The “Ask the Coach” program is produced by TranStrategy Partners, the recognized leader in freight brokerage / 3PL coaching. Since 2004, TSP has helped hundreds of freight brokerage owners and top executives build the companies they want.
Question: I read your recent article, “The Freight Business Grows Up” and as the owner of a freight brokerage, I agree with your assessment, but I am wondering where do we start? What would be a good first step to growing up? Tom in PA
Mike Temple: Tom, thanks for the question. There is more than one way for your company to grow up, but to keep it simple, I will suggest that you find a way to add more value for your customers.
Before I elaborate on “adding more value” let’s examine the competitive environment as it has been over the past thirty years and where it is heading…
Freight brokers have traditionally competed against other freight brokers who have a similar value proposition and similar pricing. In the absence of a clear competitive advantage, freight brokers depended on personal relationships with customers.
In that market, a sterling reputation, a dependable carrier network, fair pricing, great customer service along with personal relationships was enough to be very competitive. The best freight brokers differentiated themselves by excelling at the day to day blocking and tackling.
Of course, every shipper has their own expectations. While some shippers value a strategic relationship that includes a high degree of integration, trust and customer service, other shippers are content with a transactional relationship. The transactional shippers may work with multiple brokers and value a lower price over relationships and customer service.
The Evolving Freight Market
Today, freight brokers must compete against companies that have very different business models, service offerings and value propositions. Shippers have more options than ever before. In fact, it is hard to list all the new types of business models and companies that have sprung up in recent years. A few of the new options are discussed below.
Shippers who move freight in multiple modes may decide to consolidate all their business with a full service 3PL that can manage their ocean freight, drayage, warehousing, LTL and truckload needs.
The transactional shippers (who don’t value relationships) may be lured to some of the online freight marketplacesthat enables them to save by cutting out the middleman. Many people in their twenties and thirties grew up with the internet and may be more comfortable with a well-known website than a broker relationship. For proof, look at what Amazon did to the brick and mortar retailing vertical.
Over the last decade, many 3PLs and brokers bought asset based companies and vice versa. These hybrid or asset light carriers offer the best of both worlds – assets and full service brokerage. When there is a shortage of trucks for a given lane, these companies become a very attractive option for shippers because they can use their own trucks or broker the loads.
Compete by Adding More Value
To compete and win in this new market, companies must find ways to add more value for their customer. Provide such a superior service, that the customer never considers the alternative.
Understand the Customer – Solve More Problems.
To add more value, solve more of your customer problems. Rather than define your customer’s needs as a low price and good service, go deeper to understand the problems facing them and their industry.
Develop a Specialty
Rather than just moving freight for retailers, develop a full-service retail logistics specialty. Do some research on trends and challenges, attend retail logistics events, create reports, case studies and best practices that position your company as the retail logistics experts.
Provide Insights and Recommendations
With all the transportation management systems, sensors, GPS and other information created, your company can gain new insights into your customer’s business. Use these tools to gather the right information on problems and challenges facing your customer. Providing raw data isn’t always that helpful. The value is when you identify trends and opportunities from the data created.
Expand Your Services Offering
Many brokers and 3PLs are partnering with other transportation providers to expand their service offerings. For instance, if you specialize in retail logistics, it might make sense to align your company with a home delivery / final mile carrier so you can serve the rapidly growing retail home delivery market.
About the Coach Mike Temple is a Senior Partner at TranStrategy Partners and the Director of the Xcelerator Leadership Program, which is designed to be a catalyst for accelerated growth for 3PL and freight brokerage businesses. The Xcelerator Leadership Program is a yearlong program that utilizes a unique process that maximizes business results with minimum disruption to day to day operations. Check out our white paper: Does Your Freight Brokerage Business Serve You or Vice Versa?