This article is continuation of a multi-part series, see part I
Carriers vs. Brokers
Consumers’ looking for an auto transport company main objective is to find a reputable company that will do the work at a great price and quality. Many people have an unfaltering notion that they will be able to find that company without much effort on the internet or yellow pages only come to realization, maybe through their disappointing experience or other negative reviews of exactly how hard it is to do so. Some lack the understanding of the car shipping business and others may have unrealistic demands.
Car shipping is a niche industry, never intended to cater to the needs of individuals shippers, with many overextending compromises and weaknesses.
Established carriers with large fleets tend to focus on their main customers, dealers, manufacturers and wholesellers. For a large fleet it is unprofitable to dedicate great resources to acquire a customer that may only ship one or two cars. Smaller carriers do not have the resources to market themselves or offer the level of customer service that is expected. Due to the geographical size of the US and fierce competition, it is difficult for a small carrier offering nationwide service to get enough exposure.
Brokers perform a vital part in the industry primarily because of their expertise in marketing, information data management, and customer service. Brokers are usually non-asset based 3rd party logistics companies that market transportation services. A large portion of all freight shipped in US, including cars, is booked through brokers. Brokers are especially useful when carrier capacity is low and shippers are adamant about getting their product or vehicles shipped asap.
A reputable broker will have strict quality controls about the hiring practices of their subcontractors and will be able to leverage their economy of scale to meet the needs of their costumers. A customer is much more likely to find a broker directly than a carrier because brokers target customers, know about their customers tendencies and have analytical data to match customer’s demand. Carriers are rarely equipped or staffed to prospect for business opportunities.
The biggest problems with brokers is the lack of oversight and regulation. Because brokers have relatively small overhead costs and no restriction to entry into the business, often ill-trained or inexperienced companies begin to solicit their services to customers. In fact there are thousand of the different brokers just specializing in auto transportation for consumers. These brokers not only make promises to consumers which they can’t fulfill but also do not fulfill their obligations to carriers.
Majority of auto shippers are a one or two unit fleets. They often lack the resources to market themselves to their customers and especially lack the capacity and geographical coverage that their customers demand. Carriers like to have dedicated routes which offer a compromise of “home time” and profit making. It is not practical for a customer to wait for a carrier to complete their route to ship their cars since some routes take up 18 days. Carriers are on the hand are committed to their bottom line, profits. A carrier will not a purposely book a load from which he can’t make money. Carriers have large expenses not limited to fuel, wages, equipment and subjected to strict government regulations. With high overhead a carrier is interested in driving as few as possible miles and for the maximum amount of revenue. Majority of the freight that small to mid-size haulers transport comes from brokers.
Alex Marinov is the president of RCG Logistics LLC, with years experience in the shipping and freight industry. His main interest include sustainable building design, video production and automobiles.