Trucker Tools recently hosted a panel discussion on “Surviving COVID-19: What we’ve learned, what brokers and carriers should plan for in the coming months and beyond.” Trucker Tools’ CEO and founder Prasad Gollapalli was joined on the panel by Bill Cassidy, JOC’s senior editor; John Schulz, contributing editor for Logistics Management Magazine; and Avery Vise, VP of trucking at FTR Transportation Intelligence.
During the webinar, our guests answered questions about the industry during the COVID-19 pandemic and discussed what brokers and carriers need to do to survive. Our panelists also offered their predictions on what the transportation industry will look like post-COVID-19.
We posed an important question to our guest panelists as part of the webinar: what should and shouldn’t brokers do to survive the current market while preparing for recovery? We share our panelists’ responses below.
Build and Strengthen Carrier Relationships, Think Long-Term
“There’s less freight to go around, so you have to prioritize in a way that perhaps you haven’t had to before,” Vise, VP of trucking for FTR Transportation Intelligence, said. “There’s several obvious ways of doing that. The one that seems most natural is to preserve as much (profit) margin as possible by taking the carrier who’s willing to take the lowest rate. But from a business standpoint, that’s a little dangerous. By taking the carrier with the lowest rate, you’re working with a carrier who probably isn’t going to have a lot of loyalty to you once this is over, or they might not even be around once this over.”
Vise stressed how important it is for brokers to make decisions strategically and to think about what the brokerage will look like once the crisis is over. He said that you have a choice as a broker to either just try to survive the pandemic and down market at any cost and come out the other end with all of your core carriers gone, or you can come out of this with stronger relationships and stronger good will. As Vise notes, carriers are the ones going through the most turmoil right now. If you find a way to accommodate those carriers that you know you can depend on, even if it means your margins are a little lower, you can you come both come out of this in better shape.
Be Adaptable, Price Fairly
“The number one thing that brokers should keep in mind is an awareness that this is not going to be business as usual,” offers Schulz, contributing editor for Logistics Management Magazine. “What worked in the past decade probably will not work this year. Besides everyone’s personal safety, the awareness of carrier and shipper stability must be top of mind. It’s very important that as a broker you realize that you have two ways to do business: you can have a transaction-based business or you can have a relationship-based business. The latter is superior. Anyone can cut a one-time deal with any carrier anywhere. But as Avery alluded to, that carrier might not be there tomorrow. So, I think being aware that it’s not business as usual and being willing to have a Plan B. What worked in the past may not work this time around.”
Shulz also recommends that brokers who want to survive the current market and prosper in the future should avoid being confrontational or impatient with carriers right now about rates. He observes that while many in the industry are hurting right now, there is one element that carriers alone are experiencing: they are out on the road, working in the public and traveling during a global public health crisis. Instead of going for the lowest rate you can get, Shulz recommends that you think long-term.
“There’s always that temptation that a deal is a deal and that you have to jump on it right now, but everyone in this sector has to take a longer lens on what they do this time around,” says Shulz. “Carriers have assets that aren’t being utilized to their maximum, and their volumes are lack luster and uneven. Everyone has to take a long-view and try to keep everyone in business. There’s a difference between predatory pricing and fair pricing.”
Focus on Transparency, Diversification and Efficiency-Delivering Technology
“You need to be as transparent with your carriers as possible,” says Cassidy, JOC’s senior editor. “We’re hearing a lot of complaints right now from owner operators and small carriers about brokers, rates and profit margins. Having transparency is really important. And I think getting as close as you can to your carriers and shippers and having a diverse shipper base is really important to brokers at this point. If you’re a transactional player and you’re operating within one area of freight that is not necessarily essential, you’re probably not looking at much business at the moment. Being able to diversify and get into other areas that perhaps you haven’t been in before is a way to safeguard against the kind of business loss we’re seeing.”
Cassidy also says that, regardless of the size of your brokerage, it’s vital to implement solutions and technology that help you operate your business better and raise efficiency. He observes that brokerages who do everything by phone are struggling right now and that the down market is accelerating investment in results-driven technology. Cassidy notes that if you’re not investing in technology-based solutions for your brokerage right now, you’re going to be left behind.
Like Vise and Shulz, Cassidy says that going for the carrier with the lowest rate over time will cost you a lot and it may not take too long for it to catch up with you. Instead, treat the carriers you’re working with the respect that you would want to be treated with and make an effort to better understand your shippers.
“Smaller brokers probably have greater opportunities to be closer to their shippers than larger brokers do, so take advantage of that,” Cassidy says. “Don’t ignore those relationships.”
To learn more, watch the full webinar, “Surviving COVID-19: What we’ve learned, what brokers and carriers should plan for in the coming months and beyond.” If you’re interested in learning how Trucker Tools’ real-time visibility platform and Book It Now® can help your brokerage now and post COVID-19, schedule a demo with our sales team.