<$MTBlogName$

« The next game changer? How crowdsourcing is transforming the face of final mile delivery | Main | Roadblocks for IoT Implementation »

What the World Would Look like Without Freight Brokers

By Contributing Author | 02/02/2018 | 8:22 AM

By Chandler Magann, Founder, Next Exit Logistics

As of October 2017, 83% – just a bit over four-fifths – of all shippers outsource their domestic transportation needs, according to the Council of Supply Chain Management Professionals. In the council’s 2018 22nd Annual Third-Party Logistics Study, researchers also found that a quarter of all shippers are using a 3PL to plan and manage transportation logistics, both foreign and domestic.

So consider, for just a short moment, what a world without freight brokers would look like for your bottom line, employee retention, and indeed for the long-term well-being of your organization. No doubt, it would not be a season of The Walking Dead, but a world without freight brokers would be slower, more expensive, and populated by a horde of very grumpy and dissatisfied customers, who are not zombies.

Put aside the fact that planning and managing transportation would be an additional logistics position. Instead imagine using your current personnel to take on the additional responsibility that is outside of their current expertise. The individual or team will need to learn a whole new set of required skills; they will need time to find, create and foster relationships with multiple carriers; and understand efficient routing, permitting, and more.

That person must remain continuously read-in to what freight is available when and to what location.  That staffer then must harmonize those data points to your supply chain processes, or else shipments will sit at the loading dock. If your employee cannot execute the transportation and delivery of your products, the result will be delays – the third rail in the age of e-commerce.

Without freight brokers, overhead costs will definitely increase. Remembering that 83% of shippers outsource their domestic transportation needs, same report states that current transportation expenditures cost roughly 11% of revenue. What’s more, shippers are spending just over half of their transportation budget on outsourced transportation services.

So, let’s reverse-engineer this equation. A single logistics planner’s annual salary, before benefits, according to Glass Door, averages $57,105 but can run as high as $80,000. If your needs dictate building out a transportation department, the overhead costs will exponentially grow, and encompass hiring costs, space, and management systems to incorporate tasks into the overall supply chain operation.

Shippers will also need to invest in a routing and scheduling software solution that can find and communicate with carriers; track and organize pick-up and delivery windows, truck capacities, and various load configurations (LDL, intermodular, etc.), and provide access to the carriers’ current safety records. This is important to reduce fuel costs, to negotiate the best rate possible, and to mitigate legal vulnerabilities through compliance, on top of getting the cargo to its destination on time.

I recently stumbled across a blog describing freight brokers as close cousins to the Devil himself. Funnily enough, at the top of the freight broker’s Seven Deadly Sins was lowering costs. As a freight broker myself, I am not ashamed in the least about finding transportation efficiencies for my clients, because my job is to represent the interests of my clients.

That said, there is a balance to be struck. The best freight brokers work with shippers and carriers to promote close, dependable and cross-functional relationships, wherein the outsourced services are integrated into the supply chain, just more efficiently and at a lower cost.

 

Chandler Magann opened a Texas sales office of his father’s company and worked out of a spare bedroom in his house. In January 2009, Chandler’s father sold his entire business to investors. It was then that Chandler founded the freight brokerage Magann Texas, LLC, which later changed to Next Exit Logistics in July 2009.

 

 

StumbleUpon Toolbar StumbleUpon

Comments

By submitting your comments, you agree to our Terms of Service.

The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

About One-Off Sound-Off

Welcome to "One-Off Sound-Off," a blog page devoted to guest commentary on all things supply chain. This is a space where industry leaders can share their opinions and expertise with the logistics and supply chain community. If you have an article or commentary you'd like to share, please consider sending a guest blog proposal to feedback@dcvelocity.com.



Categories

Popular Tags

Recent Comments

Subscribe to DC Velocity

Subscribe to DC Velocity Start your FREE subscription to DC Velocity!

Subscribe to DC Velocity
Renew
Go digital
International