Back soliciting

CharlesD

Expert Expediter
We've been pretty careful about not doing this, but the longer I've been in this business and learned more about where freight comes from and the number of times a load is brokered at times, it got me to wondering how much of a grey area there is with this topic of back soliciting.

When I was still driving I made it a point not to try to solicit at a shipper or consignee if I got the load from another carrier or a broker. If the time period in the contract was up and I hadn't picked up a load there in that period of time, then that's a different story, but the rather confusing "who is a customer" thread the other day brought the topic back to my mind.

Here is the scenario that I always thought was pretty clear cut. I book a load from a large carrier like Panther and send one of our trucks in to pick up the load. This shipper is a direct customer of Panther. Well, soliciting them at that moment is pretty much off limits and the driver knows that. Now if we don't do another load from that shipper during the period of time that is on our contract with Panther, then when that time period is over we can pursue business with that shipper.

But what about a case where a load has been brokered nine ways to Sunday? Let's say that a small carrier doesn't have access to NLM and someone on Sylectus brokers a load to that small carrier that came from NLM. Is it really back soliciting if the small carrier figures out where the load came from and gets hooked up with NLM a week or two later to get access to that freight? If a small carrier gets a load from another carrier who got the load from the expedite division of a large truckload carrier who in turn got the load from a shipper, is it acceptable for the small carrier to seek to do business with the large truckload carrier or the shipper?

The broker carrier agreements are not exactly really clear cut on this. You will see language about not soliciting a customer until a certain amount of time has gone by, but what constitutes a customer is not the same thing across the board with all carriers. A lot of our customers are other carriers or 3PL companies. But what if we get a load from a carrier who got the load from a large 3PL that gives loads to several carriers? Is that large 3PL off limits to us for a period of time, or does back soliciting apply more to what most of us would consider a customer in the traditional sense, an actual shipper or consignee?
 

blizzard2014

Veteran Expediter
Driver
I'd contact that 3PL and let them know that their carriers are double brokering freight and perhaps get that company removed from that particular 3PL. If they are not following the rules of the contract that they signed when they got set up with the 3PL and are double brokering loads "without the knowledge and permission - particularly written permission" of that particular 3PL, then why should you not be allowed to contact that 3PL and become a carrier with them?

Now there are times when 3PL's do allow their carriers to re-broker loads and that would fall under the "related brokers" clause of a broker carrier agreement. I guess it is all in how you personally choose to run your business. I knew about NLM and most of the third party logistics companies before I even started my company and signed anyone's non-back solicitation agreement, so I am not really in violation of anything with regards to double-brokered loads coming from, NLM and other places!
 
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jelliott

Veteran Expediter
Motor Carrier Executive
US Army
I would tread carefully. Many 3pl's allow carriers and/or the larger carriers to broker their freight. Your customer is who you are billing and that is who your contract is with. Who the person you take the load from's ultimate customer is not legally relevant, your contract with the carrier is.
 

blizzard2014

Veteran Expediter
Driver
I've never back-solicited anyone's customer nor is it a practice that my company engages in. But I'd like to ask your question about this type of scenario. I used to partner up with a company that moves a lot of rail yard freight. I signed a non-compete clause with them as a driver. However one of their brokers "allfr8" who has some CSX loads from time to time is a broker that they work with whom I had prior personal dealings with and knowledge of. I am now a partner carrier with them, but I knew who they were before ever partnering up with this carrier. Does that make me guilty of back-soliciting?

I think what Charles was originally getting at was like someone pulling Ford loads for NLM and then trying to solicit Ford to get those loads directly! I would never do a thing like that. There is enough business out there "if you pound the pavement and get out of the office from time to time" that there is really no need for back-soliciting. I think people who back-solicit are simply too lazy to put the time in to generate their own customer base. There's plenty of meat out there for the sharks to fight over!
 
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CharlesD

Expert Expediter
What I was talking about isn't a case where someone tries to solicit the shipper directly, like Ford, but a scenario where a small carrier is getting those Ford loads from another carrier who is getting them from NLM. If that small carrier then goes and starts doing business with NLM, would you consider that back soliciting? A lot of the freight that gets brokered on Sylectus fits in that type of scenario. As a small carrier moves up the food chain, they're invariably going to start doing business directly with NLM and other such companies instead of getting those loads re brokered from another carrier.

Right now we're in the process of getting approved with Menlo, who gives loads to a number of carriers who in turn broker them out again. No doubt over the years we've done some of those loads from Sylectus carriers. Would us getting set up with Menlo be considered back soliciting or not?
 

jelliott

Veteran Expediter
Motor Carrier Executive
US Army
If you had a documented business relationship with the shipper before hauling for someone else you are probably ok. If someone sued you their is no saying for sure how the courts would rule for sure. I guess a lot of the other factors of the situation would come into question.
 

jelliott

Veteran Expediter
Motor Carrier Executive
US Army
What I was talking about isn't a case where someone tries to solicit the shipper directly, like Ford, but a scenario where a small carrier is getting those Ford loads from another carrier who is getting them from NLM. If that small carrier then goes and starts doing business with NLM, would you consider that back soliciting? A lot of the freight that gets brokered on Sylectus fits in that type of scenario. As a small carrier moves up the food chain, they're invariably going to start doing business directly with NLM and other such companies instead of getting those loads re brokered from another carrier.

Right now we're in the process of getting approved with Menlo, who gives loads to a number of carriers who in turn broker them out again. No doubt over the years we've done some of those loads from Sylectus carriers. Would us getting set up with Menlo be considered back soliciting or not?

Technically the answer would be yes iny opinion. Legally you had no relationship with the customer prior to hauling for the people you signed agreements with, so most would consider that a back solicitation. I am sure if you did business and brokered the load someone and they later went to them you would find that to be back solicitation.
 

CharlesD

Expert Expediter
The reason I threw the question out there is because of the nature of the way a lot of freight is moved these days. A small carrier could be trying to expand their base of freight sources and inadvertently back solicit someone. Sometimes you do a load that someone else got from a 3PL, and the name of the 3PL isn't always on the bills, so when you contact them a week later to get set up with them, you might not even be aware that there were the source of the load you just hauled for someone else.

We just got set up with a 3PL a few weeks ago and started seeing the load offers. All of a sudden I was seeing certain loads that we had in the past hauled for a partner on Sylectus. We had no idea where those loads were coming from because the bills never had the name of the 3PL. So I guess in a technical sense someone could call that back soliciting, but nobody has raised any fuss about it, probably because we're not re brokering them ourselves.
 

jelliott

Veteran Expediter
Motor Carrier Executive
US Army
The reason I threw the question out there is because of the nature of the way a lot of freight is moved these days. A small carrier could be trying to expand their base of freight sources and inadvertently back solicit someone. Sometimes you do a load that someone else got from a 3PL, and the name of the 3PL isn't always on the bills, so when you contact them a week later to get set up with them, you might not even be aware that there were the source of the load you just hauled for someone else.

We just got set up with a 3PL a few weeks ago and started seeing the load offers. All of a sudden I was seeing certain loads that we had in the past hauled for a partner on Sylectus. We had no idea where those loads were coming from because the bills never had the name of the 3PL. So I guess in a technical sense someone could call that back soliciting, but nobody has raised any fuss about it, probably because we're not re brokering them ourselves.

Or they don't know about it yet. I have seen a few legal battles and some TEANA ethics complaints filed on this topic. Tread carefully as you don't want to get a bad name among the other carriers even if it is by accident.
 

CharlesD

Expert Expediter
Or they don't know about it yet. I have seen a few legal battles and some TEANA ethics complaints filed on this topic. Tread carefully as you don't want to get a bad name among the other carriers even if it is by accident.

Yeah, I can see that being an issue, which is why we don't back solicit if we know up front who the customer was.
 

Pilgrim

Veteran Expediter
Retired Expediter
What I was talking about isn't a case where someone tries to solicit the shipper directly, like Ford, but a scenario where a small carrier is getting those Ford loads from another carrier who is getting them from NLM. If that small carrier then goes and starts doing business with NLM, would you consider that back soliciting? A lot of the freight that gets brokered on Sylectus fits in that type of scenario. As a small carrier moves up the food chain, they're invariably going to start doing business directly with NLM and other such companies instead of getting those loads re brokered from another carrier.

Right now we're in the process of getting approved with Menlo, who gives loads to a number of carriers who in turn broker them out again. No doubt over the years we've done some of those loads from Sylectus carriers. Would us getting set up with Menlo be considered back soliciting or not?
IMHO the short answer is no. 3PLs like Menlo are good sources of freight for small, growing carriers and you shouldn't limit yourself by staying away from them just because there might be some carrier overlap with one of their many clients. Granted, this is a convoluted situation but it results from 3PLs like Menlo allowing their carriers to double-broker in the first place. The bottom line is you're contracting with Menlo, not the particular shippers that they service.
 

jelliott

Veteran Expediter
Motor Carrier Executive
US Army
Actually that is not true. Most 3pls manage the freight ON BEHALF of the customer if you read the contracts. Most are not brokers and you are billing them in care of the customer, thus it is not a double broker situation. You are actually extending credit to their customer and it becomes your customer. If the customer closes the doors most 3pls are not obligated to pay you. Now if they are a 3pl but operate under a broker mgt model it is no different than a broker. They are the customer and they are obligated to pay whether they get paid or not. I have seen this go to legal between a couple of the expedite carriers. Back solicitation clause held. I am not telling anyone what to do, just relaying the facts and what I have seen.
 

Pilgrim

Veteran Expediter
Retired Expediter
Right now we're in the process of getting approved with Menlo, who gives loads to a number of carriers who in turn broker them out again. No doubt over the years we've done some of those loads from Sylectus carriers. Would us getting set up with Menlo be considered back soliciting or not?

Taking this hypothetical case as an example:
Panther takes Menlo shipment from XYZ Co. and offers it to Pilgrim Expedite - a small 15-truck local carrier that's doing pretty well for itself.
A year later Pilgrim Exp has acquired another carrier and is now in position for Menlo approval, and applies for same. In the meantime Pilgrim Exp. has accepted numerous brokered loads from Panther and a few other large carriers, some of which were Menlo loads from various companies.
John - are you saying that by applying for and getting approval as a Menlo carrier Pilgrim Exp will be in violation of their back-solicitation agreement with Panther?
 

jelliott

Veteran Expediter
Motor Carrier Executive
US Army
It very well may be. The other carrier you bought may not be. If you have a doubt, I would be safe and have an attorney review it. Cheaper to know for sure up front, than to possibly spend a lot of money in legal later. Seen it happen too many times. Everyone's contract has different clauses and stipulations.
 

Pilgrim

Veteran Expediter
Retired Expediter
One would think that Menlo would have some language in their contracts addressing this issue if they allow their loads to be brokered. Personally, I haven't seen a Menlo contract recently but it could easily be seen where nearly every carrier out there could be in violation of somebody else's backselling clause. Regardless, I wouldn't let this deter me from going for the Menlo approval. As usual, one has to have an attorney on retainer to read the fine print and argue about the details.
 

mxzane933

Seasoned Expediter
I could understand how someone would go the route of trying to get business directly from the company whos products you are shipping especially if you are doing a load that has been diverted "9 ways to sunday" lol because sometimes you feel like your being used as a slave driver instead of as a part of the company. For example in feb, i was doing a load for 85c a mile and delivered it and the company who the produced the product which was a peice of custom made steel for something but it was a very small company of 5 or so workers and they were new as well and the worker made the comment" dagum i need to get me a van with that kind of money your making" i was like ur joking bout the money but thats not y im doing it i love the job and he said well making 1.40 a mile id love it too. And thats when i realized that some brokers are.crooks.

Sent from my DROID BIONIC using EO Forums
 

CharlesD

Expert Expediter
If the broker posts the load and competitive bidding takes over to the point the broker gets a huge profit margin, is the broker a crook for awarding the load to the lowest bidder? Or should we blame the carriers who bid that low for padding the broker's profit?
 

zorry

Veteran Expediter
Yes Charles. He's a crook. The first guy that bidd at 90% of his cost should get the load. Move it at a profit for the carrier and everyone wins.
You know I'm kidding,right ?
 

turritrans

Expert Expediter
If the broker posts the load and competitive bidding takes over to the point the broker gets a huge profit margin, is the broker a crook for awarding the load to the lowest bidder? Or should we blame the carriers who bid that low for padding the broker's profit?

You get what you pay for
 
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