A FREIGHT BROKERING FUTURE

By: David G. Dwinell, Master Broker

Guide To A FREIGHT BROKERING FUTURE I am often asked what it takes to make a good broker. I have trained thousands of them since I think that any entrepreneur (read risk taker- are there any better than those in transportation?) with telephone skills, is a candidate. I have trained them all; individuals, drivers, truck owners (O/Os), trucking company owners, traffic managers, purchasing managers, insurance agents, brokers of all kinds (mortgage, auto, building materials, produce, customs, NVOCCs, oil & gas,) and a car wash owner with time on his hands. People who take my course have a 60% success ratio after 2 years. Of those who don’t learn from our school, only 1 in 19 (a government number), survives. Those with surface transportation experience have the best chances for success. In my School, you will learn the 10 distinctly different ways a broker creates liability for himself. Creating liability and de-marketing his shipper client and subsequently his carrier client is the usual cause for extinction. Most who start this business think brokering is trucking (that’s number 1 Fatal Error). All successful truckers also operate a brokerage, like Conway, Schneider, and Yellow for example. Some like me stopped owning trucks and trucking companies, and broker only for the commission. You will find that the broker s only stock in trade is his/her integrity. I know there are a lot of broker horror stories out there, but all of them involve brokers who did not receive their Master Broker s Certificate from this school. I hear them every day in class from my students. But you don’t know many brokers like me. In 25 years, I have never had a claim against my Surety Bond. I have only physically met 5% of my customers located throughout the North America, and I still have my original customer. As you will learn in my course, you can broker from anywhere, I have even brokered trucks from the middle of the Pacific Ocean. GET YOUR LICENSE Anyone, who is not a felon, can get a Brokers License. Simply go online to and complete the OP-1 and pay $300 by credit card. You will receive a license after you complete the BOC 3 and the Surety Bond of $10,000. Agents of brokers do not have to have a License, or Bond. Most brokers are also truck brokers (the motor carrier with Authority and a Brokers License). These are the only brokers who can hire owner operators. A licensed property broker cannot. Most truck brokers take possession of freight from a shipper, and turn around and hire another motor carrier to haul it. When there is an accident or something goes wrong, they think their license allows them to be free of liability. Their license doesn’t help them, because they are considered as one motor carrier hiring another, something not allowed with just a license. The actual name of the

3 license is Property Broker license. (Some at the DOT call it Broker Authority because they don’t know the difference between Authority and License ). These are the same regulators who call the Surety Bond Insurance when it is not insurance. Brokers are not required to have Cargo or Public Liability insurance. There are insurance companies out there spreading an outright lie, telling applicants for Motor Carrier & Brokers Licenses, that they have to buy Contingent Cargo Insurance for their brokerage, as well as Public and Cargo Liability for their Motor Carrier. I may get blamed for the fact that there is a full truck stop and hence a low freight rate of load going outbound, that doesn’t make a bottom feeder (a typical truckers term for a broker). Don’t fall for this one, insurance companies make money by selling policies for insurance, and spend ¾ of their administrative budgets fighting to avoid paying in the event of a loss. I have yet to meet an underwriter of insurance who can make the distinction between a truck broker and a property broker. Let s put it this way, if you take my course and learn to broker like a travel agent, (without liability) you will never need insurance. I have never had insurance. Out of the over $90,000,000 of freight I have brokered since 1981, I have had cargo losses charged to me of less than $3,000. Contingent Cargo Insurance costs about 9 cents per mile, or about 50% of your commission. You see, I just saved you the price of admission to my course! Also FMCSA will tell you there is a difference between Common and Contract carriage, (when there isn’t), and sell you both for $300 each. They too are out to make money. The Negotiated Rates Act of 1995, requires a written contract, between any shipper and the motor carrier and makes moot the difference between common and contract motor carrier. Oops, did I just save you $300? Ask anyone you meet at DOT to explain the Negotiated Rates Act of 1993 and note that hardly a sole knows anything about it. Visit and read the Law 49 CFR 370 and distinguish between Authority and License. Authority is a grant of rights to take possession of property for interstate transportation purposes, while a license can only arrange transportation between shippers and those with Authority. A licensed person may not declare an interest in the motor carriers Authority, his cargo, or his bill of lading. A broker s license is not a mode of transportation and cannot place a freight rate on a tariff. The license functions like a real estate agent, and can only quote the market rate, not a tariff rate. While you are reading the law about brokers, note that a broker s records are in fact public records available to anyone who invokes the freedom of information acts of the United States when talking with the broker. When you read the portion of the law, marked Records to be Kept by Brokers, you will note the very last line says that a broker must disclose his commission to either party to his transaction, i.e. the shipper and the motor carrier. Today your broker and all those without a Master Broker Certificate will refuse to disclose their commission. Most of my students report

that brokers universally say the commission is none of their business, and now you know that is not true. Oops, is this broker truth in lending information? If you were to start a brokerage, wouldn’t you want to come to school and learn how the Master Broker Certificate will open far more shipper doors than untrained brokers? If you still have doubts, let me ask you a question: If you buy a ticket for an airline trip from a broker (travel agent or Orbitz or others) and the plane crashes, is the broker liable for the loss, or even part of the loss? Can your widow sue the travel agent? No is the correct answer. If the same travel agent sells you a cruise on a ship steered by Gilligan, is that travel agent liable for this passenger loss? The answer is Yes. The distinction between these types of brokers is the difference between the Truck Broker and the Property Broker. You will learn in my school how to broker without liability and without insurance, even on a Haz Mat load, as I have for over 25 years. Those who fail to make the distinction in their actions, contracts and words, will learn the distinction painfully, with great financial sacrifice. Most truck brokers, who don’t take my course, end up being liable for a brokered mishap, even though they think they are not and try to prove it in court. I have been an Expert Witness in several of these cases and the jury can easily distinguish when a broker is liable and not liable. The 2 most common brokers in transportation are the truck broker and the property broker. They are as different as night & day; one has NO LIABILITY, (the property broker in it for a commission only) the other shouldn’t have liability but normally does broker freight to other trucks creating all kinds of liability thinking that this is normal. I will show you how to be a truck broker without liability, if you own trucks and hire owner operators. I teach the whole course, it’s the same to all. The broker is in a fiduciary (trust) relationship to the motor carrier actually hauling the brokered freight. In other words the broker works for the motor carrier (the guy with the Authority), collects the money from the shipper and remits to the motor carrier, less his commission. Visit the Worldpoint case of Oct 2002, Federal Court State of Washington. I show students who own trucks and who have been stiffed by brokers how use this case and the DOT regulations against the broker. The state s District Attorney in the county where the broker lives should be notified of the fiduciary relation This is usually all that is needed to get the broker to fess-up, or the District Attorney could cover the brokers home, his car, his bank accounts, the bank accounts of his children and wife, in yellow ribbons, until the broker proves he does not have the fiduciary relationship with you – the motor carrier. More and more

5 truckers bill the consignor if they are not paid by the broker, this is another method where guilty brokers may fess-up but is not a good method promoting healthy brokering. I teach both types of brokering correctly, for a profit, moving most loads with a few phone calls. BROKERING SERVICE Trucking is fragmenting into thousands of small companies. Over 130 people a day get their Authority and/or License. The age of the owner operator is waning because transportation is indeed a sellers market and truckers will no longer settle for $.90/mile when they know the truck broker is invoicing the shipper for $2.50/mile. You can only fool some of the people, some of the time. The population of brokers to work with this growing population of motor carrier Authority will grow right along with it as the complexity in the marketplace requires more brokers to unravel the growing amount of information needed to be exchanged to load trucks. Shippers are having an increasingly difficult time finding trucks and/or motor carriers to contract with. The job of the broker is the same as that of the travel agent providing choices to the traveler, choices that usually bring a savings. The definition of a broker is a person who provides a service to another; that service they could do for themselves, but choose not to. In other words, you can call Southwest Airlines direct, or go to Expedia.com or any other travel agent. Unlike the airline system where every thing is known, no one has any idea what trucks will be available this time next week, anywhere. As the number of motor carriers increase, the complexity grows exponentially. I am an expert in the field of capacity coordination (the airline reservation system for trucks). I personally have spent over $1 million of my personal funds trying to create an equivalent trucking reservation system. I have very little to show for it other than the large amount of market experience and knowledge gained in the broker has to you – the motor carrier and your freight bill the motor carrier who has the actual Bill of Lading. failing to create. I have consulted with Pegasus Reservation System (1986), Capex System (1987); MT Exchange (1989); Dial A Truck (1990); Golden Eagle System 1998 & 1999; Transportation.com (2001), virtually all are multimillion dollar failures in penetrating trucking information complexity. I have interviewed John Rollwagon, the retired CEO of Cray Computers who said they don’t build a computer big enough. Well, he suggested the internet may have the power to do it. That is where we are today. Companies like Transcore/DAT ( formerly Dial a Truck ) are scoring some small success in coordinating capacity as well as a multitude of others who are marginally effective. This leaves the role of finding tomorrow s truck today for shippers and carriers to you, the broker. Your role can be defined as finding and making a market between all of this nation s small shipper and motor carriers. Trucking is turning into a commodity just like soybeans. Trucking is sufficiently complex to require a third person to make the market between a willing buyer and seller. In fact as a broker you cannot enjoy a commission until you vend equal amounts of happiness to the shipper and carrier in every transaction. Most brokers who fail to take my course think of themselves as an AGENT FOR the shipper, and their job is to beat the trucker up on the rate. These are the same brokers that fail (in the 1 in 19 scenario quoted above.) How is that I have brokered every day since 1981, successfully, without claims against my bond or reputation? If you want to copy my example, come to my School. I hope this FREE GUIDE will provide a little direction in considering brokering as a career. You have found out that trucking can only succeed when the trucker himself knows how to broker the excess load tenders, without liability. And you now know that as a pure broker (those in it for the commission only like logistics companies), you cannot participate in the act of transportation, you may only facilitate it. WHERE TO GO FROM HERE There are these and 78 other brokering topics covered in my course, such as: How to Develop Real Market Freight Rates, not cheeeep ones, How to Negotiate Freight Rates with Shippers & Motor Carriers, How to Contract for Services Meeting Requirements of the Negotiated Rates Acts of 1993 & 1995, How to Do the Bookkeeping so you can pay all trucks on time, How to Manage Cashflow so that you will never have to borrow a nickel from a bank or freight bill factor to fund your cash flow AND pay your trucks ON TIME EVERY TIME; but most importantly, How to Broker Without Liability, placing all liability with the motor carrier (where it belongs), on behalf of the shipper, through your good offices (the travel agent). Keep 2 things in mind: 1. You can buy my textbooks $126 delivered and do it yourself 2. Should you attend a class, you will receive credit for you textbook purchase Visit and for more information or if you want to ask a tough trucking question OR simply call toll-free That’s all I have time for, I have to hurry off to my next class – number Hope to see you soon!