On the one hand, trucking demand is through the roof. Hardly any shipper has enough capacity, so brokers are in demand to be both strategic and spot partners for their customers.
On the other hand, technology apparently is being developed to make the freight broker irrelevant, with systems that are ready to automate rate discovery, visibility and payment.
Of course, neither of these extremes is entirely correct. Yes, freight brokers are in a buoyant mood these days, but it’s a complicated environment. The enforcement of a mandate requiring drivers to use electronic logging devices has put a strain on capacity and the market is as tight as anyone can remember it. But there are variances in equipment and region — it’s not a uniform tightness.
As one broker recently put it to me, “Between the ELD — yes, it has had a huge effect for us as a broker — and Trump, I’ve never seen anything like it. Margins aren’t as healthy as 2010-2012 but revenues and demand are very high. Every month is a new record.”
All these extremes and nuances collided at the Transportation Intermediaries Association’s (TIA) annual conference in Palm Springs last week. The event is the country’s largest gathering for 3PLs and is a bit of temperature check for what brokers see as critical issues.
To boil down the summit to its essence, every single session I attended could be tied to one of three themes: finding capacity, using technology more effectively and getting the hiring mix right.
In terms of what that means in the current tight capacity environment, I’d say the “frothy” freight market, as one speaker at TIA put it, is working out well for engaged brokers. And by engaged, I mean ones who are tightly connected to their customers and also ones who are taking the time to understand what technology means to their business.
To be clearer, there is a head-shaking amount of technology aimed squarely at U.S. domestic freight markets. Some of it is intended to help shippers and carriers reduce or avoid their reliance on brokers. But some of it is designed to help the brokers meet new digital imperatives, whether it be in finding capacity more effectively or cutting operational or administrative costs.
I thought of this second category when pondering the sentiments of the broker: Margins are tighter, but revenue and demand is at record-setting levels. Aren’t those the dynamics tailor-made for automation of routine functions?
In a high-volume “frothy” environment, the (margin) spoils go to those companies that reduce their operational costs per shipment and those that loosen up human resources to develop relationships with carriers and shippers instead of attending to tedious administrative tasks.
Almost every panel was colored by the never-ending search for more usable data. (I even moderated a panel on the topic with a TMS provider, a tech startup and a widely used load board.) To me, the takeaway is that every broker needs to think about its sources of data (Where do I get it? Is it real-time? Does it all even need to be real-time?) and ensure it has a system capable of ingesting that data and making it usable.
What struck me most, in this regard, was the web of software partnerships endemic across the industry. Software providers aren’t competing tooth and nail with each other as much as they’re working together to complete the puzzle for often overwhelmed brokers.
Freight brokerage is neither all good nor all bad these days. It’s neither about to be dead nor is it insulated from the technological wave cresting over the freight industry. It’s about brokers finding their service and technology niche and using a web of software providers to make their offering as potent as possible.