The job of a freight broker is to connect shippers who have goods to transport and carriers who have the capacity to move those goods. Today’s freight brokerage market is rich with opportunity, but taking advantage of the ease of getting started and straightforward licensing requirements does not guarantee future success. With countless licensed freight brokers coming into the mix every year, it is essential to know what it takes to be successful — and profitable — from the start. That begins with recognizing the ten most common reasons why new freight brokers fail, and how to avoid these pitfalls whenever possible.
Every new business owner, whether operating a sole proprietorship or a large company, needs to know where they are headed if they want to be successful. Having a sound business plan is one way to accomplish this task, but it may seem like a daunting task when starting a freight brokerage business. Failing to create one can mean trouble for the business, and quickly. Be sure to take the time to project out the potential marketing strategies, customer acquisition methods, pricing models, and business financials before jumping into a new brokerage business.
One of the most important requirements in becoming a freight broker is the federal regulation that requires specific licensing. New freight brokers, regardless of how much industry experience they have, need to acquire a freight broker license as well as post a freight broker bond or trust to operate legally. Misunderstanding these requirements or failing to meet them before starting a brokerage can lead to negative consequences down the line.
The freight brokerage industry is highly competitive, with newly licensed brokers entering the market each year. With so many options, shippers and carriers need to know that your brokerage is both available and able to take on new business. Creating a marketing strategy is necessary if you want to remain relevant to your current or potential customers. Consider options for print or radio ads, as well as technology-driven marketing campaigns through e-mail, social media, or the web.
Today, caring for our planet simply is a must. From an environmental point of view, rail freight is an excellent transport option compared to both air freight and the combination of sea and air. The major environmental advantage of rail freight is the reduction of exhaust emissions. When comparing the CO2 emissions of the different transport modes, it is clear that rail freight is the superior winner.
Looking at the distance between China and Northern Europe, air freight consumes 139 tons CO2. The combination of sea and air consumes about 77 tons CO2. Rail freight, however, consumes only five tons CO2. In comparison, it is a drop in the ocean, meaning rail is the most eco-friendly choice if sea freight takes too long.
Compared to ocean freight, rail freight is a fast and highly reliable transport mode with shorter lead times. Let us once again have a look at the distance between China and Northern Europe.
One of the biggest challenges for companies with production in China is the long lead times to Europe when shipping by sea. Ocean transports from China to northern Europe usually take about six to seven weeks. With rail freight, it is possible to more or less cut transport times in half, which significantly reduces the lead time. This is especially beneficial to companies operating in the fast-moving consumer goods industry with high demands on short delivery times. Shorter lead times also make it is easier to forecast business operations and costs and they can have a positive impact on capital binding. (I will cover that further down in this blog post.)
Rail freight is also a very punctual mode of transport. Unlike road freight and sea freight that is subjected to congestion and bad weather condition, there is little that can obstruct the path of a rail, which reduces the risk of sudden delays.
Throughout the supply chain, the use of metrics to track and understand processes provides an invaluable resource for ensuring increased production and customer satisfaction. Additionally, the use of metrics fosters positive relationships with coworkers and adherence to rulesets and best practices for the respective third-party logistics provider (3PL). Many of the following distribution center metrics to track closely mirror those found within transportation and manufacturing, but this listing will focus on those involved in distribution centers. Distribution centers have a tendency to become like the lost cousin when compared to other aspects of the supply chain, but they play a valuable, constantly-needed role to ensure the timely delivery of merchandise to retailers, customers, and others.
The overall goal of the distribution center is to make sure that freight makes into the correct mode of transportation at the appropriate time. This involves monitoring for the late departure of shipping containers as well as premature completion of a specific freight loading time. While finishing a specific shipment load sounds like it would benefit the company, it may actually detract from duties to other shipments, which in turn results in a cascading effect of inaccurate departures.
The second most important distribution center metrics to track involves the accuracy during order picking processes. As workers are given their respective lists of items to pick, it would stand to reason that each employee should be able to complete the retrieval process quickly. However, impatience has a tendency to result in errors in judgment. Furthermore, this could lead to more than the requested number of product being included in shipment, which results in shrink of inventory. However, the alternative to this, not including an item, can anger an end-customer and permanently harm the customer-business relationship.
Throughout the year, warehouses experience changes in capacity due to increases and decreases in consumer spending. For example, shipping during the holiday season tends to increase as more people begin purchasing items online for gifts. However, distribution centers cannot possibly foretell how much of a specific product needs to be available unless the distribution center management has previous accounts of how much product has typically been required during similar time periods. This is where the metric of monitoring warehouse capacity and peak volume comes into play. Appropriate warehouse tracking must include monitoring of peaks in capacity.
Fundamentally different from previous generations, 5G, the next generation wireless network technology, is engineered to greatly increase the speed and responsiveness of wireless networks. It promises data rates 100x those of 4G, with network latency around 1 millisecond, support for 1 million devices/sq. km., and 99.999 percent availability of the network. A connected world enabled by 5G is expected to generate data at unprecedented velocity and volume. This “fast data” will fuel a wide range of data-driven services and digital business models.
5G will drastically affect many industries, but the sector that stands to benefit most from the increased connectivity and speed is the logistics industry. With the lower frequency band providing wider coverage in suburban and rural areas, and the higher frequency band providing better coverage in high density urban areas, the logistics and supply chain industry will finally be able to provide end-to-end continuous coverage for monitoring, tracking and theft detection. Historically, a plethora of challenges around lost signals and insufficient coverage in rural areas have plagued the industry, leading to revenue leakage and bottlenecks for re-establishing inventory checks. 5G will solve many of these problems, positively impacting logistics and supply chain management for freight solutions buyers, cargo owners, and others in various ways, including:
5G will enable organizations to track their valuable cargo across all regions by optimizing coverage in areas that were previously far reaching and considered “dead-zones.” Improved geo-location technology will allow for better visibility into delays and unforeseen travel circumstances, ultimately enhancing location intelligence and mitigating resulting problems. 5G will allow organizations to optimize their routes through improved visibility, and avoid unnecessary trips and inefficiencies. In addition to better tracking in large rural areas, highly trafficked areas will also see benefits from the implementation of 5G networks. As shipments traverse through highly populated metropolitan areas, tracking abilities won’t be slowed down by a strained network. Ultimately, 5G facilitates the ability for logistics managers to account for cargo from end-to-end, during all points of its trip.
According to a survey from Moor Insights & Strategy, 90% of logistics and shipping providers believe the lack of supply chain visibility is one of the biggest challenges in the industry today. With 5G, the implementation of cheaper sensors will allow better single item tagging and tracking, and near edge computing on small footprint infrastructure will allow faster inventory checking. 5G will help provide end-to-end visibility, not just at an aggregate level, but into every product, helping avoid revenue leakage via theft and loss. 5G will improve traceability by providing the ability to track and gather data at every step of the way, including if a truck changes weight (indicating a potential problem). This advancement will allow cargo owners to have high amounts of visibility into the shipping process that were previously difficult to access or nonexistent.