Decades ago, brokerages were mandated by grocery and automotive industries to adopt EDI. This new technology reduced human labor on both sides, increasing visibility and driving down shipping costs. Suppliers that failed to comply lost business, while the suppliers that embraced EDI went on to transform our national supply chain. Fast-forward to the present and the brokerages who went along with the evolving market have become household names: Swift, JB Hunt, Burris Logistics, and Old Dominion.
These giants dominate the playing field because they improved their connectivity at the right time. Their ability to embrace a well-connected supply chain didn't just allow them to withstand our fluctuating economy, it placed them ahead of the curve as the industry shifted. As the gap between companies with EDI and those without it grew, so too did the gaps in their respective revenue streams, making those without connectivity less competitive over time.
But EDI and track-and-trace software are quickly becoming old news. New waves of tech companies are surfacing, working to connect the supply chain using machine-learning and artificial intelligence. How many brokerages are prepared for what's next?
Today, we're asking every transportation company to reevaluate the quality of their connectivity. As the supply chain becomes increasingly automated, your company's survival may depend on it.
Why connectivity matters.
It's easy to reduce a term like "connectivity" to a buzzword, but ignoring the benefits of a connected supply-chain can have a significant impact on your margins.
An easy example: Imagine the stress, paperwork, errors, and phone calls which traditionally surround moving loads. Think of all the wasted hours spent year after year hand-entering data and dialing drivers. Now imagine what your company could do with that same operational manpower if load information was automatically processed with technology that exists today.
With connectivity, brokers have the capacity to court new customers while providing better service to their pre-existing ones. By improving connectivity, a brokerage doesn't just reduce operational stress, confusion, and anxiety, they free up time to take on new business and win repeat customers.
Customers prefer connectivity.
Shippers look for brokerages embracing connectivity because it reduces costs on their end, too. Well-connected shippers can reallocate their employees' time away from manual operations instead of babysitting loads and collecting unwanted detention fines. Savvy brokerages who can connect with their shipper's pre-existing software infrastructure naturally win more business since both parties reduce labor when load data is being processed digitally and automatically. Poorly connected brokerages are left losing bids, unable to handle falling rates while garnering a reputation for backwards thinking as they stubbornly fail to accept our economic reality.
Rates reflect automation.
With customer rates falling year over year, how is it that some brokerages continue to see growth? The answer at this point shouldn't come as a surprise (hint: it's connectivity). Rates can and will feel like lowball offers for a company that isn't connected, but here's the hard truth: rates are only getting lower. As shippers move towards greater automation, they are restructuring their companies to process larger volumes of connected loads with less manual labor. This increasing automation will make it increasingly difficult for less connected brokers to compete with the well-connected ones, leading to another hard truth: those without connectivity will be left competing amongst themselves for a pool of loads that is rapidly drying up.
One might argue that decades upon decades of moving freight for the same customer will save them, but old relationships can quickly sour when profits diminish and cheaper, more connected suppliers exist. The gap between disconnected and connected brokerages is widening. The disconnected brokerage hires more workers, operates at higher cost, loses business and makes less profit. The connected brokerage drives more business by dedicated the same resources towards new technology in order to offer superior service.
Invest in your future.
Connectivity isn’t top shelf technology for America's supply chain anymore, it's the new standard. While EDI & track-and-trace technology introduced connectivity to the supply chain, artificial intelligence and machine learning software are right around the corner. Brokerages won’t survive the changing expectations of the transportation industry without it. A wave of new companies is already popping up to meet the needs of America's evolving supply chain as automation continues to shape our economy. The question brokerages must ask themselves is whether they will embrace the future and invest in theirs, the same way the industry giants of today did so many decades ago.
The Long Haul is written by Parade, exploring the evolving relationship between technology and the transportation industry.