Thoughtful Relationships in a Co-Broker Mindset

Andrew Gulovsen | TRANSPORTATION INTERMEDIARIES ASSOCIATION

During the LTNA (Logistics and Transportation Association of North America) conference in Nashville this past October, leaders across the supply chain discussed topics focused on technology, customer experience and logistics management. While there was much agreement about the direction of logistics in the coming years, there were a few areas of healthy disagreement.

One point of contention revolved around co-brokerage or any transaction involving two or more 3PLs. TIA defines co-brokering as an authorized and duly contracted relationship where one party has the shipper connection and the other party has access to a better capacity solution. To satisfy the shipper needs, a second broker may become involved to offer more suited capacity for a shipment or lane.

Unfortunately, there is also unauthorized double brokering where one party (or multiple parties) misrepresents itself as a carrier and then brokers out the freight to another for-hire carrier. This double brokering (or even triple brokering) destroys the transparency and significantly limits accountability to the freight – leading to higher costs, potential theft or other fraudulent behaviors.

The key to properly managing additional parties in any supply chain transaction is to have a clear delineation of roles and responsibilities – as defined in MAP21. 3PLs live and die through their relationships with the shipping community (manufacturers, distribution partners, freight aggregators and forwarders) and the transportation capacity community (trucking companies, IMCs, LTL platforms, dray companies, ocean carriers and air carriers). Proper agreement and contracts are designed to protect those relationships, while providing a mechanism to serve the clients and transportation partners.

The co-broker agreement is designed to support growth by leveraging long-term relationships that each 3PL has built, however, they may need new strategies for maximum utilization. It is important to build the relationship between 3PLs, similar to those with shippers and carriers. While it can be used transactionally, the agreement is at its most effective state when there is a thoughtful strategy guiding this new relationship.

Ultimately, with any business relationship, it is all about trust, transparency and accountability.                 

Andrew Gulovsen is Sales Director with the Transportation Intermediaries Association. For more information, go to www.tianet.org or contact Andrew Gulovsen at gulovsen@tianet.org.

Photo credit: igor kisselev/Shutterstock.com