Like any competitive business, growing and managing a freight brokerage is full of operational challenges such as: attracting and retaining carrier sales reps, increasing operational efficiency, improving profitability, and strengthening relationships with customers and carriers.
Freight brokerages are confronted with prioritizing their resources and focusing their efforts on activities that will result in the highest gains. But where do you start? Where can you create efficiency gains within your business processes? What changes would be high leverage for your freight brokerage— changes that could potentially transform your business?
In this post, we discuss:
The life of a transaction (the freight brokerage business process).
The dispatch complexities carrier sales reps are confronted with daily.
The opportunities presented by properly digitizing key aspects of dispatch.
How empowering your carrier sales reps can lead to higher sales, operational efficiency, profitability, and a more attractive workplace.
This can help you maintain your status as a brokerage of choice, become a brokerage of choice, and continually improve your position in the freight brokerage industry.
Carrier Sales: There is More to ‘Dispatch’ than Meets the Eye
For freight brokerages, the life of a transaction typically looks like this:
While ‘dispatch’ doesn’t look like much, it is the most time-consuming, labor-intensive, complicated part of the business process— especially if you want to do it well.
Carrier Sales: Dispatch Process
This process is typically taken care of by Carrier Sales Reps (operations). For each load, this is the typical process that carrier reps must attempt to execute repetitively and at scale:
1) Mental Rolodex
For every “Order Tender” that is input into the Transport Management System (TMS) by a customer sales representative, a carrier sales rep must determine which carrier may be a good fit. Often, just one shipper can provide a freight brokerage with thousands of load opportunities. For this reason, you often find that the ratio of ‘customer sales reps’ to ‘carrier sales reps’ is 1:4 (even more).
In a recent discussion with a potential freight brokerage customer with yearly revenue of approximately $180M, their carrier rolodex (list of carriers) available in their TMS is about 19,000 carriers
There isn’t a carrier sales rep in the world who can call 19,000 carriers every time they receive an order tender. Therefore, they need to narrow down the relevant carriers by doing a combination of the following:
Identify the available carriers (in-network) who have done this exact load before.
If none exist, determine available carriers who have done a similar load before.
Determine which carriers would be interested. The TMS may have some data on carriers, but this is usually impoverished data that is rarely updated. For example, they might be relying on verbal confirmation from a carrier who expressed interest in a specific opportunity. Often, this leaves sales reps chasing their tails.
If no data exists in the TMS, use a separate tool of their choice such as spreadsheets, notebooks, and sticky notes.
Each carrier sales rep is on their own island, and so is their data! Very experienced carrier sales reps typically rely on their mental rolodex to reduce the number of carriers into a manageable chunk— but even then, it is like shutting your eyes and throwing a dart at a board.
2) Phone & Email
Once the carrier sales rep has narrowed his/her options down to say, 50 carriers (or less), their next goal is to contact each carrier via phone or email and determine the following:
On average, this process takes between 2-5 minutes per phone call/email to determine if this carrier is a good fit. At 50 carriers, the time involved to run this process for a single Order Tender is about 100 - 250 minutes! In a recent discussion with a potential freight brokerage customer, I discovered their carrier sales metrics:
60 outbound calls per day
10 loads booked each day (spot freight).
On average, each call has to be less than 3 minutes. Aside from being time and labor consuming, the dispatch process is also time-constraining. It is not a surprise that the staff turnover for a carrier sales rep is high!
3) Communicate Requirements
On the phone, reps must run each carrier through this process:
Do they have an available truck for the desired pickup date? If yes, move to the next step.
Does that available truck want to (or can they) go to the load destination? If yes, move to the next step.
Does that available truck have the necessary equipment and equipment modifiers (e.g., tarps, straps, and load locks)? If yes, quote and book them (next step).
4) Quote and Book Loads
Typically, a sales rep will select the carriers they trust and know. As such, they won’t vet them further, and will simply run through this process:
If the above criteria are met, will the carrier haul the load for a price that both parties can agree on? (negotiate)
If yes, the freight load is booked. If no, repeat this process by returning to Step (1) of Communicate Requirements.
Digitize Dispatch; Empower Carrier Sales Reps
Before the current technology revolution, carrier sales reps had no choice but to execute dispatch with lots of grunt work. Today, proper digitization of the dispatch process can help your carrier sales reps:
Book more loads with greater ease and confidence.
Focus on the more human elements of their job, such as engaging carriers and strengthening relationships.
Let’s review each step in the process and discuss how to create a digital counterpart to increase speed, accuracy, and efficiency of each step.
1) Data Extraction & Analysis
Instead of relying on a mental rolodex to sort and filter through thousands of carriers, a comprehensive data infrastructure coupled with Artificial Intelligence & Machine Learning (ML) solution can:
Collect, clean, and maintain essential data on carriers such as; email data, location data (historical and real-time), lane preference, equipment types, engagement data, FMCSA data, and licenses.
Create intelligent carrier relationship profiles that inform brokerages about what loads those carriers like to move, when they wish to move them, where they want to move them, and how much they can quote for moving those shipments.
Identify and communicate the relevant carriers for particular load opportunities.
This saves sales reps lots of time, energy, and stress.
2) Identity Verification
Typically, a sales rep will select the carriers they trust and know. Having trust with carriers is great, but it does not guarantee protection against fraud. How do you know if the carrier is reliable and not a scammer/thief? Before digitization, you were exposed to this risk. With a proper digital solution, you can minimize fraud risk by automatically checking and verifying carriers' licenses, for example.
3) Digital Dispatch
Digital dispatch means you can engage the right carriers at scale by automatically inviting them to book loads. Instead of having reps pick up the phone or email each carrier one-by-one, a digital dispatch can engage (using multiple channels) the relevant carriers at scale. Those carriers then decide whether they want to quote or book those opportunities.
4) Communicate Requirements
When load opportunities are dispatched to the right carriers, they receive all the load requirements they need to decide if they want the job (or not). Instead of happening on the phone— the communication of the ‘load opportunity details’ is automated. The rep will receive inbound booking opportunities that are already vetted by a digital system.
5) Quote & Book
Prior to having a digital solution, a verbal negotiation between the rep and the carrier would occur. There might be some back and forth on the phone until a price is agreed upon. In this case, the load opportunities are already priced, and the carrier just needs to decide if they want to book them. In some instances, a verbal booking may be warranted, but this only requires a ‘light’ human touch.
The ‘Freight Brokerage of Choice’
Effectively digitizing your freight brokerages means 1) Identifying areas in your business processes that are ripe for high-leverage streamlining and optimization (e.g., dispatch), and 2) Empowering your people to perform their best by providing them the right tools and methodologies. While doing so will lead to greater sales, operational efficiency, and profitability— it’ll also help decrease staff turnover, strengthen your company’s working culture, and achieve (or maintain) status as a ‘brokerage of choice’ for internal and external stakeholders.