Survey data from FreightWaves shows that brokers see reps as the core of their business, and that they are hired on factors like tenacity, hustle, and persuasiveness. But now the importance of data, software, and quantitative decision making is upending the traditional model. Brokerages are over reliant on reps, and reps are over reliant on soft skills.
Reps are the principle lever on profitability because they are the largest overhead expense and they directly determine the largest COGS expense (buying rates with carriers).
Consider the same brokerage, where the average rep completes one more spot booking per day (going from 10 to 11 total), at 1% more margin (going from 17% to 18% average gross margin). This small change of 10% more productivity and 1% lower buy rates delivers a 20% higher net profit, and more rep commissions for a smaller team to share. A win for the owner and a win for the reps.
TMS lane preferences, Carrier 411, FreightWaves, DAT, and Truckstop provide good data but leave the rep to figure out its implications. Remember the ideal rep profile: reps make bad calculators. If you are going to hire carrier reps for their good soft skills, they need a complimentary investment in technology to cover the analytical side of their decisions.
Digitizing brokerage isn't bleeding edge: it is best practice. Everyone who has the budget is gearing up to compliment reps with tech. In the North American market there are 12x brokers with FTL revenues >$1 billion. 10x of them are heavily & publicly investing in digital freight matching. There will still be space to survive as a broker without digitizing, but the top-100 brokers will have to slash operating costs and sharpen pricing abilities to stay at the top.
Practical AI to handle analytical tasks your reps are doing today (price prediction, negotiations, carrier selection, etc.) supporting the 3x channels for brokers to find capacity: a private carrier portal, reps on phones, and 3rd party load boards. If you agree there is a problem that needs to be solved, check out our solution overview.