Customer Service

It was not too long ago that the common Carrier stood on top of the transportation world. The big rigs were the ubiquitous symbols of service and delivery, throughout North America’s highways. In the last 5 years, a transformation has been picking apart the industry toppling the common Carrier from its reign. From globalization to gas prices, the asset based Carrier has lost its caché – making way for the emergence of the Freight Broker as the new King of the Road. Here is why:

1. Carrier Agnostic - when shippers were asking for immediate pick up and delivery, individual Carriers could not respond – Their trucks would simply not be in the vicinity or their trucks were carrying loads for others and nothing was immediately available. Can you imagine a Carrier referring their customer to a competing Carrier because they have no trucks available? The solution was a Freight Broker who had virtually unlimited freight capacity. It did not matter what Carrier the broker used, as long as it met the minimum industry guidelines, and the freight was moving.

2. Knowledge capital – As the common Carrier was focusing limited resources into asset capital, such as trucks and trailers, the freight broker was channeling investments into knowledge capital such as software and services. In pure economic terms the former depreciates, the latter appreciates. This dichotomy led each to reflect a different perception on the shipper. The common Carrier was viewed as a mover of goods, somewhat of a commodity. The Freight Broker was viewed as one who understood logistics and had a deeper understanding of the shipper’s overall supply chain needs.

3. Variable cost model - As loads are depressed across the continent, due to economic softness right across the North American continent, Carriers are hauling empty miles and some trucks are sitting idle [particularly those serving the auto sector], each empty mile and each idle asset is a drain on the invested capital for the common Carrier. These are problems the freight broker is not grappling with, instead diverting much needed attention to serving the North American shipper in a somewhat parched economy.

4. Regulation Light – In a few short years Carriers have had to deal with a Tsunami of regulations and changes thrown at them, from motor vehicle safety, to the number of hours drivers can be on the road, to new fuel standards on trucks, its been tough to keep up with all the changes. These changes divert much attention limited capital and human resources away from the core business. On the flip side, the freight broker has moved in to a fill a customer service void, which may have been left when the Carriers were diverting much needed attention to deal with the tsunami.

It is important to note that the Freight Broker has not made it to the top of food chain unscathed. It spent decades trying to bring legitimacy to its business model. Nevertheless, the Carrier and Freight Broker share a symbiotic relationship; one cannot exist without the other. Perhaps, we can call each the King and Queen of the road – no matter who is which.

Robert Kheir is a Partner with Osprey Capital. A leading Canadian Based Independent Investment Bank. He focuses on Mergers and Acquisitions in the transportation and logistics sector.

Article Source: ArticlesBase.com - A Shipper’s Love Affair With the Freight Broker: