority of freight brokers will have to use load boards such as DAT, TruckStop.com, LoadSmart, or 123LoadBoard, among others. Such a freight board acts as an online marketplace where freight brokers can find loads from competing carriers.

TMS freight broker software should be able to integrate with these load boards and other common freight brokerage operations such as FTL load booking and trucking freight rate quotes – all of which are a part of the lifeblood for any successful freight broker business. This will allow brokers to source their load coverage from a single platform and update their listings across multiple load boards as necessary and from a single, centralized location.

Direct Carrier Integration

Direct carrier integrations are TMS features that allow freight brokers to have access to carriers’ systems from their own TMS. Freight brokers need to match pricing and availability data with carriers to make informed decisions on what is best suited for their customer needs. The connection can be made through an application programming interface (API) and electronic data interchange (EDI) integrations.

This TMS freight broker software is crucial because it can provide access to the full range of carrier data, including rate quotes and customer information. It also provides a way for freight brokers to update their customers on delivery status without manually logging in or making phone calls.

The TMS should also support EDI integration because this will allow them to send and receive shipments electronically instead of via faxes or paper copies that are inefficient. This is necessary because it provides a secure connection between the two parties involved in the transaction.

TIA is the premier organization for third-party logistics professionals in North America and abroad. Membership at TIA adds value to your business and provides resources for growth.
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