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TRANSCRIPT
Fixing What’s BrokeredTransformative Trends
Within Freight Brokerage
w w w . c a r g g o . c o mi n f o @ c a r g g o . c o m
0 1i n f o @ c a r g g o . c o m
A few short years ago, it was difficult to imagine freight “going digital” at all,
particularly its more transactional components. But it should come as no
surprise given the rate at which brokers, serving as intermediaries, have been
replaced by technology elsewhere in the global economy. Intermediaries, who
rely on maintaining opacity and preventing the free flow of information in
order to keep themselves relevant, have been in decline for some time now,
particularly in reference to individual consumers conducting simple,
standardized transactions.
The age of brokers acting as a barrier is coming to an end. Technology is
allowing freight to become more transparent and transformative than ever.
Here, we’ll discuss the current state of brokerage within the freight industry
and how technology is giving brokers a run for their money…
0 2i n f o @ c a r g g o . c o m
Let’s put this in perspective… What do
people do when they want to add
another blue chip to their portfolio,
book the cheapest non-redeye ticket
across the country or obtain auto
insurance compliant with state law?
They utilize technology-enabled,
self-service. Why? Because these
platforms are faster, they are easier, and
neither their fees nor incentives are
shrouded in opacity.
Schwab receives its $4.95 flat fee for
every stock trade. Orbitz offers tickets at
the same price as the airlines do
directly. And Progressive will show not
only its own insurance rates but those of
competitors as well. In this world, why
would anyone ever choose to deal with
a (non-fiduciary) broker, likely
prioritizing their own interests, again?
Nearly every industry imaginable is
looking at any sector that involves
brokers and seeing how they can
efficiently eliminate them with
cost-efficient software and technology.
The Disruptionof the Middleman
Per consultancy A.T. Kearny: Disruption through
disintermediation
of middlemen is all
the rage in Silicon
Valley with startups
in many legacy
industries building
business models
around it.
“
0 3i n f o @ c a r g g o . c o m
Saying Goodbye to OpaqueBrokerage Within Logistics
Now, the logistics industry has this same opportunity. Even a
half-decade ago, it was difficult to fathom the rate at which the
industry would begin adopting technology solutions. But
companies are raising tens, even hundreds, of millions of dollars
to implement digital visibility and transportation
management solutions, with VCs lining up to fund them.
In a few years, the industry will likely be virtually unrecognizable,
and completely digitized, making this a critical time to stay
up-to-date.
For a look at transformative trends, particularly those around long-term
alignment of interests and incentives, the same A.T. Kearny report referenced
earlier makes an astute observation:
For an even more alarming wakeup call, consider Accenture’s take on those
who embrace, as opposed to ignoring (or even fighting) a technology-enabled
logistics operation:
Accenture concludes with a concise summary of the current trend towards a
broker-free future: “After all, if you could make your own shipping
arrangements on one web-based central platform, without recourse to a
broker, why would you hesitate to do so?”
The report goes on to discuss the coming irrelevance of historical industry
staples, due in large part to technology:
In 3PL, customer-vendor relationships still focus on short term cost-cutting, rather than long-term strategic partnerships with advantages for both sides. Technologies underpinning the fourth industrial revolution may encourage such partnerships.“Still mired in largely manual and heterogeneous processes, supported by a variety of different tools, most of the industry’s incumbents simply can’t compete.“Platform-based, online marketplaces can now connect shippers directly with both Logistics Service Providers (LSPs) and carriers… Shippers with less complex shipments can easily switch to the new, platform-based services. Carriers, meanwhile, can use the online marketplaces to conduct business directly with shippers.“
0 4i n f o @ c a r g g o . c o m
No matter the perspective – shipper or carrier, individual or enterprise, producer
or consumer, human or software – the answer is the same: it is time to move
trucking into a technology-driven, disintermediated future. The costs, both
direct and indirect, of an antiquated brokerage model have become too great to
accept, let alone ignore.
Indeed, according to Ernst & Young:
Given the pace of rapid technological advances, it is easy to lose sight of the
bigger picture. If incumbents fail to innovate and capitalize on the emerging
technologies, they will miss out on the new market opportunities.
A Disintermediated,Technology-Driven Future
So, where does this leave us?
0 5i n f o @ c a r g g o . c o m
0 6i n f o @ c a r g g o . c o m
The fact that brokers insert themselves in between naturally aligned partners
should alone be cause for concern. Yes, the industry’s fragmentation dictates
there be some external method of connecting shippers and carriers, but it is of
vital importance that it respects the natural alignment of interests between the
two. Creating value by tightening that fragmentation, rather than seeking
opportunities to exploit holes in it, is the way of the future.
Such fundamental change can be daunting, even overwhelming, but the truth
is it is not as unfamiliar as it may seem. Disintermediation has already impacted
each and every one of us as a consumer, and most would argue for the better.
Its B2B potential is now being unleashed, and logistics will be the next industry
to experience it. Keeping in mind the realities of the industry, however, it is
important that disintermediation solutions not negatively impact the
commercial and legal protection associated with utilizing fully licensed brokers
(from a legal and regulatory, not functional, perspective).
The sustainability, both of our businesses and our planet, is also at stake.
Fragmentation, rather than laziness or malfeasance, is largely to blame for an
inability to more efficiently utilize shipping resources. But no matter the motive,
the problem remains the same: broker-based transactions magnify the effects
of fragmentation. The impact will only grow unless we take collective action.
0 7i n f o @ c a r g g o . c o m
Carggo: A Force in the Disruption of the Freight Brokerage Industry
INTERMEDIARIES
Legacy Digital
Incentivized to prioritize margin, at shipper’s and carrier’s expense
Alignment, not arbitrage
Full pricing & execution transparency
Firm price commitment
End-to-end automated freight management
No price transparency.Limited price commitment.
No price transparency.Limited price commitment.
Manual transaction management Digital transaction management
“Epitome of obsolescence” “Digitizing legacy brokerage”
Incentivized to reduce human error, focused on growth & margin expansion
The future offreight logistics
0 8i n f o @ c a r g g o . c o m
Carggo is a modern, robust, purpose-built technology platform to create, manage and execute shipping transactions.
At Carggo, we believe in restoring the natural alignment in the shipper-carrier relationship, rather than driving a wedge between partners in commerce. By combining cutting-edge technology, an industry-first business model, and a superior user experience, the Carggo platform does just that. While brokers frequently pair suboptimal loads and trucks (serving primarily their own interests), Carggo wants to see freight move as efficiently as possible.
Rates and availability shippers rely on.Simplicity and convenience they love.
Shipper
Equitable transactions make carriers a
meaningful part of the logistics equation.
Carrier
INSTANT, FAIR,ALGORITHMIC PRICING
INTUITIVE DIGITALEXPERIENCE
GUARANTEED EXECUTION
Equitable transactions make carriers a meaningful part of the logistics equation.
Carrier
INSTANT, AUTOMATICPAYMENTS, TRANSPARENT FEES
OPTIMAL LOADS BASED ON PREFERENCES
SUPPORT WHEN YOU NEED IT
0 9i n f o @ c a r g g o . c o m
See how Carggo can help you fulfill yourcontract and spot needs.
Real-timePricingEngine
Automated Carrier
Assignment
Automated Tracking &Payment
Integration with Major ERP &TMS Systems
X 4.3
MOREEFFICIENTPER FTE
OF ALLSHIPMENTS ARE“ZERO TOUCH”
70%
https://www.carggo.com/shippers