Licensed transportation brokers: their joys and frustrations.

On the tenth anniversary of the 1980 Motor Carder Act, the authors conducted a survey of trucking company CEOs regarding their reactions to trucking deregulation. One of the points made by a few of the respondents involved transportation brokers. Their observations were not complimentary. Two verbatim statements follow: * Brokers are parasites. They contract with shippers for freight and then ruthlessly shop among truckers for the lowest rates. They only care who can get it there the cheapest, not the safest. Shippers used to deal directly with carriers and we could establish a rapport. Today, they often use a broker, who takes a percentage and then finds anyone to move freight. Brokers take no risks and invest nothing in the trucking industry except a phone! * Brokers have become a curse of this industry. They have no authority, no trucks, or any equipment at all, and yet they manage to command a decent percentage of the revenues for shipping a product from city A to city B.(1) As a result of those comments, we decided to survey licensed transportation brokers regarding their opinions about their career area. But first, some background information. Transportation brokers provide a service to both shippers and carriers. For shippers who have freight to be transported, brokers will find a truck that will efficiently and economically transport the shipment. Brokers work with many carriers and can generally provide shippers with timely, low-cost transportation. They charge the shipper a competitive rate and in turn work with truckers who have empty cargo capacity for the shipment involved. The shipper pays the broker and the broker typically pays the carder about 85 percent of the revenue collected from the shipper.(2) Carriers benefit from this relationship because brokers assist them in their sales and marketing activities. Brokers generate additional freight that truckers need to run an efficient operation. In many cases, carriers also have a sales force, and brokers are used to supplement the efforts of the in-house salespeople.(3) In 1986, the Interstate Commerce Commission examined the service provided to both shipper and carrier by brokers and then observed, "In short, the explosive growth in the brokerage industry reflected a need in the surface transportation industry for innovative middlemen who aggressively identify and meet the needs of both shippers and carriers."(4) Transportation brokers have needed a license issued by the ICC to operate in interstate commerce since the 1935 Motor Carrier Act. Prior to the 1980 Motor Carrier Act, there were relatively few licensed transportation brokers. In 1975, there were 70.(5) However, the 1980 Act liberalized the rules regarding the ICC issuance of broker licenses. Thereafter, the ICC was to issue a license if the applicant was fit, willing, and able to be a transportation broker of property - other than a household goods carrier and if the applicant attested to his or her desire to comply with the transportation laws of the United States and the regulations of the Interstate Commerce Commission.(6) Transportation deregulation in 1980 also eased the ICC requirements for the issuance of motor carrier for-hire interstate operating rights.(7) The result was a flood of applications to the ICC for interstate operating rights - the great majority of which the ICC approved. In 1975 there were 16,005 motor carrier interstate for-hire property carriers authorized by the ICC.(8) By 1993 this number had grown to 53,205.(9) This new transportation environment created an opportunity for transportation brokers. Shippers needed intermediaries to keep track of all the new trucking options available to them, while carriers needed additional sources of freight. This was especially true of new carriers, who frequently utilized brokers as their main source of sales and marketing activities. For these reasons, the brokerage business has grown tremendously, from 70 licensed brokers in 1975 to over 8,000 in 1993.(10) Much has been written about transportation brokers, as will be noted briefly in the next section on transportation broker research. However, almost nothing is available regarding the "human relations" aspect of the brokerage business. That is the purpose of this article. Specifically, this article will answer these questions about transportation brokers: (a) If you could start your career over, would you still work as a transportation broker? (b) Has your personal income met your expectation? (c) What is the single greatest joy in your position? and (d) What is the single greatest frustration in your work? REVIEW OF TRANSPORTATION BROKER LITERATURE Transportation brokers are third-party logistics providers. This indicates that they are independent businesses that are intermediaries between the shipper and carrier. There are a number of other third-party logistics service providers - shippers' agents, freight forwarders, shippers' associations, public warehouses, protective packaging consultants, materials handling consulting engineers, electronic data interchange network providers, etc. In addition, there has been a rapid growth in the utilization of logistics service providers that perform most or all of a firm's logistics functions as independent contractors. This is known as outsourcing. While this concept is very common in some aspects of business - advertising is frequently outsourced to advertising agencies(11) - it is now rapidly growing in utilization for logistics activities, especially in the last ten to fifteen years. (An exception is the traffic function, which, for many decades, has frequently been outsourced by smaller companies.(12)) The use of any of the above third parties has advantages and disadvantages. These issues have been addressed in a number of academic and trade publications.(13) Other studies have examined the size and characteristics of transportation brokers.(14) In addition, a number of potential legal complications involved in the utilization of transportation brokers have been discussed.(15) There have also been studies that examine the pluses and minuses of using transportation brokers from the carrier viewpoint.(16) Finally, there are analyses of the pros and cons of using transportation brokers from the shipper point-of-view.(17) RESEARCH METHODOLOGY To address the "human relations" issues noted previously, a survey of transportation brokers was conducted. After the questionnaire was initially drafted, it was pretested in person with a small convenience sample of transportation brokers in St. Cloud and Minneapolis, Minnesota. Based on feedback from these brokers, changes were made in the wording of some of the questions. The sampling frame consisted of all brokers listed in the Transportation Brokers Conference of America 1993-94 Membership Directory and Handbook. An initial sample of 550 brokers was then selected. Each was sent a one-page questionnaire along with a cover letter requesting the broker's assistance. To help enhance the response rate, a preliminary letter was sent to each broker approximately one week prior notifying him or her of the pending survey. Also, a postcard was sent to each broker about five days following the survey. This postcard served both to thank those who had returned the questionnaire and to remind those who had not yet returned it to please do so. Twenty-eight questionnaires from the initial sample were returned by the U.S. Postal Service as "undeliverable," yielding a net outgoing sample size of 522. A total of 228 brokers responded to the survey, representing a response rate of 44 percent. This response rate is considered exceptional, especially given the professional status of the target sample. Responses from these 228 transportation brokers, then, form the database for this study. A limitation of this research is the ability to generalize about all licensed transportation brokers (over 8,000 in 1993) based on our sample survey of 550 members of the Transportation Brokers Conference of America: about one-half of its approximately 1,000 members. Our findings accurately represent the membership of the TBCA - but these respondents are less-than-perfect surrogates for all licensed transportation brokers for the following reasons. We spoke to Annette E. Petrick, executive director of the TBCA, and she indicated the following to us: 1. The TBCA believes there are between 3,500 and 4,000 active licensed transportation brokers. The ICC list is a much larger number because when a broker goes out of business, he or she frequently does not notify the ICC. In addition, many licensed transportation brokers are subsidiaries of a common or contract carrier, and frequently are not actively involved in the brokerage business. Therefore, the ICC registry of licensed transportation brokers is not a credible list, because many of its firms are not actively participating in the transportation brokerage business. 2. The TBCA does not believe an accurate list of active licensed transportation brokers is available at this time. At present, the TBCA is attempting to compile such a list from vendor sources - companies that sell business services and products to transportation brokers, such as business phone systems, fax and other data linking systems, computer software firms, etc. and this is how they have estimated the number of active licensed transportation brokers. 3. TBCA membership is used by their members as a means of informing shippers and carriers that they are pledged to operate as an ethical business by carefully following the TBCA Code of Ethics. 4. TBCA members are typically more established transportation brokers compared to all licensed transportation brokers, as will be noted below in more detail. In summary, the authors used the best list of active licensed transportation brokers now available. Still, it is likely that our findings do not totally represent all licensed transportation brokers, because TBCA individual members, compared to non-TBCA licensed brokers, tend to be slightly older, their companies use a greater number of carriers. and their firms have much higher total annual revenues.(18) RESPONDENT DEMOGRAPHICS Figure 1 indicates demographic characteristics of the broker respondents. As indicated in the figure, the typical respondent is male, in his 40s, has been a transportation broker for six to ten years, and has likely attended college (about 45 percent are college graduates). Information about the respondents' companies is provided in Figure 2. Two-thirds of the respondents work for companies that have ten or fewer employees. The most common annual revenues for the respondents' firm was $3 million. More than half of the brokers indicated that their total annual revenues were $3 million or less. Figure 3 shows the annual income of the respondents. Over half of the survey participants indicated that their annual incomes were greater than $70,000. TRANSPORTATION BROKER JOB SATISFACTION Figure 4 indicates that transportation brokers are very satisfied with their careers. When asked, "If you could start your career over, would you still choose to work as a freight broker?", over 90 percent answered either "definitely yes" or "probably yes." The lower portion of Figure 4 examines the demographics of those respondents who indicated they did not like their career choice. In general, those dissatisfied with their career choice - when compared to those who approved of their career selection - were younger, had more experience as a broker, were more educated, and had less income, although these differences tend to be slight. When respondents were queried, "How has your personal annual income compared to what you thought it would be?", exactly one-third of the respondents selected "much better." Figure 5 presents a breakdown of how this question was answered. JOYS OF BEING A TRANSPORTATION BROKER Each respondent was asked: "Please tell us the ONE thing you most enjoy about being a transportation broker." From these written responses, we were able to identify five commonly noted themes, plus a number of miscellaneous observations. These five themes will be discussed in descending order of frequency. Creativity Involved in Solving Customers' Problems By far the most common response - with 111 respondents or 48.7 percent of the total number of survey participants - was that the best part of brokers' jobs involved using their creativity to solve customers' problems. They liked the excitement of putting together "deals" that resulted in "win-win" situations for their shippers and carders. Here are eight representative responses to this question: * A broker is in the middle (between the shipper and the carrier). We get the enjoyment of seeing the needs of our shipper and of our carrier, at the same time. What could be better - the shipper is happy, the carrier is happy, and we get paid for it. * The ability to put together pieces of the logistics puzzle with results that benefit the shipper, carrier and our company. * The development of a trusting relationship with shippers and carders to the point that I am not just a broker - I am part of the "team." * The constant challenge. It is one of the very few businesses still operated on a verbal handshake, personal integrity, and mutual trust. * Serving the customers' and carriers' needs. Finding the fit for both parties, while being fair and honest in my dealings. When a match occurs and everybody is happy, I derive pleasure from this. * Being able to help both shippers and carriers. We are able to help keep "people" working (supply jobs); save our shipper money; keep trucks rolling; and maintain a profitable business. * The freedom of being able to create a win, win, win, situation for all parties concerned; i.e., shipper, carrier, broker, especially on heavy LTL freight. * My associations with my customers. There is no better feeling than to have a customer, either carrier or shipper, express his or her appreciation for the service I provide. There is no sweeter sound than my name on the lips of a customer. Fast-Paced Work Environment The second-most-noted joy of being a transportation broker was the fast-paced work environment. This point was made by 37 respondents, or 16.2 percent of the brokers participating in the survey. Here are five typical responses: * Every day is different and challenging. There is never enough time in a day to accomplish all you need to do. Time is never on your hands. * The pace of a busy day, making snap decisions. No two days are the same. Every day presents a new set of challenges. * Picture the New York Stock Exchange trading floor when the market is frenzied. That is the brokerage business every day. * Excitement - things are different everyday - things change every hour - talking to different people all over the country. * Every day is always different from the last. My business is such a "fast-paced world" which makes the work day seem to just breeze by. Working with People All Over the U.S. and Canada Thirty-two brokers (14.0 percent of the respondents) noted that the best aspect of their work was developing relationships with people all over the U.S. and Canada. Four typical comments follow: * Dealing with people all over the country. If you want to you can make a lot of friends and truly have fun while you are working. * The joy of talking with and meeting people from all parts of the country. I really enjoy this interaction with people and the satisfaction of seeing a task accomplished. * Developing relationships with quality people all over North America - both customers and carriers. * A great learning experience. I have learned not only many facets of transportation, but my general business knowledge has expended from my shipper and carrier customers. Also, I have met many people throughout the U.S. and Canada that have broadened my view on everything. Being Your Own Boss The joy of working for yourself was noted by 12.3 percent of the brokers, or 28 respondents. Five statements are found below: * The great American dream of deciding my own fate. * The freedom of working for myself and the chance of owning my own business. * I really believe in controlling one's own destiny. * Working for myself - enjoying the fruits of my labor. The ability to be as entrepreneurial as you can and therefore controlling your own professional destiny. * The entrepreneurial freedom. It is the perfect reflection of the once taught American dream. High Income Twelve brokers - 5.3 percent of the respondents - stated that the best part of their position was the high income it generated. Here are three of their comments: * For someone with only a high school education, I'm making a ton of money compared to most college graduates. As an added bonus, I really look forward to work each day because of the fast paced action involved. You should see me sometimes - talking to two people with two phones at the same time! * The financial rewards are fantastic. I never thought I would make this much money, while enjoying the process of making it. * I have worked on the shipper side and I have driven a track and worked as a carrier salesman. Take my word for it, being in the middle is where the money is to be made. FRUSTRATIONS OF BEING A TRANSPORTATION BROKER The respondents were also asked another open-ended question - Please tell us the ONE thing you find most frustrating about being a transportation broker. Here we found the responses to be more diverse than the similar query regarding what brokers liked best about their occupation. We were able to categorize the comments into eleven general themes, plus a number of miscellaneous observations, of which each appeared only once or twice. Each of the eleven frustrations will be examined in descending order of frequency. Not Enough Trucks Available The most common frustration of transportation brokers - noted by 48 brokers or 21.1 percent of the respondents - was that there was a shortage of trucks available when they were needed. Here are five representative comments: * Lack of equipment caused in my opinion by the 1980 deregulation of the motor carrier industry. As a result of this act the majority of owner-operators cannot make a living as they once were able to do. * Getting equipment - this is the main reason for some brokers also becoming contract or common carriers with 48 state authority and having a pool of 2-4 owner-operators that are leased to the broker on a permanent basis. * Having a good load for a good customer and not being able to find a truck. I can't tell you how frustrating this is when you let the customer down. It really hurts to call the customer back and tell him you can't cover his load. * Not being able to match up equipment with a load which causes you to give the load back to the shipper, you not only lose this shipment, but perhaps more in the future because the customer has a long memory. * There is not enough equipment available at times and this leads to situations when one cannot find a carrier to haul a load when that good customer has a shipment which is urgent. Not Respected as Transportation Professionals The second most commonly noted aggravation of being a transportation broker was that their occupation was frequently not perceived by others as being professional in nature. That is, many people thought that the transportation brokerage business consisted primarily of unethical individuals. This concern was noted by 19.7 percent of the respondents, or 45 individuals. Below are five of their observations: * The perception that many people in transportation have about us - we are the bottom of the barrel. * Trucking companies that regularly use our broker services while still holding the view that we are scum - just a necessary evil. * The few rotten apples in our industry give the rest of us a very bad reputation. Most of these problem makers are unlicensed and yet they can find customers who will use them because they are cheap. Then when the shippers have problems they blame the entire industry. Some customers believe - a broker is a broker is a broker, which is NOT true. * Some brokers have given this industry a bad reputation. Both shippers and carriers could help reduce this problem if they would be more alert in checking proper credentials and recommendations before using a new broker. * We must change the image of brokers. We are still considered by some shippers and carriers as bad guys - we are not. We provide a fair and honest service. If we didn't, we wouldn't still be in business. As a colleague said to me once, we are like chiropractors in the health care area. Not highly respected but we frequently solve problems that no one else can. No Control of the Truckers' Operation Thirty-three transportation brokers (14.5 percent of the total respondents) said their greatest frustration was not being able to control the operations of the trucking companies they utilize. Here are four responses: * Being treated by some trucking companies like your business is bad business. This type of carder will pick up a load for me and then deliver it when they want, because after all it's a "broker's" load. * Being held responsible for circumstances and events that the carrier does after they pick up a shipment which is not what they said they would do. I don't control the truckers' actions, but frequently the customer thinks I do or should be able to. * Anything that prevents me from keeping my word to a customer. It is so frustrating when carriers say one thing and do another. * Coming into work and having an irate customer yelling at me on the phone because his shipment is not where I said it would be. Why? Because the trucker involved knows there is a shortage of drivers and therefore he can treat me like [...] and that I will probably use him in the future. Truckers Who Commit to a Shipment and Do Not Do It Related to the above annoyance is when a carrier commits to take a shipment and then does not pick it up. This situation was noted by 11.8 percent of the respondents (27 brokers). Three illustrative comments follow: * Leaving the office at the end of the day thinking you have all your loads covered only to find out the next morning that some of your trucks did not show up. * I am helping carriers find back haul freight and then losing the customer pick-up because the trucker involved found that his own sales people had found a load for him. It seems like there is not much integrity sometimes in this business on the part of some of the truckers we use. * Carriers who commit to take a shipment and then a better load is found and they don't even bother to call me and let me know they won't take my shipment. This is the broker's nightmare. Shippers Who Don't Pay or Are Slow to Pay The fifth most common frustration - noted by 20 brokers, or 8.8 percent of the respondents - involved shippers who either did not pay for the trucking service involved or were chronically slow in paying. When the former situation takes place, the broker typically pays the trucker and the entire cost of shipment is borne by the broker. Here are three of their comments: * As a middleman, I try to be 100% fair to all parties. It's frustrating how much I write off because the shipper will not pay for the service provided. I pay the trucker involved and then get stiffed by the shipper. I really get sick of all the hard luck stories I hear from my customers about why they can't pay me. * Cash flow is very critical in the brokerage business. We pay our careers 30 days after they perform the transportation service, even if we have not been paid. Therefore, one must be very careful to develop a list of customers who pay you in 30 days. If you are not careful, you can easily find yourself begging a bank for short term cash needs. * Accounts receivable are the curse of this business. I find it ironic that some people say we are in an unethical business and yet our most serious problem is customers who treat us dishonestly by not paying us in the time period that they agreed to. Truckers Who Do Not Communicate When They Have Operating Problems Another frustration noted by ten transportation brokers (4.4 percent of the participating individuals) was that when a trucker experienced problems enroute with the broker's shipments, the tracker did not communicate to the broker what was happening. The brokers noted that they realized that problems take place that are beyond the control of the trucker involved - they just wanted to know the status of the shipment so they could notify the shipper and consignee that the shipment would be late. Here are three representative statements: * I don't expect perfection from my carriers - I do expect to know when they are not able to deliver my shipment in a timely manner. I can't tell you how mad it makes me to hear about problems from irate shippers! * Truck drivers and dispatchers who will not stay in touch with me when a problem arises. * Not knowing where a truck is when I have the shipper on the phone yelling at me when his shipment is not where I told him that it would be. Why is simple communication so difficult with so many truckers? Excessive Regulatory Paperwork The next most commonly noted problem area was the excessive amount of paperwork required by regulatory agencies. This frustration was listed by eight brokers or 3.5 percent of the survey participants. Here are two of their comments: * Governmental - both state and federal - regulations that increase the cost and complexity of doing business in general and in the transportation industry specifically. The paperwork that I must keep track of is immense.... * Continual governmental interference, and all the required documentation, is my greatest frustration. This is an industry that should be the essence of entrepreneurial free enterprise. Instead, I spend an inordinate amount of time completing government mandated reports and forms. Transportation Managers/Professors Who Do Not Understand What We Do Eight brokers (3.5 percent of the respondents) stated that the most severe negative about their career area was transportation managers and other presumed transportation experts who did not understand what a transportation broker did. These respondents declared that it was one thing for the general public to not be aware of the function of a transportation broker, but that it was very frustrating for people who work in transportation on a daily basis to not appreciate what function brokers perform. Two typical observations are: * The vast continuing need to educate and expose people in the shipping industry to the benefits and opportunities available through quality transportation brokers. * Other than Terence Brown, no one in academia understands brokerage in the '90s. One nationally known professor from a major university's transportation department told the TBCA members - he didn't have the time to fit brokerage into the course. The text that he used had only two pages on the subject of freight brokers. Shippers Who Demand Immediate Pickup The ninth most common problem area was shippers who demanded immediate pickup of their shipment. This concern was noted by seven brokers or 3.1 percent of the respondents. Here are two of their comments: * The shipper mentality that when they call Yellow Freight, the shipment is picked up in a matter of hours. They expect us to be able to give the same kind of service. They just don't understand that is just not possible in almost all cases. * The customer with the impossible load who needs service now. He only calls after he's gotten himself in a time jam. Then he expects you to stand on your head for him. Then he's always late with his payment and he expects you to be grateful that he called you. I don't have time for these guys any more, I just tell them I don't have any trucks available. Shippers Who Are Concerned Only With Low Prices Six brokers (2.6 percent of the survey participants) stated that they were frustrated with customers who were concerned only with getting the very lowest possible price for the shipment involved. Below are two illustrative statements: * The fact that most shippers will say that service is the most important aspect of what they want, but a majority in fact are much more concerned with receiving the lowest possible price, plus they still want me to provide the best possible service. * Customers who want the best possible service, and then constantly hunt around for a lower price. The hypocritical nature of some people. Why won't they just be honest with me and tell me that cost is the basic issue? I have no problem with that, but I hate being told service is the key, when it is not the most important factor to many of my customers. Training Employees Who Leave to Start Their Own Business The last frustration noted with any frequency was that after an employee is trained by the broker, which often is a very time-consuming process, the employee departs to start his or her own transportation brokerage business. This complaint was noted by five brokers, or 2.2 percent of the respondents. Here are two comments: * Taking a new employee into the business and training him to be a productive employee. I carried the individual for at least a year, in that I was paying him more than he was generating in income for me. So what does the ingrate do -just when he is really getting to know the business, he quits and goes into competition against me! That's gratitude. * Hiring people, teaching them, paying them well and then having them start their own business. CONCLUSION This survey indicates that transportation brokers are very satisfied in their career choice. When asked if they could start their careers over, would they still work as transportation brokers? 40.9 percent answered "definitely yes," and another 40.5 percent said "probably yes." Additionally, the transportation brokers indicated that they were pleased with their income levels. We next asked each respondent what is the greatest joy they received from being a transportation broker. By far the most common response - noted by almost half of the respondents - was the pleasure involved in using their creativity to solve customers' problems. Figure 6 presents a summary of the five commonly noted joys of being a transportation broker. The brokers gave more diverse answers to the query about the single greatest frustration in their work. The most common problems noted were that there were not enough trucks available at times to meet customers' needs and that brokers are not always respected as professionals. Figure 7 is a summary of the eleven main points that frustrated transportation brokers. We have two observations about the survey results: First, we were struck by the high percentage of transportation brokers that indicated that if they could start their careers over, they would stay brokers. We expect that there are few career areas that would be able to generate as much job satisfaction as was found in being a transportation broker. Thus, while this article examined both the joys and frustrations of being a transportation broker, the pleasures involved greatly outweighed the frustrations. Second, the reason we became initially interested in transportation brokers was the brokerage "image" problem that we discovered in our survey of trucking company CEOs. As noted earlier, a few truckers called brokers "parasites" and the "curse" of the transportation industry. In addition, the brokers in our survey indicated that they thought that a number of shippers also deem brokers unethical. We believe, based on our literature search, conversations with carriers and shippers over the past few years, and with our survey findings, that the image of transportation brokers is improving. Nevertheless, there still is an image problem, or it would not have been listed as a prominent frustration of transportation brokers. Remember, it was the second most frequently observed problem area, with almost 20 percent of the broker respondents stating it was the single greatest frustration to them in their career. What can be done about the broker image problem? We believe the marketplace will eventually eliminate most of the problem brokers. Truckers do not have to be abused too frequently before they will stop using the services of the dishonest brokers. Inexperienced shippers are a bigger conundrum, because they are so numerous, and many are not sophisticated about the transportation alternatives available in the deregulated and downsized environment. If these shippers have one or two bad experiences with transportation brokers, they may conclude that all brokers are dishonest and decide to no longer consider using the services of any transportation broker. To correct this situation, we believe that an educational campaign, perhaps sponsored by the Transportation Brokers Conference of America, is the solution. The purpose of the educational campaign would be to instruct shippers on how to locate an ethical transportation broker. Thus, shippers would be instructed to ask the broker who is soliciting their business to provide the following: (a) a copy of his or her ICC license; (b) a copy of his or her insurance certificate; and (c) a list of shipper references who can vouch for the integrity of the broker involved. If more shippers would follow these simple suggestions, the great majority of the unethical transportation brokers would soon be out of business. ENDNOTES 1 James C. Johnson and Kenneth C. Schneider. "A Decade After the 1980 Motor Carrier Act: Trucking Company CEOs Discuss Surprises and Speculations," Transportation Quarterly (July 1990), p. 353. 2 For an excellent overview of the activities of transportation brokers, see: Terence A. Brown, Transportation Brokers: History, Regulation and Operations (Alexandria, VA: Transportation Brokers Conference of America, 1992). 3 See Terence A. Brown, "Size and Operating Characteristics of Property Brokers," Transportation Journal (Summer 1990), pp. 52-57. 4 Interstate Commerce Commission, Ex Parte 39962 (1986) as found in Greg Stachura, "Licensed Property Brokers Providing A Value Added-As Needed," Council of Logistics Management Annual Conference Proceedings (Vol. 11, 1991), p. 333. 5 Terence A. Brown, Transportation Brokers: History, Regulation and Operations, p. 9. The ICC makes no distinction between general commodity and household goods brokers - both need a license issued by the ICC and both are classified as "property brokers." After the 1935 Motor Carrier Act was passed, the ICC issued relatively few property brokers licenses. This was because the Commission's administrative rules and policies governing the issuance of property brokerage licenses were so restrictive that it greatly discouraged applicants from applying for licenses. It is estimated that in 1970 there were fewer than twelve active general commodity freight brokers in the U.S. Thus, when the ICC stated that there were seventy property brokers in 1975, the great majority of them were household goods brokers. Today, the number of household goods brokers is a relatively small number of the over 8,000 brokers licensed by the ICC. For additional information on the regulatory history of property brokers, see Brown, Transportation Brokers: History, Regulation and Operations, pp. 4-5. 6 Donald V. Harper, "The Federal Motor Carrier act of 1980: Review and Analysis," Transportation Journal (Winter 1980), p. 16. 7 Harper, pp. 8-10. 8 Interstate Commerce Commission Annual Report (1975), p. 120. 9 Interstate Commerce Commission Annual Report (1993), p. 113. 10 Interstate Commerce Commission Annual Report (1993), p. 47. 11 See Eric N. Berkowitz, et. al., Marketing, 4th ed. (Burr Ridge: IL: Richard D. Irwin, Inc., 1994), chapter 19. 12 Outsourcing of the traffic function, primarily utilized by smaller firms that could not afford the cost of transportation specialists, has been a common practice historically. See Donald V. Harper, Transportation in America: Users, Carriers, Government (Englewood Cliffs, NJ: Prentice-Hall, Inc., 1978), p. 75. The use of third parties to provide logistics services for their clients is a newer trend than outsourcing the traffic function. One of the earliest discussions of logistics outsourcing is Walter F. Friedman, "Physical Distribution: The Concept of Shared Ideas," Harvard Business Review (March-April 1975), pp. 24-36ff. 13 See Robert C. Lieb, "The Use of Third-Party Logistics Services by Large American Manufacturers," Journal of Business Logistics (Vol. 13, No. 2, 1992), pp. 29-42; Joseph E. McKeon, "Outsourcing Begins In-House," Transportation & Distribution (September 1991), pp. 25-28; E.J. Muller, "A Defining Moment for Contract Logistics," Distribution (July 1993), pp. 64-69; E.J. Muller, "Contract Logistics Finds Slow Going," Distribution (July 1991), pp. 59-60; E.J. Muller, "How to Profit Using Third Parties," Distribution (May 1991), pp. 29-38; E.J. Muller, "The Top Guns of Third-Party Logistics," Distribution (March 1993), pp. 30-38; Helen L. Richardson, "Third Party Logistics: Economy Spurs Growth in Outsourcing," Transportation & Distribution (March 1993), pp. 45-47; and Phillip C. Yeager, "Third Party Services Keep Getting Better," Transportation & Distribution (January 1993), p. 34. 14 See Terence A. Brown, "Size and Operating Characteristics of Property Brokers" Transportation Journal (Summer 1990), pp. 52-57; and Michael R. Crum, "The Expanded Role of Motor Freight Brokers in the Wake of Regulatory Reform," Transportation Journal (Summer 1985), pp. 5-15. 15 See Tom Andel, "Don't Gamble With Brokers," Transportation & Distribution (August 1991), pp. 25-27; Fritz R. Kahn, "Get It In Writing," Distribution (September 1991), pp. 71-72; John D. Schulz, "New Rules for Brokers to Weed Out 'Bad Apples' May Be Coming Soon, Top ICC Official Says," Traffic World (February 28, 1994), pp. 45-46; and M. Scott Watson, "Shippers, Load Brokers, and Carriers: 'Who Bears the Loss When the Load Broker Defaults?'," Transportation Practitioners Journal (Fall 1992), pp. 29-32. 16 See Gwen R. Bachmann, James C. Johnson, and Kenneth C. Schneider, "The 1980 Motor Carrier Act Ten Years Later: Do Trucking Company CEOs Love it or Hate It?" Transportation Practitioners Journal (Winter 1990), pp. 163-186; Terence A. Brown, "Freight Brokers and General Commodity Trucking," Transportation Journal (Winter 1984), pp. 4-14; Terence Brown, "Producer Owned Truck Brokerage," Journal of Transportation Management (Vol. 3, No. 1, 1991), pp. 13-29; Terence A. Brown, "Property Brokers: A Pilot Study of Carriers' Perspectives," Transportation Journal (Winter 1990), pp. 32-39; Michael R. Crum and Benjamin J. Allen, "The Changing Nature of the Motor Carrier-Shipper Relationship: Implications for the Trucking Industry," Transportation Journal (Winter 1991), pp. 40-54; and John D. Schulz, "Growth Predicted for Private Fleets Despite New Trends To Outsourcing," Traffic World (May 18, 1992), pp. 25-26. 17 See Terence A. Brown, "Property Brokers: A Pilot Study of Shipper Perspectives," Transportation Journal (Fall 1991), pp. 45-50; Michael R. Crum and Benjamin J. Allen, "Motor Freight Transport Third Party Service: Shipper and Carrier Perspectives," Transportation Practitioners Journal (Fall 1992), pp. 37-58; Michael R. Crum and Benjamin J. Allen, "Shipper EDI, Carrier Reduction, and Contracting Strategies: Impacts on the Motor Carrier Industry," Transportation Journal (Summer 1990), pp. 18-32; James P. Rakowski, R. Neil Southern, and Judith L. Jarrell, "The Changing Nature of the U.S. Trucking Industry: Implications for Logistics Managers," Journal of Business Logistics (Vol. 14, No. 1, 1993), pp. 111-130; and Yosef Sheffi, "Third Party Logistics: Present and Future Prospects," Journal of Business Logistics (Vol. 11, No. 2, 1990), pp. 27-39. 18 Brown, "Size and Operating Characteristics...," p. 55. Mr. Johnson, CM-AST&L, is professor of marketing and transportation, St. Cloud State University, St. Cloud, Minnesota 56301-4498; Mr. Schneider is professor of marketing and marketing research, St. Cloud State University.