The cloud is democratizing access to software and computing resources. With Carggo, freight brokerages can leverage sophisticated matching and pricing engines to grow their businesses at a very low cost.
Freight brokerage in North America is undergoing a technological transformation enabled by large investments from private equity and venture capital. Investors see a fragmented, low-tech industry that nonetheless has a vital role to play in the goods economy – efficiently matching freight to trucking capacity.
Perhaps a few dozen companies have directly benefited from Wall Street and Silicon Valley’s interest in the space, but there are, depending on whose numbers you trust, something like 15,000 registered freight brokers – and countless freight agents – in the United States. The long tail of small freight brokerages has resulted in a deeply uneven landscape both in terms of capital and technology.
Even apart from outside investors, small brokerages face headwinds when it comes to digital transformation. Freight brokerage can be capital-intensive because typically brokers pay carriers before they’re paid by the shipper – cash flow management locks up a great deal of capital that brokerages could otherwise use to build their own technology.
Instead, they’re forced to rely on legacy transportation management system (TMS) providers and adapt their work processes to inflexible on-premise software platforms. If the brokerage grows its business and expands into new service offerings – less-than-truckload or intermodal, for example – it often has to invest in costly add-ons or wait for customizations.
Compounding these challenges is the fact that most third-party logistics providers (3PLs) lack the scale to realize meaningful efficiencies from technology. Even if small brokerages could access the same tools as their well-funded competitors, their lack of volume wouldn’t make a difference to the bottom line.
Carggo is bringing a different model to the freight service industry. A venture-capital backed freight startup, the company is building an automated logistics platform that brings technology and scale to brokers, 3PLs and agents.
For example, a small brokerage might want to grow an account with a certain customer, but it’s hampered by a lack of technology. It may not have sophisticated carrier management tools to allow its brokers to quickly find the right truck for a specific load. Instead, its carrier reps are forced to make dozens of phone calls to cover a single load, limiting their productivity and the amount of freight the brokerage can move.
Carggo partners with small brokers like this and offers them a white-label solution – and will even build them a customer-facing web portal – so that their shippers can enjoy the convenience of a seamless digital customer experience that preserves the brokerage’s branding.
FreightWaves spoke to David Letourneau, director of 3PL partnerships at Carggo.
“At Carggo, our goal is to empower 3PLs to grow their business,” Letourneau said. “We do this by providing white-labeled technology to 3PLs, their shippers and carriers. We also partner at the operational level so that participants in our program can benefit from the same tools as their venture-backed competitors.”
Freight brokerages can partner with Carggo for free. Once they’ve been onboarded, it’s up to the brokerage to decide how many loads and which loads it wants Carggo to handle. Carggo offers instant pricing, live performance dashboards, real-time tracking, automated carrier matching, no-touch document collection and billing, all integrated with the broker’s TMS.
Normally, when a logistics provider assesses a potential tech purchase, there’s a complex return-on-investment calculation that takes place, which also takes into consideration the risk if the implementation fails. That’s not an insignificant risk, either – up to 40 percent of new technology implementations fail or do not deliver the value they promised.
With Carggo, it’s different – initiating the partnership is free, making the adopting the platform virtually risk-free, except for the small investment of time on the part of the 3PL partner.
“Every brokerage has unique needs and customer requirements,” Letourneau explained. “It’s our job to find the right solution that sets our partnership up for success in the long-term. The process is fairly simple and involves an initial exploratory call to get the conversation started.”
In one sense, Carggo empowers small brokerages to focus on what they do best – building and maintaining close customer relationships. Shippers that prefer having a single point of contact for their freight and consistent collaboration with just a few customer reps prefer to work with small brokerages. Carggo isn’t trying to get in the middle of that relationship – it just wants to help freight brokers take on more of their customers’ business and play to their strengths.
“To industry outsiders, it might seem strange that there are so many ‘small’ freight service providers,” Letourneau said. “To Carggo and our partners, this is perfectly normal. Shippers value relationships and put trust in their transportation providers only when it is earned. Carggo focuses on providing technology and scale to proven operators – so that they can strengthen their relationships and grow their business.”