Working smarter, not harder, is critical for everybody in transportation today, but it’s especially important for freight brokers in light of the increased competition in the marketplace and the ever-more demanding expectations of shippers. What does “working smarter, not harder” mean for freight brokers? What are the biggest drivers of cost and inefficiency in the industry? How can technology help brokers work smarter and improve their profitability? Those are some of the key questions I discussed with Tom Curee, Vice President of Logistics at Kingsgate Logistics, and Prasad Gollapalli, Founder and CEO of Trucker Tools, in a recent episode of Talking Logistics.
Current challenges for freight brokers
The current growth economy, where demand consistently outpaces supply, places a premium on freight brokerage services. I began our discussion by asking Tom and Prasad what challenges this is causing freight brokers.
Tom mentioned a number of areas of labor inefficiencies that are inflating costs and Prasad agreed. Prasad described three factors contributing to these cost challenges. “First, brokers are making too many calls to carriers in order to secure coverage — on the order of 30-40 calls per load,” says Prasad. “That’s a lot of wasted time and energy.
“The second factor is very profound,” continues Prasad. “When you look at the data, 80-90 percent of the carriers that brokers use fall into the category of ‘one-load wonders,’ that is, carriers who cover one load and then fall off the system. All the work brokers put in to find and on-board that carrier is for just one load. That is a huge inefficiency and raises costs dramatically.
“The third factor is a process problem. Brokers use many sources to find capacity. It’s like finding a needle in a haystack. When a broker and a carrier connect on a load it’s more by chance than by an efficient process.”
Prasad points to the lack of accurate information (or working with information that is stale and outdated) as one of the challenges the industry faces, along with the emergence of “digital freight” competitors that are looking to disrupt the market.
Given the inefficiencies and manual labor challenges Prasad described, I asked Tom how Kingsgate Logistics uses technology to address these issues. Tom notes that with a growth rate of 20-30 percent per year, there is significant pressure to reduce inefficiencies to better leverage their resources.
“We began by looking at load tracking, which typically involves a lot of labor,” says Tom. “That’s when we began working with Trucker Tools. I was already aware that it was a widely-used GPS-based app, so it would be easy to implement with carriers. The automated tracking really improved our efficiency.”
Tom next mentioned that in working with Trucker Tools, they became aware of their solutions for handling capacity. “Their Smart Capacity tool allows us to digitally connect with carrier systems to understand their capacity so we can make faster, smarter decisions on load coverage,” explains Tom.
I asked Tom what benefits they derived from implementing these new technologies. His interesting response was that, “We didn’t implement Smart Capacity because we were ready for it. We implemented it because we believed in the idea of what we could accomplish with it.
“Once we implemented, the first benefit we experienced was it gave visibility to our carrier network,” comments Tom. “By implementing Smart Capacity, carriers could now see our freight needs and they started contacting us [proactively]. Many of these were the ‘one-load wonders’ who had done a load with us in the past and now saw opportunities to work with us again.
“The second thing we’re really excited about is the [email processing] capabilities of Smart Capacity,” continues Tom. “We were getting tons of emails from carriers informing us of their available capacity, but we didn’t have time to follow up on all of those. Now those emails are automatically forwarded to the system [which uses natural language processing capabilities to read them and capture key data points] and then matches that capacity to our load opportunities and lets the carriers know about those matches. We’re getting great response so far and we don’t have to lift a finger to get this. It’s taking technology to the next level for us.”
Our discussion covered a number of factors concerning the future of the industry. Would change be disruptive or transformational? How will companies adapt to this change? How do you bring your employees along on this journey? What questions should freight brokers ask themselves to determine if they are a leader or a laggard in this transformation? And how should brokers go about working smarter, not harder? In short, we covered a lot of ground in this episode, more than I could summarize here, so I encourage you to watch the full episode for more insights and advice from Tom and Prasad. Then post a comment and share your perspective!