Originally Posted On: Traditional Vs. Digital Freight Broker – ATS Logistics
Technology has progressively been increasing throughout the last couple decades as has the logistics and transportation industries. Logistics companies are multiplying, and new ones are emerging every day. Carriers are adding drivers, new logistics companies are opening, veteran logistics companies are expanding, and more trucking companies are hitting the markets. Technology is also bringing new systems and ways to make the shipping process easier, quicker, and more transparent for customers.
Currently developing in the freight industry on top of the growing number of traditional brokers, are digital brokers. Both are considered to be the matchmakers of the trucking, transportation, and logistics industries.
Traditional Freight Broker
A traditional broker is considered to be an intermediary between the shippers and the carriers. Most do their business with customers over the phone, in person, through email, or transportation management systems (TMS). These brokers can be either a 3rd party logistics company or an individual independent freight broker. A 3rd party logistics company operates by hiring a team of logistics coordinators that work with customers to develop a personalized strategy to successfully manage their supply chain needs. An individual freight broker works in a similar way, the only difference is just one person versus a team. The focus of the tradition broker is going to be a service focus directed at individual customer needs more so than technology derived to please the masses. However, that does not mean they are not going to continue to evolve and stay competitive in the technology growth of their competitors, including digital brokerages.
Advantages of Using a Traditional Freight Broker
Many companies today still prefer to use a traditional freight broker for a couple different reasons. The biggest reason would be that traditional brokers offer customer service that can never be duplicated by any technology, software, or app no matter how hard they try.
Traditional brokers have logistics coordinators that are educated and trained specifically to run any shipment and handle any issues that may come up for their customers. They are experts in the shipping and logistics industry, so the customers do not have to be. They understand shippers needs and can find the best option and carrier for whatever products and loads that need to be delivered.
Managing shipments and deliveries is a full time job and is a very detailed process. Each customer is going to have different logistical needs and details of their shipments. From a traditional broker the customer is going to be able to receive a custom detailed experience because moving freight is not going to be one size fits all.
The human element guarantees customers will receive help solving problems that a computer or automated system cannot. If something goes wrong, they need special requirements on their shipments, additional stops or modes, appointment times, or a shipment is not ready to be picked up, a coordinator will be there to help immediately. Experts can also help fight unwanted carrier charges and help when freight is damaged or lost. They can constantly be available through email and phone and depending on the company, even 24/7.
Many traditional brokers have relationships with multiple carriers in which they have special pricing they can provide for their customers. Also, the amount of carrier relationships for a well established traditional broker can make a difference on the types of freight that need to be shipped. The bigger network of carriers, the more options a traditional broker can provide in order get products from the origin to its destination; safely, cost effectively, and in a timely manner.
Digital Freight Broker
A digital freight broker is an online platform or app that shippers directly use to run their shipments through instead of using a human liaison. A digital broker is going to focus more on supplying state of the art technology over customer needs and human interaction. To use, a customer will enter the load that needs to be shipped and all the required information around the load, pickup, delivery, etc. The digital broker will use technology systems to find drivers that can successfully pickup and deliver the shipment. Drivers are notified of the opportunity and will either agree or disagree to run it based on price, location, and timing. Once both parties commit to the match they will agree to terms and conditions and will move forward with the shipment. Digital freight brokers are similar to how ride sharing works with Uber and Lyft.
Advantages of Using a Digital Freight Broker
Just as there are advantages of a traditional broker there are also going to be advantages in using a digital broker.
By using a digital broker, the human intermediary is replaced by automation and technology that can be run around the clock. This could be a huge advantage for shippers or truckers who operate in different time zones and languages. It would also work for people who just in general do not want to be on the phone or want the individual human customer service.
Potential Lower Prices
Since the human mediator is being cut out that means low labor costs and carriers can post their own prices for loads that need to be moved. This could mean cheaper options for shippers, however, is not always expected to happen depending on the special pricing traditional brokers have negotiated with certain carriers.
When shipments are made over the phone or email with coordinators it can take some time to find a carrier with the right space and requirements. When using a digital broker, the customer and carrier can have a faster connection to make the process go quicker, given the specifics of the freight is simplistic enough to satisfy the technological capabilities.
Optimization and Efficiency
With the artificial intelligence of digital brokers, the process of getting freight from point A to point B can be optimized to run certain lanes and routes for drivers. The combination of all the processes takes care of the shipments simply and more efficient than a human intermediary.
Logistics Industry Environment
Anyone in logistics and transportation knows the industry encounters drastic changes on a daily basis, is very complex, and extremely detail oriented. When running shipments there are millions of other companies who are also trying to get their products from point A to point B at the same time. Shippers have to consider the regulations, having to use multiple modes, distances needed to make for the deliveries, and capacity constraints. This is where traditional brokerages have a leg up on digital because as previously mentioned, they have logistics coordinators who are experts and know all the expectations, needs, and how to run the different modes of transportation. However, digital brokers also have systems to work with some of these concerns. It depends on the customer if they want to have the human element or the technology.
Overall, both types of brokers can be good in some situations, digital brokers may have more efficient technology. However, traditional freight brokers like ATS have adopted competitive and robust technology and have experts to give the service and attention shippers need. Digital freight brokering applications are interesting and are coming around fast, but talking with a human cannot be replaced. As digital brokers become more common there is worry that it will affect traditional brokers. But experts are not concerned and do not believe traditional freight brokerages will ever be in jeopardy. Humans are not going anywhere, and neither is the desire to work with an actual person when you conduct certain business.
Here at ATS Logistics we believe the most value for shippers is in the service they receive from a freight broker. We strive to make a difference in our customers’ business operations and success and know their products are important. We have competitive, efficient, and user friendly systems for customers who want to fabricate their own loads and coordinators who will provide you with the best service possible 24/7.