Freight Brokerage Companies and Shipper-Carrier Relationships
The power and versatility that come from working alongside freight brokerage companies make it easier for shippers to secure the best rates while also maximizing truckload capacity use for carriers. The ability to accurately predict market trends and shifting consumer demands is critical for continued growth and success in these times of disruption and market volatility. Monitoring the current capacity limits and fluctuations of truckload rates also remains heavily dependent on data and analysis, both of which a freight broker company can provide. Let’s look deeper look at the role of freight brokers in building stronger shipper-carrier relationships.
Freight brokers can assist shippers by making capacity procurement faster, more accessible, and more affordable. As highlighted by Supply Chain 24/7, the volume of available loads on the spot truckload freight increased by an estimated 0.3% at the beginning of August 2021. At the same time, the number of available trucks that failed to meet demand fell by nearly 1.2%. When seasonal highs and lows do not align with predicted numbers, it can be challenging to meet capacity needs. Freight brokerage companies make it easier to secure space and keep shipments moving as effectively as possible. It’s this role as a partner to find capacity and match loads to it that helps shippers and carriers work together.
Spot rates have increased significantly since the start of the pandemic, which has moved the focus away from long-term contracts and more toward short-term spot assignments. Shippers currently desire to move their freight to align more with the contract market; however, the contract market is always subject to the influence of the spot market. Regardless, more contract freight is desirable because it helps them avoid the higher rates associated with spot market bids and establishes some stability.
This usually means brokers forgoing the in-demand spot market opportunities and focusing on enticing carriers to go back to long-term contractual relationships. However, disruption inevitably comes and undermines that process.
Freight brokerage companies can help truckers and fleet managers handle this shift more effectively without sacrificing profitability when implementing more contracts. At the same time, they can help monitor bid rates and capacity availability across both the spot and contract markets to help shippers stay profitable.
With capacity restrictions and market instability merging with economic stressors and other disruptions, transportation rates have continued to increase across most markets. Everything from rising fuel costs and higher driver compensation to increased transport fees and higher surcharges also impacts shipper and consumer shipping rates. Consider the aspect of fuel costs and how it affects transportation rates. According to the U.S. Energy Information Agency, on-highway diesel fuel prices reached $3.372 on September 13th, 2021, but in the Gulf area, rates were nearly $0.30 lower per gallon. Of course, that will change in the aftermath of Hurricane Ida, which will push the all-in rate for trucking to and from that area higher in the coming weeks.
Why is this important to know?
It is the need to assess different market variables to determine rates and their likely trajectories that helps brokers balance shipper versus carrier needs.
Up-to-date insight provided by brokerage technology makes it easier for shippers and carriers to adapt and adjust budgets or capacity forecasts as needed. Understanding carrier freight rates and the services in demand by shippers will help brokers stay profitable. In turn, brokers will help shippers find the best service level for each shipment while helping carriers maximize profitability on all loads. This occurs through the application of the latest shipping technology, monitoring applications, freight matching platforms, and automated systems. And during times of disruption, brokerages use their unique position to help shippers connect with more carriers and vice versa.
Brokerages add value to the shipper-carrier relationship by providing an inexhaustible resource for scaling operations to meet demand. This ensures adaptability by keeping plenty of loads in front of carriers and giving shippers ample carriers with available capacity.
However, if the supply chain were as simple as matching any load to any carrier, there wouldn’t be a need for technology and brokers. Thus, it’s up to brokers to find the resources that maximize scalability and flexibility for both brokers and carriers along the way. That’s where the value lies--figuring out how to do more with less and avoid risk for everyone involved.
Today, the capability to anticipate changes within market trends and consumer demands remains a critical component of supply chain management and trucking logistics. Brokers can more easily monitor and regulate rates, charges, and fees due to their third-party nature. Moreover, brokers that successfully deploy technology, like Edge CAPACITY, have an opportunity to bridge the divide to create more profitable and stable shipper-carrier relationships. Contact Edge Logistics today to learn more.
About the Author
Pamela is the Marketing Manager at Edge Logistics. She has a Bachelors of Arts from DePaul University in Public Relations and Advertising with a minor in Photography. Pamela is responsible for overseeing advertising, marketing, press, and social media related to Edge.