Traditionally, transportation brokers—middlemen who match available loads with empty trucks, charging a fee to the shipper—have been outsiders, either independent businesses or divisions of asset-based companies. A growing number of shippers, however, are setting up their own in-house truck brokerage operations, says Charlie Saffro of CS Recruiting LLC, a Chicago-based recruiting firm that specializes in third-party logistics and brokerage positions.
Saffro says she's been fielding a lot of inquiries lately from shippers who want to get into brokerage themselves. Done right, it can be a lucrative proposition, especially for shippers with high-value freight and backhauls to fill. She cites the case of one produce distributor that started an in-house truck brokerage in late 2012 and after just a few months, had earned $6 million in new revenue.
Saffro cautions that in order to succeed at this endeavor, the right talent must be in place. What typically happens is that a shipper hires an experienced manager who uses his or her knowledge and contacts to handle brokerage for the shipper's own freight, she says. Later on, the manager can develop a for-profit operation serving existing customers and eventually, new customers.
Sound interesting? It's important to note that there are upfront costs and that all transportation brokers are subject to federal regulations regarding licensing, bonding, contracts, and related matters. An excellent source of information is the Transportation Intermediaries Association (TIA), which offers training and support services for new brokers. Learn more at www.tianet.org.