Digital Freight Brokerage Explained: Capacity and Visibility

One of the greatest obstacles in the transportation industry today is the dynamic, ever-changing freight market. With ocean and air travel radically impacted by COVID-19 and truckload market capacity tighter than ever, it's no wonder that shippers are looking towards digital freight brokers (DFB) to come up with flexible solutions to complex supply chain issues through transportation management solutions. Digital freight brokers use advanced technology and AI-driven algorithms to create elastic solutions that can quickly and efficiently respond to dynamic shifts in the market.

There are a lot of benefits to working with a digital freight brokerage. In this article, you'll learn how digital freight brokers help handle shifts in the transportation market by managing capacity, creating a more flexible freight process, and reducing costs across the board.

Want to learn more about how digital freight brokerages operate, the tools they use, and their digital ecosystem? Check out our webinar Going Digital: The Rise of Digital Freight Brokerage.

How do digital freight brokers manage capacity?

When you're struggling to find capacity in a tight market, how do you connect with the right carriers? A digital freight broker serves as the liaison between you and the transportation carrier, like a trucking company. Typically, the DFB will do this through digital platforms like web-based technologies and transportation management systems. The primary goal of a DFB is to match shipping entities to automated capacity, pricing, and load tendering solutions that create scalability and improved marketing buying capabilities. They take stock of their client's capacity needs, and then they reach out to their network of carriers to locate open capacity on applicable routing options.

This has a twofold benefit on overall capacity in the trucking market:

• It provides shippers access to additional capacity outside of their asset provider network, and normally at better rates

• It helps fill the trucks of freight carriers to optimize revenue

It gives shippers access to capacity.

For many shippers, both small to enterprise, finding trucking capacity is a constant uphill battle. With drastic swings in consumer demand, forecasting shipments can be difficult to procure rate-favorable coverage for their freight.

However, DFBs have access to data sets from their digital carrier network that can match available trucks to ideal shipments based on route history, rates, and inputted capacity to provide shippers with expansive coverage they may not otherwise be exposed to with an asset provider. That means the DFB has greater access to capacity for their clients. With trucking shortages being as severe as they are, particularly during COVID-19, shippers leverage digital freight brokerages and their top-tier technologies to best optimize their multimodal operations.

It fills empty miles for trucking companies.

Filling empty miles is always a top concern for carriers, particularly for their backhaul routes that get them back home to their contracted customer freight. With current full-truckload and LTL demand at near peak heights, there is a surplus of loads to choose from to fill those empty miles for carriers and passes costs savings back to the shipper as most carriers are willing to take lower rates to get back to their high paying contracted freight.

Digital freight brokers leverage tech platforms and data history to identify routes where empty miles are most prevalent for carriers to pinpoint freight to fill the empty trucks. In turn, carriers save on costs by not bringing home fleets empty, and shippers benefit by expanding their coverage network with their DFB partner. A win-win is always good for both parties to improve relationships and keep businesses moving forward.

How do digital freight brokers create a more transparent process?

The supply chain is significantly more complex than it has been in years past. Getting a product from the manufacturer to the end consumer is a trying task, involving dozens of contractors and partners and an unreasonable amount of both paper and digital documents.

Digital freight brokers have the expertise, tools, and technologies to handle this complicated process with grace and ease in a way that many shippers or asset carriers could not perform. This speeds up the entire transportation chain's productivity since the broker takes on the process and paperwork of pairing shippers with trucking companies.

Established DFBs also provide the ideal balance of technology and human support to ensure the management of shippers' freight is executed at the highest standard. Advancement in transportation management software (TMS) allows shippers to monitor shipments in real-time, see proof of delivery, signed bill of lading, compliance, inspection notes, and claim settlement. Everything is right in front of the shipper's eyes through the digital platform, creating a highly transparent and accessible system. This kind of transparency produces more control for shippers, and processes can have proactive strategies and reactive actions.

Are digital freight brokerages the future of freight?

How do digital freight brokers create a more efficient + flexible process?

The automation of all of these processes increases efficiency for both shippers and carriers. Fewer phone calls, faxing paperwork, and clerical concerns. It all happens automatically, which reduces labor costs (on both sides) and speeds up the entire process.

Most DFBs utilize artificial intelligence (often in tandem with human expertise). This means the AI can learn where chokeholds might occur in a shipper's network, and teams can implement the necessary tactics to prevent future events from happening. This allows for a more flexible and quick response to the constant changes in the freight market's dynamics.

How does a DFB reduce costs?

1. Maximized capacity: When capacity is maximized, shippers have access to more favorable rates for their shipments.

2. Reduced labor costs: The transparency of the DFB radically cuts down on labor costs both for shippers and carriers by automating systems, streamlining paperwork, and utilizing artificial intelligence programs.

3. Enhanced efficiency: The enhanced efficiency and flexibility translate to greater productivity, which lends itself to a heartier bottom line.

4. Optimized pricing: The DFB handles pricing and price-matching by ensuring the shipper is getting the lowest possible available rate balanced with speed, service, and other values that are important to their clients.

Ultimately, digital freight brokers offer shippers the most competitive freight market rates while optimizing capacity and routing for carriers.

Importance of carrier relationships

This symbiotic relationship between carrier and shipper only works if the digital freight brokerage has strong established relationships and carriers' network at their disposal. The DFB needs to have reliable relationships with each transportation company to ensure that their clients receive the best possible price and service.

If you're looking at DFBs, the top piece of advice is to go with a brokerage that spends time forging relationships with quality carriers. These connections keep costs low while promoting transparent and efficient service. Moreover, you'll want to build a strong relationship with your freight broker as well, so seeing that they have established relationships with carriers and other clients give you an idea about their reputation and trustworthiness. To see real-world examples of successful digital freight brokerage outcomes, explore our case studies.

Do you care about the kind of technologies that the digital freight brokerage will use to get the job done? You should also take a look at the team's experience, their network of relationships, and their ability to connect both through digital platforms and human expertise.

Frequently Asked Questions

What is a digital freight broker?

A digital freight broker is a company that connects shippers with carriers using advanced technology platforms, artificial intelligence, and digital tools to streamline the shipping process. They manage capacity, pricing, and logistics through automated systems while providing transparency and real-time visibility.

How is a digital freight broker different from a traditional freight broker?

Digital freight brokers leverage technology platforms, AI-driven algorithms, and transportation management systems to automate processes, provide real-time tracking, and optimize pricing. Traditional brokers typically rely more on manual processes and phone-based communications.

What are the main benefits of using a digital freight broker?

The main benefits include access to expanded capacity, reduced labor costs through automation, enhanced transparency with real-time tracking, optimized pricing, and more efficient processes that respond quickly to market changes.

How do digital freight brokers help with capacity issues?

Digital freight brokers connect shippers to a broad network of carriers through digital platforms, providing access to capacity that may not be available through traditional channels. They use data and technology to match available trucks with shipments based on route history, rates, and capacity needs.

Do digital freight brokers work with all types of shipments?

Most digital freight brokers handle various shipment types including full truckload (FTL), less-than-truckload (LTL), and multimodal transportation. The specific capabilities depend on the broker's network and technology platform.

Final Thoughts

To learn how Redwood's Modern 4PL approach to digital freight brokerage can connect your supply chain to winning shipping solutions, contact a freight specialist today.

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