It's not a secret that many are facing challenging times as spot freight volumes and revenue continue to decline. With many looking to stay above water, finding the courage to take risks is challenging. But taking risks is essential to growth.
We must shift our mindsets rather than focus on the doom and gloom. Brokers have fewer opportunities, and the percentage of freight moving on the spot market is smaller than usual.
In these times, it becomes about learning to do more with less, become leaner, and figure out ways to maximize win rates and margins with each opportunity.
Below are four actions you can take to maintain growth during challenging periods.
1. Continue to Invest
When budget cuts arise, the allocation for new technology is frequently the first to go. Implementing new technology can bring a distinct set of challenges that expand beyond cost — especially when it comes to organizational adoption.
During times of economic downturn, where survival takes precedence, it’s understandable that leadership might be reluctant to take on new technology initiatives that may alter a rep's current process.
However, a study that focused on top-performing companies in the 2008 recession showed investing in new technology was actually a common thread for the organizations that came out on top. (KPMG)
- The best-performing companies achieved an impressive 36.5% revenue growth, while the lowest quartiles suffered an 8.7% decline.
- On average, the top performers experienced a 1.1% growth in gross profits and a 0.9% growth in EBIT.
Rather than retrenching, these leading companies plotted new growth strategies, investing in new technology, and shed what no longer provided growth potential.
2. Use Automation to Optimize Efficiency
Automation in the logistics industry comes in many forms, supporting departments across an organization, including sales, customer relationship management (CRM), billing, accounting, tracking, and business intelligence.
By leveraging automation software tools, organizations can:
- Optimize human resources
- Increase productivity
- Enable better coordination and reduce human error
- More time to spend building valuable relationships
- Increase data analysis
Many brokerages are even implementing automation into their pricing strategies with technology providers such as — AVRL, BitFreighter, Hubtek, and S2Q Systems. That can help a broker to maximize their “at bats” -- bid on more opportunities than they would otherwise be able to respond to, more quickly, resulting in higher win-rate and often improved margin on the business they do win.
A real-time quoting API tool that allows users to automate truckload quotes in real-time or to spot boards of various Shipper TMS’. Users can now leverage an API pricing provider to power truckload quotes through Bitfreighters EDI and LiveQuote functionalities.
The TABiConnect Rate Management System is a rate quotation automation tool that provides omnichannel access to shipper quoting processes, a dynamic control tower of parameter command, and a powerful data management function to drive better decision.
Speed to Quote™ and Speed to Bid™ by S2Q Systems
Speed to Quote™ is an email workflow automation platform that helps brokers and carriers increase response time to incoming quote requests from email and bid boards as fast as possible.
3. Focus on Building Strong Relationships
In a soft market, the key to winning business or securing reliable carriers often lies not in having the lowest cost or the best price, but in establishing solid relationships with customers and carriers. Building solid relationships is undeniably one of the most valuable tasks humans can undertake, especially in a down market. And it’s an aspect of business that cannot be automated.
The ultimate goal should be to provide reps with tools that allow them to make decisions faster and do more with less. Once you give reps the tools they need to succeed, human capital can be used to focus on more value-added tasks — such as building new relationships and growing the ones they already have.
By leveraging data, automation, and relationships, you can position your business for success, even in the most challenging times.
4. Leverage Data That’s Connected to Reality
In a challenging market with limited opportunities, guessing is a luxury you can't afford. That's why it is vital to have data sources that are up-to-date and reflect what is happening in the market today, not last week.
Pricing algorithms should integrate seamlessly into the workflows of carrier and customer representatives, as well as the sources of demand (email, load boards, customer APIs, etc.) and supply (email, text, load boards, etc.).
A comprehensive understanding of your data enables you to identify market trends, patterns, potential opportunities, and risks. This enhances negotiation and helps reps make accurate decisions that reflect current market conditions.
The key is to find a sweet spot that will allow you to maximize your margins and your win rate. Without a truck in hand, it’s challenging to predict what you’re going to pay, especially with the speed the market moves. It’s almost like a game of darts — the number of times you’re going to hit the bulls-eye dead center is likely relatively low. But which is better, 7” off or 18” off?
Here we look at two examples: one where we’ve underestimated the market rate and one where we’ve overestimated it.
- In both examples, we use 7% and 18% errors as comparisons, meaning that we presumed the market rate to be 7% or 18% off the actual cost.
- In both examples, assume that we’ve quoted the customer at a 15% markup on a presumed rate based on these assumptions before we’ve secured a truck.
- And let’s say, for this example, that we’ve determined our “sweet spot” is a 5 – 25% margin.
- The perceived margin in all cases is 13% -- which in this market would be great
But then we book a truck, and that’s where our assumptions fall apart.
With the underestimated example, at a 7% error, the actual margin is 6.9%, which is still within our margin target zone, but with an 18% error, we’ve actually LOST almost 6%
With the overestimated example, at a 7% error the actual margin is 23%, which is high, but still within our margin target zone, and which still has a higher potential win rate. But at an 18% error with a 35% margin, it is more likely we’d have lost the bid because we overbid the market.
Understanding the actual current market rate conditions can have a significant impact on your margin. That's where Greenscreens.ai comes in. By harnessing the power of big data and advanced machine learning, Greenscreens.ai offers real-time market price predictions that accurately reflect ongoing market activity. Moreover, it takes into account a company's unique buying power to provide relevant market buy rates and suggested sell price guidance. With Greenscreens.ai, you can trust that your decisions are based on connected data, ensuring you stay ahead in a challenging market environment.
