Trucking Company Agent Programs
We get a lot of questions about different trucking company agent programs from both truck freight brokers as well as capacity truck agents.
The truth is twofold:
One, there are as many different truck agent programs out there as there are trucking companies.
Two, when it comes right down to it all the truck agents or truck freight broker agency programs are the same.
Yes, we thought that would confuse you.
We will try to justify our two seemingly contradictory statements for you.
Let’s start with what you probably want to know when comparing a truck agency program.
Compensation is probably the first thing that comes to mind. We understand that. Compensation is what gets your attention.
We have run across two general types of compensation programs for truckload agents. One is all trucks are paid ‘X’, the agency receives ‘Y’ and the trucking company keeps ‘Z’.
Just to put numbers to this truckload agency program compensation let’s say all trucks are paid 75%, the agents get 8% and the trucking company keeps 17%.
This is one type of typical agency program payout. The percentages may vary but you get the picture. The second type of truckload agency compensation program we have run across is the ‘total payout’ model. Under this truckload agency compensation program the company pays out ‘XY’ and they keep ‘Z’. This means how much the agent makes depends on how much they pay their owner operators.
Putting numbers to it, let’s say the trucking company pays out a total of 85%, this includes the agency compensation and contractor compensation. The trucking company keeps 15%. So if the trucking agent pays out 75% to their owner operators the agency keeps 10%. If they pay out 78% then they keep 7%.
Personally we like the Total Payout truckload agency model.
The Reputation of the trucking company should be very important to you when evaluating a truck agent program. What is their reputation in the industry in the way they treat their contractors and agents?
How long has the trucking company been in business? This is important not only to ensure they can pay their trucking agents but it also gives you an idea about how well their process are designed and how your customers and owner operators will view them.
What is their safety rating? Don’t kid yourself, customers look and transportation company safety ratings. Yes, there are some customers and brokers that don’t care but if you want to ensure you can keep your trucks loaded and ultimately grow your business you had better care. It makes a huge difference.
If you are an existing truckload agent, will they take your current contractors? Different trucking companies have different driver standards. But, this DOES make a big different to the trucking companies safety ratings. It makes a difference to your operations if you are going to make a move if only half your drivers can be approved but don’t’ assume that makes the trucking company you are looking at the bad guy. What are the safety ratings with the company you are with? There is probably a reason your drivers won’t qualify just everywhere.
The better the trucking company the more they care about safety and the harder it will be to get your contractors approved. But, if you are just signing on anyone and your current company allows that you might find yourself out of business, your current trucking company shut down by the DOT or a lack of customers or sitting in front of a jury explaining why you have unsafe drivers.
Yes, you need trucks and revenue but you also need a safe operation. Good, stable trucking companies want safe drivers.
Personal relationships are also important if you are a truckload agent looking to make a change. Are the people you dealing with at the potential trucking company nice? Do you like dealing with them? The transportation industry is all about relationships. Most of the time an extra percentage is not worth dealing with someone you don’t trust.
Technology is an ever growing important issue in the trucking industry. You need to find a company that even if they are behind right now, embraces the future of technology and is working to catch up. I know if you are ‘old school’ you probably like phone calls and personal interaction but the industry is changing. Admittedly it is changing slower than most other industries.
At the very least make sure when you are evaluating a trucking agency program that you like their load entry system. It doesn’t have to have a hundred bells and whistles but it should at least be easy to put a load in and dispatch a truck. The last thing you need is to have to fight the computer while you are juggling a hundred emails and phone calls.
Watch out for the hidden items. If a trucking company tells you they are going to pay you X% then you find out that it is actually less because they take stuff off the top or have LOTS of charge backs then you cannot compare them the same way to another company that says they will pay you X%.
Not saying all the charge backs or taking things off the top is bad, just that it is important they are honest about it. Just take these things into consideration when you are comparing total truck agent compensation.
We also mentioned above that all trucking companies agent programs were the same. Well, they are, in a way.
Let us explain. Most trucking companies offer many of the things we listed above. Some are stronger in one area as compared to others.
Most trucking companies have similar total margins which means they can only payout so much and still hit their profit goals. They just package the agent compensation in different ways.
One company might pay you 8% of 100% while another might pay you 9% of 97%.
One company might pay you 10% but you are responsible for contractor bad debt while another company might pay out 8% but you are not responsible for contractor bad debt.
A company with a bad safety rating might pay you 10% because you can’t find the best freight while a company with a great safety rating might pay you 9%.
A brand new trucking company just trying to figure the truckload agency model might pay you 10% because you are going to have to suffer through their growing pains or the real risk they may decide to get out of the truckload agency model.
All trucking companies operate from the same payout potential pool. They just move the water around depending on circumstances.
Good luck out there.