There’s no doubt that when compared to a direct rep, freight agents (or freight brokers) make more money. How is this possible? Aren’t commissions paid based on sales in either scenario? Well, yes, in the broad picture, whether you’re a direct rep or a freight agent, you receive commissions based on sales performance.
Freight agents own their own book of business and typically receive much higher commissions than direct reps receive. A direct rep might be straight salary, or have a salary + commission. Commissions range, but are typically 10% of gross margin on services sold. Commissions for direct reps are capped, though. A direct rep making a base + commission may have their commissions capped at, say 40k per year. A freight agent would receive up to 50% commission on those same services and have an uncapped ceiling. Uncapped commissions are huge. That by itself might double or triple what an agent can make in a year as opposed to working for a carrier under a capped commission structure.
A top-notch direct rep might make upward of $80,000 in a good year. A top-notch freight agent could make over $400k on those same services.
The single greatest complaint from direct reps is that they spend way too much time servicing their existing accounts when they’d rather be selling new ones. Sales reps want to sell, so it’s only natural that they’d be frustrated when they can’t. Instead, direct reps that should be out selling act as customer service reps.
All sales people, direct rep or freight agent, want their clients coming back over and over. The problem happens when the sales person or freight agent doesn’t trust their parent organization to adequately support their base of clients. An organization’s inability to support clients could happen for a variety of reasons. Maybe there are too many reps and the support arm of the company isn’t staffed appropriately. Perhaps there’s an influx of support requests at one time and the support department is overwhelmed. Maybe the direct rep is acting as after sale support by design. Whatever the reason, the burden of keeping customers happy falls to the sales rep when it should fall to the organization.
As a freight agent, the 3PL partner shoulders the weight of after sale support. This allows the agent to actually go out and sell rather than spend half of their time doing support. In many instances, the direct rep doesn’t trust corporate support to take care of their clients with the urgency and importance they place on them. All to often, managers of direct reps cite the rep’s base salary as a component of support. A good sales manager, however, knows that a sales rep’s value is in selling! The cost of supporting and selling clients at the same time can reach into the tens of thousands when we look at what a freight agent can make respectively.
Support is what makes or breaks 3PL companies. They are the middlemen in between carriers and clients, so supporting their direct clients and their freight brokers is (or should be) priority one. That’s why a direct rep considering becoming a freight agent or freight broker needs to thoroughly research and investigate several 3PL providers before signing on to become a freight agent with that 3PL partner.
Budding freight agents shouldn’t be afraid to ask the tough questions and expect the same service from their prospective 3PL partner that their clients receive.