Going for Broker

Not too long ago, if you were a shipper with just northbound freight-loads coming to Canada from the United States-you called a load broker. The broker’s pitch to the shipper was that it was dealing with a hundred carriers, so it could guarantee that there would always be a northbound truck near your Kansas City plant when you needed it.

Today, of course, brokers are telling shippers they can handle their inbound freight, too. And maybe even take over warehousing. Load brokers are starting to move out of the boiler rooms and into neat, $23-a-square-foot office space with a bank of phones and a mile of Ethernet cable running through the walls. They’re third-party logistics companies, enjoying the broad, free range of middle ground between what the shipper pays and what the company actually hauling the freight makes on the deal.

It’s a situation a lot of truckers resent. They need brokers to keep their trucks full, but they’re doing it at a depressed rate. And when a freight broker goes belly-up, any payments due to the carriers usually vanish, too.

One of the stories I’ve been following lately is a court fight involving the trustee for the Mississauga, Ont., load-broker arm of TCT Logistics and a small group of carriers led by Jim Hicks, the president of Travelers Transportation Services in Brampton, Ont. When TCT Logistics and its Calgary-based parent went bankrupt earlier this year, Hicks was owed about $100,000. So he decided to test a little-used law in Ontario that requires brokers to keep the portion of the payment owed to the carrier in a trust account. KPMG, the trustee in the bankruptcy, had indeed set money aside as it collected receivables, but said the funds in the trust account-believed to be about $2.8 million-should be paid to secured creditors, who reportedly are owed $70 million.
Ontario is the only province with a load broker liability law.

“I wasn’t about to leave $100,000 sitting there,” Hicks says. ‘It’s owed to my company-we did the work, and the law says the money is supposed to be there so we can get paid.” A judge agreed. More details about the case appear in our Dispatches section, which starts in page 14.

Hicks says he had no indication that the brokerage business was going under. “We heard rumours about TCT Logistics and its trucking operations out in Calgary, but the guys we were dealing with in Mississauga was paying its bills in 30 days,” he says.

I asked Hicks what he learned from the experience. He says Travelers, a general freight operation, deals with dozens of different load brokers on a regular basis. He wonders how much he really knows about any of them.

“I think carriers have to look really hard at the brokers they do business with. How many carriers ask their brokers to make sure the money is paid into trust? I know that even after all we’ve been through, only one broker we use keeps the payment in trust. One, out of God knows how many we use.”

He says carriers need to be more responsible about their broker relationships. Ask the broker if it’s authorized to broker freight. Ask if it is bonded, as Ontario law requires.
“If you’re a load broker in Ontario, you know about this law but you just don’t talk about it,” Hicks says. “Carriers, on the other hand, think the law is a joke because it’s never been enforced. There’s never been any attention given to it by the province. Until now, with this court case.”

Homeland Security

Sept. 22-29 marks National Trucking Week, sponsored by the Canadian Trucking Alliance and its provincial affiliates. I find these events contrived-gratitude should be a 52-week affair-and I wasn’t going to mention it, but I reconsidered after reading Jim Park’s essay, which starts on page 54.

Jim says fleet managers need to get creative if they want a work environment that attracts good people and entices them into sticking around. So here’s a challenge for those who manage drivers: focus on families. Create a chat area or a bulletin board on your web site drivers and their families can use to stay in touch. Set up a laundry room at your terminal so drivers don’t have to bring home dirty clothes.

Put together a list of phone numbers of your drivers’ spouses so they have someone to call if they need something-a babysitter, someone to mow the lawn, someone to talk to.

The drivers I know freely admit that the only job tougher than being a truck driver is being a trucker’s spouse or kid.

If a driver’s family feels the company cares about them-that it appreciates them-they’ll be more understanding of the demands the business places on the driver. Who could be cynical about that?