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  • Writer's pictureKurtis Tryber

Disruption in the Freight Brokerage Industry: How to Secure Your Brokerage’s Future

Updated: Aug 22, 2019

Freight brokerages and logistics companies with capital are aggressively purchasing other companies with technology assets— this behavior has been accelerating, with a different acquisition or merger taking place every two weeks. For example, earlier this year, Redwood Logistics bought Strive Logistics, and combined, they now have over $1 Billion in freight under management.

Meanwhile, big shippers like Anheuser-Busch are using multiple digital freight brokerages, describing the “tech-enabled carrier space" as something that "provides transformational value,” says Mark Young, the director of transport procurement. Why? Because digital brokerages collect data that allows them to predict what loads and opportunities truck drivers will accept. This obsession with driver experience is attractive to shippers looking to use data to find the highest quality, lowest risk and efficiently prices truck.

— Big disruption in the freight brokerage industry is coming. We are seeing a very traditional slow-to-change industry full of legacy family-built brokerages at threat of being either absorbed to made extinct. However, at the center of these challenges comes opportunity, especially for brokerages with experienced people. People and experience will be the competitive advantage in this evolving market.

So, in this post, we share some of our thoughts on the key challenges and opportunities that freight brokerages are confronted with. Furthermore, we share some essential elements every brokerage needs to successfully adopt digital solutions to secure the future of their business— all while managing day-to-day operations!

Disruption Comes Faster than You Think

About 10 years ago (maybe less), when you wanted to buy something, you had to drive to a store, pick what you want off the shelf, and pay for it— that’s how traditional products were bought and sold since the beginning of time. And in 1999, during an interview with the CEO of Sears, Amazon was dismissed as a threat to the Sears business.

Sears couldn’t imagine how Amazon was going to invade their space— but they did. Even in 1999, this obsession with customer experience was apparent when Jeff Bezos told a 60 minutes reporter that they were generating gigabytes of data on their customers per day few, all used to make recommendations and the buying experience better.

Similarly, aggressive disruption is coming to the freight brokerage industry, and it is coming faster than most can imagine. For anyone running a freight brokerage, it’s important not to underestimate how quickly things are changing. This isn’t just a scare tactic— it’s strategic advice.

Broker and Sales Reps— Their Roles Will Evolve

Most brokers and carrier sales reps use disruptive technology in their lives already; iPhones for emails and directions, Amazon for shopping, and even Uber when they want to get from A to B without driving their own car.

Fast forward to their work-day, and it's like they are forced to travel back in time and work as if it is the 1900’s:

  • Filtering through 1000’s of emails.

  • Post-its stuck all over their monitors.

  • Calling truck drivers one at a time.

— all in an attempt to make intelligent freight-matching decisions that will serve their carriers, shippers, and their business.

Technology can help by replacing a lot of repetitive brokerage tasks that just can’t be done by humans reliably, quickly, and at scale, such as analyzing data on 10s of 1000s of carriers. Done right, technology will assist brokers with allocating more energy and effort to activities that require human touch such as customer success, relationships, and sales, enabling brokers to:

  • Quickly match the correct loads with the correct carriers.

  • Book more loads and create consistent capacity for carriers.

  • Effectively forecast load supply and demand.

  • Deliver targeted carrier engagement.

  • Strengthen carrier and shipper relationships.

Essential Elements to Successful Adoption

Even if you want to adopt new technology solutions for your brokerage, it is not as simple as logging onto Amazon, finding a product, and getting it shipped and installed. To properly leverage digital solutions for your brokerage, you must think strategically:

1) Understand What Technology Is Good for and What It Isn’t Good For

Understanding what technology is suitable for and what it isn’t will assist you to identify inefficiencies that can be improved in every part of your organization.

In another post, we clearly cover what tasks are suitable for automation and what tasks and activities absolutely still need a human touch. Getting this distinction clear will help companies focus on more complex tasks where automation isn’t possible, and save them lots of time and money on repetitive grunt work.

For example, right now, there is incredibly valuable data available from thousands of daily interactions brokerages are having with their carriers. The question is— how can technology help you capture and capitalize on this data? Because no human being can collect, clean, and manage data on 10s of 1000s of carriers. So, there is an opportunity for technology to help here.

Meanwhile, human beings are great for exceptions management, especially when there is a potentially large negative impact if it is done wrong. For example, the sending of rate confirmations (contracts)— this task can have very large negative impacts and will most likely always require a human touch.

2) Understand Your Business-Specific Needs

What technologies does your organization really need? The answer is— there is no ‘one-size-fits-all’ answer. Because the digital solution for your business is more of a strategic methodology than a product— it all depends on what outcome you are trying to achieve.

For example, if you are dealing with high consistent/dedicated freight, solutions should already exist within your Transport Management System (TMS).

However, if you are dealing with same-day spot-freight opportunities, you need a more sophisticated solution than sending carrier sales reps to filter through 1000s of emails and hunting to secure carriers on load boards.

3) Navigating Change is About People

If you have identified repetitive tasks that are accomplished daily— you are ready for automation. But installing new technology and benefiting from it often starts with engaging, training, and supporting people— your success with adopting technology is going to be synonymous with how well you work with your people.

So, when transitioning, you need:

  • Clearly defined strategy and implementation plan that the leadership team is aligned with.

  • A dedicated team to work with the technology vendor on an appropriate rollout strategy complete with stakeholders and key milestones to achieve.

  • A technology vendor who is incredibly responsive and has great hands-on customer training and support— there will be lots of questions that need answers!

Yes, there are some scary, challenging times ahead for the freight brokerage industry. And, these times also present exciting opportunities to audit your organization, clarify your business strategy, and implement solutions that will help secure your brokerage business for the future.


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