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ECI and the Egg Industry seek to eliminate Truck Brokers
Transportation News...
(Egg broker wants to eliminate truck brokers)
-by Nicole and Justin Richards-
According to sources within the ECI organization, "Egg Clearinghouse Inc. has a mandate to
eliminate truck brokers by negotiating with the carriers directly".
ECI Quote: "There is a movement in the egg industry to eliminate the truck brokers." end-quote.
"As far as what the brokers charge for their service that depends upon the distance. On
long-distance hauls, say from Iowa to California, the truck broker in most cases makes more than ECI does on the load. Today, the going rate from Iowa to California is $1,850 but the brokers still charge $2,250 which was the rate six months ago when fuel was at a premium. (This I know because we've begun to call carriers direct, who by the way, agree with my assessment of truck brokers' credit worthiness and without exception want to deal with ECI direct)."
-Top executive with ECI.-
"Many truck brokers find the cheapest hauler, not the most reputable"
quotes an ECI top official.
"M&P Malquat, Pile Trucking, Heartland Express, G-Line Trucking are just some of the
brokers that ECI works with. These people are considered not just business associates but also friends."
-ECI-
We wonder if these truck brokers are aware of ECI's stated stand on contacting carriers
direct. Are the instructions from the ECI board of Directors, to eliminate all
truck brokers,
or all of them except "our friends"? How much longer will they
be friends when they are in the same competitive business?
"About 90% of the eggs produced in the US and sold domestically for Table Egg use (versus the production of egg products sold to bakers and export) are sold under pre-determined contract. The market reporter, Urner Barry Publications, sets a price quote daily which is used in these contracts. The other 10% is traded on the open market of which ECI trades 90%. Therefore, Urner Barry's main source of trading information, is the trading on ECI."
-ECI-
"Truck Brokers running a
"Scam?"
"Today, there are very few truck brokers remaining in the egg industry. Many scammed the trucking industry by failing to pay the truckers after they have been paid then declare
bankruptcy. Two days later they resurface under another name and run the same scam again. Today, the situation is so bad that ECI has been asked to become a truck broker in order to insure that the trucking companies get paid in full" says ECI.
ECI further states: "Alarmingly, this is happening a lot. Last week, ECI, the receiver and the producer split the cost of the trucking for a load delivered from Iowa to Texas that was already paid to the truck broker who went out of business owing many carriers. Many truck brokers have declared bankruptcy or worse, just stopped operating and reopened under another name. Some such as TH Transportation were also brokering eggs and egg product and ceased operations owing its creditors, most in the egg industry, over $600,000. They are now operating the trucking department as Laura Thompson Trucking and have no intention of making good on this debt."
"Many brokers factor their receivables immediately with a factoring company. This is the process of selling your receivable immediately and getting 90% of the money up front. The cost varies from 2 to 10%. The truck broker gets their money immediately. This also removes their responsibility to insure they haul for companies that pay. So the broker continues to haul for a nonpaying company that is not paying the factoring company until the factoring company refuses to accept any more of the receivables for the non-paying company. The broker ceases operation and becomes another company letting both the factoring bank and his creditors "blowing in the wind".
Further explanation from ECI:
"Blind trading means that neither trading party knows the identity of the other until the trade is consummated. Everyone gets treated the same. Every company, regardless of size, has the same rights. Our purpose is to discover the value of eggs of known quality using an auction-style system. This trading style insures fairness. We take possession, the buyer pays us and we pay the seller. We are on the hook for all penalties imposed but not paid by the offending party".
Our Question: if ECI can deal directly with the carriers to eliminate the truck broker, why can't the buyer and seller of eggs contact each other directly, and eliminate ECI?
© 2002- Nicole and Justin Richards are investigative reporters for the Denver-Mall.com "the magazine" and can be reached at advertising@denver-mall.com
Richard
F. Wise is the senior editor of the Denver-Mall.com online magazine and can be
reached at
advertising@denver-mall.com
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