Transportation Services in the Age of Transparency
Brokers have their place in every shipper’s roster of available carriers and capacity. Brokers often fill the need for infrequent, one-off, unusual, and complex transportation services. If a shipper doesn’t have the time or the means to find asset-based carriers to haul their business, brokers can help—but there is a cost.
All shippers need a broker strategy. At a minimum, a shipper should have relationships with at least 1-5 brokers, have contracts in place with them, and have rates established where possible. Shippers need to be careful to work out liability, payment terms, accessorials, and required minimum carrier quality standards in advance with their broker partners so they are protected from unforeseen and uncontrollable circumstances that may occur with their shipments.
Brokers are needed in the transportation marketplace. They fill the gaps between shippers and owner-operators and draymen, assist resource and technology-constrained shippers and trucking companies, help with capacity shortfalls, and innately provide transportation management outsourcing.
Brokers are in business for the same reason as everyone else - to make money. They earn their income by making connections and by knowing their market as well or better than anyone else. Brokers live and die by information. They use arbitrage and leverage between available truckload capacity and shipper demand. When there are plenty of trucks around, brokers keep their fees to a minimum and work hard to put available capacity together with shipper needs. When capacity is tight, everyone’s rates go up and their fees are higher because of the more difficult work in securing capacity and to increase their margins over time —sometimes resulting in significant markups over the actual cost of the truck. It doesn’t take long for them to cover enough shipments to make a profit that offsets any losses or break-even shipments they covered when trucks were plentiful. What’s interesting here is that these capacity tightening’s are often quite seasonal and occur with regularity—barring catastrophic events like hurricanes, major storms, etc.—yet, shippers always seem willing to pay the premium when capacity tightens. Brokers can usually be assured that they will be able to make most of their annual profits come Produce Season, Fall Peak, and other regularly occurring surges of demand.
What makes a shippers’ agent different from a broker?
A shipper’s agent acts as an extension of your staff. Like your employees, they are measured by a combination of service, cost, and quality of work. However, the shipper’s agent model minimizes your fixed costs, allowing you to not have to make difficult staffing decisions in either good times (difficulty in finding personnel) or bad times. The transparency that is possible with this model also allows you to see exactly how well your partner is doing in terms of providing the shipper’s agent services, and potentially allows you to change the level of services provided without having to make a technology change.
A company like ours, IntelliTrans, augments the shipper-broker-carrier relationship and provides complete transparency. Transparency to rates, pricing, capacity, and throughout the entire supply chain. We provide accurate, easy-to-access metrics, and we give our customers a clear picture of their freight in the marketplace. Our pricing is tied to services provided and value delivered and is on a per-shipment basis, making it purely transactional—if your shipment volumes fall, so do your costs for the service. Our success is enabled by our team of career professionals, using honed business processes, and the robust performance of our Transportation Management System, CarrierPoint, that provides the underlying infrastructure we use to perform these services.
You can rest assured that we work hard to manage your freight regardless of the season or state of capacity in the market. Rather than take advantage of limited truckload supply, we work on your behalf to keep your costs as low as possible by making sure we effectively manage the commitments you have in place with your carriers and avoiding having to pay higher fees during periods of high demand and low supply as much as possible.
IntelliTrans is looking to form long-term trusted partnerships with our customers and earn our fees based on the quality of services we provide and our ability to innovate. You can depend on us to come up with creative, technology backed solutions to your freight challenges.