Between June 2018 and June 2019, the spot market prices for loads have dropped by almost -19%. Simultaneously, the spot market capacity has increased by 29.9%. These two market trends have created incredible stress and challenges for Carrier Sales Reps (CSRs) in 2019. Having interviewed multiple CSRs and CSR managers to understand their problems, I have identified a consistent trend across the industry. In this post, I share the top 4 common challenges CSRs face in 2019, and what the brokerage industry can learn from these challenges.
1: Broken Contracts Straining Carrier Relationships
As spot prices have dropped, contract freight (dedicated freight) is moving to the spot market. In many cases, shippers are even breaking their year-long contracts because the spot prices in the market are so significantly lower. Therefore, many brokerages who had dedicated freight have had to drop prices to compete in the market again. A CSR who was promised 15 loads per week might only have 2 or 3 now. Subsequently, the CSRs’ carriers who were promised loads aren't getting them, misperceive the brokerage to be giving their loads to the spot-market carriers.
2: The Need to Rebuild Carriers Networks
When the spot prices in the market were much higher in 2018, carriers started buying more trucks and equipment to increase their capacity. However, with shippers breaking contracts, those carriers can't afford to keep their new trucks. As such, we are seeing a lot of carrier companies going out of business this year. As carriers shut-down, brokerages are left with less in-network capacity, placing additional stress on CSRs to find new carriers to ship loads.
A carrier you might have used every day last year, are not in business this year. CSRs must 1) Start building new carrier relationships from scratch, and 2) Risk new carriers going out of business too (there's no guarantee those carriers will stay in business).
3: Losing Focus on Customer Service
Because of the decrease in dedicated freight, CSRs must focus on sourcing more capacity and loads for carriers, and handling quotes, for example. CSRs have less time and energy to focus on customer service and relationship-building. For example, providing customers updates on their loads and managing exceptions.
4: Carriers Become the Competition
Carriers that are doing the best are the ones cutting out the middle-man— freight brokerages. If a carrier has worked with your brokerage, they have access to your shippers, and they know where those loads are going. In 2018, brokerages were competing with other brokerages, offering better value and service to both shippers and carriers. However, many carriers are now going direct to shippers in larger numbers, removing the need for freight brokerages.
Conclusion
No brokerage or CSR can control what happens in the market. What can brokerages do about it? Control how they respond. During tough times, the main factors that will help your business manage risks associated with fluctuations in spot prices— though not guaranteed— are:
Maintaining excellent relationships with both carriers and shippers. That means exceptional, consistent customer service.
Optimizing workflows and automate grunt-work, allowing CSRs to focus on carrier relationships and delivering exceptional customer service.
Leverage intelligent technologies that help CSRs identify, qualify, and match spot freight opportunities with the correct carriers. Technology can help CSRs plan loads ahead of time and keep both shippers and carriers happy.