How To Get Better Shipping Rates

Overcoming the High Shipping Rates

A Guide for Freight Brokers Looking to Get into Volume Discounts ??????

We've all faced the dreaded "your rates are too high" objection. While we don't want to be the cheapest option, we do want to offer fair rates for the level of service we provide. In this article, we'll explore some methods for handling this objection while bringing our rates as freight brokers down to a more competitive level. ????

Please note my way of doing things will involve an incredible amount of work and experience on your end as a broker and possibly even face-to-face meetings, travel, personal investments, and more. However, to compete with some of North America's largest brokerages, it may be essential, especially when it comes to volume shippers and contracted lanes.

Volume Discounts and Carrier Negotiations: Mastering the Art of Freight Brokerage ??????

In the competitive world of freight brokerage, overcoming objections and securing cost savings for shippers is essential for success. Two interconnected strategies can help you achieve these goals:

offering volume discounts and negotiating better rates with carriers through volume and back-hauls.

Personally, volume discounts has been something I have used to get in the door with these larger shippers and big-box stores for years; this method, unfortunately, does require a bit of control or leeway on your ability to go below your typical 15% margins. However, to compete with the larger 3PLs, it can and will be essential.

Let’s dive deeper into these approaches and discuss how they can help you stand out from the competition. ??

Volume Discounts: The Key to Long-term Business Relationships ????

When a shipper is sending a large number of shipments, offering volume discounts based on the increased business can be a powerful incentive. This encourages shippers to consolidate their shipments with your brokerage, leading to cost savings for both parties! ????

However, volume discounts only work when BOTH the shipper and carrier are in agreement, and you have NO competition. It's important to remember that this strategy comes with a significant responsibility. Both the shipper and carrier are relying on you as the broker to ensure their loads are covered and trucks are loaded. ???? Giving a load back when a shipper places all their eggs in one basket, simply is not an option.

For brokers new to the industry or those who may not have the resources or experience as a larger brokerage, there may be more opportunity and profits sticking to niche markets. We will dive more into niche markets in the next newsletter. But lets continue and go into more details on the HOW TO DO THIS.

Carrier Negotiations: Building Trust and Securing Better Rates ????

Leveraging your relationships with carriers to negotiate better rates on behalf of your clients is crucial. As a broker, you often have access to multiple carriers, which allows you to compare rates and secure the best possible pricing. But it’s in the power of these relationships that you can distinguish yourself from the rest of the crowd. The best brokers hardly use load boards and rely on trust and partnerships with carriers. ????

To make volume discounts work, it's essential to involve the decision-makers on the carrier side during rate negotiations. Remember, carriers are used to being promised loads and volume, just as shippers are used to being promised reliability. That's where relationships and trust come into play. ????

The same amount of effort you place into negotiating with the shipper must be placed in negotiating with the carrier.

When working with volume, your margins as a broker may be lower. It's important to focus on the long-term benefits of this approach. For example, moving close to 2000 shipments per year for a client may generate $72,000 per year in net profits with margins below 8 percent ???? This is why it is CRUCIAL to have commitment from the shipper and carrier to avoid potential risk.

To make the most of this strategy, it is highly recommended to integrate your TMS with the shippers. This helps to reduce overhead costs, streamline processes, and automate redundant tasks. By doing so, you can lower the overall cost required to run freight at these volumes. ?????

Without these automation integrated, it becomes nearly impossible to commit to such low margins; however, when done correctly, you can secure steady and consistent freight year after year.

Back-hauls: An Opportunity for Higher Margins ????

When you have regular lanes to specific areas, it's essential to consider back-hauls. By selling a load as a rounder, you can save carriers hundreds of dollars, which gives you room to negotiate and earn higher margins while keeping the shipper's cost down. If you have regular lanes, as a broker, that's a good place to focus your prospecting. It's much easier to sell a rounder than a one-way trip to a carrier. ????

When working with volume shippers, I have always placed my prospecting efforts towards securing back-hauls for the carriers committed to the lanes. In most cases, I'm only working with 2 or maybe 3 carriers to ensure full coverage of all lanes!

The responsibility involved when brokering freight this way is extremely high. This is why your relationships with both carrier and shipper MUST be rock solid. In most cases, the carriers are dedicating their fleet to a single shipper, and shippers are dedicating their loads to a single broker “aka you”. As a broker, ideally, you have multiple clients, so the loss may not seem as significant. However, to the carrier or shipper, it can be detrimental.

Maximizing Prospecting with Salesflare CRM - The Secret Weapon I Swear By ????

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Recap: What Did We Learn?