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You’re probably tired of hearing about the ongoing freight recession – and we’re honestly right there with you. Since late 2022, you’ve probably felt the pain of lower freight demand and read what felt like thousands of reports about difficult market conditions for brokers.
We’re not here to dwell on the recession. Instead, we’d like to take a forward-focused view of how brokers and 3PLs can use automation and other innovative strategies to survive and thrive now and long into the future. In a changing industry, we want you to be equipped with this guide and its potential tools.
I swear, we’re not going to dwell on the recession. But a couple of quick, high-level data points will help put the brokerage sector in better context.
In late 2022, there were 31,235 active freight brokerages registered with the Federal Motor Carrier Safety Administration. In July 2024, that number was 26,653, meaning approximately 1 in 7 brokers has closed since the start of the downturn. Additionally, active brokerages were down 11.6% year-over-year from July 2023 to July 2024.
Those statistics point to a broker market that will feature increased levels of competition today and in the years to come. You’ll have a better chance of success by employing the right tech and business approaches.
Enough of the bad news – we’re here to help you survive and thrive. Automation and artificial intelligence can help brokers improve operational stability and increase efficiency. Better yet, a slowdown – even one that may be ending soon – presents a great opportunity for brokers and 3PLs to invest in tools that will have them off and running once the boom times return.
Why, then, is automation powered by AI so important for brokers to use at this time? The following reasons are crucial:
Merely investing in automation without a keen eye for the problems you want to address might not get you very far. However, there’s no shortage of broker challenges that AI can tackle.
Manual data entry: If a broker is doing all or most of its data and indexing by hand, not only does it use many manhours, but it will also inevitably run into issues with basic human error. Even if the data entries are over 99% accurate, that 1% can lead to major issues.
Duplicate invoicing: When including internal invoices and those from carriers and factors, many brokers end up seeing at least 20% duplicates. If there’s no way to quickly delineate the duplicates, you’re going to end up with a lot of unhappy partners.
Exception processing: Inconsistencies are bound to occur in the day-to-day running of a brokerage. Employing a tool that makes them visible as soon as possible means fast attention can be paid to them.
Struggles with business scalability: Someday, a roaring market will return. When that day comes, you want to be able to take advantage of increased demand with confidence – which might not be possible with outdated manual processes.
Missing documents and billing requirements: Assume your invoices are ready and accurate, but a crucial document is missing that will delay billing. You need to know what needs to be resolved for cash flow.
Associated fraud risks: Double brokering and other forms of fraud are arguably the costliest headaches for brokers today. AI won’t stop bad actors from trying out scams, but it can help show actionable insights to make it less likely and more addressable.
Automation for brokers can solve these issues by:
But automation can’t be a one-size-fits-all proposition. It pays to work with a company that has a strong reputation for creating solutions for brokerages of various sizes, understands the ins and outs of how this sector of freight works, and has plenty of current happy customers to talk to. It’s also crucial to partner with a vendor who is accustomed to working with many different document types and can train an automation platform for the specific differences in how a brokerage employs documents.
The core purpose of freight brokerages and 3PLs isn’t going to shift considerably. The name of the game is brokering loads. But there are other sources of revenue brokers can take advantage of. Let’s look at fuel as an opportunity.
Research shows that as much as 30% of the value of a given load is in the cost necessary to move a load from point A to point B. This cost is obviously crucial for fleets, but it can be prohibitive at times for small carriers and owner-operators. Additionally, it can be difficult for these small carriers to access the fuel card and fuel discount programs available to massive fleets.
Traditionally, a broker wouldn’t receive any part of the revenue from a fuel discount program or would have to go through a fuel advance platform that is hard to manage. But today, a broker can capture part of this revenue stream without much friction or financial bureaucracy.
By using digital or virtual fuel cards, brokers can share the discount amount – up to 50 cents per gallon in some cases – with their carrier partners. Unlike plastic fuel cards that may easily be forgotten about or lost by drivers, a digital fuel card is pre-approved for a certain amount and uses a one-time PIN. Both brokers and carriers can add cash flow easily with this arrangement, creating a win-win situation.
There are additional ways brokers can forge stronger bonds with carriers, including:
Today’s freight economy still presents its fair share of challenges, but there are also significant opportunities for brokers willing to embrace automation and innovative strategies. By leveraging AI-driven solutions, brokers can streamline operations, enhance efficiency, and build stronger relationships with carriers, positioning themselves for success even in fluctuating markets.
As the industry continues to shift, those who adapt and invest in technology will not only survive but thrive, unlocking new revenue streams and ensuring long-term stability.
To take advantage of automation and tools like virtual fuel cards at your brokerage, reach out to a member of our sales team and learn more today.
