How Freight Brokers Fit into the Future of the Industry
August 30, 2018 (Investorideas.com Newswire) Throughout the history of shipping, never has there been such an exciting trajectory for the industry as there is in the present day. Technology has entered the business in full force, prompting some to embrace freight as a viable business opportunity and others to consider transitioning out of the market altogether. There are several components of the freight industry that are ripe for disruption, from brokerage operations to the way trucks are driven. But the digital transformation of the market of freight and shipping is most likely to impact freight brokers in the most noticeable way. It is necessary to recognize what potential is out there for freight brokers, new and old, as well as the challenges they need to overcome as the industry shifts in a drastic way.
For freight brokers able and willing to jump into the new way of doing business, there are plenty of opportunities throughout the industry. Over the years, shipping accounts for the movement of more than 80% of products from one point to another, with an impressive 33 million trucks licensed to do just that. With the introduction of e-commerce companies and their need for nationwide transport in a short period of time, the freight industry overall stands to grow by at least 3% over the next several years, consistently. Profitability of shipping is also poised for growth among licensed freight brokers, as they work as the necessary intermediaries between shippers and suppliers of all sizes.
Adding to the potential for increased revenue in the freight brokerage business is the reality that many seasoned brokers are planning an exit from the market. Thousands of the more than 13,000 licensed freight brokers in the United States are at or near retirement age, and the obstacles on the horizon represent too big a challenge to overcome with such little time left in the business. New freight brokers have an opportunity to gain valuable market share by partnering with soon-to-retire brokers, improving the odds of success even further. However, there are reasons for doubt for those just getting started, as the challenges forcing some brokers out of the business have the potential to shift the essential role intermediaries play among shippers and suppliers.
Possible Challenges for Freight Brokers
The most pressing issue among today's freight brokers is the influx of technology used by their customers. While some business management tools are designed to make freight operations simpler, in doing so, brokers have the potential to be pushed out of the mix. For instance, Uber Freight, a mobile application that digitally connects shippers and suppliers, cuts out the need for a broker altogether. It can be seen as a more efficient way of doing business; however, many are concerned about the lack of human interaction in the process.
The same concern surrounds the addition of autonomous trucks, with programs spearheaded by several technology companies throughout the United States and beyond. Self-driving trucks have the potential to remove truckers from the freight equation, leaving freight brokers with fewer customers on at least one side of the business line. While driverless trucking tests are currently up and running in many parts of the country, the market is not yet positioned for a rapid shift to autonomous vehicles. Freight brokers can rest easy knowing that this change is still a few years away, at best.
Even though there are ample opportunities for freight brokers in today's marketplace, the challenges coming to the industry are quite real. It is necessary for freight brokers with years of experience or brand new to the business to take note of what's changing and how they can set themselves up for success in the future. This requires embracing technology trends of today and staying up to date with movements impacting the years ahead, all while continuing to build strong relationships with shipping and supply customers with each successful haul.
Eric Weisbrot is the Chief Marketing Officer of JW Surety Bonds. With years of experience in the surety industry under several different roles within the company, he is also a contributing author to the surety bond blog.
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