Freight brokers are companies that act as intermediaries in the moving of freight throughout the United States. They agree to move freight for a shipper for a fee and then find a carrier who will move the freight for an amount that is less than the fee the shipper is paying the broker (hopefully). You can think of this as buying capacity from a trucking company at a low price, then adding value-added services to that capacity and selling it to a shipper at a higher price. Brokers collect money from shippers (revenue) and pay money to carriers (purchased transportation) and retain the difference (margin/profit) to run their businesses. Generally, a broker owns no assets (trucks) but may be connected to an asset provider, or they may own a few assets. The roles used as examples in this book are those found at typical non-asset, spot-market brokerage organizations. Companies that provide asset-based services or full transportation management services, such as full LTL (Less Than Truckload) shipping management, TMS (transportation management system) services, and freight bill auditing, will certainly find the material herein valuable, but some adaptation will be needed to apply these concepts to those types of roles.

Many of the original brokers used a cradle-to-grave organizational model (one person managed all aspects of the buying and selling of capacity) and often were paid using a 100 percent variable, straight-commission model. So, what’s wrong with this approach for paying your employees?

Nothing wrong at all. That is, if every employee has the same opportunity, the same skills, the same training, and all your freight is from the spot market, where each day is a new day and no one knows for sure what’s coming his or her way.

However, as this industry has matured, many freight brokers have found the traditional approach no longer works for them. This is especially true in organizations with substantial business from contracted or long-standing “house” accounts, or those moving toward more sophisticated organizational structures (such as using strategic account managers, strengthening th