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Running a brokerage or 3PL has always had its share of complexities and challenges, but the unpredictable freight market in recent years has made it a Herculean task. Brokers long for the stability that has been in short supply of late.
The current market is marked by an extended period of loose conditions. Spot rates have been well below contract rates, and brokers are forced to offer low prices to maintain business.
Thankfully, we do see a light at the end of the tunnel as the sector moves deeper into Q4 and starts 2025, though. The market may tighten significantly in the coming year, leading to potential contract risks and margin erosion after the post-pandemic freight recession. Brokers must strategically target lanes and remain resilient to navigate this transitional period while preparing for the potential positive market shift ahead.
With modern automation software that uses artificial intelligence, brokers can significantly reduce their exposure to market volatility by employing tools that reduce manual processes and simplify payments and billing. This whitepaper will look at several areas where automation provides the most value to brokers and 3PLs.
In the current market, speed is paramount. Brokers who can accelerate the billing process gain a competitive edge, securing cash flow faster and maintaining liquidity. With automation, brokers can also receive tracking confirmations and relevant documents quickly, allowing for immediate billing.
Forward-thinking providers offer automated follow-ups for missing documents, cutting down on back-and-forth communication and minimizing delays. This faster turnaround is critical in a market where capital access directly impacts business stability.
Moreover, reducing manual processes decreases the potential for errors, improving cash flow timelines. Automation ensures a broker’s accounts receivable are managed with precision, while also making sure payments to carriers are issued promptly. As brokers face margin pressures, getting cash faster and with fewer issues can be the difference between floundering and prospering.
Accuracy in billing is vital to improving days sales outstanding (DSO) and ensuring smoother cash flow. Many brokers are still bogged down by manual processes that require teams to review each document for compliance with customer requirements. However, automation has changed the game.
The best automation platforms not only streamline this document review but do so with a level of precision that far surpasses manual efforts. For example, the premier automation systems on the market achieve 95-98% accuracy in document processing, compared to the 50-60% achieved with other platforms.
This level of accuracy dramatically reduces the number of payment disputes, minimizes delays in invoicing, and strengthens broker relationships with both carriers and shippers. Faster, more accurate billing leads to reduced DSO, meaning more working capital is available for brokers to reinvest in their operations.
The implementation of automation platforms leads to substantial cost savings. With market conditions forcing companies to cut headcount or eliminate outdated technologies, automation offers a streamlined solution that allows brokers to reduce operational costs without sacrificing performance. A reduction in DSO by even one day can save brokers thousands of dollars in working capital over time, money that can be reinvested into growing their business.
But cost savings aren’t just about staffing; they also come from improved accuracy and fewer payment delays. This operational efficiency translates into tangible financial benefits as brokers scale without increasing their overhead.
As the market potentially tightens in 2025, scalability becomes crucial. Automation allows brokers to grow without the need for headcount or additional training that are vulnerable to market whims. By implementing tools that automate repetitive tasks, brokers can handle increasing volumes without the need for additional personnel, thus minimizing costs and maximizing productivity.
With a scalable platform in place, brokers are well-prepared for the future. Whether volumes increase or market conditions shift, having the ability to ramp up operations without missing a beat provides a significant advantage over competitors still reliant on manual processes.
Brokers who fail to plan for the coming market changes will be left scrambling when demand increases, potentially losing out on revenue due to operational inefficiencies. With automation powered by AI, however, they can confidently manage higher volumes while maintaining accuracy, speed, and cost control.
“Lights-out” processing takes advantage of a platform that functions 24/7, without the need for constant human oversight. In an industry where time is money, having a platform that processes and bills shipments while staff are off duty is invaluable.
Automated processing ensures that invoices can be prepared, sent, and tracked even during off-hours, meaning a broker’s operations never truly stop. This can lead to faster payments and a greater ability to meet customer needs, all while maintaining a lean, cost-effective operation.
Not all automation vendors provide this level of continuous service. Brokers should seek out platforms that allow them to stay ahead of the curve by leveraging 24/7 processing capabilities, ensuring that their billing and document management processes are as efficient as possible, regardless of time zone or office hours.
This whitepaper underscores how automation provides freight brokers with the tools to not only survive but thrive in a competitive and volatile market.
With faster billing, improved accuracy, substantial cost savings, scalability, and the potential for lights-out processing, brokers can focus on what they do best after employing the best automation software: building relationships and moving freight. Automation offers the stability brokers need to navigate market fluctuations and emerge stronger than ever.
