Industry TalkRegular Industry Development Updates, Opinions and Talking Points relating to Manufacturing, the Supply Chain and Logistics.
Love Letter to the Brokers Who Know There Are No Short-Cuts
A famous Mark Twain line you might know is, “The report of my death has been grossly exaggerated.” Yet, it’s not quite what he penned. Twain originally wrote, “The report of my death was an exaggeration.” Over the years, the words have evolved into the version we often hear today.
The past ten years of VC money has been wagered on a few choice logistics thoroughbreds. The companies had a slick thesis and were laser-focused on eliminating the people in brokerage. The problem they were trying to address was technology. It was old, and because it was old, it required people. People could stop being used once the tech was updated. It was a who’s who of premiere disruptor pedigrees. The guy who broke bookstores was coming at it, as was the guy who broke taxis. Had they ever booked a load? Nope, and it didn’t matter. They hadn’t owned a bookstore either. It was only a matter of time until the winner of the “black-out” brokerage was crowned. An obituary for the freight brokerage was drafted and filed away; it needed to await the demise patiently. An editor was secretly pleased that the work was done, and all that was needed was for someone to hit “publish.”
It would be an understatement to say that freight brokers of all shapes and sizes were sweating it. Just listen to earnings calls for publicly traded freight brokers around 2017. Uber this, Convoy that…. etc. “What are you doing?” “Aren’t you concerned?” “How are they impacting your business?” Rumors were rampant; death was near.
Then, it didn’t happen. Something was off. Six months went by, then a year, a pandemic, a red hot freight market that grew broker share of wallet. Along the way, the disruptors had to buy established legacy 4PLs with pricing capabilities and strong customer relationships because otherwise, their business would fail. The disruption had come to the disruptor. Merit could not convert. It’s not so much that the field overwhelmed the thoroughbreds and they couldn’t fend them off; the field knew something critical about the last leg. They could not be disrupted, replaced, or disintermediated.
The customer relationships built broker’s businesses, but that is not what saved the brokers from being disrupted. Because the broker rarely sees the freight that they move, they better bring something of significant value to those who do see it. What freight brokers bring to the Shipper and Carrier market is an ability to respond to real-time changes that occur hourly within supply chains and access their extensive relationships, knowledge, and data to solve problems. What saved freight brokerage from unlimited money was a superior hustle to provide service and communicate accurate prices when supply chain chaos, big and small, impacted both sides of the market. Every time the broker with a spreadsheet or low-cost TMS won over the faceless, solution less, digital broker.
The proof is in the app store reviews for digital marketplaces. The “disrupting” carrier apps have devastating three-star reviews. Comments such as “Everything was great with X until I couldn’t unload my trailer and couldn’t talk to anyone;” and “Decent rates but no customer service, this should be considered gambling.” Look closely at the performance of Fortune 1000 shippers during almost four pandemic years, and you’ll find that the ones that could best meet their customers’ expectations had a higher mix of freight brokers.
When the digital providers add back the required customer service layer, can they still call it a marketplace? Was the pursuit correct and the approach all wrong? Could this be solved with just a few more billion? But what if we added “A.I.” this time? Anyone who is looking for just another shortcut is ultimately flawed.
To the Brokers
To all freight brokers, I want to express my appreciation for all of you who have made it in this industry, whether by choice or necessity. You have persevered through negative and bounced loads and pushed through the end-of-month and end-of-quarter shipper rushes. You have also navigated the mania of “Digital Brokers” and made it through to year 3, year 5, year 7, and year 17. Your resilience and determination are truly remarkable.
I understand that this industry takes work. To those who understand what it takes to be a freight broker: You have faced challenges that would make others give up, but you have persisted. You have priced lanes right, but sometimes wished you could have taken some back. You beat back carrier factoring companies. You navigated the highest of spot markets and the hard hangovers. You have done all this and more; I want to thank you. Your dedication to the brokerage craft inspires all of us at MVMNT. You have shown us that we can achieve anything we set our minds to with hard work, grit, and determination. You are the backbone of this industry, and we are lucky to have you.
So, to all of you who have made it this far. Thank you for your tireless efforts, unwavering commitment, and endless drive. You are why this industry thrives, and we are grateful for all you do.
Finally, somewhere along the way, the word “brokerage” became something to avoid. Mega-freight brokers have been trying to hide it because someone who doesn’t understand this industry has advised them to appear as so much more. Using other words, they hid the complexity brokers addressed in the supply chain and diminished their value. Changing the word or hiding the word didn’t make the job easier.
At MVMNT, we love the word brokerage. You manage complex relationships with ever-changing needs and mountains of data that you commit to memory to make your daily tasks easier. You don’t need tech to replace you. The starting point for technology in this industry should be to complement the needs of brokers and not some futile efforts to replace them. I’ve got news for you: a shipper whose entire Q1 is sitting on a trailer 1 hour away from delivery wants to avoid resolving a missing delivery number through a chatbot. They want to make a phone call, know the person on the other line, and hear their confidence when they say, “Give me 5, and I’ll have this fixed.”
Brokerage’s future is bright, and we are proud to be a part of it. Let’s embrace the word brokerage and wear it as a badge of honor, acknowledging the value and complexity that freight brokers bring to the supply chain. Let’s continue to evolve and integrate technology to complement our expertise, not replace it.