Cancel OK

Top Gear

Today’s truck brokers use technology to evolve, enhance, and expand services
Top Gear

Technology and consolidation have been key to the success of many truck brokers navigating today’s produce world, yet the old adage ‘the more things change, the more they stay the same’ still applies. While operational functions have advanced, it’s still about finding quality truck service at a competitive price, and the professional handling of claims.

Yes, state-of-the-art equipment and savvy technicians play a role, but companies with a bedrock of capable and customer-friendly associates—in the office or behind the wheel—will always rule the road.

“Good people make good companies,” asserts Mike Devine, president of L&M Transportation Services, Inc. in Raleigh, NC. “If you’re able to attract and retain great employees who have a service mentality, it goes a long way in the success of your company.

Kenny Lund, vice president for support operations at Allen Lund Company, LLC, agrees: “No matter what happens with technology, the relationship is king and dependent on having the right people. This is not an industry that can be run simply with the best data systems—you must have the right people using those systems. Your word and good reputation in the marketplace are still the most important assets a broker can have.”

“The basic service we provide of matching a customer order with an appropriate truck and managing on-time delivery has not changed very much,” posits Steve Howard, president of Patterson Companies, Inc. in Plant City, FL. “The biggest change is more in how we provide the service today versus a decade or two ago.

Technology has changed every aspect of our business—what used to be phone calls and faxes is now emails, texts, and electronic GPS readings using satellites.” Truck-stop pay phones have been replaced by cell phones and tablets serving as miniature computers, providing access to the world via the internet from just about anywhere, Howard adds.

Brokers have made great strides, with few needing to “fish for loads” to stay busy. “The days of offices with a bank of phones and ‘dialing for dollars’ are dwindling,” reflects Dan Vaché, United Fresh Produce Association’s vice president of supply chain management, based in Redmond, WA. “But that’s not to say they do not exist or come and go from the market. That’s one of the challenges: here today and gone tomorrow does not create a solid and dependable business environment.”

The Times, They are a Changin’
Business basics remain constant, but there’s no disputing shipping practices have improved. “In a word, they have become more sophisticated,” observes Luis Campano, executive vice president at John J. Jerue Truck Broker, headquartered in Lakeland, FL. “A couple decades ago, technology wasn’t so crucial, the business wasn’t so complex.”

Twitter

Technology and consolidation have been key to the success of many truck brokers navigating today’s produce world, yet the old adage ‘the more things change, the more they stay the same’ still applies. While operational functions have advanced, it’s still about finding quality truck service at a competitive price, and the professional handling of claims.

Yes, state-of-the-art equipment and savvy technicians play a role, but companies with a bedrock of capable and customer-friendly associates—in the office or behind the wheel—will always rule the road.

“Good people make good companies,” asserts Mike Devine, president of L&M Transportation Services, Inc. in Raleigh, NC. “If you’re able to attract and retain great employees who have a service mentality, it goes a long way in the success of your company.

Kenny Lund, vice president for support operations at Allen Lund Company, LLC, agrees: “No matter what happens with technology, the relationship is king and dependent on having the right people. This is not an industry that can be run simply with the best data systems—you must have the right people using those systems. Your word and good reputation in the marketplace are still the most important assets a broker can have.”

“The basic service we provide of matching a customer order with an appropriate truck and managing on-time delivery has not changed very much,” posits Steve Howard, president of Patterson Companies, Inc. in Plant City, FL. “The biggest change is more in how we provide the service today versus a decade or two ago.

Technology has changed every aspect of our business—what used to be phone calls and faxes is now emails, texts, and electronic GPS readings using satellites.” Truck-stop pay phones have been replaced by cell phones and tablets serving as miniature computers, providing access to the world via the internet from just about anywhere, Howard adds.

Brokers have made great strides, with few needing to “fish for loads” to stay busy. “The days of offices with a bank of phones and ‘dialing for dollars’ are dwindling,” reflects Dan Vaché, United Fresh Produce Association’s vice president of supply chain management, based in Redmond, WA. “But that’s not to say they do not exist or come and go from the market. That’s one of the challenges: here today and gone tomorrow does not create a solid and dependable business environment.”

The Times, They are a Changin’
Business basics remain constant, but there’s no disputing shipping practices have improved. “In a word, they have become more sophisticated,” observes Luis Campano, executive vice president at John J. Jerue Truck Broker, headquartered in Lakeland, FL. “A couple decades ago, technology wasn’t so crucial, the business wasn’t so complex.”

Lund maintains the business has always revolved around information, but the increased speed and flow of data in recent years has allowed companies that invested heavily in technology to do more, in a faster, much more efficient manner.

But technology is a two-edged sword, bringing additional controls and restrictions as well. “In some ways, it’s more difficult to operate,” Lund observes. “Brokerages are now more commoditized, as there is more pricing information in the marketplace.”

And unlike in years past, fixed contracts are becoming more of the norm than the exception. “Most truck brokers didn’t have contracts with their carriers, something that is now essential,” remarks Campano.

Vaché agrees: “When the market’s steady, it’s a benefit to both; when rates fall above or below the contracted price there are no issues as it flows both ways. With the seasonality of the perishables market, it’s wise to have the comfort of knowing you will have wheels under your product for pickup and delivery, and not have to chase after the spot market. This also creates stability with dependable carrier/drivers who can count on keeping their assets moving. When tractor trailers sit idle, there’s no commerce and both time and money are lost.”

Most would still say the pros outweigh the cons. A recent tech breakthrough from Venice Beach, CA-based Cargomatic is modeled on Uber, the popular ride management app, which matches shippers with the drivers best suited to haul loads at a prearranged, fixed price. Cargomatic played a role in clearing the backlog from the protracted West Coast ports dispute.

And sophisticated technology now tracks trucks in real time and monitors trailer temperatures. Shippers can be proactive in dealing with problems and respond to temperature variations affecting the quality and condition of perishables, notes Vaché. In addition, software programs can assign optimal delivery routes and track the on-time performance of drivers. “This leads to better service, rewarding dependable carriers or drivers and eliminating underperformers.”

As for the cons, mandates from the Federal Motor Carrier Safety Admin-istration’s Compliance, Safety, Account-ability (CSA) program have brought about a slew of controversial measures from speed inhibitors and electronic logging devices to hours of service restrictions. Campano confirms today’s trucking world is certainly more complex than in years past. “Questions about assuming vicarious liability or should a truck broker be responsible for CSA scoring rarely, if ever, came up.”

Lund too has an opinion on the troubled CSA program and its effects on the transportation sector: “I think business will change dramatically in the next five years as overregulation continues to restrict capacity.”

Another negative is technology’s ability to nearly eliminate the need for any face-to-face contact. Deals can be sealed by phone and contracts sent via email or fax. But building relationships between shippers and carriers is still paramount to operating a successful brokerage, Lund says. “In many ways, technological advances hinder relationship building as the relationship gets broken down into data inputs and outputs. We work hard to teach our employees that relationships and high service levels are more important than the technology.”

The Shifting Role of 3PLs
The ongoing dearth of trucks and drivers has triggered an influx of third-party logistics providers, or 3PLs, to manage services for all or part of a customer’s supply chain management. Many are separate firms handling various outsourced transactions, but some larger brokers have added 3PL services to their portfolio. “In my opinion, there’s always going to be a need for the spot market truck broker, but I see the use of technology and 3PL services taking on a bigger role in the future,” comments L&M Transportation’s Devine.

“The biggest brokerage firms continue to refine the specialization within their teams, going away from the old cradle-to-grave broker to be truck specialists, account managers, data input teams, and track and trace teams,” says Doug Stoiber, a recruiting consultant with Ag1Source in Hesston, KS, and a former supply chain executive with L&M Transportation Services.

Lund believes medium and large brokerages have changed significantly as they have been asked to offer more and more services. “Larger brokerages now offer services that include transportation management system (TMS) software, load consolidation, bid management, warehousing, long range pricing, managed services, scheduling software, EDI (electronic data interchange), contingent cargo insurance, international transportation, intermodal services, and LTL (less than truckload) and small package transportation,” he says.

While there is no shortage of 3PLs, the produce industry offers specific challenges. “Hauling produce does pose different problems than hauling dry freight, but done correctly 3PL services can be very beneficial,” Devine says.

Lund agrees, explaining that the company’s TMS system was built specifically for produce shippers. “Most TMS systems can’t handle the multi-pick, multi-drop, multi-change orders that happen regularly with produce shipments. Because we ‘grew up’ in the produce world, we’re able to offer services on a large scale that are appropriate to the produce industry.”

As the role of truck brokers and 3PLs evolve and the industry contracts, top notch service becomes key to long-term success. “The backbone of the produce transportation business will continue to be truckload shipments,” Devine contends, “and some brokers are going to stick with this bread-and-butter service while leaving the rest—LTL, pool distribution, and the like—to the competition.”

Yet those who can offer more, like warehouse services, cross-docking, and multi-drop loads, will be able to reap the benefits. “In these cases, we become more of a ‘solutions provider’ for challenges in their business units,” explains Devine. “People who can provide value-added solutions will continue to be very important in the produce hauling and logistics business.”

Best Practice Fundamentals
It is no secret perishables require a more carefully choreographed loading and delivery performance than other cargo. But some things should never change, and these are of the utmost importance to long-term success according to Jerue’s Campano: service, integrity, and relationships.

“Truck brokers have to make the customer or carrier’s job easier and more efficient if they’re going to succeed,” Campano says. Doing the job, as committed, is a start, but communication is central to the best possible outcome, especially if there’s an issue. This is where solid relationships come into play: if you’ve invested both time and resources, there will be trust on both sides to do the right thing, he says. Lastly, money talks: “Quick pay is vital,” he emphasizes. Speeding up the process will not only be appreciated by carriers, but go a long way in building strong relationships.

Stoiber, too, believes in the benefits of quick pay and long-term partnering. Brokers should “balance the needs of carriers and customers, to work hard to keep their most loyal trucks busy when things are slow, and resist the urge to chase high-dollar loads in peak season by shorting loyal customers. You always ultimately lose business by trying to be the cheapest,” he warns. If you want to keep your carriers, he recommends “pay quickly, work hard for them, communicate, be their advocate in disputes, and treat owners and drivers as though they were supply chain partners, not necessary evils.”

For Patterson’s Howard, it boils down to a few tried-and-true essentials: exceed the customer’s expectations for safe and on-time deliveries at a fair rate; deal with carriers in an ethical manner; pay promptly; maintain a highly motivated and skilled workforce; and use cutting-edge technology to operate efficiently.

“At the end of the day everybody has to make a profit,” Devine points out. “It’s our job to figure out cost effective solutions that are good for all parties involved.”

The Big Picture
Matthew Young, a transportation and logistics analyst based in Chicago with Morningstar considers the rising ranks of brokers and 3PLs in the industry as bringing order to a ‘highly fragmented’ market. “From the perspective of carriers, brokers serve as an attractive source of freight opportunities thanks to their ability to aggregate demand across a customer base of thousands of shippers. By using an intermediary, small and midsize truckers can minimize empty miles and supplement sales efforts—no small benefit in a capital intensive business like trucking.”

Looking ahead, Young sees both rising competition and consolidation. “Shippers’ use of domestic 3PLs has been evolving for several decades, and although intermediaries will continue to process more freight, the market is maturing. This means the 3PL landscape has and will become progressively competitive—more specifically, expect a large portion of the market to become more organized as the industry consolidates. Small brokers once limited in scope will increasingly gain access to a larger capacity base, stronger buying capabilities, and more sophisticated technology as they are gobbled up by acquisitive providers.”

Campano and Howard both agree, citing high costs for technology and the shrinking pool of owner-operators as major impediments for small outfits. “Carriers with less than five trucks, which represents a large percent of our base, are struggling to stay in business,” Howard confirms. “The move has been to larger fleets over the last decade.”

“Another trend to watch is the rising level of brokered LTL freight,” Young predicts. “The less-than-truckload industry is significantly smaller in size at approximately $35 billion, compared with the $300 billion plus full-truckload market. That said, brokered LTL freight appears to be on the rise as carriers are increasingly turning to brokers of scale to supplement freight opportunities, and brokers are actively seeking out avenues of growth and new sources of capacity.”

Concluding Thoughts
With over-the-road trucking still the produce industry’s primary mode of shipment, the miles are there for the taking for skilled truck brokers. Those who can use technology to boost efficiency, protect loads, build a network of reliable carriers, and offer top notch customer service will prosper both now and in the future.

Twitter