You can certainly include the freight broker business in the many areas that have flourished recently in the volatile and expanding supply chain world. As the volume of goods needing to be shipped increases, so does the demand for the people who can help assure those goods make it from Point A to Point B in the most efficient, timely, and economical way. That means the freight sales broker, the person who connects shippers with carriers and makes sure the handoff goes smoothly with the freight arriving safely, is in high demand. So, for those hoping to enter the freight broker business or thinking of expanding their freight broker business, we present a bevy of strategies and tips on improving freight sales and growing a broker business.
The State of Freight Brokerage Business
As mentioned above, the freight brokerage business is making a significant impact on the supply chain industry. The boom is so compelling that it’s worth taking a closer look. Estimates have indicated there will be a 36% compounded annual growth rate of freight brokerages until 2028, and other sources like Gartner are reporting that 20% of all freight currently goes through brokerages. With all of the obstacles out there — tight capacity, port congestion, raw material shortages, and a stretched labor force — it proves that having the people who can find all the answers when moving shipments is even more important these days.
Freight Broker Business Models
Freight brokers must deal with so many variables in a day that it is vital to be exceedingly organized. That organization begins with the models a freight broker business will have. There are two main types of broker models: Cradle to Grave and the Chicago model.
Cradle to Grave (C2G)
Cradle to Grave is what many would consider the original freight broker business model. In the C2G model, the responsibility for every step of the process from beginning to end — including sales, customer service, locating capacity for the shipment, and recordkeeping — is handled by one person. This model is especially popular among independent brokerage agents who like to be in charge of all aspects of the process. Brokers are responsible for growing their own book of business in C2G. With just a single point of contact for each customer, it can be easier to build a relationship with a deeper level of trust. The biggest concerns in this model are that a freight sales broker who has built up a strong relationship with a customer could leave the company or that the service levels of some brokers can be inconsistent.
Chicago (aka Buy-Sell)
This model got its name from the region that made it famous. The key difference with C2G is that this powerful freight broker business model splits sales and operations into separate roles. The lone role for sales is signing on new shippers and increasing opportunities with current customers. The operations team is responsible for all the details in the actual moving of loads: sourcing, rate negotiation, and shipment management. A benefit of the Chicago model is that it allows the salespeople to focus on only one thing. Also, the ability to scale up the business when expansion is needed and training new workers are easier with two different teams. But putting together two separate teams can take more work to execute and usually comes with more upfront costs for new brokerages.
Strategies to Build a Freight Broker Book of Business
A book of business, also known as an account list or client list, must be well-organized and well-maintained. Not only can it help keep track of your customers, but it can help quickly discern where to focus attention, be it highly valued listings or lower valued ones that need nurturing to grow. Here are three types of book-of-business strategies.
This means the broker will handle any shipping, no matter where or how it needs to go. This not only means a broker can have a greater pool of customers but that as the broker works more and more with each customer, they can build up a better relationship and be better able to anticipate their needs. One challenge to this approach is that the book of business can get too large, making it harder to manage each account’s distinct characteristics. On the other hand, if the book has limited customers, the broker can be devastated financially if one of the large accounts leaves.
Another strategy can be to focus on specific industries. By doing this, a broker can become extremely knowledgeable about that industry and use that insight to assist many shippers and carriers in growing the business. It’s an ideal way to go with industries that need special handling, such as produce or hazardous cargo. One concern with this specialization route is that some industries deal with seasonal impacts, and part of the year could leave a broker scrounging for deals.
By Lane Type
This strategy is all about where the shipments are going. Here, brokers work specifically with shippers and carriers that transport in distinct lanes or routes. Some popular lanes include Atlanta to Miami and San Francisco to Los Angeles. This can allow a broker to know all the intricacies of those lanes — destinations, distribution centers, and warehouses — to find shortcuts and make the shipping of the goods more efficient. This strategy can be limited by how many customers use those particular lanes.
8 Tips to Grow your Freight Brokerage Business
If you have just started out in the freight brokerage industry or are looking to expand the scope of the brokerage business you already have, here are some ways that you can use to take your company to the next level.
1. Start with Existing Customers
: This can be one of the simplest and easiest ways to expand your book of business. Talk to your existing customers and let them know you are looking to grow your freight broker business and that you could be the company to fill the gaps in their business. Another possible way to pick up customers is to get back in touch with former customers and let them know you are expanding and can offer more than you did in the past.
2. Unearth New Clients
Drumming up new business will also be needed to ensure a feasible expansion. Make time to track down and contact potential customers regularly. Before making contact, explore their website and other online sources, such as LinkedIn, so you know what they might be looking for and how your company can help. Then you can make contact with some background information that can make for a more productive conversation.
3. Use Your Existing Carrier Network
Tap into your carrier network to determine their logistics needs and backhaul lanes. Perhaps a prospect for a new customer will appear, and the new customer can help keep their carrier trucks full on backhauls.
4. Beef Up Your Referral Network
It never hurts to contact a good customer and ask if they know of another business that might benefit from your services, especially if you are offering more than you used to, and if they could put in a good word for you. Their word can go a long way and sway that client to join them in working with you.
5. Sound Out Your Customers’ Customers
Referrals can reach some companies in your industry, but talking to your clients’ customers might open doors to other unexpected sources for new clients. If a current customer is shipping raw materials, there’s the possibility of also handling the shipping needs of the manufacturer using those raw materials.
6. Take Advantage of a Broker Load Board
Brokers can peruse load boards for loads that fit their abilities or lanes and bid on them. Not only could this lead to a shipment being successfully moved, but it could also cement another relationship that can bear fruit in the future. Load boards, like the one offered by ComFreight, can make those new connections happen.
7. Lean into Fast Payment
Using a freight invoicing app, like ComFreight’s HaulPay, can be a boon for all sorts of businesses. For brokers, HaulPay can get your broker margin in one day, offer Quick Pay to your carriers, digitize your carrier payments and provide free automation software that can be integrated into your TMS.
8. Utilize Freight Factoring
Offering freight forwarding to help the carrier get paid more quickly can be another valuable tool in helping expand your brokerage service. Freight factoring is a way for the company delivering the product or, in many cases, for the broker that made a deal for the deliverer to be paid within hours after delivery to help pay expenses. The freight forwarding company then waits for the invoice to be paid by the shipper much later. ComFreight’s HaulPay platform provides an easier way to handle payments.
ComFreight Can Help Brokers Raise Their Game to the Next Level
The freight broker business and the rest of the supply world have taken off. The number of brokerages is rising, and many are expanding. To either enter the fray or raise their game, a broker must cultivate relationships and be knowledgeable. These tips we have provided give you a better understanding of what it takes to step up your game. Another way to step up your game is to add ComFreight to your lineup. ComFreight is a leading digital payment and finance solution company for brokers and carriers. To see what our innovative factoring, payment financing, and load board can do for you, visit our website today.