The short answer to the question raised above is yes. As explained in greater detail in an earlier eUpdate, a transportation broker is a company which owns no assets and acts as a wholesaler by arranging for carriers to move loads for shippers. While the vast majority of brokers are more likely to be handling truckloads, some do provide LTL services through one or more LTL partner carriers, and others become part of the small package world through affiliations with one or more regional small package carriers. The truly important issues to address here are the same whether you’re looking at carriers or brokers: how do you qualify a provider to handle your freight?
According to Jeffrey Tucker, CTB, CEO of broker Tucker Company Worldwide, and current Vice Chairman of the Transportation Intermediaries Association, shippers need to be as diligent in selecting their brokers as they are with asset-owning carriers. The following list of key considerations was provided by Jeff when he spoke at a recent meeting of the Philadelphia chapter of the American Society of Transportation & Logistics. Each question covers a vital aspect of a broker’s operations, and if the answer to any of these is “no”, you should “move on to another broker”. Here’s what to look for. Does the broker have:
- Written, formalized carrier selection criteria?
- Dedicated risk management personnel?
- Written contracts with 100% of all carriers used?
- Written procedures specific to each shipper served?
- Insurance certificates with: $1 million or more of General Liability & Auto Coverage; Contingent Cargo Coverage at least $100,000; Workers Compensation; and Errors & Omissions coverage?
Other important questions which Jeff strongly recommends should be investigated include:
- Would the broker pass an audit by your company auditors, to your standards?
- Is the broker a member of the Transportation Intermediaries Association?
- Does the broker have one or more Certified Transportation Brokers (CTBs) on staff?
- Do key staff members or the company itself belong to TIA or other trade associations, such as ATA, TCA, NPTC, or NITLeague?
- How many years has the broker been in business as a broker?
- Are the broker’s website and materials of professional quality?
- Has the broker earned ISO-9001 or other quality recognitions?
- Has the broker or anyone on staff been recognized by outside organizations?
- Can the broker provide reliable references?
- Is this broker at least as effective as the best asset-based carriers available?
- Is this broker reliable?
- Does this broker use viable on-time service metrics?
To Jeff’s list I would add:
1. Conversations with carriers used by the broker to find out if carriers are paid timely and correctly and are treated with respect as partners.
2. An on-site visit to understand how dispatch is managed during normal business hours, after hours, and on holidays and weekends. Are experienced managers on duty 24/7/365?
3. Interviews with current shippers served to find out: How accurate is billing and how timely? How are billing problems resolved? How are operational problems identified, managed, and alerted to shippers and consignees? What kind of backup plan is engaged when a pickup or delivery is missed? Are shippers given a pro-active solution along with the first indication of an operational problem or just advised that there is a problem to solve? How late in the day are shipment tenders confirmed or rejected?
4. A full test of the broker’s shipment tracking system.
As you can see, selecting a broker really is very much like selecting a carrier. You’re looking for capability, competence, excellence, and control. So go ahead, do your research, and see if a transportation broker might be a good specialized arrow you need to add to your quiver.
This article is part of the monthly series authored by the Institute for Supply Management’s Logistics & Transportation Group Board Members, who are current practitioners, consultants, trainers, and educators. In future columns, they will continue sharing their views on a number of Supply Chain and Professional Development topics.
George Yarusavage, CTL, C.P.M., CICSM, is a principal in Fortress Consulting, LLC, specializing in Transportation, Logistics, and Sourcing issues and training. He is also the Treasurer of ISM’s Logistics & Transportation Group and can be reached at gyarusavage@yahoo.com, or (203) 984-4957. Membership in the L&T Group is open to all current ISM members who are responsible for or have an interest in Logistics & Transportation.
According to Jeffrey Tucker, CTB, CEO of broker Tucker Company Worldwide, and current Vice Chairman of the Transportation Intermediaries Association, shippers need to be as diligent in selecting their brokers as they are with asset-owning carriers. The following list of key considerations was provided by Jeff when he spoke at a recent meeting of the Philadelphia chapter of the American Society of Transportation & Logistics. Each question covers a vital aspect of a broker’s operations, and if the answer to any of these is “no”, you should “move on to another broker”. Here’s what to look for. Does the broker have:
- Written, formalized carrier selection criteria?
- Dedicated risk management personnel?
- Written contracts with 100% of all carriers used?
- Written procedures specific to each shipper served?
- Insurance certificates with: $1 million or more of General Liability & Auto Coverage; Contingent Cargo Coverage at least $100,000; Workers Compensation; and Errors & Omissions coverage?
Other important questions which Jeff strongly recommends should be investigated include:
- Would the broker pass an audit by your company auditors, to your standards?
- Is the broker a member of the Transportation Intermediaries Association?
- Does the broker have one or more Certified Transportation Brokers (CTBs) on staff?
- Do key staff members or the company itself belong to TIA or other trade associations, such as ATA, TCA, NPTC, or NITLeague?
- How many years has the broker been in business as a broker?
- Are the broker’s website and materials of professional quality?
- Has the broker earned ISO-9001 or other quality recognitions?
- Has the broker or anyone on staff been recognized by outside organizations?
- Can the broker provide reliable references?
- Is this broker at least as effective as the best asset-based carriers available?
- Is this broker reliable?
- Does this broker use viable on-time service metrics?
To Jeff’s list I would add:
1. Conversations with carriers used by the broker to find out if carriers are paid timely and correctly and are treated with respect as partners.
2. An on-site visit to understand how dispatch is managed during normal business hours, after hours, and on holidays and weekends. Are experienced managers on duty 24/7/365?
3. Interviews with current shippers served to find out: How accurate is billing and how timely? How are billing problems resolved? How are operational problems identified, managed, and alerted to shippers and consignees? What kind of backup plan is engaged when a pickup or delivery is missed? Are shippers given a pro-active solution along with the first indication of an operational problem or just advised that there is a problem to solve? How late in the day are shipment tenders confirmed or rejected?
4. A full test of the broker’s shipment tracking system.
As you can see, selecting a broker really is very much like selecting a carrier. You’re looking for capability, competence, excellence, and control. So go ahead, do your research, and see if a transportation broker might be a good specialized arrow you need to add to your quiver.
This article is part of the monthly series authored by the Institute for Supply Management’s Logistics & Transportation Group Board Members, who are current practitioners, consultants, trainers, and educators. In future columns, they will continue sharing their views on a number of Supply Chain and Professional Development topics.
George Yarusavage, CTL, C.P.M., CICSM, is a principal in Fortress Consulting, LLC, specializing in Transportation, Logistics, and Sourcing issues and training. He is also the Treasurer of ISM’s Logistics & Transportation Group and can be reached at gyarusavage@yahoo.com, or (203) 984-4957. Membership in the L&T Group is open to all current ISM members who are responsible for or have an interest in Logistics & Transportation.
