Businesses that move truckload freight juggle a multitude of variables, some expected and some … not so much. As long as consumer behaviors and economic conditions continue to shift, so too will capacity supply and demand, as well as rates and the availability of labor.
Instead of seeking silver bullet solutions that purport to eradicate volatility, forward-looking shippers and their respective freight partners are leveraging bespoke strategies to move and flow with inevitable shifts in the market. To that end, a more dynamic category of freight partner is emerging – the strategic freight broker – whose predictive technologies, industry expertise, and data insights help shippers mitigate risk while facing market shifts.
The “secret sauce” of the strategic freight partner, and each of its products, services, and offerings, requires the right mix of trust, transparency, and technology.
Prior to its partnership with Transfix, an enterprise retailer depended on the spot market and asset-based carriers for capacity. As one of its first digital partners, Transfix helped the retailer evolve towards a dedicated carrier model to sustain its 20% year-over-year growth.
In a recent interview, the Director of Transportation explained the value of this type of partnership: “The dedicated model with Transfix allows us the flexibility to maneuver when we need to maneuver. Retail is very emotional, so we have to be a calming force for our merchants to provide capacity for whatever should arise.”
He believes that today’s shippers need more from brokers than a rate and a truck. A strategic freight partner will constantly innovate capacity and pricing solutions, monitor market conditions, and manage carrier performance to drive continuous supply chain improvement.
“Transfix has grown alongside us, and that’s my idea of a partnership – one that is scalable and collaborative,” he said. “With 20% growth plans as a strategy, we have to look long term to ensure we have carriers that understand our sense of urgency.”
Over the past decade, artificial intelligence has penetrated the industry, helping to transform and automate the task of matching loads to available trucks, therefore reducing unnecessary truckload waste. With this influx of efficiency, the role of the broker can naturally evolve to pursue more strategic and data-driven partnerships with both shippers and carriers. However, few brokers are actually taking advantage of this opportunity.
Meanwhile, the digitalization of processes and entire industries is entering its next phase. One enterprise retail customer recalled that back in 2016, all they needed from a broker was a truck and a good rate. But today, he said, a broker must have data, analytics, and integration capabilities to help achieve long-term growth plans.
Beyond integrating with the latest transportation management systems via EDI and API, expanding pricing options in addition to contract and spot is becoming more essential to driving business objectives. Since contract rates can quickly lose relevance, especially in a volatile market, and the spot market can cause shippers to compromise service, shippers are beginning to explore other pricing models that can support their complex supply chain.
“We can help shippers assess their lanes,” said Scott Sokoloff, VP of data and analytics at Transfix. “If the shipper has more stable lanes, they can be priced for contract, while more volatile lanes in more volatile markets are candidates for a dynamic and optimal market rate based on real-time data. If the market turns in shippers’ favor, their costs drop. If it turns towards carriers, the prices would adapt to ensure shippers’ service metrics are hit.”
To derive a forward-looking rate, Transfix uses a blend of machine-learning and industry expertise. Understanding seasonality, for example, helps the data science team create a model that incorporates expected changes to differentiate between noise and actual signals, so that shippers and analysts don’t over-react to expected shifts. By investing in a longer-term strategy with a freight partner like Transfix, shippers’ service operations are apt to improve, making them more desirable to carriers, which could in turn lead to lower rates.
The digitization of information is only impactful when the right team of experts provides context and analysis, and both sides of the partnership value open communication. The strategic freight broker leverages its capabilities in data science and market dynamics with shippers, so their regular meetings fuel continuous operational improvement.
“One barrier that always seems to get in the way is communication, so we try to infuse an understanding with our partners in terms of what is important to handle, because if you don’t know that, it’s going to be very hard to innovate and come up with solutions,” said John Schilli, director of transportation at Henkel. “Conversations on virtual meetings have become very operationally focused, which is good. But there also needs to be a time where you step back and say, ‘What is the next level of strategic thought? What is the next big thing we’re trying to tackle?’”
For many shippers, a key goal is to mitigate the ups and downs of the market by providing each store or warehouse visibility into the loads they’re getting, information they can then timely and accurately communicate to customers.
Additionally, through data intelligence, a strategic freight partner is able to provide the visibility to match like-lanes and customers and potentially share capacity with other shippers to reduce waste.
A strategic partner, by way of AI and data-powered decision-making, pushes customers to pursue long-term planning and goals. True transparency requires technology and human expertise to work in tandem. With a firm understanding of lanes, market conditions, and vertical seasonality, the strategic freight broker will tailor each solution – whether capacity sourcing, pricing, or transportation management – according to the needs of the shipper.
Stay tuned for the breakdown on our newest pricing solution – Transfix TrueRate+.