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Over the past 18 months, we have seen a significant shift toward shippers utilizing brokers as their primary carriers. Many shippers abandoned the strategy of focusing on asset-based carriers, and now load their routing guides with brokers as the choice of record.
We also see brokers being able to meet the detailed requirements of many shippers and fill the same strategic partner concept an asset-based provider typically holds.
From our point of view as a transportation management provider, Penske has been involved in many shipper bids of late and asked the question: Why the big swing in strategy?
Here's what we are finding:
Many shippers then single source the tail activity; overflow shipments; and those that are ad-hoc or do not meet the standard shipment profile to brokers. This allows the brokers to perform where they are strong. From our perspective, this is a good strategy to deploy through your annual procurement cycle.
The trend to utilize brokers will continue through 2017. The true test of the concept will occur when we see capacity tighten and rates begin to escalate.
A few thoughts to ponder moving forward:
Unfortunately, many of these questions cannot be addressed with quantitative data and we will have to wait for market conditions to change before we know the answer.
Shippers with a hybrid strategy will be able to best navigate tightening capacity. We all want to be the preferred shipper. A partnership with the asset carrier—and broker—will be your key to ensuring that a carrier and broker treat you as the preferred shipper.
This article was written by Bob Daymon, vice president of freight management operations at Penske Logistics, and first appeared in the January 2017 issue of Inbound Logistics Magazine.
Bob Daymon is vice president of freight management operations for Penske Logistics. He is responsible for the global growth and development of transportation management which includes network engineering, carrier procurement, shipment execution and freight payment plus transportation analytics. Daymon earned a bachelor's degree in business and organizational development from the University of Akron.