The logistics industry can be difficult to navigate as the market shifts. While each freight brokerage may be up against different constraints, they typically face similar challenges. The biggest challenges freight brokers face today include the following.
Increasing Competition
The freight brokerage industry is highly competitive, and brokers face challenges in setting themselves apart from their competitors. With the rise of digital platforms and technology solutions, more players have entered the market, intensifying the competition.
FreightFriend Solution: Brokers need to be able to connect with the right carriers, quickly, to book more freight in less time while keeping their network and load info private
Technological Advancements
While technology brings opportunities, it also presents challenges. Freight brokers need to adapt to rapidly evolving digital platforms, transportation management systems (TMS), and other software tools to remain competitive. Adopting and integrating new technologies can be complex, requires internal resource time, and requires investment.
FreightFriend Solution: Work with a platform that easily integrates with existing platforms and is a simple and intuitive tool that gets teams up and running quickly.
Margin Compression
Freight brokers often face pressure on profit margins due to various factors. Shippers and carriers negotiate rates aggressively, and rising operating costs, such as fuel prices, insurance, and regulatory compliance, can squeeze profit margins.
FreightFriend Solution: Use a tool that allows booking more freight in less time with all matched load information at ones fingertips.
Capacity Constraints
The availability of reliable and cost-effective transportation capacity is a persistent challenge for freight brokers. Factors such as driver shortages, capacity imbalances, fear of double brokering, and seasonality can make it difficult to secure capacity for shipments, especially during peak seasons or in specific regions.
FreightFriend Solution: Build a trusted network of consistent capacity during the slow season so during peak system, performance is optimal.
Carrier Relationship Management
Building and maintaining solid relationships with carriers is crucial for freight brokers. However, managing a network of carriers, ensuring timely payments, and addressing carrier performance issues can be challenging. Maintaining a balanced, up-to-date, and reliable carrier base is critical for meeting customer demands.
FreightFriend Solution: Manage carrier data in one place with a single source of the truth CRM tool that delivers results based on ongoing feedback.
Regulatory Compliance
The freight brokerage industry is subject to various regulations and compliance requirements, such as licensing, insurance, and freight brokerage authority. Staying compliant (and up to speed!) with all these regulations, especially as they evolve, can be challenging and time-consuming.
FreightFriend Solution: Reference public data like FMCSA to make sure carriers are compliant and current.
Customer Expectations
Managing customer expectations for real-time visibility, efficient communication, and seamless transactions has become increasingly important. Customers expect transparency, accurate tracking, and timely updates throughout the shipping process. Fulfilling these demands requires investment in technology and effective customer relationship management.
FreightFriend Solution: Use tools that work well together to cover carrier management, pricing, and shipment tracking.
Industry Volatility
The transportation industry is influenced by various external factors, including economic conditions, geopolitical events, and natural disasters. These factors can lead to market volatility, changing freight rates, and unpredictable supply chain disruptions, posing challenges for freight brokers in maintaining stability and profitability.
FreightFriend Solution: Create and strengthen carrier relationships now and succeed in the long term.
Double Brokering
The explosion of technology platforms available makes it easier than ever for brokers to find carriers and for carriers to find loads. While these platforms have undoubtedly made it easier for brokers to do their jobs, they have also created an environment in which double brokering can thrive. In fact, based on internal reviews at TriumphPay, the amount of freight that would be “by-the-letter double brokering” is about $500 million to $700 million per year.
FreightFriend Solution: Stop posting and praying. Work in a mutual friendship platform with your trusted carriers.
Ready to see how FreightFriend can help your freight brokerage succeed? Sign up for a demo here.