MISSISSAUGA, Ont. — After selling MSM Transportation to Wheels Group last year, Mike McCarron joined Wheels to oversee mergers and acquisitions in a bid to consolidate the Canadian 3PL space.
To gain a greater understanding of where the freight brokering segment is headed, McCarron called together several leading brokers for a roundtable this week, hosted at Wheels Group’s headquarters. Also on-hand was Level5 Strategy Group, which will be compiling a white paper on the subject. CTL.ca was invited to report on the discussion and will be publishing a three-part series this week.
The participants included:
Manny Speranza, FBI-Freight
John Tittel, Hot Freight International
John Flaherty, HTS Freight Logistics
Ian MacDonald, ShipNorthAmerica Transportation
Larry Cox, Polaris Transport Group
Eric Carusi, Transpro Freight Systems
On the sales evolution
How relationships are established has changed drastically in the freight-brokering world. Most of the brokers in the room got started in the business by parking their car and going door to door, which usually provided an unobstructed path to decision makers. That all has changed.
“It’s very difficult to door-knock like we did 25 years ago,” Speranza said. “We tried hiring some people on salary and it didn’t work out. Today, the guy who controls that freight may be in Los Angeles.”
The days of assigning outside sales reps a territory have passed.
“I see companies investing less in outside sales,” Speranza said. “It’s too costly to make a sales call. You still have to have that relationship, but it may be at a different level.”
Added Flaherty: “The territory has expanded. It’s North America now.”
Freight brokers are seeing more success in drawing in customers through dynamic, optimized Web sites, MacDonald said.
“Everybody today is using the Web,” he said. “It’s not something that’s new, but it hasn’t been utilized very well in this business.”
MacDonald said the closing percentage is much higher when a customer comes to you.
Even social media has a place, added Polaris’ Cox.
“The way I see the world doesn’t matter,” he said. “The world is going to do what it does. I’ve never used Twitter or Facebook, but it doesn’t matter what I think. That’s who’s going to be buying our service at some point.” Your Twitter followers will one day be freight buyers, Cox added, noting he keeps an eye on where his site comes up in Internet searches compared to those of competitors.
On the importance of technology
Freight brokers that are able to provide their customers with real-time information about their loads and can integrate carrier systems with those used by shippers will be at an advantage going forward, according to Carusi.
“Being proactive with information and not being afraid to give bad information is what will (retain) your customers,” Carusi said. “The customers want to see (information) right away so they can act on it if they’re forwarding the freight. Proactivity with information is going to hold onto your relationships.”
This type of service is no longer only available when dealing with large carriers, added Tittel.
“Any carrier can get their hands on good software that can notify customers of shipment statuses,” he said. “That’s a big development. In years gone by, you had to create your own software or buy expensive software. Now a carrier with five to 10 trucks can get a dispatch system right off the Internet.”
But freight brokers today are looking to take it to another level, and to integrate their carriers software programs with those their customers are using.
“The number one question in this industry is ‘Where’s my freight’?” Cox pointed out.
MacDonald said “We spend an inordinate amount of time on phone calls with smaller carriers. It is frustrating.”
Tittel said Hot Freight International allows its trusted carriers to tap into its software system to provide status updates, which are sent directly to the customer.
“Investment in technology is key going forward,” said Speranza. “You have to be willing to make that (investment).”
Technology allows customers to input their load requirements early, enabling freight brokers to identify opportunities to consolidate shipments and reduce costs.
Cox said this is the way of the future and that these sophisticated software platforms will eventually become as prevalent as e-mail is today.
“You better leave enough (profit) to invest in the business or you won’t be in business,” he said. “Ten years from now if you don’t do all of this, you’ll be gone.”
– In the conclusion of this three-part series, we’ll look at consolidation in the trucking and 3PL spaces, and opportunities for future growth.