Looking for the right shipping solution? Whether you’re new to supply chain or in need of a refresher, there are new terms that arise all the time. We’re here to help you break it down. Today we’re looking at digital freight brokers, who are a great resource for businesses with cargo to ship.
Under the traditional freight brokerage model, shippers and carriers operate within a disaggregated network of tens of thousands of freight brokers. These brokers are responsible for connecting truckers with potential loads. Most of these deals are done by phone or fax, and take hours or even days to confirm and finalize. For this reason, the traditional model is often limited by time, manpower, and geographic location.
A digital freight brokerage, on the other hand, connects truckers and shipping entities through mobile apps or other digital platforms. By leveraging a digital marketplace platform, this technology can match shipper demand with carrier capacity more efficiently, connecting the two directly without the need for a middleman.
Since digital freight brokers are not tied to a physical location like a traditional freight broker, these marketplaces often have a wide network. Cargomatic’s network, for example, includes more than 22,000 carriers across the US.
But this growing space does more than connect the dots from one end to another. Artificial intelligence and machine learning are used under the digital model to predict trends in supply and demand and make the market more efficient.
Instead of calling around to multiple brokers, carriers can find more jobs through fewer channels by referring to a centralized digital ecosystem. In turn, the channels themselves become easier to interact with.
A digital freight broker is distinct from a dispatcher, as FreightWaves has pointed out. Although both connect truck drivers with jobs and there may be some overlap between the two, a truck dispatcher works primarily with the driver or owner-operator to ensure they have the resources to do their job, such as scheduling and other admin assistance. A freight broker takes a more big-picture approach, with a focus on the connection between a carrier and a shipper. In many cases, dispatchers may work with a freight broker to source work.
Cargomatic works with all types of carriers looking for freight, whether they’re interested in a quick job to supplement their day or dedicated lanes to add to their rotation. Our platform takes a lot of the back office work off the back of owner-operators, fleets, and dispatchers.
Here are some more ways digital freight brokers simplify the shipping and logistics process.
Freight transactions can create an immense amount of data that a digital freight broker will process daily. These data points include proof of delivery (PODs), bill of lading (BOLs), invoices, payment documentation, and much more.
Traditionally, this data has been handled manually by employees. And, in shipping, there is no shortage of paperwork to be handled.
However, changes in AI and machine learning have improved to the point that many of these tasks can be automated. This does not necessarily mean fewer employees, but it does mean more productive employees who are available to take on more valuable tasks.
Brokerages must understand freight markets in real-time. This insight is dire for capturing changes in load volume, capacity, and other information that determines day-to-day pricing for thousands of lanes. Before this data was widely available, brokers priced lanes based on their own data or third-party tools. But if we’ve learned anything from 2020, it’s that we cannot always rely on historical data or past trends.
With the depth of data available now, digital freight brokers now have forward-looking data that can be used to predict rates based on real-time conditions. Brokerages that use the most accurate data will have a clear advantage over ones still using analog or dated methods.
Even the most established digital freight brokers have a hard time sharing customer and carrier data internally. Individual brokers can be protective of their customer and carrier relationships. For a freight broker, though, this creates inefficiencies and issues that can lead to immense costs. Cross-sell and sell-up opportunities are missed.
Utilizing software and communications platforms that share customer and carrier information across the company not only helps drive top-line revenue with an existing customer base, but always lowers the cost of transportation procurement.
One of the key elements of a digital freight brokerage is the ability to integrate data with shippers and carriers. While traditionally, brokers may have seen giving away market insight as giving away parts of their competitive edge, transparency is actually where the market is trending.
Customers now expect to have direct integrations with their vendors. On the flip side, smaller fleets are becoming more tech-enabled and are looking to automate processes and become as efficient as possible.
The freight brokerages that invest in freight technology to give their customers and carriers more visibility into the process will be in the best position to help their customers and carriers become more efficient, which translates into more profits for all parties. They are making the pivot to be a digital freight brokerage.
Traditional communication methods like phone calls or emails will always be important to brokers – whether digital or analog. However, technology is now providing more methods for customers and carriers to stay engaged in real time.
Customer relationship management (CRM) tools have evolved from boring customer databases to a full suite of services for customer engagement and communications.
Business to consumer (B2C) companies have also created an entirely new sales and marketing playbook using customer engagement tools for years.
Freight brokerages that study and implement this technology and B2C sales and marketing tools will have a clear advantage over the analog brokers that are satisfied with business as usual.
Anthony Fullbrook, President of OEC Group, North America, joined Cargomatic on a recent People on the Move podcast.
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FMC Commissioner Carl Bentzel joined Cargomatic on a recent People on the Move podcast.
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