3PL Perspectives
Jeff Hanson | FreightFriend
This article was originally published on www.freightfriend.net.
AS A BROKER, growing your business can be tough, depending on the market. One of the best strategies we always recommend is to focus on improving carrier relationships. Some tactics that fall under this include proactively having conversations with your contacts and pre-booking freight.
Many brokers will agree that these are important things to do, but other tactics can be tempting. One question we often hear is: “We’re getting a lot of spot opportunities right now and making a lot of profit off them—so why would I contract freight for less money?”
It all goes back to the importance of relationships. Here’s why.
The Scratch-Each-Other’s-Back Scenario
Imagine a shipper is always sending out spot freight for a particular lane. It’s clear they did not plan to go to spot week after week, and their budget is being blown.
When you notice something like this, why not take the opportunity to give the shipper a quote to take the lane? Yes, you’ll be quoting under the spot rate, but taking this lane means you’re signing up for guaranteed business. Not only does this ensure revenue, but you’re also saving the shipper time, money, and headache—and you’ll be top of mind for them the next time a bid comes up.
The bottom line: The better a relationship you build with a load planner, the more freight you can likely expect from them in the future. By guaranteeing business, you’re opening your team up to take on more spot freight in the future.
How to Find & Convert Spot Opportunities
Let’s first consider why spot opportunities come up. Often, it’s because the shipper has more volume than was bid out, or perhaps it’s simply a challenging lane.
If you’re working with a larger shipper:
• Store data on any spot that comes up (or, if you don’t have the bandwidth, just opportunities you’re interested in).
• Analyze it frequently. I recommend a weekly or monthly basis.
• As time passes, you should start to see patterns—the same lanes coming up again and again.
With larger shippers, this might be a new lane, or they might not have had a chance to put out a mini or annual bid just yet. By proactively giving them a quote, you could convert the opportunity before bids even go out.
If you’re working with a small- to mid-size shipper:
• Look for spot from point-to-state or point-to-region.
• Find several individual shipments that you’re willing to combine together to offer a single rate.
This strategy works well for smaller customers because they often don’t have enough volume to go to a bid. By combining individual shipments, you’re making the load planner’s life easier and taking a stressful situation off of their hands.
If you’re willing to do the legwork, these methods can be a good way to beat other brokers to get business. For a smaller brokerage, start by storing your data in a well-planned Excel or other spreadsheet document.
Once your volume of data outgrows a spreadsheet system, at that point, procurement software might be well worth the cost. One contracted lane could pay for the software itself.
Jeff Hanson spent nearly a decade at a global 3PL leading one of the company’s top-performing team and managing some of the largest accounts. He is an expert in leadership and procurement strategy. Based in Chicago, Illinois, FreightFriend is a tech solution provider that enables shippers, brokers, and carriers to move freight and source capacity on a privatized, centralized platform. To find out more about FriendFriend, or contact Jeff, please visit www.freightfriend.net.
