In the current environment, where freight volume is soft, freight brokerages are looking for ways to increase profits. While it may not be possible to get more freight from your current customers, it is possible to grow by increasing your market share. A great way to increase profits, while keeping overhead costs low, is by adding independent agents to your brokerage.
The agent model
The agent model in a freight brokerage works like this: you provide back-office support to experienced brokers, who work as independent business owners. Typically, you will pay them a commission based on the gross profit from the loads they move. In exchange, you provide back-office support by handling all the accounting, billing, insurance, marketing, etc.
HOW TO MANAGE AGENTS
Tools for managing agents are available in many TMS systems, including DAT’s broker TMS, DAT Keypoint.
The agent model allows for quick revenue growth. Although the agent’s commission dilutes the company’s profit margins per load, adding agents will allow your brokerage to move many more loads per day. Agents can help you expand into new territories or add a specialization to the services your brokerage offers.
Using agents can be a win-win situation: you add extra revenue to your company, while the agent can concentrate on what he or she does best—negotiating and moving loads—without the risks of business ownership. Many agents work from home or an off-site office and enjoy the independence of setting their own schedules.
Managing your agents
To succeed using the agent model, a quality transportation management software (TMS) is a must for managing the operations and accounting functions for both you and your agents. Many TMS systems have features designed specifically for managing agents. For example, DAT’s broker TMS, DAT Keypoint®, has an Agent Module that customers can easily add.
DAT Keypoint’s Agent Module allows agents to see their own customers (shippers) and loads, while the home office has a global view of all the freight from all the agents. You can also configure certain information to be shared between agents to facilitate collaboration on moves. Carriers are shared among the agents, so carrier qualification is done at the corporate (home office) level. This ensures that all insurance and safety checks are in place for everyone. On the accounting side, all agent loads are automatically available to accounting for paying the carrier and billing the customer.
Providing the right tools
To attract and retain the best agents, you’ll want to provide them with tools that will keep them operating at peak efficiency. These include a load board for posting loads and searching trucks, a freight rating service to give them price guidance on current market rates, and a carrier monitoring service that enables them to check carriers’ DOT authority, insurance, and CSA safety scores. DAT offers all these services, and all can be integrated seamlessly into DAT Keypoint or most other TMS systems.
If you’d like more information about DAT Keypoint, the Agent Module, or any other DAT product, please send me an email or call 800-728-7305.
Categories: Best Practices and Benchmarks