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Vertex Transport, LLC

309 Ponce Blvd.
Jacksonville, FL  32218
Phone: (904) 421-0980
Fax: (904) 421-0981

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Brokers Have A Carrier Vetting Process That Includes Authority, Insurance Verification and Safety Rating

By Mike Steele, CEO, Vertex Transport

September 30, 2017

This is one of the areas where a good broker really excels. This a critical place where they can add value and justify their margins. 

There are literally hundreds of thousands of carriers out there moving freight, but many of them have no business doing so.  Some have expired operating authority, minimal or non-existing insurance or a safety rating that is one-step away from being shut-down.  Finding a carrier where any of these situations exist is an unnecessary risk to you and your freight.  

Brokers continually scrutinize operating authority not only for expired authority, but also for new authority. If no track record exists to determine whether the carrier should be entrusted with any freight, then why take the chance.  A low MC (motor carrier) or DOT (Department of Transportation) number indicates that the carrier and its authority have been around for many years.  That suggests stabilty.  On the other hand, a high MC or DOT number points to a newer carrier and many brokers with not tender freight to carriers with a number less than six months old. 

Insurance is another area where ongoing scrutiny is needed through the various tools and websites that track carrier insurance protection.  You don't want to hire a carrier with expired or insuffient insurance and your broker will steer you clear of these.  Insuffient insurance applies to higher value loads.  You don't want to move a load worth $500,000 with a carrier that only has $250,000 of coverage.

Safety is something that has been a top priority in the trucking industry the past several years.  Solid, well financed carriers will have a good or adequate safety rating, while others will not.  You don't want your freight to be on a truck operated a carrier that is literally being followed by the FMCSA just waiting for the next infraction to shut them down. 

So trust your broker to represent you well in there areas. 

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Brokers Have The Know-How To Steer Clear Of Under-Insured, Inexperienced Carriers

By Mike Steele, CEO, Vertex Transport

August 27, 2017

One of the most important decision points in moving your freight is deciding which carriers you will use to move your move.  You can try to do this yourself, but freight brokers like Vertex Transport are often better equipped to do the job.

Brokers have access to the tools needed to vet carriers for quality and safety and do it all the time as a course of business.  They will also have built their own database of carriers over the years and already know which carriers are better to do business with – and the ones you want to steer clear of.

Why would you entrust an expensive truckload of freight with a carrier you don’t know anything about? While many carriers have good reputations with good safety records, the proper due diligence is needed before consigning freight to a trucker.

Performing the appropriate due diligence on freight carriers is a tedious, but necessary task.  Just two of the tools that brokers use to do this vetting include: 

Carrier 411 is a paid carrier monitoring service.  Its universe contains nearly one million carriers that are registered with the Federal Motor Carrier Safety Administration (FMSCA). This service is used to confirm identities and to run equipment VINs and license plates to make sure nothing negative jumps out. The service also identifies carriers with a history of unethical behavior and companies that operate under multiple names or MC numbers to hide their true identity.

DAT Carrier Watch is another paid service brokers use to collect and verify carrier insurance levels. It has a link to the Transportation Intermediaries Association’s (TIA) Watchdog report that displays TIA member reports about carriers.

The Department of Transportation (DOT) inspects carriers regularly and rates them for safety. DOT ratings are typically satisfactory, unsatisfactory or conditional. The carrier usually has time to improve a conditional rating.  Good brokers stick with those carriers with satisfactory or improving safety rating. 

Another thing to consider is not using a carrier whose operating authority is less than six months old.  That is not a long enough a period of time for a sufficient service history to have been established.

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Brokers Have The Shipping Volume Leverage Needed To Negotiate Better Rates 

By Mike Steele, CEO, Vertex Transport LLC

July 25, 2017

Most small to medium sized shippers have less freight volumes to tender to carriers than brokers do.  That's why brokers have greater buying power than most shippers do. 

This doesn't apply just to freight volumes in general, but over specific traffic lanes as well.  Carriers who specialize in runs to specific markets position their equipment in these markets and are always looking for freight to keep their trucks full.  Empty trucks equals empty miles, thus higher costs for carriers as driver still need to be paid and fuel still needs to be purchased. 

Carriers also have differing long haul and back haul characteristics.  One carrier's headhaul lane is another carrier's backhaul.  Brokers can provide carriers with more backhaul freight, which means more freight can also be moved at backhaul rather than headhaul rates. 

Think of working with a broker as working with a co-op.  With a broker, your freight is essential pooled with the freight of other shippers to be tendered to carriers.  This implies greater volume, and thus a load that might normally cost $1000 to be moved might cost $950 or even $900 because you have more than one load to tender to a carrier. 

Brokers deal largely in the spot market where freight and pricing velocity is more uncertain.  Brokers can use their buying power with carriers to normalize the flow of freight across certain lanes, thus helping take uncertainty out of pricing.  For example, on lanes where prices range from $2.50 to $3.50 per mile depending on time of year and even the day of the week, stablilzing the movement of freight might shave the price range by 50 cents a mile.  Over the course of hundreds of miles and thousands of loads that can add up to tremendous savings.

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Brokers Manage Risk, Providing a Layer of Protection Between You and the Carriers 

By Mike Steele, CEO, Vertex Transport LLC

June 20, 2017

Working with brokers to secure transportation for your freight comes with a multiple of benefits, including providing a layer of protection between your company and the carriers selected to move the goods.  Insurance is a huge piece of this.

All brokers are required to carry a surety bond of $75,000, which provides a pool of money that carriers can collect against if the broker fails to pay their bills.  This provides a plus to you by working through that broker because the carrier is assured of getting paid.

Carriers are legally responsible for the safe handling and delivered condition of freight they transport.  To insure against most negatives, motor carriers typically carry a form of primary trucker's cargo liability insurance.

Where the broker provides extra protection is by carrying Contingent Cargo Insurance, which acts as a back-up to the coverage provided under the motor carrier's insurance. The default insurance limit for cargo policies is $100,000, so higher-value shipments must be placed with more financially secure motor carriers with higher limits, say up to $250,000. If the broker is involved, the contingent cargo policy should follow suit.

Highway transport of freight has the constant risk of huge accidents resulting in serious personal injuries and property losses.  Federal motor carrier safety regulations mandate minimum auto liability insurance limits of at least $750,000.

However, neither limit is sufficient to cover the possible range of losses when there is significant property damage and/or loss of life.  Motor carriers that proactively manage risk can be expected to have $2 million or more of coverage, but recent jury verdicts have reached 10 times that amount.

Continuing litigation has identified possible exposure for brokers, too.  Some jurisdictions allow a cause of action against the broker for negligence in hiring or selecting the motor carrier that causes injury. The insurance market has responded with a type of insurance that covers this risk: primary truck brokers liability insurance.  It covers a broker's use of hired trucks to move brokered freight, the core activity in which brokers are engaged.

Utilizing a skilled broker that incorporates risk mitigation in the selection process reduces the risk to parties further removed from the transportation cycle.  For shippers concerned about managing risk, they should choose a broker with the best financial responsibility and insurance.  Parties that work together with a common approach to safety can achieve greater success than those that do not.

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Brokers Have the Resources to Develop and Maintain Relationships With Large Numbers of Carriers

By Mike Steele, CEO, Vertex Transport LLC

May 29, 2017

One of the main reasons for outsourcing your transportation management activities is the huge window it opens to providing access to a greater range of carriers.

By using a broker to manage your transportation, instead of having access to dozens or maybe hundreds of carriers, you will have access to literally thousands of carriers.  And that means having access to tens of thousands of pieces of rolling stock. 

This is particularly important if your needs include specialized equipment such as reefers or flatbeds.  This type of equipment is always in high demand, making it more difficult to find if your carrier base is small. 

By having access to more trucks, it lessens the likelihood of having to pay to have that truck repositioned in a different market to pick up your freight.  This saves you money and helps reduce the overall transit time for your load from Point A to Point B. 

And don't forget that brokers are more experienced at vetting carriers for you.  So you are more likely to have a truck on your load that has a better reputation, better safety record and the proper insurance. For more information about that benefit, see our previous post below.

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Brokers Manage Risk, Providing a Layer of Protection Between You and the Carriers

By Mike Steele, CEO, Vertex Transport LLC

April 18, 2017 

This is often an overlooked benefit when shippers choose to work with brokers to move their freight.  Brokers provide leverage in management risk by providing an additonal layer of protection between the shipper and the carrier.  This is especially true in the case of insurance.

All freight brokers must carry a broker's surety bond in the amount of $75,000.  This ensures that carriers will get paid on a first come basis if the broker should default.  This was increased from just $10,000 a few years ago.  This change helped to weed out some of the smaller, less desireable brokers.  Many brokers carry a bond exceeding the new minimum, some as much as $250,000.  This higher level of coverage makes the broker more attractive to the carrier and thus more willing and likely to haul your freight. 

Motor carriers are legally responsible for the safe handling and delivered condition of freight they transport.  To insure against most pitfall, motor carriers typically carry a form of primary trucker's cargo liability insurance.

While brokers rarely touch freight themselves, most carry contingent cargo insurance, which acts as a back-up to the coverage provided under the motor carrier's own insurance.  The default insurance limit for cargo policies is $100,000, so higher-value shipments must be placed with best-in-class, financially secure motor carriers with higher limits, up to $250,000.

Brokers often have a solid carrier selection process.  Diligent brokers not only add value through their expertise in managing capacity, they also contribute to mitigating financial risks relating to cargo safety, including prevention.

Highway transport of freight poses the constant risk of large accidents resulting in serious personal injuries and property losses.  Federal safety regulations for carriers require minimum auto liability insurance limits of $750,000; however, $1 million limits are relatively common.

Utilizing a skilled third party or broker, one that incorporates risk mitigation in the selection process, reduces the risk to parties further removed from the transportation cycle.

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Brokers Have Access To a Wide Range of Equipment and Modal Types

By Mike Steele, CEO, Vertex Transport LLC

March 22, 2017

As a continuation of our series on the top reasons for using a freight broker, we'll address access to capacity.  Unlike asset-based carriers, brokers are not limited to the capacity like truckers are.  Carriers can only provide capacity for the number of trucks and drivers in their operation.  A broker will have agreements and contracts in place with literally thousands of reputable carriers, thus the carriers' collective capacity becomes that of the broker.  And not only is the number of trucks available increased through use of a broker, so does the mix of equipment types.  For example, a truckload carrier that deals exclusively in dry vans will not be able to handle freight that requires refrigeration or open bed.  They will be limited to handling dry cargo that fills a 48' or 53' trailer.

And it goes deeper than this.  Multi-modes are also now at the disposal of the shipper.  Less-than-truckoad and intermodal options now become available, as do non-highway modes such as air or ocean.  So if finding a truck in a critical lane becomes particularly difficult, the railroads now offer truck-like services in most markets.  All under the direction of your broker.

So when deciding on which carrier to use, you may want to be less limiting in your choices and select a broker instead.  You'll find that the landscape becomes less constrained when you do. 

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Freight Brokers Are Licensed and Bonded Intermediaries

By Mike Steele, CEO, Vertex Transport LLC

November 30, 2016

Recently, we started a blog on the top reasons for using a freight broker.  We broke these reasons into eight categories.  Let's take a few moments to elaborate on the first one:  freight brokers are licensed and bonded intermediaries.

Everyone business man or woman who runs a freight brokerage firm must be licensed and bonded.  These are federal government requirements designed to protect not only the shipper, but also the carrier. 

A freight broker must have operating authority issued by the Federal Motor Carrier Safety Administration (FMCSA).  These are often referred to as motor carrier numbers.  The lower the number, the longer the authority has existed.  For example, an MC# of 333444 would indicate a broker that's been around for several years.  An MC # of 888999 indicates an authority that may only be several months old.  The age of the authority doesn't necessarily imply stability, but the longer the authority has existed the more likely a shipper or carrier may want to do business with that broker.

The freight broker must also be bonded and carry a Surety Bond of at least $75,000.  This is the minimum amount having been increased from $10,000 in 2013.  This bond exists to protect the carrier.  It exists to provide a fund to be paid to carriers in the event the broker becomes insolvent and not paying its carriers.  Alert carriers will always want to check out the bond the broker has before moving their first load from them.

If you are approached by someone alledging to be a freight broker, but can't provide active and valid operating authority and a surety bond, DON'T do business with them. It could be a scam, or at least it could be an opportunity to lose your freight.

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Top Reasons for Using A Freight Broker

By Mike Steele, CEO, Vertex Transport LLC

September 13, 2016

Freight brokers play a huge and important role in the logistics supply chain. They support manufacturers, retailers, wholesalers and government entities in the movement of freight between Points A & B. They perform services for these types of shippers that these companies would need to have the expertise and resources to otherwise do on their – often at a higher cost in time and money.

In the next several installments in this blog, we will explore the following top reasons why your company should consider using a freight broker, if you are not already:

  1. Brokers are licensed and bonded intermediaries
  2. Brokers have access to a wide range of equipment and modal types
  3. Brokers manage risk, providing a layer of protection between you and the carriers (including insurance)
  4. Brokers have the resources to develop and maintain relationships with large numbers of carriers
  5. Brokers have the shipping volume leverage needed to negotiate better rates
  6. Brokers have the know-how to steer clear of under-insured, inexperienced carriers
  7. Brokers have a carrier vetting process that includes authority and insurance verification and safety rating
  8. Shipping is the broker’s core competency

Until next time…………..