Freight Brokerage 'Booking Structures': Opportunities to Streamline Your Operations
Updated: Jul 17, 2019
Every freight brokerage uses one— or a combination of— four main booking structures: 1) Outbound region, 2) Inbound region, 3) ‘Carrier manager' model, and 4) ‘Free for All.' While you might have a combination of two such as ‘Free for All' and ‘carrier managers,' you won't have a mix of outbound, carrier manager, and the ‘Free for All.’
Each ‘booking structure' has several pros and cons, and each model can benefit from leveraging technology to increase bookings, reduce grunt-work, and strengthen carrier engagement. Without understanding the pros and cons of each booking structure, and what you are trying to achieve with your freight brokerage, you could:
Limit your companies’ growth potential.
Create unnecessary friction and inefficiencies in your processes.
Lose your competitiveness in the marketplace.
In this post, we will talk about the different ‘booking structures,' their pros and cons, and where technology can significantly help to streamline your operations, amplify business development efforts, and scale relationship-building and engagement.
Freight Brokerage ‘Booking Structures’
1: Outbound Region
The outbound region model is also referred to as the ‘outbound state’ model. In this model, the region could be the Pacific Northwest, for example. Or, the state being referred to could be California.
Freight brokerages using this model will focus on booking any loads picked up in a specific region or state, leaving for another region or state. If we use California to illustrate this— a broker would focus on any load being picked up in California and leaving California for another state such as Nevada or Colorado.
When a carrier sales rep is dealing with outbound opportunities, the reps have a centralized carrier base to draw from. In California, for example, they are focused on three main subregions; San Francisco/Bay Area, Los Angeles, and Sacramento. As such, carrier sales reps can better understand their carriers, build stronger relationships with them, and use that intel to engage them better. Typically, this means better carrier utilization and lower carrier churn.
However, carriers typically charge more money since these bookings are more often than not, headhauls. Whereas backhauls cost truck drivers just as much regardless of whether they are empty or fully loaded. Therefore, freight brokerages need a great deal of load volume to optimize this model correctly.
With the right technology, brokerages can help offset the potential additional costs associated with headhauls and increase the number of loads booked per day. This can lead to a decrease in operational expenses and an increase in revenue. To do this, the technology solution must:
Understand carriers needs
Anticipate carriers needs ahead of time
Engage the right carriers at scale
Reduce fulfillment risk
Fairly price loads
Increase carrier re-utilization
2: Inbound Region
The inbound region model is also referred to as the ‘inbound state’ model. In this model, the region could be the Pacific Northwest, for example. Or, the state being referred to could be California.
Freight brokerages using this model will focus on booking any load that is being picked up from any other state going into a specific state (or region). If we use Florida as an example, that means any load that’s picked up from any other state and going into Florida. In this model, a single carrier sales rep is usually responsible for all the inbound to just one region.
The main benefit of using the inbound model— better pricing. If carriers are returning to Florida already, they typically can carry loads for lower prices. Arguably though, the money you saved on the load isn’t going to offset the costly time and effort a rep used to book the load.
I’ll explain: the carrier sales rep never knows where the next load is coming from. Is it Texas? Is it Colorado? Is it California? Because the carrier base is spread across the entire country, a rep needs to know more specific carriers in order to book a load. Or, they must resort to load boards.
In comparison to the outbound model, carriers must triple down on their efforts to book a load (e.g., phone calls, emails, load boards) and onboard more new carriers for ‘one-off’ loads. This leads to lower carrier re-utilization, weaker carrier engagement, and rep burn-out.
Again, the right technology can help augment efforts in this model by building thousands of intelligent carrier profiles at scale, anticipating their needs, and engaging them to book. This can help increase carrier re-utilization and reduce unnecessary grunt-work.
3: ‘Carrier Manager’ Model
In the ‘Carrier Manager’ model, one carrier sales rep can be responsible for 40 or 50 carriers. The rep’s role is to leverage their networks to find loads for those carriers. Wherever those carriers decide to send a truck, the rep must do everything they can to find loads for them. This is a 100% carrier-centric model.
Usually, the ‘carrier manager' model is combined with either the inbound or outbound region models (discussed above). This model works well if you have plenty of ‘consistent dedicated freight’ loads because reps can deeply understand the carriers they work with— their needs and business drivers— and deliver exceptional service to customers who want to move a load from A to B.
To illustrate: if a customer wants to move a load from Chicago to Miami, the carrier sales rep can draw upon his/her Rolodex to find trusted carriers. With a smaller network of coverage, the rep can focus more on coverage needs.
However, the ‘carrier manager' model needs a great deal of load volume to satisfy their carriers' needs consistently. This model does not work for small companies. Furthermore, because one carrier is responsible for up to 40 or 50 carriers and must find loads for those carriers, loads are often either mistimed or mismatched.
The right technology can help with scaling ‘digital freight matching’ efforts by automating the engagement of the right carriers at scale and on time. This assists in reducing mismatched or mistimed bookings, enabling the carriers sales rep to book more loads quickly and confidently.
4: Free For All
In the ‘Free for All’ model, any available load can be booked by any rep in the company. Typically, this is combined with a ‘Carrier Manager’ model. That means whenever a load opportunity presents itself, carrier sales reps can all attempt to match that load with one of their carriers.
The main upside to this is it drives healthy competition amongst your carrier sales reps, incentivizing them to stay active, secure more bookings for their carriers, and at a competitive price. This drives better margins.
However, carriers typically don't have a pleasant experience with you and tend not to return to your freight brokerage because they receive multiple calls from reps within the same company.
This leads to very limited carrier re-utilization and very high need to constantly onboard new carriers. As such, it is tough to build long-term carrier relationships and engagement.
With the right technology solution, you can scale and improve engagement by enabling carrier managers to manage more carriers and more loads, all while maintaining an exciting ‘competitive’ spirit within your freight brokerage.
Summing Things Up
Each ‘booking structure' has its pros and cons. It's vital for freight brokerages to understand how their booking structure assists them to achieve their key business goals, critical areas for improvement, and how technology can be leveraged to achieve that.
One-size fits all solutions do not exist; brokerages must apply technologies in a way that suits their unique operational requirements. Remember: the digital solution your business needs is not a product— it is a strategic methodology that leverages the power of technology.