Transportation Funding

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A Transportation Blog

How To Find Good Freight Brokers

It’s a problem that many small or mid-sized trucking companies run into constantly. How can you find good freight brokers — ones that will pay a good rate, and pay on time? Every dispatcher knows the feeling: Scanning the load board and seeing a list of only unfamiliar or questionable brokers. And yet sometimes you have no choice. Your driver needs to get home, and he or she is in an area where there simply aren’t many options. So you take a load that you aren’t sure about.

There are many things you can do to find out about freight brokers. The load board might have some information about how the broker pays its bills. Or you might be able to piece together some authority or bond information about freight brokers FMCSA Licensing information. You might even ask around to see what other truckers say about a company. But load boards aren’t always able to put together complete information, and the FMCSA won’t tell you you days to pay. Asking around won’t always give you a reliable picture.

Transportation Funding Group Can Help

If you’ve looked around our website, you know we’re a factoring company. And you’ve seen that we can help you speed up your cash flow like we have hundreds of trucking companies over the years. But that isn’t all we do. Our goal is to do whatever we can to help our carriers be financially healthy. So we also try to provide useful credit information about freight brokers and shippers before a carrier moves a load.

Transportation Funding Group has more than 20 years’ experience with freight brokers large, medium, and small, and we can tell you what our carriers’ experience with a particular broker has been. And since new freight brokerages appear all the time, we’ve got the resources and research to investigate companies that we haven’t worked with before, and tell you whether it makes sense to accept a load or not. And if a carrier of ours moves a load for an otherwise good freight broker, but we’re still having problems collecting, we’ll do whatever it takes to get paid, and if that means putting together a bond filing against a freight broker, we can do that too.

So even if you aren’t sure whether you need cash flow help, give us a call. Though we are a factoring company, we’ll also help you with more than just improving cash flow.

FMCSA’s Proposed Safety Rules

In January of this year, the Federal Motor Carrier Safety Administration (FMCSA) announced a proposal to change truck fleet safety rules.

truck inspection

According to the FMCSA, the goal is to monitor a larger number of trucking fleets than it has in the past. This could have a big effect on truck fleets: Currently, the agency rates fleets as satisfactory, conditional, and unsatisfactory, and the current rules prevent unsatisfactory fleets from operating. Under the proposed safety rules, though, the FMCSA would eliminate the “conditional” rating. Any fleet that isn’t satisfactory would no longer be able to operate. This will mean that fleets in violation of safety standards would not be given a chance to make appropriate changes. (The FMCSA argues that, under the current system, it is often not able to monitor fleets rated “conditional,” and as a result, required safety changes are never made.) Furthermore, the FMCSA estimates that it would base its safety ratings on road-side inspection of 75,000 trucks per month.

Opponents of this proposal (including the American Truck Association and the Truckload Carriers Association) don’t like the changes for several reasons. First, they say, the proposed safety rule standards are arbitrary, and are the same as those under the current Safety Measurement System (which Congress said were unclear). The guidelines the FMCSA will use to determine safety are statistically flawed, they say. Additionally, removal of a “conditional” rating will mean that a fleet found unfit will be barred from operation, with no practical option to appeal or improve the unfit rating. Ultimately, opponents argue, the proposed safety rules will make it harder for fleets to be judged accurately while doing little to improve safety.

The Advantages of Billing Services

Everyone knows that time is a precious commodity. You juggle your time, do your work and juggle your responsibilities, hoping that there will be enough time to get everything done. For many trucking companies, one of the things that sucks up lots of time each week is invoice and bill preparation. Many small trucking companies find that they would take advantage of an outside billing service if it’s reliable and priced right. In response to this need, Transportation Funding Group has developed a low-cost billing service.

Transportation Funding Group recently completed the development of a QuickBooks-based billing system that we use to help our carriers generate and process billing. It’s simple: just submit your paperwork to TFG and we’ll assemble the paperwork and produce a professional-looking invoice. Your billing is then processed on the factoring side immediately, so that you have access to your cash flow as soon as possible, instead of later, once you’ve found time to do your weekly billing.

With this billing service, you get back the time that you have been spending on bill preparation. You can devote yourself to your other responsibilities — dispatch, customer relations, actually driving — instead of grinding through your billing each week. Just send us your trip tickets and supporting documents, and we’ll take care of the rest.

We charge on a per-invoice basis, and our rates are low. There is no long-term contract and you get complete flexibility. Call TFG at 1-800-705-3863 to learn more.

The Importance of Reliable Credit Information

As you haul freight for various shippers and brokers you occasionally must decide whether or not to risk extending credit to a new customer (shipper/broker). Naturally, you want to get paid for hauling the freight, but dealing with unknown companies might leave you holding the bag. Everyone has heard stories of brokers (or experienced them firsthand) who promise “too good to be true” rates—and then rip truckers off after the fact.

So how can you minimize your risks?

The obvious first solution is to check new customer credit with a reliable credit reporting source. There are several solid credit companies that you can subscribe to in order to access credit information. Ansonia Credit and Compunet are both reliable trustworthy credit companies. Based on your useage, subscription fees can run $25 to $35 per report. Higher volumes generally command lower rates.

Another good source of information is credit data available from your factoring company. At Transportation Funding Group you may go online via our website and access credit information on more than 30,000 debtor files for free! You can look at how long we have been doing business with the customer, what their high credit has been, how quickly they pay their bills, and other key credit information that can help you make a smart credit decision.

Our carriers regularly call us to ask for help with credit decisions. If we need to order a credit report to supplement our credit information, we do that at no charge to our carrier.

TFG performs all credit follow-up with your customers: we make the phone calls and keep the money turning. This regular and ongoing contact helps keep your accounts under control. If a problem develops we alert you to that immediately so you can take steps to protect your interests. This up-to-the-minute credit information gives you added peace of mind that you have an outside third party looking out for your company. We can assist you with other credit follow-up steps which might include filing against a broker’s bond, among other things.

Since October 2013, the minimum limit for a broker bond was increased from $10,000 up to $75,000. This is a good change, especially if you do need to file on a particular broker’s bond. With a higher minimum, there’s a better chance that you can get paid on an invoice from a deadbeat broker.

The better credit information you have available to you, the less likely you will be to have credit write-offs.

The Way of the Future? Vehicle Miles Traveled Tax in California

The California legislature recently passed a bill that could change how vehicles are taxed. Instead of continuing to use the traditional method of — a tax on fuel consumption — California seems likely to adopt a “Vehicle Miles Traveled” tax. If put into place, this could have an effect on general driving habits, and could pose significant financial problems for trucking companies.

By making this change, California lawmakers (along with Washington and Oregon, who are considering similar programs) are responding to a decrease in the amount of fuel tax revenue the state has received in the past several years. Both a downturn in freight traffic and the rise of fuel efficient vehicles have wreaked havoc with the Golden State’s ability to pay for roads and other transportation-related services, and the Legislature sees this as a way to boost that deficit.

Here’s how it would work in California: The state currently enforces a 53 cent-per-gallon fuel tax (in addition to the federal tax of 18 cents/gallon). They would eliminate that 53 cent tax and replace it with a fee of 5 cents per mile driven. The state would install a GPS tracking device on all vehicles to monitor use, and assess a tax on that basis. Supporters of the tax argue that it will generate more revenue than an increased gas tax would, and would force those who use the roads more to pay for a greater percentage of their upkeep.

(Supporters also advocate for VMTs to be imposed at the federal level, given the Federal Highway Trust Fund’s ever-impending insolvency.)

There are voices (especially in the trucking industry) that oppose the vehicle miles traveled tax. The most common and obvious counterargument is those who drive for a living will bear a disproportionate share of the tax. Some argue that oversight of the VMT tax would be more costly than it’s worth, and suggest that evasion would be common. Others point out the astronomical costs associated with putting the tax in place (i.e., the cost of installing GPS devices in every car). And, perhaps most importantly, is the issue of privacy — many oppose the idea that the state will effectively have the ability to monitor and record the movement of every car on the road. (Some, including Sen. Barbara Boxer of California have suggested that the law could not pass at the federal level for this reason.)

The trucking industry will watch California’s pilot program closely. If adopted, it has the potential to greatly effect the way truckers do business in California and throughout the west.

The Question of Credit Management

Comparing the concerns that truckers have today with those of ten years ago can be interesting. As we cited in our last post, many of the problems are the same today as they were ten years ago. One area that was not elaborated upon, however, was the topic of extending and managing credit.

It’s one thing for a trucker to have secured good customers, have the correct rates calculated, and have drivers in the trucks (but it can be difficult, obviously, to secure these things all at the same time). And once you have these things in place, a trucker hauls the freight but then must wait 30, or more, days to get paid for the services rendered. How do you know you will be paid? How do you know how much credit to extend?

The question of credit management is one that gets far too little attention. Truckers must educate themselves regarding credit and employ the best practices to avoid credit problems. The faltering economy may be affecting your shipping customers and the brokers that hire you to move freight, and these companies may not be as credit-worthy as they were in the past. They could pose a serious credit risk to your company. Equip yourself so that you can minimize some of the risks of extending credit.

The first tool you should have is a good, reliable outside credit checking source. There are load boards that will rate a customer debtor’s past payment record. This is a good start, but load board information can be limited. Like a patient in the doctor’s office, you might need to get a second opinion. There are several valuable and reliable credit companies serving the trucking industry that provide you with a more in-depth look at a customer’s past payment habits. Ansonia Credit and Compunet Credit serve the trucking industry and for a reasonable subscription fee. These credit management tools, and others like them, can give you added peace of mind.

Another credit-checking tool: If you factor your invoices with a factoring company (like TFG), the factoring company often has a database of credit information that you may access in order to help you with your credit decision. At TFG we make this information available to you at no cost 24 hours a day.

Looking at today’s problems in the industry can help you focus on how you might improve your credit management operations. Better and more attention to credit management are only going to help your company.

There’s a new survey being conducted by the American Transportation Research Institute, which is attempting to identify the Critical Issues in the Trucking Industry for 2014. There’s still time for you to participate in the survey, which you can find here. You’ll be provided you with a copy of the results once the survey is completed. This is a good way for you to access information that can help you manage your company better.

If you have questions about credit management call us at TFG at 800-705-3863.

Truckers’ Concerns, 2014 Edition

A recent study highlighted a number of truckers’ concerns, and some of the issues raised aren’t surprising. Research conducted by the American Transportation Research Institute shows that, though there are many standard transportation problems on the list, the most important are those relating to the current status of trucking regulations.

Leading off the list of truckers’ concerns was the 34 Hour Restart regulations enacted in 2013. We’ve already discussed those regulations in detail in a previous post, but it isn’t surprising that truck drivers are bothered by regulations that, they claim, make roads less safe while hampering productivity. Right behind 34 Hour Restart on the list was a similar issue: the “Compliance, Safety, Accountability” program that heightens safety requirements (and monitoring) related to freight movement. Perhaps the biggest questions surrounding the CSA program relate to enforcement, which hasn’t been consistent in the two years since it began. Other regulatory issues making the list included electronic logbook recording requirements (coming in at 5th) and truck fuel prices (8th), which may become more important as lawmakers debate whether to increase the fuel tax by twelve cents.

The remainder of the list indicates economic concerns: The driver shortage and driver retention; general concern about the state of the national economy; and transportation funding. (Contact us if you’re concerned about that last one — we can help!)

But what a difference a decade makes. In 2005, truckers’ concerns focused primarily on general economic issues. Today, while economic issues still make the list, it’s traffic and safety regulations that lead the way.

34 Hour Restart; Other Legislative Rumblings

In the last few weeks, there have been rumblings in Washington that might lead to regulatory changes for truckers.

In a hearing before the Senate Commerce Committee on June 30, representatives from the FMCSA and the trucking industry sparred over current safety regulations. The primary bone of contention, not surprisingly, was the 34 Hour Restart, a rule that took effect one year ago and limited the number of hours in a week that drivers can operate. Competing proposals before the Senate include one from Sen. Susan Collins (R-ME) that would put the 34 Hour Restart on hold until research into its effect was completed. On the other hand, Sen. Cory Booker (D-NJ) has proposed a bill that would keep the Restart in place permanently. Not surprisingly, truckers and trucking industry advocates remain unsatisfied with the 34 Hour Restart rules, which they suggest puts more trucks on the road during higher traffic times (and are actually less safe).

One way to adjust to the 34 Hour Restart Rules / CC BY-SA 3.0 by Fourthords

One way to adjust to the 34 Hour Restart Rules / CC BY-SA 3.0 by Fourthords

Another issue mentioned during the July 30 hearing, by Sen. Roy Blunt of Missouri, concerned the FMCSA’s drug and alcohol testing rates. According to the FMCSA’s regulations (in 49 C.F.R. 382), though the initial required rate for drug and alcohol testing was 50% of the average number of drivers per year, the testing rate can be reduced to 25%. That is, if the trucking industry as a whole passes the random tests more than 99% of the time for two years, the head of the FMCSA may lower the rate of testing. Though the industry has passed the test each of the last two years, the rate of testing remains at 50%. As Sen. Blunt suggested, “there’s some point where that number goes down to 25%.”

Both of these topics arose in the wake of the resignation of Anne Ferro, the FMCSA chief, announced July 25 and effective at the end of August. Ferro’s tenure was marked by a notable increase in regulations aimed at promoting safety (including both of those discussed above, and the “Compliance, Safety, Accountability” program, which has had some notable issues of its own). The industry will undoubtedly watch closely as Ms. Ferro’s successor is chosen, and as Congress deliberates over the state of trucking regulations.

FMCSA Proposed Insurance Requirements For Trucking Companies

It’s well-known that, at the end of 2013, the Federal Motor Carrier Safety Administration increased the minimum insurance coverage requirements for freight brokers to $75,000. But it may be less widely known that the Department of Transportation has proposed increasing the insurance requirements for trucking companies as well. In a report issued in April 2014, the FMCSA suggested that, in the near future, the current minimum requirement of $750,000 could be increased to an amount much higher. (You can read the full report here.)

Volvo Truck, courtesy of Patrice Raunet Hollywood

Volvo Truck, courtesy of Patrice Raunet Hollywood

In its report, entitled Examining the Appropriateness of the Current Financial Responsibility and Security Requirements for Motor Carriers, Brokers, and Freight Forwarders – Report To Congress, the FMCSA suggested that current insurance minimums were not high enough. The previous minimums, the report says, were set during the 1980s, and the cost of damages over the past three decades has risen dramatically since then. During the same time, insurance rates have dropped a bit –meaning that an increase in the minimum insurance requirements may not bring trucking companies’ actual insurance costs to a level above what they were when the previous minimum was set. This led the authors of the report to conclude that:

”[T]he current financial responsibility minimums are inadequate to fully cover the costs of some crashes in light of increased medical costs and revised value of statistical life estimates.”

What is interesting about this conclusion, though, is that it does not appear to account for some other (possibly significant) numbers, which the report itself mentions a few pages earlier. There are 330,000 crashes per year involving trucks, but fewer than 3,300 of these crashes cause damage in excess of the current insurance minimum of $750,000. In effect, then, the FMCSA will increase its requirements for all trucking companies because fewer than one percent of accidents exceed the current minimums.

How much might the FMCSA increase the insurance requirements? It isn’t clear yet, because the agency has only begun the process of putting together a new rule. The report gives us a hint, though: it cites a study from the Pacific Institute for Research and Evaluation recommending a minimum policy limit of $10 million per crash.

We don’t know where the FMCSA will set the minimums in the future, or when they might do it. But we’ll have future posts on this issue, so make sure to check back.

The Truck Driver Shortage for Small Truckers

There’s a truck driver shortage in the trucking industry, but it may not be a bad thing for small trucking companies.

It’s been a problem that’s received significant press over the last couple of years: even as general unemployment remains a problem for the economy as a whole, the Wall Street Journal reports that the trucking industry continues to experience a driver shortage. At the time of this post, there were an estimated 25,000 unfilled trucking jobs in America, and, according to a report from the American Transportation Association, that shortfall could increase tenfold over the next decade.

There are a couple of possible reasons for the shortage. The WSJ article mentioned above suggests that it’s possible that younger drivers simply don’t like the idea of life on the road. It’s also possible that the federal regulations enacted in 2013 have played a role; since the new driving-time rules took effect, drivers are forced to stay on the road longer, but at the same pay rates. Another commenter suggested that a construction boom is contributing to the driver supply problems: individuals who would otherwise drive trucks have changed industries, and are working work locally.

Regardless of the cause of the continuing shortage, what does this mean for trucking companies in the short- and medium-term? It makes sense that a weak labor supply will have upward pressure on prices – in other words, driver wages will generally increase as trucking companies compete to hire a smaller pool of drivers. This would help drivers, of course; but it may also help smaller trucking companies.

As wages go up, over time, the price of loads will rise – that’s an obvious benefit. And as larger truckers are constrained by a dwindling driver supply, they’ll be able to deliver fewer loads. Copeland Trucking, as reported in the WSJ article referenced above, have been “turning away business because of unfilled openings.” These loads still need to be moved, and it may mean that flexible smaller companies can fill the gaps created by larger companies’ inability to hire drivers, as more loads become available.

The driver shortage is real, and it may not be going anywhere. But it may, in the long run, be a good problem to have for small companies.