Freight Brokerage Business. The Staff of Entrepreneur Media, Inc.

and resources, what business should we be in?

       • What is important to us? What do we stand for?

      Smyrna, Tennessee-based MCD Transportation’s mission statement reads: “To provide our customers with dependable transportation services based on fair and competitive pricing programs with an emphasis on customer service for all concerned parties. To be receptive to customers’ needs and react in a professional and timely manner. To recognize customers, carriers and vendors as our only assets for continued success.” Not only is the mission statement used as a marketing tool, but employees are also encouraged to periodically review it and suggest any changes they think are needed.

      Use the Mission Statement Worksheet in Figure 3–5, page 46, to help you write one for your business.

      For help creating a full business plan that includes a mission statement, consider using one of the following standalone software or online computer applications:

       • BizPlanBuilder—www.businesspowertools.com/project/bizplanbuilder-small-cloud-business-plan-software-app-template-crowd-fund

       • Business Plan Pro—www.businessplanpro.com

       • LivePlan—www.liveplan.com

       • Plan Write—www.brs-inc.com/pwb.asp

FIGURE 3–5: Mission Statement Worksheet

Seasonal Issues

      It’s likely that no industry is more affected by seasonal issues than transportation. The volume and type of freight moving often depends on the time of year. At times, there will be an abundance of trucks and drivers eager to haul loads, and other times balancing the federal budget will look like a simpler task than finding a single truck and driver. For example, even though you may not handle produce, produce season can cause a lack of trucks that affects your ability to serve your customers. Another busy season is, of course, the fourth quarter, as holiday merchandise and year-end orders are moving.

      In addition to equipment availability, there’s also the issue of weather. Snow and ice can create dangerous driving conditions and affect transit times. Fog and rain can be year-round problems in various parts of the country. In dry seasons, areas prone to wildfires may experience road closures due to heavy smoke and fire jumping across highways. Tornadoes usually last just a few minutes and hurricanes take less than a day to pass through an area, but the damage they leave behind can have a major impact on the ability of truckers to move cargo.

      Beyond the mechanics of seasonal issues—getting the freight on trucks and moved—is the impact of seasons on your revenue. If possible, build your customer base with accounts that are not strongly seasonal in nature. Expect some slowdowns at certain times of the year; prepare for those periods and use the time to evaluate your business and deal with any internal issues that need attention. You can also increase your sales efforts during slow periods. It’s very important to understand your customer base so you can accurately predict and prepare for the slow periods, especially when it comes to adjusting for a drop in cash flow.

The Impact of 9/11 on Brokers

      The terrorist attacks of 9/11 have prompted increased security measures for all modes of transportation. An issue of particular impact on brokers has to do with who is driving the trucks. “You used to be able to drive right up to the shipping dock, get your load, and go,” says Joe Workman, president of Transportation Resources, Inc., a freight management company with headquarters in Winter Park, Florida. “Now, in many cases, drivers have to show identification before they are admitted to the premises, and some companies require drivers to be pre-qualified before picking up a load. Shippers are more concerned than they’ve ever been about who is hauling their freight.”

      Workman says many shippers want to be able to maintain communication with drivers by either cell phone or satellite. “If drivers don’t have reliable on-the-road communication means, we can’t use them, and that cuts back on our available trucks.”

      If you want to handle air freight, you should know that airlines now require cargo to come from known shippers. “Somebody with the carrier has to know you and vouch for you,” says Workman. “It’s harder now for new people to do business.”

      Customers who ship sensitive or hazardous materials have special requirements, and you should find out what those are as far in advance as possible. Workman advises, “Know your customers—know who they are, what they do, and what you’re picking up.”

       CHAPTER

       4

       What Can Go Wrong?

      In the freight business, the ability to deal with problems is essential. What can go wrong? Everything! No matter how well you handle your part of the process, there are certain things that are out of your control, but for which your shippers will look to you for assistance and solutions.

      Because brokers are not carriers, they are generally not liable for loss or damage of a shipment while being transported. They can, however, be held liable if they are negligent, or if they offer services other than brokerage. Aside from the liability issue, part of your service package should include assisting your customers with problems whether you are responsible or not.

Transit Delays

      It’s virtually impossible to list all the reasons freight might be delayed in transit. Weather is always a major concern. Trucks break down, traffic gets heavy, highways are closed, drivers get sick—and your customers will expect you to deal with it all. Cathy Davis of MCD Transportation in Smyrna, Tennessee, recalled a nightmare of a situation involving the proverbial “driver from hell.” She said, “The freight was held hostage [for payment] by an owner/operator even though the company had signed a contract agreeing to the terms. We had to pay air freight charges to ship more material to keep the customer’s production line going.”

      Most of your problems won’t be that dramatic, but any time the freight does not move precisely as expected, your customers will be looking to you for situation management and information.

      warning

      Sometimes employees of the shipper or consignee, or at the warehouses those companies use, try to cover damages and shortages they cause by trying to make it look like the carrier’s fault. Protect yourself and your carriers while maintaining your relationship with customers and warehouses by insisting that drivers do their jobs thoroughly, which means checking the load and making complete documentation.

Cargo Loss or Damage Claims

      As the broker, you are not responsible for cargo loss or damage claims. Keep in mind that although common carriers are generally liable for loss or damage to the