Whether you’ve worked with a freight brokerage in the past or are thinking about doing so in the future, it’s important to understand how the right broker can help your business. The first step when making any investment or decision that could impact your company is to do your research.
You’ve probably heard about freight brokerages and their carrier networks, but do you know how they work?
How do they make sure that they’re finding and utilizing the best carriers?
What do brokers look for in a trucking company and how can you make sure that they select the correct carrier for your shipment?
Here at ATS Logistics, we’ve been adding to, monitoring and utilizing our carrier network for over 30 years. We’re constantly updating our carrier vetting and selection process, and you deserve to know how we do so.
In this blog, we’ll tell you exactly how freight brokers:
We'll also tell you how to find a broker with a reliable carrier selection process.
How Does a Freight Brokerage Choose Your Carrier?
When the time comes to find the correct solution for your shipment, it’s difficult to generalize how freight brokerages, as a whole, do so. That said, here at ATS Logistics, we have a process that we’ve found to be highly effective when it comes to choosing a truck.
As such, we’ll tell you how we choose your carrier so that if — in the future — you need a process to reference, you’ll have one. This should give you a pretty good idea of what to look for when selecting a brokerage going forward.
Here at ATS Logistics, we have an internal system dedicated to filtering carriers based on 4 criteria. These are carriers we’ve used before and initially found either via online load boards or the “become a carrier” page on our website.
Once they enter our internal system they’re never removed, only filtered, ranked and selected based on:
- The amount of insurance they hold
- Their CSA ratings
- Their level of active authority
- Our internal 5-star rating system
1. The Amount of Insurance They Hold
According to the Federal Motor Carrier Safety Administration (FMCSA), carriers are legally required to hold $1 million in Auto Liability insurance. Without having the mandated level of this insurance, a carrier is unable to possess active authority and will be automatically sidelined until these issues are amended.
As stipulated in our Broker-Carrier agreements, we require our carrying partners — as do most brokers — to hold to the FMCSA’s standards.
Although ATS Logistics only requires carriers to maintain at least $100,000 of cargo insurance, some shippers may request more. Usually, this is due to the heightened liability level — based on the monetary value — of their freight.
If you’re a shipper who requires a higher level of cargo insurance a broker should have the ability to filter down their search to identify carriers with higher levels of cargo insurance to meet your needs. Simply filtering down our search by this criteria helps us find these solutions.
2. Carrier Compliance, Safety and Accountability (CSA) Ratings
The second piece of the ATS Logistics carrier selection process is the analysis of a carrier’s Compliance, Safety and Accountability (CSA) scores. These ratings provide an effective method for holding carriers accountable for their actions and the practices they employ.
The FMCSA breaks these ratings down into four categories that are defined as follows:
None: The rating given to a carrier who has not yet been audited by the FMCSA. This rating is considered to be admissible and carriers with this rating are widely accepted by reputable brokerages.
Satisfactory: This rating is given to a carrier who either meets or exceeds the FMCSA’s guidelines for administrative safety practices.
Conditional: A rating that is given when most of the FMCSA’s safety guidelines are met.
Unsatisfactory: This rating is applied to a company who — following its audit — is found to have a large number of deficiencies.
Using an automated system here at ATS Logistics, we only dispatch carriers who have CSA ratings of "none" or "satisfactory". This fact — outlined in our broker-shipper agreement — helps to promote a consistently reliable supply chain.
To help further this, programming is in place to immediately notify ATS Logistics’ representatives if a carrier is rated “Conditional” or “Unsatisfactory” and completely restricts their dispatch.
3. Their Level of Active Authority
This is important. In order for a carrier to be dispatched to a load, they must have the federally mandated level of active authority to legally haul freight.
If a carrier isn’t legally allowed to do so, this generally means that they are missing a piece or two needed to legally operate as a commercial motor carrier.
This could include but is not limited to:
- Proof of insurance
- Pending motor carrier registration with FMCSA
- Pending drug and alcohol tests
- Incomplete registration for business operations licenses
Carriers who don’t possess the necessary level of operational authority will be completely sidelined from the carrier selection process until their situation is amended.
4. Internal Rating System
Although monitoring carriers for CSA ratings, insurance and active authority is important, good brokerages also maintain internal rating systems to move the needle a bit further. Here at ATS Logistics, we do so using a 5-star rating system. This is a home-grown method — developed throughout the years — for filtering carriers based on:
1. Carrier History
This serves as a written record, answering all questions surrounding:
- How many loads has this carrier successfully delivered?
- How long has this carrier been in operation?
- What type of equipment do they specialize in?
- What lanes do they like to haul?
- Where are their trucks frequently located?
2. The size of their operation
In an industry as large as the trucking industry, companies vary greatly in size. And, the majority of trucking volume comes from companies with fleets of 20 trucks or less. Because of this, brokers must take the size of a carrier’s organization into consideration when searching for the best solution for their shipper.
In many instances, a single truck carrier will provide the service needed to execute a single one-off shipment. When handling higher volume shippers though, a broker will want to have partner carriers with a pool of trucks, drivers and trailers that’s sizable enough to stand by the commitments they make to their customers.
For the most part, larger trucking companies — with more resources — are more predictably available than smaller operations. As such, based on their likelihood of availability, these carriers are displayed as an option more readily than one truck operations.
3. Prior experience working with this carrier
Some brokerages, like ATS Logistics, maintain an internal system to help them review carriers based on their past performance. This provides an excellent way for brokers to weed out unreliable, unsafe or consistently negligent, trucking companies from their network.
Recording prior experience working with a carrier is an important piece in holding carriers accountable for following through for a broker and their customers.
As such, if a carrier is backing out of their commitments, missing appointments or making it difficult to communicate deadlines and expectations with them, these faults are recorded.
If these discrepancies are consistently repeated, these carriers are added to the brokerage’s “no-load” list. Being placed on this list essentially prohibits a brokerage — and its individual logistics professionals — from tendering a load to these carriers.
If a carrier is consistently providing a high level of service, hitting on-time delivery, providing visibility and communication, they will receive positive comments from their broker. Ultimately, these carriers receive a higher Star Rating and will be contacted more frequently on future shipping opportunities.
4. Quality of partnership
Every time a brokerage brings a shipment to a carrier, they’re helping that carrier succeed. Brokerages trust carriers with each load they offer them and carriers trust brokerages to bring them freight in the future.
If a broker can't keep the lights on, serve their customers and bring the carrier future shipments, this partnership would be lost. To do this though, brokers need reliable carriers they can count on.
As such, carriers who are used frequently by a broker and boast a demonstrated history of success, are ranked higher than those who are utilized less.
These “preferred carriers” become true partners for good brokers as they come through for their customers, demonstrate safe practices and employ the load tracking technologies needed for macro-point visibility.
How Does a Freight Brokerage Maintain Carrier Relationships?
The best freight brokerages — those who have a demonstrated history of success — maintain their relationships with reliable carriers to ensure that they have the most well-rounded supply chain possible.
To do this, these brokers have teams of carrier representatives who are tasked with maintaining mutually beneficial relationships with carrier partners spanning the nation. These carrier representatives are a brokerage’s first line of defense against deficient carrier partnerships.
Although many of the nation's 17,000 + brokerages don’t have carrier representatives, those who have the resources — and prioritize reliable service — do.
Since they have individuals dedicated to maintaining these relationships, the best brokerages can establish lasting relationships that — given safety compliance and reliability between parties — stand the test of time.
How Does a Freight Brokerage Acquire New Carriers?
Freight brokers can leave an imprint on the lives, supply chains and bottom lines of their customers. To do this, though, a broker must maintain two things:
- A high level of industry expertise
- An extensive network of partner carriers
To do the latter of these, there are two methods available to brokers. The systems that good brokerages use to find carriers, help them move their customer’s freight correctly and safely.
Additionally, the destination/pick-up locations of their next shipment request are difficult to predict. As such, brokers are constantly looking — whenever possible — to add to their carrier network.
Brokerages can do this in multiple ways, but here are a few:
- Load matching websites
- Internal "become a carrier" webpages
Brokerages use these methods to find the vast majority of their partner carriers. From one-man owner-operators to full-fledged trucking companies, brokers use load-matching websites and internal load request pages to find the carriers in their network.
What Are Load-Matching Websites?
Load-matching websites are digital freight-matching platforms that connect truck drivers and trucking companies to businesses that need their services. These easily accessible online platforms give shippers, brokers and carriers all the information needed to facilitate an initial interaction.
To find a new carrier, brokers enter the shipment’s information:
- Shipment origin
- Shipment destination
- Total miles
- Equipment typed needed
- Weight of commodity
- Offered rate (sometimes included)
This information is submitted on platforms such as Internet Truckstop and DAT. Provided they pay the monthly fees to access this information (usually around $100), these load matching systems are a highly potent resource for brokers as they search for additional partnerships.
How Does a Freight Brokerage Find Carriers on Internet Load Boards?
When a broker has a shipment to move and needs to do so outside of their usual network, they use internet load boards to find a suitable trucking solution located in their customer’s area. Brokers can narrow the pool of carriers down using a variety of criteria. This is done so that only carriers who have the correct equipment type and experience needed to move a load remain. Additionally, carriers are filtered by their level of insurance, active authority and CSA rating.
Once all of a brokerage’s criteria are met, the work begins to get the shipment onto the deck of their selected carrier’s trailer. At this point, the internet databases have done their job of providing brokers with their initial pool for carrier acquisition.
What Are Internal "Become a Carrier" Pages?
Although the majority of the time brokers find new carriers via online load boards, this isn’t always the case. The most successful and well-known freight brokers get new partners through name recognition and reputation as well.
These brokerages have native load-request or “become a carrier” pages on their websites where outside trucking companies can enter their information. Following this request, one of the broker’s internal operations experts reaches out to these carriers to get them registered as a carrier in their system.
During this conversation, the brokerage’s operations expert verifies the new carrier’s equipment type, special requests and needs. This helps to promote a fruitful partnership.
How Does a Broker Find Carriers Using Referrals?
This business is all about relationships and good brokerages know this. As such, they’re constantly looking to add good carriers to their networks. Sometimes these carriers are found through word of mouth in situations where the broker’s carrier representative hears about a great carrier that they don’t currently do business with.
In these instances, brokers reach out to these parties with the hopes of establishing a relationship.
Although this is not the most common way these relationships are fostered, they can be very successful as they’re sparked through recommendations from an already trusted partner carrier.
How to Select a Brokerage With a Great Carrier Selection Process?
Finding a brokerage that will help you meet your deadlines comes down to what you need and what your supply chain requires. Once you pinpoint these needs, make sure that your partner can meet them based on their carrier network, size and selection process.
Download the Freight Brokerage Selection Checklist to help you manage this process going forward.
Now that you have a far better understanding of how a freight broker’s carrier system works, you’re ready for the next step in your brokerage selection process.
Read this blog where we outline what spot quotes are and how a freight brokerage uses them. Doing so will give you far better insight into how your spot rates are calculated so that you can make the most of your shipping budget.