Freight Brokers

6 Questions Shippers Need to Ask Freight Brokers

Question #1. How do you choose your carriers?

Speaking of carriers and insurance, now is the time to say that shippers would want to know what selection method you use to pick carriers. Whether the carriers have insurance themselves will be an important part of that question. After all, they want to make sure that they will be covered should something happen to the cargo they shipped. Shippers may ask about about your carrier safety record, as well as whether you have outlined all terms and conditions in a written contract. Verbal agreements and generous promises won't get you far.

Question #2. How big is your business?

There’s nothing wrong with being a small operation, even a one-man operation, as long as you don’t take more work than you can handle. Still, many shippers may ask that question and freight brokers may feel pressured to exaggerate the number. But for establishing long-term relationships honesty is the best policy. Shippers may also ask how many years you have been in business, because they will take that as a measure of how reliable you are.

Question #3. How many modes of transportation do you use?

While truckload motor carrier services are the most common, some shippers will ask you if you are also using other modes, such as LTL, vans, air freight, rail intermodal, to name a few. They do that for two main reasons. First, having multiple options means that you can be more flexible, so if the cargo can’t be shipped through one mode, you will quickly find another. Second, it means that you have many partners and can probably offer more than one option for each of the modes.

Question #4. Are you financially stable?

A frequent question you may encounter is one about your financial stability. Shippers normally have a lot at stake, and will want to make sure that the freight broker they do business with doesn't have any financial and credit problems. They may want to look into your finances and possibly run a credit check at the Red Book Credit Services. If your business is profitable, this is a green light for shippers. In addition, be ready to answer questions regarding your payment methods and how quickly you compensate carriers.

Question #5: Do you have a freight broker bond?

This will likely be the number one question on any shipper’s list. A freight broker bond means you are properly licensed and bonded. A freight broker bond is also designed to protect shippers in case you are not keeping your contractual agreements and are delaying payments. The FMCSA contains a searchable database of all licensed and bonded freight brokers, which means shippers might not ask you directly whether you’re bonded. Still, it’s a good idea to keep maintain proof that you’re bonded (via your Motor Carrier Report) that can be shown upon request.

Question #6: Do you have cargo insurance?

There are different types of cargo insurance for freight brokers, but luckily you don’t need them all. Shippers are likely to ask whether you have contingent cargo insurance. Even though you are not physically handling freight, if a shipment is lost or damaged, the carrier may not make good on the claim. This is when your contingent cargo insurance kicks in to cover the losses. You are not obliged by law to have this insurance, but both shippers and carriers are likely to ask you and be more willing to work with you if you have it.

What’s your strategy?

In your daily work with shippers you have probably encountered many such questions. Can you share some of them for your fellow brokers? What strategies are you using to establish long-term relationships with shippers? Leave a comment in the section below.