The Complex Freight System: How Cashfreight.com Eliminates Costly Middlemen and Streamlines the Industry
In the trucking industry, moving a load from point A to point B involves multiple players, each taking a share of the load rate, which drives up costs for both shippers and carriers. Shippers, brokers, carriers, dispatchers, and factoring companies all play a role in what should be a straightforward process, but these extra layers add inefficiencies and hidden expenses. Other load boards will never be able to reduce these costs because they are built on the backs of brokers/intermediaries, long term payment contracts, and subscription based income. This business model will never be able to remove the costs and overhead, spoken of in this article, required to change the industry for the better.
Here’s how the traditional freight system works, why it’s costly and complex, and how Cashfreight.com is here to simplify and streamline it all.
How the Traditional Freight Process Works
Step 1: Booking the Load
Shipper to Broker: Shippers contact brokers to move their loads. The broker gathers load information and either posts it on a load board or contacts carriers or dispatchers directly.
Broker’s Cut: Brokers often take 20-50% of the load rate. For example, if a shipper offers $2,000 to move a load, the broker might keep $600 to $1,000 and offer the carrier the remaining $1,000 to $1,400.
Impact on Costs: These high broker fees drive up the total cost for shippers and significantly reduce carriers’ earnings.
Step 2: The Complex Documentation Process
How It Works: Once the load is booked, documentation begins, including contracts, bills of lading, proof of delivery, and invoices. These documents pass through multiple hands—from shipper to broker to dispatcher to carrier and back again.
Delays and Errors: Each transfer adds time and increases the likelihood of missing or incorrect paperwork, which can lead to disputes or delayed payments.
Step 3: Factoring Companies and Cash Flow
How It Works: Because payments from brokers to carriers can take 30-90 days, many carriers rely on factoring companies to get paid immediately. These companies pay the carrier up front, typically taking a 2-5% fee.
Impact on Carrier Earnings: Factoring fees further cut into carrier profits. For example, if a carrier earns $1,000 after the broker’s cut but uses a factoring company, they might end up with just $950-$980.
Step 4: Dispatcher Fees
How It Works: Many carriers use dispatchers to help find and manage loads. Dispatchers typically charge 5-10% of the load rate.
Cumulative Costs: Combined with broker fees and factoring, dispatcher fees further erode a carrier’s profits. On a $2,000 load, carriers might take home just $900-$1,000 after all deductions.
Challenges in the Traditional System
Brokers Control the Deal
Brokers are the first point of contact for shippers and hold control over the entire transaction.
They negotiate prices with both shippers and carriers, often inflating the cost for shippers while minimizing the payout to carriers.
This system allows brokers to prioritize their profit margins, often at the expense of carriers and shippers.
Lack of Transparency
Most communication happens through emails, phone calls, or verbal agreements, making it hard to prove what was said or agreed upon.
Carriers are often unaware of critical load details, such as detention times, lumpers, or tarping requirements, until it’s too late to renegotiate.
Carriers Bear the Burden of Miscommunication
Miscommunication or missing information disproportionately affects carriers:
Detention Time: Brokers may fail to inform carriers about extended load or unload times, leaving carriers unpaid for hours of waiting.
Threats of Blacklisting: If carriers raise concerns, brokers may threaten not to work with them in the future, forcing carriers to accept poor treatment.
This dynamic places carriers in a vulnerable position, with little recourse for addressing grievances.
Unaccounted Costs Erode Carrier Profits
Carriers often overlook additional costs when accepting loads, including:
Factoring Fees: Carriers lose 2-5% of earnings for immediate payment.
Detention Time: Unless negotiated upfront, carriers aren’t compensated for long wait times.
Lumpers: Fees for loading or unloading freight are sometimes passed on to the carrier without warning.
Tarping or Extra Equipment: Specialized requirements like tarping may not be compensated if not communicated in advance.
By the time these hidden costs are deducted, carriers often take home far less than expected.
Communication Challenges
Multi-Step Communication: Information flows through multiple layers—from shippers to brokers, brokers to dispatchers, and finally dispatchers to carriers.
Impact: This multi-step process slows down updates, increases the chance of miscommunication, and leads to scheduling conflicts, errors, and unnecessary frustration.
Why the Traditional System is Broken
The traditional freight system is inefficient, costly, and often unfair to carriers. Here’s why it fails:
Brokers Control the Narrative:
With no direct communication between shippers and carriers, brokers control how much information is shared and can manipulate both ends of the contract to maximize their profits.
Carriers Are Disadvantaged:
Miscommunication, hidden costs, and long delays disproportionately affect carriers, leaving them with less money, more stress, and no leverage to negotiate better terms.
Lack of Accountability:
Verbal agreements and informal communication make it hard to enforce contracts or resolve disputes. Carriers are often forced to accept unfavorable terms without any recourse.
How Cashfreight.com Eliminates These Costs and Simplifies Freight
Cashfreight.com is designed to remove these costly middlemen, streamline documentation, and provide direct communication. By using Cashfreight.com, shippers and carriers can operate more efficiently, saving time and reducing expenses. Here’s how:
Direct Contracting for Transparent Pricing
Solution: With Cashfreight.com, shippers post loads directly on the platform providing all information up front in written format, allowing carriers to secure loads without going through a broker. This eliminates the 20-50% broker fee, miscommunications, and allowing shippers to save on freight costs and carriers to keep more of their earnings.
Benefit: Shippers get more competitive rates, and carriers receive better pay without sacrificing a share to intermediaries.
Automated Documentation with LoadBook™
Solution: PowerBook™ automates load confirmations, contracts, bills of lading, proof of delivery, and invoicing. Documents are stored in real-time on the platform, allowing instant access for both shippers and carriers, eliminating the need for a broker or factoring company to handle these processes.
Benefit: This direct, automated process accelerates payment cycles, allowing carriers to receive payment faster (within 48 hours) and reducing the need for a 2-5% factoring fee.
Real-Time Load Updates with LoadItNow™
Solution: LoadItNow™ provides instant load contracting for exclusive loads, and instant updates to the system, so carriers and dispatchers can view updates in real-time without third-party involvement. This ensures that everyone stays informed, eliminating delays caused by communication gaps. Brokers can still post Non-exclusive loads and carrier will know they will have to wait to see if the load is available or not.
Benefit: Real-time updates prevent miscommunication, keeping jobs on schedule and helping carriers and shippers resolve issues instantly.
Secure, Fast Payments with Stripe® Integration
Solution: Cashfreight.com's PowerPay™ integrates with Stripe® for double verification of users and secure payments, so carriers are paid promptly after delivery, reducing risk and their reliance on factoring companies. Shippers save with up front payments by reducing company overhead, reducing risky accounts payable, and possible overspending. With PowerPay™ automating payments, there are fewer payment delays, ensuring faster transactions and reduced freight rates.
Benefit: Faster payments improve cash flow and eliminate the 2-5% cost associated with factoring companies, allowing carriers to retain more of their earnings reduce risks, and allows shipper reduced rates and lower overhead for all.
Direct Communication Between Shippers, Carriers, and Dispatchers
Solution: Cashfreight.com’s InLoadChat™ messaging system allows direct written communication, so shippers, carriers, and dispatchers can stay connected, maintain transparency, and resolve issues without needing a broker or middleman.
Benefit: With a clear line of communication, and written transparency, all parties can address updates, questions, and changes in real-time, reducing the risk of misunderstandings and creating a smoother, more efficient operation.
How Cashfreight.com Helps Reduce Freight Costs for Everyone
By eliminating brokers, factoring companies, and dispatcher fees, Cashfreight.com enables a more cost-effective way to move freight. The platform reduces overall freight costs, and overhead, allowing shippers to save on load rates and carriers to retain a larger percentage of the pay. Here’s a breakdown of potential savings on a $2,000 load rate:
Broker Fees (20-50%): Eliminating brokers saves $400 to $1,000 per load average .
Factoring Fees (2-5%): Fast, direct payment through Stripe® removes the need for factoring, saving another $40 to $100 per load average.
Dispatcher Fees (5-10%): With direct access to load information, easy negotiations, automatic paperwork, and simple contracting, carriers don’t need a dispatcher to negotiate rates, saving another $100 to $200.
By cutting out these fees, Cashfreight.com significantly lowers freight costs and allows carriers to keep more of their hard-earned pay. On a $2,000 load, a carrier who might have only made $900 under the traditional system could now make up to $1,800 or more—nearly doubling their earnings.
Once again other load boards will never be able to reduce these costs because they are built on the backs of brokers/intermediaries, long term payment contracts, and subscription based income. This business model will never be able to remove the costs and overhead, spoken of in this article, required to change the industry for the better.
Join the Freight Revolution with Cashfreight.com
Cashfreight.com is transforming the logistics industry by simplifying the freight process, reducing unnecessary costs, and improving communication. By eliminating middlemen, automating documentation, and providing real-time updates, Cashfreight.com brings transparency and efficiency to an outdated system. Whether you’re a shipper looking to save or a carrier aiming to keep more of your earnings, Cashfreight.com is the smarter way to move freight.
Experience the future of logistics—sign up with Cashfreight.com and join the revolution for a more efficient, affordable freight industry.
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