Background

In April 1999, Lisa Fouts embarked on the formation of a new and solely owned company, Cargo Transit, Inc., a certified woman-owned business headquartered in Weaverville, North Carolina. Lisa’s goal was to build a company based on detailed and honest communication and with her customers and carriers. Lisa brought seven years of dispatching and operations management experience to her new business as well as an accounting background. Lisa’s experience, vision and hard work have paid off. Cargo Transit was recently certified as a “best broker” by the National Association of Small Trucking Companies, which invites only the top 5% of all U.S. brokers to participate.

TransCore: What challenge comes to mind first when you think about starting Cargo Transit in 1999?

Lisa Fouts: Getting a credit line established with carriers was hard since Cargo Transit had little or no credit history. Many times I would book a carrier on a load only to have them come off the load unless Cargo Transit advanced them in full prior to picking up or delivering. Typically only small to mid size carriers would extend us credit. With their help, we slowly grew an excellent credit history!

TransCore: Tell us about your communication philosophy. How does that work? How has it helped your business?

Lisa Fouts: As a broker, we don’t have our own equipment.  In fact, our most important asset is detailed and honest communication, which has helped us grow steadily.

For example, I call the customer when the driver is dispatched for pickup with the city and state of the truck and an estimated pickup arrival time. I also give the customer check calls from the driver. Then I call the customer a final time when the load is delivered to let them know if there are any overages or shortages, but more importantly to say, “Thank you for the load.”

The customers appreciate that I keep them updated on the truck location. Even if I have news the customer isn’t completely happy with, my goal is always to call the customer before they call me looking for the truck.  Likewise, the carriers and drivers appreciate Cargo Transit’s detailed expectations communicated up front and directions for each load.

TransCore: How did you find carriers to work with your fledgling business? How did you convince them to continue to work with Cargo Transit?

Lisa Fouts: I found most of my carriers from TransCore’s DAT load posting service.

I would make sure the carrier had all the details of the load before we contracted to each other. I would be sure to get pickup and delivery appointment times and directions for the driver. Getting the directions tells them you care about them and the load. If you go the extra mile for the drivers, they will do the same for you!

When the driver called for dispatch, I would trust, but validate the promises the dispatcher had previously made to me. I would tell the driver the specifics of the load and make sure he had the proper equipment and driving hours to meet my customer’s needs.

Detailed communications, saying thank you, and treating everyone fairly and with respect has a positive effect:  customers offering more freight and carriers are happy to haul Cargo Transit’s loads.

Brokering is not rocket science: fair prices, consistent quality service and demonstrated appreciation of your customers and carriers make for a winning formula.

TransCore: Beyond clear communication, what else it important for carrier retention?

Lisa Fouts: Timely payment to your carriers!  You can’t gain or retain customers if you don’t have carriers. Most carriers check a broker’s average days-to-pay before they will haul for you. If you’re over 30 days, most carriers will not haul for you or they’ll demand payment up front. In the beginning, I used personal savings, along with a bank credit line to make sure Cargo Transit carriers were always paid promptly.

TransCore: How have you grown your business?

Lisa Fouts: I am a disciplined person, and I have always worked at least 40 hours a week, usually much more. If I don’t have loads to work on, I’m on the telephone trying to build Cargo Transit’s customer base. At first, getting new customers to give Cargo Transit a chance was difficult.  But I was determined to succeed.  I kept calling shipping managers until some of them gave Cargo Transit an opportunity to show them what we could do. Determination, persistence and performance pay off!

TransCore: Your Web site at cargotransit.com devotes a lot of space to your agent program. When did you start that? What has helped make it successful for you?

Lisa Fouts: At the beginning of 2003, I decided to expand Cargo Transit with agent offices, but first I needed a solid brokerage software program in place. After much research and speaking with numerous companies, I purchased TransCore’s Logistics Suite dispatch software (editor’s note:  formerly known as Keypoint Transportation). It fit Cargo Transit’s needs perfectly. It was software specifically designed for freight brokerage with agent offices.  You sent a trainer to my office and I was off and running.  I then signed the first agent office under Cargo Transit. Logistics Suite has been reliable and dependable since the day it was installed and we have had no “down time”. It is also simple enough to train the new agents over the telephone.

TransCore: How have you identified new agents? What hurdles have you had to overcome to expand that business?  And how have the agents themselves contributed to your business growth?

Lisa Fouts: Most of Cargo Transit’s agent offices have come from referrals of other agents. I attribute the growth of the agent offices to straightforward business practices. Cargo Transit has a good program, we are honest with the agents, and we do what we say we are going to do. Word of mouth has been by far the most effective means of increasing our agent offices.

Much of Cargo Transit’s growth and overall success is directly due to our hard working agents.  We work together as a team to move loads.  If TransCore had an agents-of-the month award, I’d nominate ours every month!

TransCore: Is there anything in particular someone needs to watch out for when building an agent business?

Lisa Fouts: Add agent offices slowly. Most companies don’t realize the amount of working capital needed to carry just 1 agent. For example if one agent moves 10 loads per week at an average rate of $1,000 per load, this totals approximately $40,000 per month. A good customer pays in 30 to 40 days. At this rate a broker can need working capital of $40,000 to $80,000 in no time for just one agent. This doesn’t factor in “quick pay” programs that good brokers must offer to their carriers.

Cash flow management and lack of enough start up working capital are primary reasons many brokers fail in the first five years of business. Pay very close attention to your accounts receivables and accounts payables. Get the POD from your carrier and invoice your customers ASAP. Always run a credit check on all of your customers and constantly monitor their credit line and adjust if necessary. It really only takes one customer not paying you to put you in debt and out of business.