The Changing Business of Freight Brokerage: Three Ways to Come Out on Top

Preet Sivia | PARADE A.I.

OVER THE PAST 15 years, brokerages have largely adopted solid foundational technologies such as a Transport Management System (TMS), a tracking system, and a Customer Relationship Management (CRM) system such as Salesforce. However, the way Carrier Sales Reps (CSRs) engage carriers remains largely unchanged: relying on mental rolodexes, executing repetitive tasks, manually checking load boards, and manually making TMS queries. Subsequently, the brokerage-to-carrier experience has also been left unchanged.

In the past year or so, the freight brokerage industry has started to undergo drastic change. Top brokerages are challenging their tried-and-true methodologies and are evolving to level-up their CSRs’ skills. Instead of having their CSRs focus purely on booking a load, they are having them focus on delivering more targeted experiences for carriers (and ultimately, customers), asking questions like:

• Was this carrier the lowest risk carrier for my customer (deadhead, quality, history, repeating DC visits, etc.)?
• Does this carrier prefer a digital booking experience, a phone call, or a hybrid approach?
• Which carriers will offer the best margins for this load?

We are now in a time when an increasing number of brokerages are adopting more sophisticated technologies to help employees work faster and perform better; specifically, booking more loads and finding the best carrier for those loads with ease.

• Provide competitive rates to carriers and shippers while increasing volume to up profit per employee.
• Provide better, personalized customer service at scale to strengthen carrier relationships.
• Collect information about carrier preferences to learn and develop ways to deliver target engagement.
• Increase in-network carrier capacity and secure contracts with more (and larger) shippers.

As freight brokerages leverage technologies to deliver more competitive services to their customers and carriers, the industry is undergoing rapid consolidation. Freight brokerages and logistics companies with capital are aggressively purchasing technology-forward, asset-based businesses with a different acquisition or merger taking place every few weeks.

With the brokerage industry undergoing consolidation, forward-thinking brokerages are increasingly consolidating their customer accounts and better engaging their carriers at scale. Shipper customers are getting better and easier access to the right carriers for their loads. Furthermore, carriers can increasingly shop for better margins and more relevant load opportunities.

Questions: How will your freight brokerage differentiate itself? Why should a carrier or a shipper engage with your brokerage? How will your brokerage stay relevant now and in the future? In this column, we share three essential practices to keep your freight brokerage relevant.

1. Use data to drive decision-making: In carrier sales, smart brokerages are using large amounts of information to make the carrier experience as easy and relevant as possible. For example, with the correct use of data, you can:

• Understand how many trucks are available for a given load.
• Send carriers fewer opportunities that are more targeted and relevant—which means you give them more freight that they want, rather than freight they specifically told you they don’t.
• Time the sending of new load opportunities to increase the likelihood of load-acceptance.

Doing the above is an overhaul of how many brokerages approach the carrier experience. By taking a data-driven approach to bookings, engagement, and customer service, we have seen brokerages increase their loads booked 2.5×, increase engagement of inactive carriers 3×, and increase loads per carrier by 32%.

2. Consider a restructure: Today, different organizational booking structures exist—outbound region, inbound region, carrier manager model, and free-for-all—all of which have different pros and cons. The best brokerages are selecting an organizational structure that best fits their organizational goals, considering the following:

• Who is facing their carriers and customers?
• How specifically their internal representatives are engaging with their carriers and customers.
• How to deliver the best carrier experience and build the best relationships?

But significant and necessary restructures aren’t limited to just organizationally. Aside from streamlining booking structures, the top freight brokerages are also restructuring their attitudes towards supporting their CSRs, for example.

3. Use technology to scale quality at speed: Arguably, technology is one of the biggest differentiators as you compete in enabling carrier sales. Technology can help you quickly scale high-quality engagement at levels that are impossible for human beings to do themselves.

Think about the best carrier experiences your brokerage can deliver. Now, imagine automatically scaling those great carrier experiences to tens of thousands of your in-network carriers. If the best brokerages are leveraging technology to provide that level of service, you don’t want to lag behind.

However, don’t assume technology is always a quick-fix. While adopting the right technology is critical to the future of your brokerage, you must first create a strong technology foundation for your company before you can effectively benefit from great technology solutions. With a solid foundation, you can capitalize on more advanced technologies.

Summary

Many freight brokerages built great reputations and relationships over a long period of time. Many brokerage CEOs and executives were once operators themselves, and, with consistent hard work and effort, have grown their brokerage and company culture to what it is today. However, they must evolve and adapt yet again for their brands and company cultures to survive in this new era of freight brokerage. Here are five activities we believe every brokerage ought to be focusing on:

• Clarify your organization’s goals and objectives.
• Build a strong technology foundation that enables you to adopt and benefit from technology solutions now and in the future.
• Implement a booking structure that enables you to scale your business without sacrificing on quality of engagement and relationships.
• Build a CSR-centric culture within your organization.
• Engage the right technology partner to help you grow your business.

Preet Sivia is Co-Founder and Chief Business Officer at Parade A.I., which helps America’s leading enterprise freight brokerages and 3PLs automate workflows. Parade A.I. is the most widely adopted Carrier Platform in the freight brokerage and 3PL industry, compatible with most ERP systems and TMS providers.